Two New Papers on Fee Shifting

1. Megan LaBelle has posted a paper on ssrn titled Fee Shifting for PTAB Proceedings.  Here is a link to the paper, and here is the abstract:

Fee shifting in patent litigation has been a hot topic in recent years. In Octane Fitness v. ICON and Highmark v. Allcare, the Supreme Court made it easier to shift fees under 35 U.S.C. § 285, which allows courts to award reasonable attorney’s fees to prevailing parties in patent cases. Moreover, several bills have been introduced in Congress since 2013 that would expand courts’ power beyond the parameters of § 285. Various aspects of these proposals have been heavily debated, including whether fee shifting should be mandatory or discretionary, how to recover fees from the “real party in interest,” and whether to adopt a one-way or two-way fee shifting scheme.

These sort of design choices regarding a fee shifting regime are not simply about who should pay for patent litigation. Fee shifting schemes also provide a roadmap from lawmakers about whether and how litigation ought to proceed. Fee shifting regimes, in other words, are used to influence litigation conduct. Thus, if Congress is going to alter the fee shifting landscape for patent litigation, it must make careful choices in order to incentivize certain types of patent disputes, while simultaneously discouraging others.

This Article does not advocate for a new fee shifting regime for patent litigation, nor does it endeavor to design one. Instead, it focuses on one narrow but important question about fee shifting in patent cases that has received surprisingly little attention: whether prevailing parties should be able to recover attorney’s fees incurred for litigation before the Patent Trial and Appeal Board (PTAB) — the administrative tribunal of the U.S. Patent & Trademark Office that was created by the America Invents Act (AIA). With the steep rise in both PTAB proceedings (post-AIA) and fee motions (post-Octane/Highmark), district courts are bound to face this question more frequently. While the U.S. Court of Appeals for the Federal Circuit has allowed for the recovery of such fees in the past, the Federal Circuit’s analysis was flawed in light of Supreme Court precedent. Thus, this Article proposes that Congress enact legislation allowing parties who prevail at the PTAB to recover their attorney’s fees.

2.  Scott Flanz has published a paper titled Octane Fitness:  The Shifting of Patent Attorneys' Fees Moves into High Gear, 19 Stanford Tech. L. Rev. 329 (2016).  Here is a link to the paper, and here is the abstract:

In 2014, the United States Supreme Court decided Octane Fitness. LLC v. ICON Health & Fitness, LLC, significantly altering the standard for granting attorneys’ fees shifting at the close of a patent litigation. Combine with precedent announced on the same day in Highmark Inc. v. Allcare Health Management Systems, scholars have opined that under the new regime, the standard for proving entitlement to attorneys’ fees in patent litigations will be considerably relaxed. Despite the widespread acceptance of the viewpoint, few empirical analyses—if any—have objectively confirmed it.

This paper provides a first glimpse into whether the Supreme Court’s decision in Octane changed the attorneys’ fees standard in practice. By investigating the rate at which courts have granted attorneys’ fees motions before and after Octane, broken down by whether the movant was a patentee or accused infringer, the technology of the patent asserted, the circuit and district where the suit was decided, and what factors were considered by each court in its opinion, this research confirms that Octane’s reinterpretation of § 285 has had observable effects. In particular, this study finds a statistically significant increase in the rate of attorneys’ fee shifting after Octane, particularly for motions filed by accused infringers and in motions concerning electronics and software patents. The results of this study shed light on meaningful and recent changes to the patent litigation incentive structure and will be helpful in predicting future changes to the patent litigation landscape.