Will The Supreme Court 'Bar-B-Que' The Federal Circuit’s 'Exceptional Case' Test? Early Views Of Justices Ginsburg And Scalia

On October 1, 2013, the Supreme Court granted certiorari in two cases dealing with the fee-shifting provision in patent cases: Highmark Inc. v. Allcare Health Management Systems (No. 12-1163) and Octane Fitness, LLC v. ICON Health & Fitness, Inc. (No. 12-1184). The fee-shifting provision states that a "court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285 (emphasis added).

Federal Circuit's Definition of "Exceptional Cases"

At issue is the Federal Circuit's "rigid and exclusive" (according to petitioners) two-part test for finding a patent case "exceptional":

"Absent misconduct in conduct of the litigation or in securing the patent, sanctions may be imposed against the patentee only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless."

Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005)(emphasis added).

Apart from the Supreme Court's recent distaste for "rigid" Federal Circuit tests, the Justices were likely persuaded to grant certiorari in order to examine why the identical phrase—"exceptional cases"—in the Lanham Act has been interpreted by various regional circuits to permit fee-shifting to the prevailing party in trademark cases even in the absence of subjective bad faith. See 15 U.S.C. § 1117(a) ("The court in exceptional cases may award reasonable attorney fees to the prevailing party."); Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 123 (8th Cir. 1987) ("Bad faith is not a prerequisite to a Lanham Act fee award.").

One regional circuit that has taken an expansive reading of "exceptional" is the D.C. Circuit. In Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 771 F.2d 521, 526 (D.C. Cir. 1985) (Ginsburg, Scalia, JJ.), the D.C. Circuit held that under the Lanham Act "[s]omething less than 'bad faith,' we believe, suffices to mark a case as 'exceptional.'" The "we" in this sentence refers to then-circuit judge Ruth Bader Ginsburg, author of the Noxell opinion, joined by then-circuit judge Antonin Scalia.

Ginsburg and Scalia views in Noxell v. Firehouse No. 1 Bar-B-Que Restaurant (D.C. Cir. 1985)

Before being elevated to the Supreme Court, Justices Ginsburg and Scalia both served together as circuit judges in the U.S. Court of Appeals for the D.C. Circuit. In a case of first impression in the circuit, a prevailing trademark defendant (a San Francisco-based barbeque restaurant and its...