CAFC has mixed decision in Highmark v. Allcare

The summary of the Highmark v. Allcare case:

We therefore affirm the district court’s finding that Allcare’s allegations of infringement of claim 102 rendered the case exceptional under section 285 and reverse the district court’s finding that Allcare’s other claims and actions supported an exceptional case finding. Because the district court did not determine the amount of attorneys’ fees apportionable to each of the above issues, a remand is necessary. See Molins PLC v. Textron, Inc., 48 F.3d 1172, 1186 (Fed. Cir. 1995) (remanding for a calcula- tion of attorneys’ fees based on the court’s partial reversal of the underpinnings of the exceptional case finding). We remand this case to the district court for a calculation of attorneys’ fees based on the frivolity of the claim 102 allegations only.

Independent claim 102 recites:

A method of managing an integrated health care management system having input means, pay- ment means and memory storage comprising:

(a) storing through said input means into said memory storage personal health profile data for each of a predetermined plurality of per- sons;
(b)storing into said memory storage symp- toms and treatment data for each of a prede- termined plurality of health profiles and problems;
(c) storing in said memory storage criteria for identifying treatments requiring utilization review;
(d) storing in said memory storage criteria for identifying treatments requiring second opin- ions;
(e) entering into said system information iden- tifying a proposed medical treatment for one of said plurality of persons;
(f)identifying whether or not said pro- posed medical treatment requires utiliza- tion review; and
(g) preventing said system from approving payment for said proposed medical treat- ment if said proposed medical treatment requires utilization review until such utilization review has been conducted.

5,301,105 patent col. 28 ll. 8-30.

Of interest in this case:

After reviewing the record, the district court found the case exceptional and that Allcare’s attorneys had violated Rule 11. Exceptional Case Order, 706 F. Supp. 2d at 738- 39. The court based both its exceptional case finding and the Rule 11 sanctions on the same conduct. The court found that Allcare’s claims for infringement of claims 52 and 102 were frivolous. The court also found that Allcare engaged in litigation misconduct by asserting a frivolous position based on res judicata and collateral estoppel, shifting its claim construction position throughout the course of the proceedings before the district court, and making misrepresentations to the Western District of Pennsylvania in connection with a motion to transfer venue. After finding the case exceptional under section 285, the district court entered judgment awarding Highmark $4,694,727.40 in attorneys’ fees and $209,626.56 in expenses, and it also invoked its inherent power to impose sanctions and awarded $375,400.05 in expert fees and expenses. The district court did not determine how much of the monetary awards were attributable to each issue.

Of exceptional cases:

Under 35 U.S.C. § 285, a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” Once it is determined that the party seeking fees is a prevailing party, determining whether to award attorneys’ fees under 35 U.S.C. § 285 is a two-step process. Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1327-28 (Fed. Cir. 2003). First, a prevailing party must establish by clear and convincing evidence that the case is “exceptional.” Id. at 1327. An award of fees against a patentee can be made for a frivolous claim, inequitable conduct before the Patent and Trademark Office, or misconduct during litigation. Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989). Second, if the case is deemed exceptional, a court must determine whether an award of attorneys’ fees is appropriate and, if so, the amount of the award. Forest Labs., 339 F.3d at 1328.

Of "objectively baseless"

The central issue is whether Allcare’s infringement counterclaims against Highmark were frivolous. It is established law under section 285 that absent misconduct in the course of the litigation or in securing the patent, sanctions may be imposed against the patentee only if two separate criteria are satisfied: (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). The require- ment that the litigation be objectively baseless “does not depend on the state of mind of the [party] at the time the action was commenced, but rather requires an objective assessment of the merits.” Id. at 1382. “To be objectively baseless, the infringement allegations must be such that no reasonable litigant could reasonably expect success on the merits.” Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008) (internal quotation marks omitted).

Seagate is cited:

Furthermore, even if the claim is objectively baseless, it must be shown that lack of objective foundation for the claim “was either known or so obvious that it should have been known” by the party asserting the claim. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007); see also iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1377 (Fed. Cir. 2011). This is known as the subjective prong of the inquiry.