Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 2012 U.S. App. LEXIS 25054 (Fed. Cir. Dec. 6, 2012) (Dyk, J., concurring):

Judge Moore, Judge Reyna, and Judge Mayer in his panel dissent, urge that both this decision and Bard are inconsistent with our prior authority. This is incorrect. More fundamentally, they assert that the de novo standard is inconsistent with the Supreme Court's decisions in Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990), and Pierce v. Underwood, 487 U.S. 552, 108 S. Ct. 2541, 101 L. Ed. 2d 490 (1988), which dealt with the standard of review for awards of attorneys' fees under Rule 11 and the Equal Access to Justice Act ("EAJA"). But those cases arose in quite different contexts, and are no basis for reading sections 284 and 285 as requiring deference to district courts on the objective reasonableness issue.

First, the language of sections 284 and 285 does not mandate deference to the district court's discretion on questions of law. To the contrary, section 285 was amended to replace an open-ended discretionary standard, and to restrict the discretion in the district courts. Section 285, as originally enacted, provided that the district court "may in its discretion award reasonable attorney[s'] fees." Patent Act of Aug. 1, 1946, ch. 726, 60 Stat. 778. The 1952 Patent Act deleted the "in its discretion" language and replaced it with the "exceptional case" standard that exists today. 35 U.S.C. § 285 (2006) ("The court in exceptional cases may award reasonable attorney fees to the prevailing party."); see also Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d 688, 691 (1984); Alan M. Ahart, Attorneys' Fees: The Patent Experience, 57 J. Pat. Off. Soc'y 608, 617 n.37 (1975).

Second, the relevant policy considerations behind sections 284 and 285 are quite different from those involved in EAJA and Rule 11. Those provisions are addressed to the award of attorneys' fees, not enhanced damages, as provided in section 284. Even as to the attorneys' fees provision of section 285, the considerations are different. Rule 11 deters abusive litigation practices, Cooter & Gell, 496 U.S. at 393, and EAJA discourages the government from initiating unjustified litigation by evening the playing field, "eliminat[ing] for the average person the financial disincentive to challenge unreasonable governmental actions." Comm'r, INS v. Jean, 496 U.S. 154, 163, 110 S. Ct. 2316, 110 L. Ed. 2d 134 (1990). In contrast, section 285, while it serves deterrent purposes, is a primarily compensatory provision. See, e.g., Mathis v. Spears, 857 F.2d 749, 753 (Fed. Cir. 1988) ("The purpose of Section 285 is to reimburse a party injured when forced to undergo an 'exceptional' case." (emphasis omitted)). Early on, it was recognized that attorneys' fee awards were "not to be regarded as a penalty for failure to win a patent infringement suit," and should only be allowed where it would be "grossly unjust that the winner . . . be left to bear the burden of his own counsel fees." Rohm & Haas, 736 F.2d at 691 (quoting Park-In Theatres, Inc. v. Perkins, 190 F.2d 137, 142 (9th Cir. 1951)).

Third, unlike sanctions under Rule 11 or attorneys' fees under the EAJA, enhanced damages and exceptional case findings frequently involve extraordinarily large awards, often amounting to millions of dollars.

Footnote 3. For enhanced damages, see, e.g., Krippelz v. Ford Motor Co., 667 F.3d 1261, 1264--65 (Fed. Cir. 2012) ($21 million in enhanced damages); i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 858 (Fed. Cir. 2010) ($40 million in enhanced damages); Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1323 (Fed. Cir. 2008) ($38,482,008.00 in enhanced damages).

For attorneys' fees, see, e.g., MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 910 (Fed. Cir. 2012) ($4,683,653.03 in attorneys' and experts' fees and expenses); Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., 628 F.3d 1359, 1366 (Fed. Cir. 2010) (over $6 million in attorneys' fees); Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381, 1385 (Fed. Cir. 2008) ($16.8 million in attorneys' fees).

Highmark was awarded approximately $5 million in attorneys' fees and expenses in this case. Highmark, 687 F.3d at 1308. Bard was awarded $185,589,871.02 in enhanced damages and $19 million in attorneys' fees and costs. Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., 670 F.3d 1171, 1178 (Fed. Cir. 2012). The Supreme Court recognized in Pierce that large fee awards "militat[ed] against" an abuse of discretion standard: "If this were the sort of decision that ordinarily has such substantial consequences, one might expect it to be reviewed more intensively." Pierce, 487 U.S. at 563. However, the Court concluded that this concern was unwarranted as applied to EAJA, because at the time EAJA fee awards were typically only a few thousand dollars. Id.; see also Jean, 496 U.S. at 164 n.12 ("In 1989 [EAJA] awards averaged less than $3,000 each").

Fourth, unlike the situation under Rule 11, the decision to award attorneys' fees and enhanced damages to prevailing parties under sections 284 and 285 is based on the entire case, and does not turn on whether the patentee's position would have been reasonable at the time of filing the complaint or pleading. See Antonious v. Spalding & Evenflo Cos., 275 F.3d 1066, 1076 (Fed. Cir. 2002); Fed. R. Civ. P. 11 advisory committee's note, 1983. Rather, our en banc decision in Seagate established that objective reasonableness for enhanced damages is a single retrospective look at the merits of the case after the conclusion of the litigation, when there is a "prevailing party." See, e.g., Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1264 (Fed. Cir. 2008) ("[O]bjective baselessness requires a determination based on the record ultimately made . . . not on the basis of information available to the patentee at the time the allegations were made."). The same is true of attorneys' fee awards under section 285 in the litigation of unmeritorious cases. Nor do sections 284 and 285, in these respects, implicate supervision of the local bar, a matter that Cooter & Gell found particularly within the expertise of the local district court. 496 U.S. at 404.

Fifth, appeals of enhanced damage awards and exceptional case findings typically come to this court either after an appeal that resolved the merits, or in an appeal that also involves review of the merits. The district court, when it makes an objective reasonableness determination after a trial on the merits, is simply unable to forecast what this court will decide in the merits appeal. In this respect, it is not "uniquely positioned" to decide the objective reasonableness question. Moreover, the existence of appellate review on the merits before the objective reasonableness determination significantly mitigates the concern expressed in Pierce with "the investment of appellate energy" in de novo review. Pierce, 487 U.S. at 561; see also Cooter & Gell, 496 U.S. at 403-04. It will not require a significant "investment of appellate energy" for an appellate panel that has already addressed the merits to then determine if, under the correct law, a litigant was objectively unreasonable. Quite the contrary; the merits panel is typically better situated to make that determination than the district court, and remand for a district court's determination of objective reasonableness in light of the appellate merits determination would often be wasteful. The Federal Circuit brings to the table useful expertise. Our court sees far more patent cases than any district court, and is well positioned to recognize those "exceptional" cases in which a litigant could not, under the law, have had a reasonable expectation of success.