throbber
(Slip Opinion)
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` OCTOBER TERM, 2013
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`Syllabus
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`1
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` NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
`
`
`
` being done in connection with this case, at the time the opinion is issued.
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`
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` The syllabus constitutes no part of the opinion of the Court but has been
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` prepared by the Reporter of Decisions for the convenience of the reader.
`
` See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
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`SUPREME COURT OF THE UNITED STATES
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`
` Syllabus
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` HIGHMARK INC. v. ALLCARE HEALTH
`
`MANAGEMENT SYSTEM, INC.
`
`CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
`
`THE FEDERAL CIRCUIT
` No. 12–1163. Argued February 26, 2014 —Decided April 29, 2014
`
`Petitioner Highmark Inc. moved for fees under the Patent Act’s fee-
`shifting provision, which authorizes a district court to award attor-
`
`ney’s fees to the prevailing party in “exceptional cases.” 35 U. S. C.
`§285. The District Court found the case “exceptional” and granted
`Highmark’s motion. The Federal Circuit, reviewing the District
`
`Court’s determination de novo, reversed in part.
`
`
`Held: All aspects of a district court’s exceptional-case determination
`under §285 should be reviewed for abuse of discretion. Prior to Oc-
`tane Fitness, LLC v. ICON Health & Fitness, Inc., ante, p. ___, this
`determination was governed by the framework established by the
`
`Federal Circuit in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc.,
`393 F. 3d 1378. Octane rejects the Brooks Furniture framework as
`unduly rigid and holds that district courts may make the exceptional-
`case determination under §285 in the exercise of their discretion.
`The holding in Octane settles this case. Decisions on “matters of dis-
`
`cretion” are traditionally “reviewable for ‘abuse of discretion,’ ” Pierce
`
`v. Underwood, 487 U. S. 552, 558, and this Court previously has held
`that to be the proper standard of review in cases involving similar de-
`
`terminations, see, e.g., id., at 559; Cooter & Gell v. Hartmarx Corp.,
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`496 U. S. 384, 405. The exceptional-case determination is based on
`
`
`statutory text that “emphasizes the fact that the determination is for
`
`the district court,” Pierce, 487 U. S., at 559; that court “is better posi-
`tioned” to make the determination, id., at 560; and the determination
`is “multifarious and novel,” not susceptible to “useful generalization”
`
`
`of the sort that de novo review provides, and “likely to profit from the
`experience that an abuse-of discretion rule will permit to develop,”
`id., at 562. Pp. 4–5.
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`

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`2
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`HIGHMARK INC. v. ALLCARE HEALTH MANAGEMENT
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`SYSTEM, INC.
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`Syllabus
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`687 F. 3d 1300, vacated and remanded.
` SOTOMAYOR, J., delivered the opinion for a unanimous Court.
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`

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` Cite as: 572 U. S. ____ (2014)
`
`Opinion of the Court
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`1
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` NOTICE: This opinion is subject to formal revision before publication in the
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`
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` preliminary print of the United States Reports. Readers are requested to
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` notify the Reporter of Decisions, Supreme Court of the United States, Wash-
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` ington, D. C. 20543, of any typographical or other formal errors, in order
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` that corrections may be made before the preliminary print goes to press.
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`SUPREME COURT OF THE UNITED STATES
`
`
`
`_________________
`
` No. 12–1163
`_________________
` HIGHMARK INC., PETITIONER v. ALLCARE HEALTH
`MANAGEMENT SYSTEM, INC.
`ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
`
`
`APPEALS FOR THE FEDERAL CIRCUIT
`
`[April 29, 2014]
`
`JUSTICE SOTOMAYOR delivered the opinion of the Court.
`Section 285 of the Patent Act provides: “The court in
`
`exceptional cases may award reasonable attorney fees to
`the prevailing party.” 35 U. S. C. §285. In Brooks Furni-
`ture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378
`(2005), the United States Court of Appeals for the Federal
`Circuit interpreted §285 as authorizing fee awards only in
`two circumstances. It held that “[a] case may be deemed
`exceptional” under §285 “when there has been some mate-
`rial inappropriate conduct,” or when it is both “brought in
`
`subjective bad faith” and “objectively baseless.” Id., at
`1381. We granted certiorari to determine whether an
`appellate court should accord deference to a district court’s
`determination that litigation is “objectively baseless.” On
`the basis of our opinion in Octane Fitness, LLC v. ICON
`
`Health & Fitness, Inc., ante, p. ___, argued together with
`
`
`this case and also issued today, we hold that an appellate
`court should review all aspects of a district court’s §285
`determination for abuse of discretion.
`I
`Allcare Health Management System, Inc., owns U. S.
`
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`2
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`HIGHMARK INC. v. ALLCARE HEALTH MANAGEMENT
`
`
`SYSTEM, INC.
`Opinion of the Court
`Patent No. 5,301,105 (’105 patent), which covers “utiliza-
`tion review” in “‘managed health care systems.’”1 687
`F. 3d 1300, 1306 (CA Fed 2012). Highmark Inc., a health
`insurance company, sued Allcare seeking a declaratory
`judgment that the ’105 patent was invalid and unenforce-
`able and that, to the extent it was valid, Highmark’s
`actions were not infringing it. Allcare counterclaimed for
`patent infringement. Both parties filed motions for sum-
`mary judgment, and the District Court entered a final
`judgment of noninfringement in favor of Highmark. The
`Federal Circuit affirmed. 329 Fed. Appx. 280 (2009) (per
`
`curiam).
`
`Highmark then moved for fees under §285. The District
`
`Court granted Highmark’s motion. 706 F. Supp. 2d 713
`(ND Tex. 2010). The court reasoned that Allcare had
`engaged in a pattern of “vexatious” and “deceitful” conduct
`
`Id., at 737. Specifically, it
`throughout the litigation.
`
`
`found that Allcare had “pursued this suit as part of a
`bigger plan to identify companies potentially infringing
`the ’105 patent under the guise of an informational sur-
`vey, and then to force those companies to purchase a
`license of the ’105 patent under threat of litigation.” Id.,
`at 736–737. And it found that Allcare had “maintained
`infringement claims [against Highmark] well after such
`claims had been shown by its own experts to be without
`merit” and had “asserted defenses it and its attorneys
`
`knew to be frivolous.” Id., at 737. In a subsequent opin-
`
`ion, the District Court fixed the amount of the award at
`$4,694,727.40 in attorney’s fees and $209,626.56 in ex-
`penses, in addition to $375,400.05 in expert fees. 2010 WL
`6432945, *7 (ND Tex., Nov. 5, 2010).
`The Federal Circuit affirmed in part and reversed in
`
`——————
`1“ ‘Utilization review’ is the process of determining whether a health
`
`
`insurer should approve a particular treatment for a patient.” 687 F. 3d,
`
` at 1306.
`
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`

`
`
`
` Cite as: 572 U. S. ____ (2014)
`
`Opinion of the Court
` part. 687 F. 3d 1300. It affirmed the District Court’s
`
`exceptional-case determination with respect to the allega-
`tions that Highmark’s system infringed one claim of the
`’105 patent, id., at 1311–1313, but reversed the determi-
`nation with respect to another claim of the patent, id., at
`
`1313–1315. In reversing the exceptional-case determina-
`tion as to one claim, the court reviewed it de novo. The
`
`court held that because the question whether litigation is
`“objectively baseless” under Brooks Furniture “‘is a ques-
`tion of law based on underlying mixed questions of law
`and fact,’” an objective-baselessness determination is
`
`reviewed on appeal “‘de novo’” and “without deference.”
`687 F. 3d, at 1309; see also ibid., n. 1. It then determined,
`contrary to the judgment of the District Court, that “All-
`
`care’s argument” as to claim construction “was not ‘so
`unreasonable that no reasonable litigant could believe it
`
`would succeed.’” Id., at 1315. The court further found
`that none of Allcare’s conduct warranted an award of fees
`under the litigation-misconduct prong of Brooks Furniture.
`687 F. 3d, at 1315–1319.
`
`Judge Mayer dissented in part, disagreeing with the
`view “that no deference is owed to a district court’s finding
`that the infringement claims asserted by a litigant at trial
`
`were objectively unreasonable.” Id., at 1319. He would
`
`have held that “reasonableness is a finding of fact which
`may be set aside only for clear error.” Ibid. The Federal
`Circuit denied rehearing en banc, over the dissent of five
`judges. 701 F. 3d 1351 (2012). The dissenting judges
`criticized the court’s decision to adopt a de novo standard
`of review for the “objectively baseless” determination as an
`impermissible invasion of the province of the district
`court. Id., at 1357.
`
`We granted certiorari, 570 U. S. ___ (2013), and now
`vacate and remand.
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`3
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`

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`4
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`
`HIGHMARK INC. v. ALLCARE HEALTH MANAGEMENT
`
`
`
`SYSTEM, INC.
`
`Opinion of the Court
`
`
` II
`Our opinion in Octane Fitness, LLC v. ICON Health &
`
`Fitness, Inc., rejects the Brooks Furniture framework as
`unduly rigid and inconsistent with the text of §285. It
`
`holds, instead, that the word “exceptional” in §285 should
`be interpreted in accordance with its ordinary meaning.
`
`Ante, at 7. An “exceptional” case, it explains, “is simply
`one that stands out from others with respect to the sub-
`stantive strength of a party’s litigating position (consider-
`ing both the governing law and the facts of the case) or the
`
`unreasonable manner in which the case was litigated.”
`Ante, at 7–8. And it instructs that “[d]istrict courts may
`determine whether a case is ‘exceptional’ in the case-by-
`case exercise of their discretion, considering the totality of
`the circumstances.” Ante, at 8. Our holding in Octane
`
`settles this case: Because §285 commits the determination
`whether a case is “exceptional” to the discretion of the
`district court, that decision is to be reviewed on appeal for
`abuse of discretion.
`Traditionally, decisions on “questions of law” are “re-
`
`viewable de novo,” decisions on “questions of fact” are
`“reviewable for clear error,” and decisions on “matters of
`
`discretion” are “reviewable for ‘abuse of discretion.’”
`Pierce v. Underwood, 487 U. S. 552, 558 (1988). For rea-
`
`sons we explain in Octane, the determination whether a
`
`case is “exceptional” under §285 is a matter of discretion.
`And as in our prior cases involving similar determina-
`tions, the exceptional-case determination is to be reviewed
`only for abuse of discretion.2 See Pierce, 487 U. S., at 559
`
`
`(determinations whether a litigating position is “substan-
`
`
`
`
`
`——————
`
` 2The abuse-of-discretion standard does not preclude an appellate
`
` court’s correction of a district court’s legal or factual error: “A district
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` court would necessarily abuse its discretion if it based its ruling on an
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`erroneous view of the law or on a clearly erroneous assessment of the
`evidence.” Cooter & Gell v. Hartmarx Corp., 496 U. S. 384, 405 (1990).
`
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`5
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` Cite as: 572 U. S. ____ (2014)
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`Opinion of the Court
`tially justified” for purposes of fee-shifting under the
`Equal Access to Justice Act are to be reviewed for abuse of
`discretion); Cooter & Gell v. Hartmarx Corp., 496 U. S.
`384, 405 (1990) (sanctions under Federal Rule of Civil
`Procedure 11 are to be reviewed for abuse of discretion).
` As in Pierce, the text of the statute “emphasizes the fact
`that the determination is for the district court,” which
`“suggests some deference to the district court upon ap-
`peal,” 487 U. S., at 559. As in Pierce, “as a matter of the
`sound administration of justice,” the district court “is
`better positioned” to decide whether a case is exceptional,
`id., at 559–560, because it lives with the case over a pro-
`
`longed period of time. And as in Pierce, the question is
`“multifarious and novel,” not susceptible to “useful gener-
`alization” of the sort that de novo review provides, and
`“likely to profit from the experience that an abuse-of-
`discretion rule will permit to develop,” id., at 562.
`
`We therefore hold that an appellate court should apply
`an abuse-of-discretion standard in reviewing all aspects of
`a district court’s §285 determination. Although questions
`of law may in some cases be relevant to the §285 inquiry,
`that inquiry generally is, at heart, “rooted in factual de-
`terminations,” Cooter, 496 U. S., at 401.
`
`
`*
`*
`*
`
`The judgment of the United States Court of Appeals for
`the Federal Circuit is vacated, and the case is remanded
`for further proceedings consistent with this opinion.
`
`
`
`It is so ordered.

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