The U.S. Supreme Court handed a loss to a Fort Worth firm Tuesday in a dispute over whether it should have to pay the attorneys fees and costs of a health insurer that defeated the small fry in a patent case.
The justices essentially gave wide deference to the federal district judges in deciding when fees are appropriate in patent cases. Over the past decade, the U.S. Court of Appeals for the Federal Circuit, which hears patent appeals, has had more stringent standards on awarding attorneys fees in patent suits, where legal expenses can run in the millions of dollars.
All of which means Fort Worth’s Allcare Health Management Systems, Inc. could be on the hook for roughly $5.5 million in fees and other expenses that its opponent, Highmark Inc., has rung up in a decade-long court dispute between the two, according to court records and comments by Highmark attorney Cindy Kernick, a partner in the Pittsburgh, Pa. office of Reed Smith LLP.
In the wake of the Supreme Court decision, the Highmark case will go back to the Federal Circuit, which will have to apply the new, looser standard for awarding legal expenses. Should that go Highmark’s way, then the case would be sent back to the Northern District of Texas to begin the process of collecting the money.
The Supreme Court’s decision in the Allcare-Highmark dispute came down the same day as another case covering similar ground, Octane Fitness vs. Icon Health & Fitness.
The decisions in Highmark and Octane Fitness could help make would-be patent plaintiffs think twice about filing lawsuits without doing their homework on whether they have a reasonable likelihood of proving their case in court, Kernick said.
“People who have done legitimate homework, those people will still sue,” she said. “They’re not at risk under the new standard.”
A Washington, D.C.-based attorney for Allcare, Donald Dunner, could not be reached for comment late Tuesday. Dunner is a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP.
In addition to Reed Smith, Highcare was represented by Hogan Lovells.