Highmark Inc. v. Allcare Health Management System, Inc., 134 S. Ct. 1744

Allcare owned U.S. Patent No. 5,301,105 covering "utilization review" in managed health care systems; Highmark sought a declaratory judgment of invalidity/unenforceability and noninfringement.
The district court entered final judgment of noninfringement for Highmark; the Federal Circuit affirmed on the infringement merits.
Highmark moved under 35 U.S.C. §285 for attorney’s fees as the prevailing party; the district court found the case "exceptional," citing vexatious and deceitful litigation conduct, and awarded roughly $5.3 million.
The Federal Circuit affirmed the exceptional determination as to one claim but reversed as to another, applying a de novo standard to the district court’s finding that a claim was "objectively baseless" under the Federal Circuit’s Brooks Furniture framework.
This Supreme Court decision (issued with Octane Fitness) rejects the Brooks Furniture binary framework and holds that district courts decide exceptional-case status under §285 in the exercise of discretion, with appellate review for abuse of discretion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper standard of review for a district court’s §285 "exceptional" determination	Highmark: defer to district court’s discretionary judgment	Allcare: appellate review should be de novo for "objective baselessness" questions	Abuse-of-discretion review applies to all aspects of §285 determinations
Validity of Brooks Furniture two-prong test (objective baselessness or litigation misconduct)	Highmark: district court applied Brooks but found broader misconduct supporting fees	Allcare: Brooks requires distinct analysis and de novo review for objective-baseless prong	Brooks Furniture framework rejected as unduly rigid; §285 interpreted by ordinary meaning of "exceptional"
Whether district court’s factual findings about litigating conduct merit deference	Highmark: district court’s firsthand impressions and factual findings should stand	Allcare: some legal aspects of exceptionalness are reviewable de novo	Fact-based assessments (reasonableness, conduct) are rooted in discretion and reviewed for abuse of discretion
Whether appellate court may correct legal or clearly erroneous factual errors in §285 rulings	Highmark: limited review but appellate courts can correct errors	Allcare: de novo review necessary for mixed questions of law and fact	Abuse-of-discretion review governs, but appellate courts may reverse if district court based ruling on an erroneous view of law or clearly erroneous facts

Pierce v. Underwood, 487 U.S. 552 (discretionary fee determinations merit appellate deference)
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (sanctions and fee decisions reviewed for abuse of discretion; appellate relief allowed for legal or clearly erroneous factual error)
Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005) (Federal Circuit’s rigid two-prong test for §285 exceptional cases)
Allcare Health Mgmt. Sys., Inc. v. Highmark Inc., 687 F.3d 1300 (Fed. Cir. 2012) (panel applied Brooks and reviewed objective-baselessness de novo)