Highmark, Inc. v. Allcare Health Management Systems, Inc.
687 F.3d 1300
| Fed. Cir. | 2012Background
- Allcare owns US patent no. 5,301,105 directed to integrated health care management with respect to utilization review.
- Highmark sued for declaratory judgment of noninfringement/invalidity; Allcare counterclaimed for infringement of claims 52, 53, and 102.
- Special Master conducted claim construction; district court adopted, leading to noninfringement for claims 52 and 53.
- District court found the case exceptional under §285 due to frivolous infringement claims, litigation misconduct, and related conduct; it awarded substantial attorney fees and costs and sanctioned attorneys under Rule 11, later vacated.
- Appellate panel affirmed in part, reversed in part, and remanded to calculate fees attributable to the frivolous claim 102 only; jurisdiction under 28 U.S.C. §1295(a).
- Dissent argued Bard should not govern de novo review and urged deference to district court findings of fact and law in §285 exceptional case determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was claim 102 infringement objectively and subjectively frivolous? | Allcare contends claim 102 was not objectively baseless or brought in bad faith. | Highmark contends claim 102 was objectively baseless and pursued in bad faith. | Yes for objective baselessness and bad faith; claim 102 upheld as exceptional. |
| Was claim 52 infringement objectively baseless? | Allcare argued claim 52 could cover multiple embodiments, including non-automatic treatment proposals. | Highmark argued claim 52 was limited to an automatic diagnostic system. | No; claim 52 was not objectively baseless; sanctions reversed for this claim. |
| Did litigation misconduct alone justify §285 exceptional finding? | Allcare contends misconduct arguments were insufficient to render the case exceptional. | Highmark argued conduct (res judicata theory, shifting claim construction, misrepresentations) supported exceptionality. | Not by itself; misconduct did not sustain the exceptional finding here. |
| Should the district court's fee award be remanded for apportionment? | Remanded to apportion fees to the valid exceptional-claim determinations (claim 102) only. |
Key Cases Cited
- Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005) (objective baselessness and bad faith standard under §285; de novo/applies to objective prong)
- Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003 (Fed. Cir. 2012) (de novo review of objective reasonableness under §285; mixed questions of law/fact)
- iLOR, LLC v. Google, Inc., 631 F.3d 1372 (Fed. Cir. 2011) (objective prong requires objective baselessness with clear and convincing evidence for subjective prong)
- Seagate Tech., LLC v. West Digital Corp., 497 F.3d 1360 (Fed. Cir. 2007) (objective/subjective standard for basing exceptional case review)
- Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (U.S. 1993) (establishes objective reasonableness standard for litigation claims)