John van der Luit-Drummond

Tomorrow, the US Supreme Court will hear oral arguments in Highmark Inc v Allcare Management Sys Inc. According to Allcare’s attorney, Erik Puknys, the case is about more than the ‘troll problem’ Highmark has focused its arguments on.  

IAM previously highlighted this case, which addresses scenarios where successful defendants in patent lawsuits can seek costs and sanctions for litigation that they believe has been frivolous. The Supreme Court will decide the level of deference the Federal Circuit should give to district courts when determining whether an award is appropriate. Highmark argues that district courts are best placed to decide if a claim is objectively baseless. It believes that leaving these decisions out of the purview of the Federal Circuit will act as a deterrent to patent trolls and protect innovators from meritless lawsuits.  

However, Puknys told IAM that if the Supreme Court rules in Highmark’s favour neither defendant nor plaintiff will be able to appeal such awards: “I cannot see the logic in how Highmark’s argument helps defendants. It is clear that defendants are on the losing end of these cases just as often as plaintiffs are. Having the Federal Circuit able to correct legal errors of a district court judge helps both sides. A defendant on the wrong end of a decision is just as helpless as a plaintiff is.”

Allcare has received support from both the legal profession and advocacy groups. According to Puknys the amici that have lined up in his client’s favour show that this case is not about patent trolls: “You have the Intellectual Property Owners Association, whom you would expect want rules that are favourable to patentees, and then you have the Business Software Alliance (BSA), which traditionally want to stick up for the rights of defendants.” Yet Puknys told IAM that both these organisations are in favour of Allcare’s arguments because the ruling it seeks would benefit plaintiffs and defendants. “I think that surprised a lot of people because of Highmark’s insistence that its position is the anti-troll position. If that were true you would expect the BSA to side with them because they are very active on the troll issue by lobbying congress for stricter controls and on what is beneficial to the software industry.”

Many high-profile technology companies like Google have filed neutral amicus briefs in this case. While these companies believe fee shifting will have its benefits, they agree with Allcare that appeals to the Federal Circuit should be permitted. A United States Government Accountability Office report from August 2013 found almost 80% of patent cases were filed by operating companies. Perhaps Google and others have stepped into this case realising that unappealable fee shifting decisions would have a detrimental impact on all patent owners.

“Cisco, Facebook, Intel, HTC; these are companies you would expect to support the anti-troll position put forward by Highmark,” said Puknys. “Instead the argument that they put forward is virtually identical to ours. I tip my hat to my opponents, they have done a great job of creating the impression that this case is all about policing trolls. Quite frankly it is not.”