Last month I wrote about an intercircuit conflict over the appropriate standard of review for reviewing hearsay rulings (here). A similar circuit split exists over the appropriate standard of review for reviewing a district court’s decision to award enhanced damages and attorneys’ fees.
Unlike its sister circuits, the Federal Circuit reviews such decisions de novo. See Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003, 1005 (Fed. Cir. 2012). Last week the Federal Circuit denied rehearing en banc in Highmark, Inc. v. Allcare Health Management System, reaffirming its position in the circuit split. No. 2011-1219 (Fed. Cir. Dec. 6, 2012).
Judge Kimberly Ann Moore—with whom Chief Judge O’Malley and Judges Rader, Reyna, and Wallach joined—dissented to the circuit’s refusal to reconsider the issue en banc. The dissent’s opening paragraph packs quite a punch:
Contrary to our precedent, the divided Highmark panel decided that a district court's exceptional case finding—based on its determination that the infringement claims asserted at trial were objectively baseless—is entitled to no deference and should be reviewed de novo. Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1309-10 (Fed. Cir. 2012). Because Highmark deviates from precedent, invades the province of the fact finder, and establishes a review standard for exceptional case findings in patent cases that is squarely at odds with the highly deferential review adopted by every regional circuit and the Supreme Court in other areas of law, I dissent from the denial of rehearing en banc.
“Not surprisingly,” Judge Moore explained, “given the clear direction from the Supreme Court, the regional circuits are unanimous that the issue of objective reasonableness under Rule 11 is to be reviewed deferentially by the appellate courts.4”
4 See, e.g., Whitehead v. Food Max of Miss., Inc., 332 F.3d 796, 802-03 (5th Cir. 2003) (determining compliance with Rule 11 is "an objective, not subjective, standard of reasonableness under the circumstances" and concluding that the "district court is better situated than the court of appeals to marshal the pertinent facts and apply the fact-dependent legal standard mandated by Rule 11" (citation omitted)); see also CQ Int'l Co., Inc. v. Rochem Int'l, Inc., USA, 659 F.3d 53, 62-63 (1st Cir. 2011); Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, LTD., 682 F.3d 170, 177-78 (2d Cir. 2012); In re Taylor, 655 F.3d 274, 282-83 (3d Cir. 2011); Merritt v. Int'l Ass'n of Machinists & Aerospace Workers, 613 F.3d 609, 626-27 (6th Cir. 2010); Ross v. City of Waukegan, 5 F.3d 1084, 1088-89 (7th Cir. 1993); Clark v. United Parcel Serv., 460 F.3d 1004, 1010-11 (8th Cir. 2006); G.C. & K.B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1109 (9th Cir. 2003); Dodd Ins. Servs., Inc. v. Royal Ins. Co. of Am., 935 F.2d 1152, 1155 (10th Cir. 1991); Kaplan v. DaimlerChrysler, A.G., 331 F.3d 1251, 1255 (11th Cir. 2003).
Judge Timothy Dyk, with whom Judge Pauline Newman joined, responded to the criticisms expressed by their dissenting colleagues in a concurring opinion:
Judge Moore, Judge Reyna, and Judge Mayer in his panel dissent, urge that both this decision and Bard are inconsistent with our prior authority. This is incorrect. More fundamentally, they assert that the de novo standard is inconsistent with the Supreme Court's decisions in Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990), and Pierce v. Underwood, 487 U.S. 552, 108 S. Ct. 2541, 101 L. Ed. 2d 490 (1988), which dealt with the standard of review for awards of attorneys' fees under Rule 11 and the Equal Access to Justice Act ("EAJA"). But those cases arose in quite different contexts, and are no basis for reading sections 284 and 285 as requiring deference to district courts on the objective reasonableness issue.
The Supreme Court has a history of reversing Federal Circuit decisions, so keep this one on your radar.