HIGHMARK v. ALLCARE MANAGEMENT SYSTEMS

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Case Basics
Docket No. 
12-1163
Petitioner 
Highmark, Inc.
Respondent 
Allcare Management Systems, Inc.
Decided By 
Advocates
(for the petitioner)
(Assistant to the Solicitor General, Department of Justice, for the United States as amicus curiae supporting the petitioner)
(for the respondent)
Term:
Facts of the Case 

The Patent Act allows a court to award reasonable attorneys fees in exceptional cases in which the lawsuit is objectively baseless and brought in bad faith. Allcare Management Systems, Inc. (Allcare) owns a patent that covers a computer-based method of generating treatment options based on symptom data entered by a physician. This process can help an insurance company determine whether to approve a particular treatment for a patient. In 2003, Highmark, Inc. (Highmark), a health insurance company, sought a declaratory judgment of non-infringement of Allcare’s patent. Allcare filed a counterclaim and alleged that Highmark infringed on two sections of its patent. The federal district court awarded summary judgment in favor of Highmark. The court also found that Allcare had willfully pursued frivolous infringement claims and ordered it to pay Highmark’s attorney’s fees and costs. On appeal, the U.S. Court of Appeals for the Federal Circuit independently reviewed the district court’s determination that Allcare’s claims were objectively baseless. The appellate court affirmed the lower court’s finding with respect to one of Allcare’s claims and reversed the court regarding Allcare’s second claim.

Question 

Did the appellate court apply an improper standard of review to the district court’s determination that Allcare pursued objectively baseless claims against Highmark?

Conclusion 
Decision: 9 votes for Highmark, 0 vote(s) against
Legal provision: Patent Act

Yes. Justice Sonia Sotomayor delivered the opinion for the unanimous Court. The Court held that a district court is in the best position to determine whether a lawsuit is objectively baseless and, as such, is entitled to deference upon appeal. The Federal Circuit applied too strict a standard in its independent review of the case, which should be reserved for questions of law. The Court remanded the proceedings and instructed the Federal Circuit to examine the district court’s findings for abuse of discretion.

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HIGHMARK v. ALLCARE MANAGEMENT SYSTEMS. The Oyez Project at IIT Chicago-Kent College of Law. 22 November 2014. <http://www.oyez.org/cases/2010-2019/2013/2013_12_1163>.
HIGHMARK v. ALLCARE MANAGEMENT SYSTEMS, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2010-2019/2013/2013_12_1163 (last visited November 22, 2014).
"HIGHMARK v. ALLCARE MANAGEMENT SYSTEMS," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 22, 2014, http://www.oyez.org/cases/2010-2019/2013/2013_12_1163.