May 20, 2014

Order in the Court

It’s not every day that the Supreme Court of the United States agrees on a case with a 9-0 vote. But in April that’s exactly what happened when the justices made a landmark ruling involving a company that ProSight Specialty® Insurance (ProSight) had the privilege of insuring. And, it’s a case that should have positive implications for American business for decades to come.

The lower courts did not agree with Octane, choosing to maintain a very stringent and difficult to meet criteria for a case to qualify as exceptional.  The United States Supreme Court unanimously returned the case to the lower court providing guidance on a more relaxed and common sense definition of an exceptional case. The case, Octane Fitness, LLC v. ICON Health & Fitness, Inc., is a significant ruling in the field of patent law. Both manufacturers of elliptical machines, Icon filed a lawsuit against its competitor, Octane, alleging that parts of an Octane machine infringed upon an Icon patent. A federal court held that Octane’s design did not violate the Icon patent.  Octane argued further that there was no real basis for the lawsuit, but rather Icon’s intent was to deter competition through expensive and frivolous litigation.  Octane sought their expenses in defending the litigation under a section of the Patent Act that allows the winning party to recover legal fees in “exceptional” cases.

Paul Kush, Chief Claims Officer at ProSight Specialty Insurance, says that while the ruling won’t stop frivolous litigation completely, it will probably put the brakes on many suits that are filed for anti-competitive reasons or by patent trolls. “This is a very important case for American business because it fundamentally changes the economics of filing patent infringement cases. This sends a strong message that filing frivolous lawsuits could have severe financial implications for the losing party and will not be rewarded by the justice system. With our steadfast support over the course of several years, this case reached the highest court and eventually to a decision that will have a lasting impact on many industries.”

ProSight is proud to have played an important role in this monumental case, which we believe will have a positive effect for businesses that can now embrace innovation without the fear of attracting baseless lawsuits. For more information on this case, visit http://www.patentdocs.org/2014/04/patent-trolls-beware-supreme-court-issues-decisions-in-octane-fitness-and-highmark.html