How Octane Fitness won a U.S. Supreme Court case to help curb frivolous lawsuits

Fresh off a win at the U.S. Supreme Court, SNEWS talks to Octane President Dennis Lee on what might amount to a legacy of fewer frivolous lawsuits.

It’s not every day that the fitness industry finds itself before the U.S. Supreme Court.

But after six years of rulings and appeals, Octane Fitness is one step closer to coming out on top in a patent lawsuit brought against it by Icon Health & Fitness in 2008.

In reality, Octane won the patent case in U.S. District courts back in 2012. But after having to spend $1.8 million in attorney’s fees to defend itself throughout the saga, it petitioned the lower courts to have Icon (the losing party) reimburse those costs based on the alleged frivolous and unreasonable nature of the patent lawsuits.

“To have someone come forward and sue us on something that had no chance of winning was frustrating,” Octane President and CEO Dennis Lee told SNEWS. “We won every step of the way and they kept appealing. The time, money and energy spent on this should have gone toward our product innovation and growth, not legal fees.”

Icon had sued Octane on two separate patents, one concerning heart rate monitoring technology, the other about a mechanical link on ellipticals. “The heart rate claim was so unreasonable that Icon was forced to drop it from the case early in the litigation, and Octane won on the linkage issue,” Lee said.

While the lower courts ruled in Octane’s favor that it did not infringe on Icon’s patents, they denied Octane’s claim that the lawsuits were “exceptional” enough to have the losing party pay winner’s legal fees. The finding was based on laws in place to protect real victims of crimes, no matter their economic standing, so that they don’t feel financially deterred to file a case.

The debate over the law is how the case landed in the Supreme Court. Octane argued that the law had become a "rigid and virtually insurmountable test," and that trial judges should be able to award fees when a patent holder “unreasonably pursues a case having an objectively low likelihood of success” to serve as a deterrent to litigation abuse via groundless lawsuits.

After hearing the case in February, the U.S. Supreme Court unanimously agreed with Octane in early May. The decision will send the case back to the lower courts, where district judges will have increased leeway to rule on legal fee reimbursement with a “preponderance (an abundance of quality) of the evidence,” versus just “clear and convincing evidence.”

Justice Sonia Sotomayor wrote, "A case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award."

The decision goes beyond the fitness industry. Fifteen amicus briefs were filed in support of Octane’s petition, including one by the United States Solicitor General’s Office.

“We are thrilled to be in the position of helping relieve the burden of meritless lawsuits on businesses across all industries with this historic decision,” Lee said.

The final chapter for Octane is slated to come later this year, when the case returns to the district court to reconsider the reimbursement of legal fees under the re-interpreted law.

--David Clucas