In patent cases, § 285 fee motions now almost routinely feature a familiar defense playbook. After a non‑infringement or invalidity win, the prevailing accused infringer points to the patentee's early correspondence: emails and letters that propose a license or settlement at figures “well below the cost of defense.” Those offers are then recast as “extortionate,” “coercive,” or “nuisance‑value shakedowns,” and offered to the court as proof that the entire case was “exceptional.”

That framing is legally flawed. It treats a basic and economically rational feature of settlement practice—that a plaintiff often proposes to resolve a dispute for less than what both sides would spend litigating it—as inherently suspect. And it collapses two distinct questions into one:

1. Did the patentee have an objectively reasonable infringement position when it made the demand?
2. Did the patentee know or should it have known that its infringement position was unreasonable or was the settlements demand for an improper purpose?

Defendants commonly ignore both, waving the “below‑defense‑cost” number as if it were self‑proving abuse, without first addressing both objective and subjective baselessness. That shortcut is improper under Federal Circuit law—even under Octane's “totality of the circumstances” standard.

As Globetrotter Software v. Elan, 362 F.3d 1367 (Fed. Cir. 2004) and its companion cases make clear, patent‑enforcement communications—including demands to license or settle at amounts below expected defense costs—are presumptively lawful and protected. They can be characterized as “wrongful,” “abusive,” or “bad‑faith” conduct only if the underlying infringement assertions were themselves made in bad faith, which in this setting requires a showing that they were (1) objectively baseless—that no reasonable litigant could have expected to prevail and (2) subjectively baseless—pursued for an improper purpose.

The consequence for § 285 is straightforward and important. Courts applying § 285 and Octane Fitness should not treat a patentee's “below‑cost‑of‑defense” settlement demands as evidence of exceptionality at all—not even as one more data point in the “totality of the circumstances”—unless and until they first make a finding of bad faith in the Globetrotter sense, i.e., both requirements. Without a prior determination that the patentee's infringement allegations were objectively and subjectively baseless when made, consideration of such settlement demands as a basis for fee‑shifting is improper, even under Octane's flexible totality‑of‑circumstances framework.

The attached article develops this point and explains Globetrotter's bad‑faith requirement, shows how Federal Circuit precedent makes objective/subjective baselessness a threshold—not just a factor—and then argues that this threshold must be satisfied before alleged “below‑cost‑of‑defense” settlement demands can properly enter any § 285 exceptionality analysis

Bad Faith Is Necessary Before Considering Settlement Demands