Patent Law Practice Center

Octane Fitness acquired by Nautilus for $115 million

North Castle Partners announced the sale of Octane Fitness, LLC, a manufacturer of zero-impact cardiovascular fitness equipment, to Nautilus, Inc. (NYSE: NLS) for a purchase price of $115 million.

Those familiar with the patent industry will readily recognize the name Octane Fitness. It was Octane Fitness, the much smaller company, that successfully sued and prevailed in a patent infringement lawsuit against ICON Health & Fitness. The case went all the way to the United States Supreme Court on the issue of attorneys’ fees. A unanimous Supreme Court ruled that the district court has broad discretion to award attorneys’ fees under Section 285 of Title 35 of the United States Code. See Octane Fitness, LLC v. ICON Health & Fitness, Inc.

Rudy Telsher represented Octane Fitness, and in July 2015, I had an opportunity to speak to him on the record. Telsher explained that many people incorrectly jumped to the conclusion that Octane was a patent troll. Quite to the contrary, ICON accused Octane of infringing one of its patents that was never commercialized, “so in that sense [ICON] was a non-practicing entity as to the patent and suit,” Telscher explained. “[Octane] had award winning technology covered by a different patent.”

When I learned of the acquisition of Octane Fitness by Nautilus, I reached out to Telsher for a comment. “Happy ending to a long battle,” Telscher said. “Octane did it by the book. They developed award-winning technology. When that technology got challenged by ICON, under the pretense of patent claims that never should have been brought, they defended all the way to the Supreme Court. A fabulous ending to a little guy stands up to the big guy battle.”

Incidentally, in unrelated news that will keep the name Octane Fitness in the forefront of minds of those in the patent industry, the Supreme Court is currently considering whether to extend the Octane Fitness ruling. In Octane Fitness, the Supreme Court ruled that district court judges should be given broad discretion to award attorneys’ fees, overruling the Federal Circuit and explaining that their interpretation of prior Supreme Court precedent was erroneous. That same Federal Circuit reasoning deemed erroneous has been similarly applied by the Federal Circuit in analyzing awards of enhanced damages for patent infringement. Therefore, this term, the Supreme Court must decide whether to also give district court judges broad discretion to enhance patent infringement damages pursuant to 35 U.S.C. 284. Stay tuned. Oral arguments were heard on February 23, 2016, and a decision will be handed down no later than the end of June 2016.