- BASICS: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 USC § 285. “We hold that an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances.” Octane Fitness (U.S. 04/29/2014) (overturning “rigid and mechanical formulation” Fed. Cir. had adopted in 2005, that case is “exceptional” only “when there has been some material inappropriate conduct,” or when the litigation is both “brought in subjective bad faith” and “objectively baseless.”); Univ. of Utah (Fed. Cir. 03/23/17) (aff’g denial of award of attorney fees in inventorship dispute); Bayer Cropscience (Fed. Cir. 03/17/17) (aff’g award of fees against patent owner and licensor, where its interpretation of the license agreement was implausible and contradicted by its own witnesses and statements, it failed to do sufficient due diligence, and filed frivolous preliminary injunction motion in midst of targeted discovery which would debunk its claim); Angioscore (Fed. Cir. 11/08/16) (non-precedential) (aff’g denial of fees award in part because patent owner had defeated a non-infringement summary judgment motion); Large Audience (Fed. Cir. 10/20/16) (non-precedential) (vacating J. Real fees award; rejecting reliance on cancellation of claims in reexamination ivo different standard of proof and different claim construction, although “reexamination rejection of asserted claims may be relevant to an assertion of frivolousness in some cases”); Lumen View (Fed. Cir. 01/22/16) (aff’g exceptional case finding: “allegations of infringement were ill-supported, particularly in light of the parties’ communications and the [patent owner’s own] proposed claim constructions, and thus the lawsuit appears to have been baseless.”); Integrated Tech. II (Fed. Cir. 10/21/15) (non-precedential) (aff’g finding of exceptional case despite plaintiff winning only part of case); Gaymar (Fed. Cir. 06/25/15) (aff’g judgment that losing patentee’s position not objectively baseless; rejecting factors relevant to subjective prong only; misconduct of movant a factor under totality of the circumstances, but sloppy lawyering is not misconduct); Biax Corp. (Fed. Cir. 02/24/15) (non-precedential) (rev’g fees award against patent owner where trial court’s claim construction remained ambiguous until it awarded SJ and thus infringement assertion was not objectively unreasonable); Homeland (Fed. Cir. 09/08/14) (non-precedential) (aff’g award of attorneys’ fees against patent owner ivo failure to produce evidence of infringement before the SJ ruling and repeated filing of unsolicited papers). May award fees “in the rare case in which a party’s unreasonable conduct—while not necessarily independently sanctionable—is nonetheless so ‘exceptional’ as to justify an award of fees.” Octane Fitness (U.S. 04/29/2014). Court can consider same factors as in Copyright Act fees determination. Preponderance of the evidence. Id. (overturning Fed. Cir. “clear and convincing evidence” standard); OPlus Tech. (Fed. Cir. 04/10/15) (vacating denial of fees; overturn of “clear and convincing evidence” standard “lowers considerably the standard for awarding fees.”) S. Ct. did not revoke discretion of a district court to deny fee awards even in exceptional cases. Icon Health (Fed. Cir. 08/26/14) (Octane Fitness remand) (non-precedential). S. Ct. did not overturn Fed. Cir.’s precedents (including Monolithic (Fed. Cir. 08/13/13) (patentee misrepresented date of key evidence, and tried to mask false testimony); MarcTec (Fed. Cir. 01/03/12) (patentee misrepresented law of claim construction and the court’s constructions); Eon-Net (Fed. Cir. 07/29/11) (patentee lodged incomplete and misleading extrinsic evidence)) for basing exceptional-case determination on unreasonable and vexatious litigation tactics. SFA Sys. (Fed. Cir. 07/10/15) (aff’g denial of attorney fees).
- Court Exercises Discretion In View Of The Totality Of The Circumstances: S. Ct. quoted Fogerty Fantasy, Inc., 510 U. S. 517 (1994) (copyright fees award) non-exclusive list of factors trial court may consider: “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Octane Fitness (U.S. 04/29/2014); cf. Lumen View (Fed. Cir. 01/22/16) (deterrence may be a factor in determining whether to award fees but not in setting the amount of fees).
- Deferential Review: “Appellate court should review all aspects of a district court’s § 285 determination for abuse of discretion.” Highmark (U.S. 04/29/2014) (rejecting Fed. Cir. standard of de novo review). Although a trial court’s error law assessing the merits may constitute an abuse of discretion, the appellate court need not decide whether the trial court’s decision on the merits was correct. SFA Sys. (Fed. Cir. 07/10/15) (aff’g denial of attorney fees). The Octane Fitness deferential standard applies “both ways”: “discretion is entitled to a district court’s findings that § 285 attorney’s fees are not applicable, as much as discretion is owed to findings that they are applicable.” Site Update (Fed. Cir. 02/01/16) (non-precedential) (aff’g denial of fees where “reasonable minds may differ”).
- Fees For Appeal Stage: Fed. R. App. Proc. 38 (“If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.”); Walker (Fed. Cir. 01/06/17) (aff’g award of sanction against party who continued litigation post settlement; and awarding fees and double costs on appeal, amounting to $51,801.88, against appellant and its counsel in view of appellant’s “bent to mischaracterize clear authority and to draw illogical conclusions from the law and facts.”); Therasense (Fed. Cir. 03/12/14) (2-1) (aff’g denial of fees for appeal stage).
- Cir. Cases Overruled In Part By Octane Fitness: “Absent litigation misconduct or misconduct in securing the patent, a case is exceptional under § 285 if ‘(1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.’ Similar to the evaluation under Rule 11, for litigation to be objectively baseless, the allegations “must be such that no reasonable litigant could reasonably expect success on the merits.’” Raylon (Fed. Cir. 12/07/12) (citations omitted); Monolithic (Fed. Cir. 08/13/13) (aff’g award of $8,419,429 attorney fees based on fabrication of evidence; need not show bad faith or baseless litigation if litigation misconduct shown); but see Octane Fitness (U.S. 10/01/2013) (granting cert. to review Fed. Cir.’s 2-part test for exceptional case determination against a patent owner). “Subjective bad faith only requires proof that the ‘lack of objective foundation for the claim ‘was either known or so obvious that it should have been known’ by the party asserting the claim,’” in view of totality of the circumstances. Kilopass (Fed. Cir. 12/26/13) (vacating denial of fees, for failure to adequately consider objective evidence that patentee should have known infringement claim had no basis. Also, suggesting that but for earlier panel rulings, this panel might hold that objective baselessness is enough for trial court to have discretion to award fees and clear and convincing evidence standard should not apply).