CAFC Says “No”…Ninth Circuit Says “Yes”

Under 35 U.S.C. § 285, a prevailing party in a patent infringement dispute may be awarded reasonable attorney fees in “exceptional cases.” I’ve previously discussed the contours of what constitutes an “exceptional” case based upon earlier cases. In 2018, the Central District of California awarded attorney’s fees stemming from a parallel PTAB proceeding, and in 2019 a Michigan court held that conduct at the PTAB may even be permissible as being the sole basis for fees in parallel district court proceedings. Most recently, however, based upon the guidance of the Federal Circuit, 285 has not been extended to attorney fees incurred during a PTAB proceeding.

In Dragon Intellectual Property LLC v. DISH Network LLC, 1-13-cv-02066 (DDE 2021-08-16, Order), (here) the Court granted the defendants’ motions for attorney fees under § 285 but stopped short of awarding them for IPR proceedings.

In 2014, plaintiff Dragon sued several defendants including Dish alleging that each defendant sold products that directly infringed on several claims of a patent having to do with a recording and playback apparatus. Dish and another defendant responded by asserting that their products could not infringe noting that the publicly available user manuals of the products in question continuously recorded from the time viewing or listening began. In conjunction with this observation, the defendants alleged that infringement was not possible because applicants of the patent in question disclaimed coverage of “continuous recording devices” and threatened to seek sanctions and attorney’s fees against Dragon if they did not dismiss the claims. Dragon instead subsequently amended their infringement contentions explaining their theory of how continuously recording devices could infringe. Dish responded to the amended complaint by filing IPR of the patent in question which ultimately determined that the asserted claims were unpatentable.

In the aftermath of the Court’s final judgement, following numerous motions by the defendants for attorney’s fees, plaintiff separately appealed both the PTABs obviousness ruling and district court’s final judgment of non-infringement. The Federal Circuit affirmed the PTAB’s findings while the plaintiff successfully petitioned the district court to vacate all judgments of non-infringement.

Defendants argued in various motions that they should be awarded attorney’s fees incurred in the IPR that they voluntarily brought because they prevailed in defending the separate suit in district court. The defendants contended that preventing them from recovering IPR fees under the statute effectively punished them for resolving the cases through a more efficient means. The Federal Circuit declined to rule on the issue of attorney’s fees but commented “we see no basis in the Patent Act for awarding fees under § 285 for work incurred in inter partes review proceedings.” In the Delaware district court litigation, Judge Andrews referred the motion to Magistrate Judge Hall to provide a recommendation regarding the fees. Judge Hall ultimately concluded that “Congress could have provided for such fee shifting but didn’t.”

While here the Court recommended a more conservative approach to awarding fees (perhaps based on the CAFC’s prodding) to not include successful IPR proceedings, 285 has been afforded more breadth by other circuit courts. As noted in the link above,  American Vehicular Sciences LLC v. Autoliv, Inc. explains that even in cases where there is no substantive litigation in district court, defendants may be able to be awarded attorney’s fees if they are able to establish that PTAB proceedings are “exceptional.”

As always, your mileage may vary.