Enhanced Damages: No ‘Prevailing Party’ after Rule 41(a) Voluntary Dismissal

RFR Industries v. Century Steps (Fed. Cir. 2007).

RFR holds patents covering a rubberized filler used on train-tracks that run over streets. The parties had a settlement agreement in place, but Century decided to stop payment — apparently believing that RFR’s claims were “barred by the doctrines of patent exhaustion and implied license.”

RFR sued.  Century answered the complaint and faxed a copy to RFR, but did not post a copy to the plaintiff.

RFR then got cold-feet and asked the court to dismiss the complaint without prejudice. Under the Federal Rules of Civil Procedure (R. 41(a)(1)), the plaintiff has a right to dismiss an action before the other side serves its answer or a motion for summary judgment.

In any event, the lower court didn’t allow RFR to dismiss the case — instead it granted Century’s 12(c) motion on the pleadings (with prejudice) and awarded attorney fees.

On appeal, the CAFC reversed, finding that Rule 41 “means what it says.” (applying 5th Circuit law). Because RFR had not been “served with the answer” it still had a right to dismiss its case.

So long as a plaintiff has not been served with an answer or a motion for summary judgment, the plaintiff need do no more than file a notice of dismissal to dismiss the case.

The CAFC also reversed the award of attorney fees, holding that a voluntary dismissal under R.41(a) does not result in a “prevailing party” as required by the enhanced damages statute (35 USC 285).