Federal Circuit: Litigation Misconduct Should Probably Result in Attorney Fee Award

In Oplus Tech v. Vizio, the Federal Circuit remanded with an order for the district court to expressly determine whether an award of attorney fees are warranted.  After the merits were determined (summary judgment of non-infringement) the district court found the case “exceptional” under 35 U.S.C. 285 based upon litigation misconduct by Oplus.  However, the district court then refused to award fees to the victorious accused (without fully articulating its reasons for the denial).  On appeal, the Federal Circuit reviewed the record and could not “find a basis to support the court’s refusal to award fees.”

Although the “exceptional case” finding can still be a distinct step from a fee award. The case here suggests that a court should ordinarily award fees in exceptional cases.

Although the award of fees is clearly within the discretion of the district court, when, as here, a court finds litigation misconduct and that a case is exceptional, the court must articulate the reasons for its fee [denial] decision. In light of the court’s fact findings regarding the extent of harassing, unprofessional, and vexatious litigation, the change in legal standard by the Supreme Court, and the lack of sufficient basis to deny fees under § 285, we vacate and remand for the district court to consider whether and the extent to which fees are warranted. Because the court premised its decision regarding fees under § 1927 and its inherent power at least in part on its decision to deny fees under § 285, we vacate those rulings and remand for further proceedings.

Thus, on remand, the district court will reconsider whether fee award is appropriate based upon its prior determination of litigation misconduct.

The particular misconduct here that went unchallenged on appeal:

The court found that from the start Oplus “delayed the litigation by strategically amending its claims to manufacture venue,” and, in doing so, “flouted the standards of appropriate conduct and professional behavior.” It found that “Oplus provided only the most tenuous basis in its initial complaint for bringing suit in Illinois” and that its “first amended complaint took its first step over the boundaries of professionalism” because the “amendment rendered its allegations against Sears prima facie inadequate.” It chastised Oplus for “ignor[ing] well-settled law” by asking “the [Panel on Multidistrict Litigation] to return the case to Illinois after it lost” the motion to transfer to the Central District of California.

The court found that “Oplus misused the discovery process to harass Vizio by ignoring necessary discovery, flouting its own obligations, and repeatedly attempting to obtain damages information to which it was not entitled.” It found that Oplus implemented an “abusive discovery strategy” that involved “avoid[ing] its own litigation and discovery obligations while forcing its opponent to provide as much information as possible about Vizio’s products, sales, and finances.” The court noted that its “greatest concern . . . was Oplus’s counsel’s subpoena for documents counsel had accessed under a prior protective order.” In that instance, counsel for Oplus represented an unrelated patentee in a prior litigation against Vizio and, pursuant to the protective order in that prior litigation, retained copies of documents produced by Vizio. Here, counsel for Oplus, Niro, Haller & Niro, drafted what it called a tailored subpoena for documents retained by counsel for the earlier plaintiff, which also happened to be Niro, Haller & Niro. The court concluded that it “strain[ed] credulity” to believe that Oplus “issued the subpoena without using any knowledge by three attorneys [that both worked on the earlier case and the present case] as to the content of the discovery sought.” The court found that “Oplus blatantly misinterpreted its own prior discovery requests in an attempt to obtain the same information the Court had previously refused to compel.”

The court found that “Oplus used improper litigation tactics including presenting contradictory expert evidence and infringement contentions as well as misrepresenting legal and factual support.” It found that Oplus’s response to Vizio’s complaint about contradictory expert opinions—where Oplus disavowed “its own expert’s statement when Vizio cited the paragraph, rather than the paragraph heading” of its expert’s report—was “merely one example of Oplus’s strategic manipulation of the facts and evidence provided to the Court.” In another example, it noted that whereas “Oplus’s infringement contentions cite[d] a patent to show infringement” of Oplus’s patents, its “expert testifie[d] that the same patent did not disclose the methods of Oplus’s patents.” It found that “Oplus consistently twisted the Court’s instructions and decisions” and attempted “to mislead the Court.” It complained that when “Oplus had no evidence of infringement of one element of a claim, it simply ignored that element and argued another.” It found that “Oplus regularly cited to exhibits that failed to support the propositions for which they were cited” and that “Oplus’s malleable expert testimony and infringement contentions left Vizio in a frustrating game of Whac-A-Mole throughout the litigation.”

The district court particularly highlighted the activities of four lawyers from Niro, Haller & Niro: Gabriel Opatken, Raymond Niro, Arthur Gasey, and Paul Gibbons. [District Court 285 Denial][Patently-O Discussion].  The story told to the district court was that Opatken was a fresh new attorney handling most of the case but who was insufficiently supervised.  Once put on notice of the misconduct Ray Niro put a stop to those activities.  I suspect that the district court felt that internal reprimand was sufficient.


18 thoughts on “Federal Circuit: Litigation Misconduct Should Probably Result in Attorney Fee Award

  1. 4

    We have a patent case against a major multinational, and a junior associate was solely responsible for handling the case. Why am I having trouble believing that?

    Patent cases tend to look more like all-hands-on-deck-free-for-alls in my experience, especially at the partner level.

    1. 4.1

      That doesn’t sound realistic to me, either. But wouldn’t this be easy to disprove? Billing records, signed documents, etc.?

  2. 3

    The clowns on the district court bench deciding damages in this this case were only out done by the members of the law firm.

  3. 2

    I disagree with the characterization of the decision that exceptional cases will ordinarily result in attorney fees. I thought the decision is very limited and not meant to suggest such a bright-line: the district court should articulate its reasoning why attorney fees should not be granted.

    1. 2.1

      The holding that “exceptional cases will ordinarily result in attorney fees” is not “a bright line.”

      A “bright line” (or something closer to it) would be “exceptional cases must result in fee shifting.”

      The lesson here for judges is that if a judge determines that a case is exceptional due to attorney misconduct, a decision not to shift fees must be accompanied by an argument and supporting facts justifying that decision. The problem here was that the district court did little more than make a conclusory statement to the effect that “both sides were bad” with little or no evidence to back that up. To make matters worse, at the oral arguments it appears that the representatives for Niro weren’t able to identify any unreasonable, vexatious behavior or misconduct on the part of defendants, much less any behavior as revolting as that of the patentee and its counsel.

      1. 2.1.1

        MM, I object!

        When the lawfirm runs amok, the lawfirm should pay — not the client who often cannot control the lawfirm and may not have good visibility into what is really going on.

        In order to link the abusive conduct by lawyers back to the client, I would think that they at least be informed of the abuse by the court and thereafter take no effective action.


          When the lawfirm runs amok, the lawfirm should pay — not the client who often cannot control the lawfirm and may not have good visibility into what is really going on.

          Absent evidence to the contrary, I think it’s reasonable to assume that the client knows what’s going on. I don’t think it’s a radical proposition to suggest that knowing what it’s lawyers are doing and saying — at some level of specificity higher than “litigating” — is the client’s duty.

          I may be confusing this case with some other case but wasn’t there some evidence here that the client was aware of some problems with the case right from the beginning?


            With the case or with the lawyer? According to Dennis, the lawyer was new and out of control.

    2. 2.2

      Abuse of discretion is the standard of review. Not justifying a decision once exceptional circumstances is found is an abuse of that discretion, but weighing the reasoning is too much interference.

      The opinion says nothing of whether something “probably,” “ordinarily,” “presumptively,” or “normally” should happen. Judicial fairness requires the district court to give reasons, but weighing those reasons shouldn’t be reviewed under abuse of discretion.

      1. 2.2.1

        J: The opinion says nothing of whether something “probably,” “ordinarily,” “presumptively,” or “normally” should happen.

        I agree that the CAFC did not expressly say this but, as a practical matter, I think the ordinary situation is that a finding that litigation misconduct has occurred and the case is exceptional will result in at least some attorney fees being awarded. In fact, I think it will the rare case when fee shifting does not occur under those circumstances.

        Judicial fairness requires the district court to give reasons, but weighing those reasons shouldn’t be reviewed under abuse of discretion.

        Why not? Consider: defendant engages in 20 instances of vexatious conduct. Judge finds the case exceptional but decides not to award fees to the plaintiff because the plaintiff didn’t wear a tie in court. That sounds like an abuse of discretion to me, notwithstanding the fact that “reasons” were provided.

  4. 1

    Internal discipline is enough?

    Seems the firm should be sanctioned.

    But how does one do that under 285?

    1. 1.1

      Doesn’t the district court have Rule 11, inherent power the court, and some other stuff that I learned back in civil procedure that I vaguely remember?

    2. 1.2

      Ned —

      We have many lawyers in our firm who never appeared in this case. Even assuming the sanction is appropriate—and more than one district judge turned down any monetary award—why do you propose fining lawyers who were not involved? Is this the Eiger Sanction?

      1. 1.2.2

        Joe, Look, the other side has been damaged. The attorney responsible should pay, not the client. The award should be sufficient to cover the actual damage.

        I have actually been in court waiting for a motion to be heard when I saw a Chief Judge handed it to a lawyer who was guilty of discovery misconduct. It was a whopping big fine.

        But this does raise in interesting ethics question if your firm tries to push liability for the damages caused by litigation abuse off to the client. You both need lawyers.


          Ned — I respectfully disagree. The issue is the conduct of lawyers who appeared and acted in a certain way, not the liability of other lawyers who did not appear or act. What’s the evidence that a firm tried to push liability for damages caused by litigation abuse off to a client?



            Joe, I see your point and do not disagree in principal.

            The attorneys who went off the reservation need to be sanctioned, and their ability to pay a fine must be considered as a matter of due process, etc.

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