by Dennis Crouch
Intellectual Ventures I LLC v. Trend Micro Inc. (Fed. Cir. 2019) [IVFeeAward]
IV sued Trend Micro back in 2010 for infringing its U.S. Patent Nos. 5,987,610, 6,073,142, 6,460,050, and 7,506,155. After substantial back and forth, we eventually learned that the patents are invalid as directed toward abstract ideas. See Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016). On motion, the Judge Stark then awarded attorney fees to Trend Micro based upon the changed testimony of IV’s expert witness at trial in the parallel Symantec case.
Ruling from the bench, the … district court concluded that Intellectual Ventures’s conduct was exceptional “solely with respect to this collection of circumstances regarding [its expert’s] changed testimony.” Considering “whether the case overall is exceptional,” however, the district court expressly “f[ou]nd it was not.” The district court also concluded that “it would be wrong to say that [Intellectual Ventures’s] case was objectively unreasonable.”
Slip. Op. The district court ruled that the case is not “exceptional” but went ahead and awarded attorney fees. The problem is that 35 U.S.C. § 285 expressly limits attorney fee awards to “exceptional cases.”
The court in exceptional cases may award reasonable attorney fees to the prevailing party.
35 U.S.C. § 285. On appeal, the Federal Circuit has vacated and remanded — holding that the district court erred in its analysis. It is improper to find that the case is not exceptional and also award attorney fees under Section 285.
A portion but not the Whole: The district court did find that a discrete portion of IV’s litigation misconduct was improper and exceptional. However, the district court ultimately concluded that discrete misconduct did not taint the case enough to render the whole “exceptional.” On appeal, the Federal Circuit found that Section 285 attorney fees are only available when the case as a whole is exceptional.
Instead of determining whether the case was exceptional, it appears that the district court may have focused on whether one discrete portion of the case stood out…. This is not the appropriate analysis. Section 285 gives the district court discretion to depart from the American Rule and award attorney fees “in exceptional cases.” Accordingly, under the statute, the district court in this case should have determined whether the circumstances surrounding the expert’s changed opinion were such that, when considered as part of the totality of circumstances in the case, the case stands out as exceptional.
Slip Op. A “district court has discretion, in an appropriate case, to find a case exceptional based on a single, isolated act.” Such as finding must also consider the case as a whole and the totality of circumstances. Here, the district court did not make such a conclusion — and in fact concluded that the case was not exceptional.