Attorney Fees Following PTAB Invalidation

Dragon Intellectual Property, LLC v. Dish Network LLC (Fed. Cir. 2020)

After Dragon sued DISH for patent infringement back in 2013, DISH collaterally attacked the patent with an inter partes review (IPR) proceeding against the asserted US5930444.  The district court partially stayed the litigation — stayed as to DISH and another IPR filer (SXM), but continued the litigation proceedings as to eight other defendants.

Things didn’t go so well for Dragon. Following a claim construction, the district court entered judgment of non-infringement in favor of all defendants (April 2016).  Then, the PTAB came back cancelling all of the asserted claims (June 2016).  On appeal, the Federal Circuit affirmed the PTAB cancellation and dismissed the district court appeal as moot.  On remand, the district court then vacated its prior non-infringement decision and also dismissed the case as moot under US Bancorp and Munsingwear. “A party who seeks review of the merits of an adverse ruling, but is frustrated by the vagaries of circumstance, ought not in fairness be forced to acquiesce in the judgment” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 25 (1994).

Following the dismissal for mootness, DISH and SXM requested attorney fees under 35 U.S.C. § 285 as the prevailing parties.  The district court denied the motion — finding that the parties won the case, but don’t actually count as “prevailing parties” as required by the statute.

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

35 U.S.C. § 285.  Further, the district court ruled that the success came in the PTAB, not the district court; and “success in a different forum is not a basis for attorneys’ fees.”

On appeal, the Federal Circuit has vacated and remanded — holding that the “prevailing party” question does not require “actual relief on the merits.”  What matters is whether the defendant “successfully rebuffed Dragon’s attempt to alter the parties’ legal relationship in an infringement suit.”

For precedent here the court cites and follows B.E. Tech., L.L.C. v. Facebook, Inc., 940 F.3d 675 (Fed. Cir. 2019).  B.E.Tech. has very similar facts with an infringement lawsuit being rendered moot based upon an unpatentability finding during an IPR. One difference is that in B.E.Tech, the defendant was seeking costs under Fed. R. Civ. P. 54(d)(1) rather than attorney fees under 35 U.S.C. § 285.  However, since both provisions require a “prevailing party,” the court found that the the same rule should apply to both situations.

The decision here should be distinguished from the court’s recent decision in O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, 2019-1134, 2020 WL 1845302, at *3 (Fed. Cir. Apr. 13, 2020).  In Mossberg, the court ruled that case voluntarily dismissed without a court order could not satisfy the prevailing party requirement because it lacked “sufficient judicial imprimatur.

On remand in Dragon IP, the district court will need to reconsider whether an exceptional case exists and whether attorney fees are appropriate given that the defendant now satisfies the “prevailing party” requirement.

Of note, although the mootness determination satisfies the prevailing party requirement, it is likely not sufficiently “on the merits” in order to satisfy the requirements for claim or issue preclusion.

10 thoughts on “Attorney Fees Following PTAB Invalidation

      1. 2.1.1

        There’s a question of whether the case was “exceptional.” Whether the presumed-valid claims were or weren’t facially infringed seems like it could be a factor in the answer.

        1. 2.1.1.1

          Once taken back into the Office (at the institution decision point), there is presumption of validity.

          That particular stick in the bundle of property rights (be that term as it may) was taken at that point in time.

          1. 2.1.1.1.1

            oops:
            ‘there is presumption of validity”
            ==>
            “there is NO presumption of validity”

  1. 1

    Is there another issue here? Is this D.C. vacatur of its non-infringement decision on remand inconsistent with anti-vacatur [balancing] cases like Protegrity USA, Inc., et al. v. Netskope, Inc., (N.D. Cal. Sept. 13, 2016),] citing U.S. Bancorp Mortg. v. Bonner Mall P’ship, 513 U.S. 18, 26-27 (1994), and Reynolds v. Allstate Ins. Co. (N.D. Cal. Oct. 4, 2012)? Can that be appealed here? Anyone care to discuss the relationship of vacatur and mootness re Fed. Cir. refusals to decide issues on appeal by holding them moot in view of case disposals on other issues?

    1. 1.1

      P.S. Given this DE DC judge’s prior views, and the partial stay, it would seem surprising if he did not continue to deny attorney fees on this remand. But what happened re the “eight other defendants?”

    2. 1.2

      It takes more than just winning or losing any IPR to make a suit “exceptional” and get attorney fees for defendants or patent owners.

    3. 1.3

      If the patent is invalid, what’s the significance of vacating the noninfringement judgment?

      This sometimes happens when parties settle after the patent is found not infringed, as the patentee wants to be able to license and sue others and avoid collateral effects of a bad claim construction. But if there’s a final ruling that the challenged claims are invalid… why bother? Is there a surviving dependent claim the patentee might be able to enforce?

      Either way, it’s unclear how the mootness ruling would have any effect on the question of who prevailed.

      I’d have to see the district court decision re vacatur to have an opinion on whether it’s inconsistent with US Bancorp. As you note, they’re balancing cases. US Bancorp says that courts should reflexively vacate judgments. On the other hand, if the district court thinks, for example, that it decided some close questions on the way to the non-infringment ruling and that it’s unfair that the patentee can’t take an appeal because the ptab invalidated the patent, then that seems like a consideration legitimately favoring vacatur.

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