Keith Manufacturing Co. v. Larry D. Butterfield (Fed. Cir. 2020)
This is another prevailing-party case following a settlement.
Butterfield is a former employee of Keith Mfg. After leaving the company, Butterfield filed a patent application that eventually resulted in US9126520. The patent covers a mechanism for unloading trailers — which also happens to be the focus of Keith’s business. The lawsuit alleges various causes of actions, including trade secret misappropriation, breach of contract, invalidity, inventorship correction, etct.
Butterfield issued a covenant-not-to-sue Keith on the patent; and the parties then settled the case. The lawsuit officially ended with the filing a stipulation of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii) (voluntary dismissal without court order based upon agreement of the parties).
The stipulated dismissal did not mention costs or attorney fees, and Butterfield subsequently moved for attorney fees under the Patent Laws (section 285) as well as FRCP 54(d) and Oregon state statute.
The district court rejected the request for fees — holding that a stipulation-of-dismissal without a court order does not count as a “judgment” and that R.54(d) implicitly requires a “judgment” as a prerequisite to awarding fees. No judgment; no attorney fees. In particular, the rule states that the motion for attorney fees must be filed within “14 days after the entry of judgment” and must also “specify the judgment.”
On appeal, the Federal Circuit has reversed — explaining that the use of “judgment” in R.54(d) has the “prudential purpose” of avoiding R.54(d) requests of attorney fees all throughout the litigation and the subsequent piecemeal appellate litigation. Rather, in this case, “judgment” in the provision should be seen as including “dismissal.” Thus, on remand the district court may now consider the attorney fee motion.
Note – the Federal Circuit outcome here is the same as that reached by the 10th Circuit in Xlear, Inc. v. Focus Nutrition, LLC, 893 F.3d 1227 (10th Cir. 2018) (Lanham Act case).