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Denial of Attorney Fees Affirmed Where No Useful Purpose Would Be Served by Remand

August 12, 2009

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Last Month at the Federal Circuit - September 2009

Judges: Schall, Gajarsa (author), Dyk

[Appealed from: E.D. Tex., Judge Folsom]

In Wedgetail, Ltd. v. Huddleston Deluxe, Inc., No. 09-1045 (Fed. Cir. Aug. 12, 2009), the Federal Circuit affirmed the district court’s denial of attorney fees under 35 U.S.C. § 285. Wedgetail, Ltd. (“Wedgetail”) is the assignee of U.S. Patent No. 6,857,220 (“the ’220 patent”), which is directed to fishing lures that simulate swimming motions when dragged through water. Wedgetail sued Huddleston Deluxe, Inc. (“Huddleston”) forinfringement of the ’220 patent. Huddleston, in turn, filed counterclaims of noninfringement and invalidity. After the district court issued its claim construction order, Wedgetail filed a motion to dismiss all claims with prejudice, in which it granted Huddleston a covenant not to sue. Huddleston opposed Wedgetail’s motion solely on the ground that Wedgetail’s proposed order of dismissal would deprive Huddleston of the opportunity to seek attorney fees as the prevailing party. The district court granted Wedgetail’s motion, dismissed all claims with prejudice, and ordered each party to bear its own costs and attorney fees. Huddleston appealed the district court’s denial of attorney fees under 35 U.S.C. § 285.

On appeal, the Federal Circuit first reminded that the Court may award reasonable attorney fees to the prevailing party in exceptional cases. The Court cautioned, however, that it has rejected an expansive reading of § 285 and that “only a limited universe of circumstances warrant a finding of exceptionality in a patent case: ‘inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.’” Slip op. at 3 (quoting Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed. Cir. 2002)). The Court further stated that, absent litigation misconduct or inequitable conduct before the PTO, it has awarded attorney fees “only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” Id. at 5 (quoting Brooks Furniture Mfg., Inc. v. Dutailer Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005)).

The Court also reminded that, because of the “high level of deference owed to district courts on this issue and the limited circumstances that could qualify as exceptional, the [C]ourt has not imposed a blanket requirement that a district court provide its reasoning in attorney fee cases.” Id. Instead, the Court has held only that a statement of the district court’s reasoning is generally necessary to enable review when a motion for attorney fees is granted or when attorney fees are denied despite the presence of one or more of the circumstances listed above.

Here, the Court concluded that Huddleston directed the Court to nothing in the record that could compel a finding of exceptionality or would otherwise suggest a need for the district court to provide its reasoning. Accordingly, the Court determined that the lack of detailed analysis by the district court did not warrant reversal.

The Court also rejected Huddleston’s argument that the district court committed reversible error by failing to entertain a motion for attorney fees under § 285. The Court found that Huddleston’s request for attorney fees failed to satisfy Fed. R. Civ. P. 54(d)(2)(B), which sets forth the requirements for filing a motion for attorney fees. Specifically, the Court found that Huddleston did not file a motion for attorney fees with the district court but instead merely requested that the district court set a briefing schedule for such a motion. The Court further found that Huddleston failed to state in its briefing the amount of attorney fees sought. Accordingly, the Court concluded that Huddleston’s claim “would appear to fail procedurally.” Id. at 7.

The Court next considered Huddleston’s argument that the filing of a separate motion for attorney fees with the district court would have been futile in light of the district court’s order. Huddleston asked the Federal Circuit to treat the district court’s order “either as a prejudicial deprivation of Huddleston’s right to file a motion or as an erroneous determination that fees are not owed.” Id. The Federal Circuit found that the record on appeal presented neither any apparent misconduct nor any judicial findings of misconduct on Wedgetail’s part. The Court also found that Huddleston had not provided any reason for the Court to believe that Huddleston might successfully present evidence to the district court on remand. For these reasons, the Court concluded that Huddleston “failed to demonstrate either that the district court clearly erred in failing to find this case exceptional or that Huddleston was harmed by the district court’s failure to entertain a motion for attorney fees.” Id. at 8.

Because the Federal Circuit found that the district court’s decision, although lacking explanation, was supported by the record, the Court concluded that “[n]o useful purpose would be served by a remand to enable the district court to tell us in express terms what we already know from the record.” Id. at 9 (alteration in original) (quoting Consol. Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804, 815 (Fed. Cir. 1990)). Accordingly, the Court affirmed the district court’s decision not to award attorney fees under § 285.

Summary authored by Stephen C. Bellum, Ph.D., student associate at Finnegan.