Federal Circuit Holds § 285 Applies to Exceptional Cases, Not Exceptional Portions of Cases

In Intellectual Ventures I LLC v. Trend Micro Inc., No. 2019-1122 (Fed. Cir. Dec. 19, 2019), the Federal Circuit remanded the district court’s award of fees under 35 U.S.C. § 285, holding that while fees may be appropriate based on a single, isolated act, the case must be exceptional under a totality of the circumstances.

Intellectual Ventures asserted several patents against Trend Micro.  During claim construction, the district court adopted IV’s proposed construction.  But during trial, IV’s expert changed his opinion, explaining the change was due to trial preparation.  During a subsequent hearing, IV maintained that their expert had not changed his opinion, even though he clearly had.  The asserted claims were found invalid, and the district court awarded Trend Micro section 285 attorney’s fees, reasoning that while the overall case was not exceptional, IV’s conduct “solely with respect to . . . [IV’s] changed testimony” met the threshold. 

The Federal Circuit vacated the section 285 award and remanded, holding that the district court did not apply the proper legal standard.  The Court explained that a district court has discretion to find a case exceptional based on a single, isolated act, but the case—not a portion of it—must be exceptional.