Success on the Merits Not Necessary to Be Prevailing Party Under Section 285

In Raniere v. Microsoft Corp., the Federal Circuit analyzed what it meant to be a prevailing party under 35 U.S.C. § 285.  Section 285 allows for the award of reasonable attorneys’ fees to the prevailing party in exceptional cases.

In response to Raniere’s complaint alleging two counts of patent infringement, Microsoft moved to dismiss the suit for lack of standing after discovering that the PTO’s records indicated that Raniere did not own the patents.  After Raniere produced documents and gave testimony regarding the patent ownership, which the district court labeled “wholly incredible and untruthful,” the district court dismissed the case with prejudice.  Microsoft moved for and was awarded attorneys’ fees under § 285.  Raniere appealed this ruling, claiming that § 285 required a party to succeed on the merits of its case to be the prevailing party.

The Federal Circuit held that success on the merits was not required for a party to be awarded attorneys’ fees.  Applying Supreme Court precedent, the Court held that a prevailing party is a party that receives a judicially sanctioned change in the legal relationship of the parties.  Thus, the grant of a motion to dismiss would make the moving party the prevailing party under § 285.