Recent patent fee shifting decisions illustrate the increased
risk of patent fee shifting and the need for protection for patentees.

Since the Supreme Court decided Octane Fitness and Highmark, the “raw number of fee awards to prevailing accused infringers has more than quadrupled,” the “rate at which district courts have granted fees to prevailing accused infringers has nearly tripled, and “the rate at which prevailing accused infringers have moved for fees has almost doubled,” according to the Federal Circuit Bar Association.

Recent patent fee shifting decisions illustrate this increased risk, including:

  • Advanced Ground Information Systems, Inc. v. Life360, Inc. (S.D. Fla. Dec. 1, 2015) (awarding $684,000 in fees from the date of the Markman ruling through trial because the plaintiff’s litigation positions and tactics were exceptional, noting that the parties “never competed, never lost business to each other, indeed had never heard of each other before AGIS lawyers sent a demand letter” and that “continued assertion of these claims seem designed to extract settlement not based upon the merits of the claim but on the high cost of litigation”).
  • Orbit Irrigation Products, Inc. v. Sunhills Int’l, LLC (D. Utah Nov. 30, 2015) (awarding attorneys’ fees of $220,000 to the patent owner upon finding the case to be exceptional due to the defendants’ litigation misconduct, for which the court had previously entered sanctions).
  • Novartis Corp. v. Webvention Holdings LLC (D. Md. Oct. 28, 2015) (finding that “Webvention’s practice of offering licensing fees that were far lower than the cost to defend a patent infringement suit, … its late disclosure to the PTO of prior art in its possession, and its dealings with Novartis specifically create inferences of improper motivation, litigation misconduct, and a need for deterrence sufficient to justify awarding Novartis attorney’s fees,” and ruling that allowing Webvention and its parent entity to dissolve in order to avoid liability would “fly in the face of any rational public policy”).
  • Integrated Tech. Corp. v. Rudolph Techs., Inc. (Fed. Cir. Oct. 21, 2015) (affirming an Arizona federal court’s exceptional case finding in favor of the patent owner but vacating the $3.2 million fee award, despite the parties’ pre-appeal stipulation to the fee amount).
  • In re Unified Messaging Solutions LLC Patent Litig. (N.D. Ill. Oct. 1, 2015) (granting defendants’ exceptional case motion in part due to plaintiff’s standing defect, and awarding fees related to motions for judgment on the pleadings and sanctions).
  • Nova Chemicals Corp. v. The Dow Chemical Co. (D. Del. Sep. 30, 2015) (granting attorneys fees but denying sanctions after Nova sought to set aside a prior infringement judgment under Rule 60, where the court found that “the nonpatent issues are sufficiently ‘intertwined with patent issues’ to invoke § 285”).
  • AdjustaCam, LLC v. Newegg, Inc. et al. (Fed. Cir. Sep. 17, 2015) (remanding for reconsideration in light of Octane Fitness, while noting that defendants’ arguments “appear to have significant merit”)
  • Segan LLC v. Zynga Inc. (N.D. Cal. Sep. 10, 2015) (awarding $1.9 million in fees because “Segan’s claim construction positions and infringement theory were so unreasonable as to make this case ‘exceptional’ within the meaning of section 285,” and further sanctioning plaintiff’s counsel $100,000 under Rule 11 while saying it was a “close question” whether to find counsel jointly and severally liable for the fees award).
  • Universal Electronics, Inc. v. Universal Remote Control, Inc. (C.D. Cal. Sep. 4, 2015) (awarding more than $4.6 million in fees and costs due to the plaintiff’s improper motivation in bringing suit, inadequate pre-suit marking analysis, “discovery gamesmanship,” and other “troubling” conduct).
  • Icon Health & Fitness, Inc. v. Octane Fitness, LLC (D. Minn. Sep. 1, 2015) (awarding $1.6 million in attorneys’ fees and costs to Octane because Icon’s arguments were “particularly weak” and the “inclusion of a peripheral party to establish venue in an inconvenient and high-cost district … is highly suspicious”).
  • Advanced Video Technologies LLC v. HTC Corp. (S.D.N.Y. Aug. 28, 2015) (declining to sanction AVT or its counsel but, in a decision generally critical of patent assertion entities, awarding fees to the defendants, holding that doing so will “serve as a deterrent to other PAEs who might prefer to ignore doubts about their title, warning them to make sure they own the patent before initiating suit”).
  • In re: Rembrandt Technologies LP Patent Litigation (D. Del. Aug. 20, 2015) (granting defendants’ motion for fees because of plaintiff’s exceptional conduct during the litigation, including improperly compensating fact witnesses and document spoliation).
  • Checkpoint Systems Inc. v. All-Tag Security S.A. (E.D. Penn. Dec. 2, 2015) (on remand after the Supreme Court vacated the Federal Circuit’s reversal of a 2011 award of $6.5 million in fees under the Brooks Furniture standard, the court reinstated its original fee award and further awarded $1 million in supplemental fees and costs incurred since 2009, concluding that the case was exceptional because plaintiffs “brought suit in bad faith with the improper motive of crippling Defendants’ business,” and adding prejudgment interest at 6% because “complete compensation should include money that Defendants did not have access to during litigation”).
  • Deep Sky Software, Inc. v. Southwest Airlines Co. (S.D. Cal. Aug. 19, 2015) (awarding $387,000 in fees, including fees related to a reexamination proceeding, after finding that the case was exceptional because plaintiff engaged in inequitable conduct before the PTO).
  • Large Audience Display Systems LLC v. Tennman Productions LLC (C.D. Cal. Aug. 18, 2015) (awarding more than $750,000 in fees and costs after determining that the case is “sufficiently extraordinary to warrant an award of attorneys’ fees” because the plaintiff formed the corporation solely for the purpose of jurisdiction, prolonged the reexamination process, and violated canons of professionalism).
  • Drone Technologies, Inc. v. Parrot S.A. (W.D. Penn. Jul. 28, 2015) (awarding fees of $1.6 million after concluding that the party’s “dilatory and unreasonable conduct merits a finding that this case is exceptional” under § 285).
  • Intellect Wireless, Inc. v. HTC Corp. (N.D. Ill. Jul. 21, 2015) (holding Intellect Wireless and its law firm jointly and severally liable for $4.1 million in fees and costs—including fees for pursuing fees).
  • SFA Systems, LLC v. Newegg Inc. (Fed. Cir. Jul. 10, 2015) (upholding a denial of fees, but finding that the practice of filing lawsuits for the purpose of extracting nuisance settlements could make a case “exceptional”).
  • Highmark, Inc. v. Allcare Health Management Systems, Inc. (N.D. Tex. Jun. 23, 2015) (on remand after the Supreme Court’s decision, granting $5.3 million in attorneys’ fees and expenses, and finding that the patent owner’s inadequate pre-filing investigation and “conduct and litigating positions ‘stand out’ to the Court today as exceptional just as they did when the Court made its original § 285 determination”).
  • Bayer CropScience AG v. Dow AgroSciences, LLC (D. Del. Jun. 18, 2015) (granting $5.9 million in attorneys’ fees, including fees related to two mock arguments, after finding that plaintiffs’ litigation tactics and the weakness of plaintiffs’ claims rendered the case “exceptional”).
  • Alzheimer’s Institute of America v. Elan Corp. PLC (N.D. Cal. Jun. 5, 2015) (after the case was stayed pending the outcome of trial in a related case against Avid, and after a finding of no standing and an award of fees under section 285 in Avid, the court dismissed this case and awarded fees based on collateral estoppel).
  • American Calcar, Inc. v. American Honda Motor Co. (S.D. Cal. May 7, 2015) (after noting that inequitable conduct does not automatically render a case exceptional, the court found that the inequitable conduct in this case warranted a finding of exceptionality and awarded fees).
  • Home Gambling Network, Inc. v. Piche (D. Nev. Apr. 16, 2015) (awarding $1.36 million in fees and costs, including fees for defending against a licensing agreement breach, because “in an action having both patent and non-patent claims, recovery may be had under Section 285 for the non-patent claims if the issues involved therewith are intertwined with the patent issues”).
  • Lugus IP, LLC v. Volvo Car Corp. (D.N.J. Mar. 26, 2015) (awarding more than $900,000 in fees after granting summary judgment because the plaintiff’s infringement argument was not “objectively reasonable”).
  • Kilopass Technology Inc. v. Sidense Corp. (N.D. Cal. Mar. 11, 2015) (awarding fees and costs of more than $5.5 million because, in the words of Octane Fitness, the case “st[ood] out from the others”).
  • Digital Reg of Texas, LLC v. Adobe Systems, Inc. (N.D. Cal. Mar. 9, 2015) (shifting fees based on changed testimony of one witness and updated document production in response to testimony of a second witness, “regardless of whether it resulted from carelessness or bad faith”).
  • TechRadium, Inc. v. FirstCall Network, Inc. (S.D. Tex. Feb. 27, 2015) (shifting fees after finding that the plaintiff’s “use of in-house counsel to file and pursue this lawsuit — which is virtually unprecedented in a patent lawsuit — makes this case ‘exceptional’ in and of itself”).
  • Cambrian Science Corp. v. Cox Communications, Inc. (C.D. Cal. Nov. 20, 2015) (awarding fees of $627,000 to Cox for its entire defense and $316,000 to the other defendants for their defenses after claim construction because the plaintiff’s claims were “lacking in substantive strength after the Court’s claim construction” and its litigation tactics were “less than cooperative”).
  • Logic Devices, Inc. v. Apple, Inc. (N.D. Cal. Dec. 4, 2014) (shifting fees and stating that the previous, “overly rigid” test for § 285 fee-shifting was “abrogated in Octane Fitness“).
  • Linex Techs., Inc. v. Hewlett-Packard Co. (N.D. Cal. Oct. 30, 2014) (awarding fees of $721,000 to the five defendants because the plaintiff “knew or should have known that its . . . claims were meritless”).
  • Pure Fishing, Inc. v. Normark Corp. (D.S.C. Oct. 28, 2014), aff’d, slip op. (Fed. Cir. Oct. 16, 2015) (shifting fees because the case “stands out (as exceptionally weak) with respect to its substantive strength, thus supporting an award of fees under Octane Fitness”).
  • LendingTree, LLC v. Zillow, Inc. (W.D.N.C. Oct. 9, 2014) (shifting fees and finding the lawsuit “exceptional under the totality of the circumstances” because the plaintiff “stonewalled” the defendant’s “pursuit of . . . defenses,” “refused to recognize” the strength of the defendant’s case, and “proceeded with its minimally-sufficient claims . . . at all costs”).
  • Summit Data Systems, LLC v. NetApp, Inc. (D. Del. Sep. 25, 2014), aff’d, slip op. (Fed. Cir. Oct. 9, 2015) (shifting $1.4 million in fees–including $235,000 in expert fees–against an Acacia subsidiary, where the district court found the suit to be exceptional partly because the defendant’s system indirectly benefited from the plaintiff’s license to RPX, and because “the court is convinced that an award of attorneys’ fees in this case is necessary to deter this sort of reckless and wasteful litigation in the future”).
  • Parallel Iron LLC v. NetApp Inc. (D. Del. Sep. 12, 2014) (shifting fees “to deter [the plaintiff] from continuing to litigate in such a manner in the future”).
  • Homeland Housewares, LLC v. Sorensen Research & Devel. Trust (Fed. Cir. Sep. 8, 2014) (upholding a district court’s fee award of $253,000 after finding that the court did not abuse its discretion in deeming the case “exceptional” given the party’s “failure to produce admissible evidence of infringement” and its “overall conduct during the litigation”).
  • Romag Fasteners, Inc. v. Fossil, Inc. (D. Conn. Aug. 14, 2014) (shifting fees after finding the case to be “exceptional” based on the “totality of the circumstances and a consideration of the Octane Fitness”).
  • Yufa v. TSI Inc. (N.D. Cal. Aug. 14, 2014) (shifting fees and confirming that, “after Octane Fitness, no bright-line rules define the parameters of what is exceptional, and no element is dispositive”).
  • Falana v. Kent State University (N.D. Ohio Jul. 31, 2014) (shifting fees because witness misconduct is “sufficient to support the Court’s conclusion that this case is exceptional”).
  • Medtrica Solutions Ltd. v. Cygnus Medical LLC (W.D. Wa. July 10, 2014) (granting reconsideration in light of Octane Fitness and shifting fees even though “there was no evidence of bad faith or litigation misconduct” and the party’s litigation decisions were not “necessarily objectively baseless,” but because the case was “uncommon based on the absence of evidence supporting … infringement at summary judgment”).
  • Cognex Corp. v. Microscan Sys., Inc. (S.D.N.Y. Jun. 30, 2014) (shifting fees because “the defenses that were offered at trial were particularly weak and lacked support in the evidence presented”).
  • Intellect Wireless, Inc. v. Sharp Corp. (N.D. Ill. May 30, 2014) (shifting fees and confirming that “Octane Fitness has broadened the standard for finding exceptional circumstances supporting an award of fees”).

Patentees face additional risk of fee shifting in the wake of several significant changes to patent doctrine. For instance, the Supreme Court’s recent decisions on patent-eligible subject matter under Section 101 (Alice Corp. Pty. Ltd. v. CLS Bank Int’l), induced infringement under Section 271(b), (Limelight Networks, Inc. v. Akamai Technologies, Inc.), and definiteness under Section 112 (Nautilus, Inc. v. Biosig Instruments, Inc.) each make it more likely that accused infringers will emerge from litigation as the “prevailing party” under Section 285.  The need for patentees to acquire fee shifting protection has never been more acute.