This week, Judge Stark granted defendants' motions for attorneys' fees in two separate cases. Although the cases are unrelated, there is nonetheless a fair amount of overlap in what the Court found persuasive in granting fees.
The defendants in both cases - Wi-Lan v. Sharp Electronics Corp., C.A. No. 15-379-LPS and Belcher Pharmaceuticals, LLC v. Hospira, Inc., C.A. No. 17-775-LPS - moved for fees under 35 U.S.C. § 285, arguing that the cases were exceptional.
So what helps convince a judge that a case is exceptional, and what are some other through-lines in these rulings?
The case really has to stand out
The degree to which a case stands out from others with respect to a party's litigating position or the manner in which the case was litigated is, of course, part of the standard. But it is also a practical question that is informed by the experience of the judge ruling on the motion (in this case, Judge Stark).
For example, in the Belcher case, Judge Stark found that the case stood out due to his finding regarding the plaintiff's inequitable conduct in securing the patent-in-suit:
[T]hat finding certainly makes this case stand out from all the other cases I have seen. I think I've had approximately 30 patent bench trials. I have never once found inequitable conduct. As best I could tell and recall, this is the sole instance in which I have ever found an inequitable conduct case proven; and so clearly it stands out and is truly exceptional in every way.
Judge Stark explained that while "it doesn't automatically...follow from a finding of inequitable conduct that a case is exceptional and that fees should be awarded," "here it very much does follow,..."
In the Wi-Lan case, the Court found that plaintiff's continued assertion of one of the patents-in-suit after its failure to obtain admissible evidence to prove infringement made the case stand out:
[T]his case consisted of more than just mere routine disputes in a run-of-the-mill patent case. In particular, how the plaintiff handled the issues relating to the source code and the other evidence necessary to prove infringement of the '654 patent does make this case stand out and makes it overall exceptional.
Listen to the Judge
In both cases, Judge Stark had warned the plaintiff that fees could be in the offing if they continued to assert infringement. In the Belcher case, he recounted that while he had declined to award Rule 11 sanctions against plaintiff earlier in the case, he did note at the time that:
[Defendant] Hospira' s arguments might be quite likely to persuade me that this case is exceptional for the purposes of awarding fees under Section 285. And I made sure that [plaintiff] Belcher understood and realized it was being warned from the get-go.
Similarly, in the Wi-Lan case, Judge Stark found it "notable" that as far back as 2016 he had advised the parties that "defendants at the conclusion of the case may cite their experience with plaintiffs infringement contentions as a basis for arguing that this case is exceptional for purposes of Section 285."
He further emphasized the importance of such comments:
This is not the only case in which I have said similar things well before the end of the case, but it doesn't happen very often. And that's further evidence that this case does stand out from the many, many other patent cases that I have handled.
It helps to have an appellate win
In both the Belcher and Wi-Lan case, issues that were key to the fees decision had gone up on appeal. In the Belcher case, the Federal Circuit affirmed Judge Stark's inequitable conduct finding, and in the Wi-Lan case, the Federal Circuit affirmed summary judgment of non-infringement.
The appellate record featured more heavily in the Wi-Lan order, where Judge Stark pointed out that the Federal Circuit agreed with him on Wi-Lan's lack of diligence in developing admissible infringement evidence, and noted that the Federal Circuit had addressed both the problematic nature of how Wi-Lan obtained declarations to support the admission of source code to show infringement, and Wi-Lan's failure to point to a viable route in the Federal Rules for admissibility.
But in both rulings, it appears that the defendants' success on appeal went some way to convincing Judge Stark that a fee award was appropriate. However...
No appeal or expert fees
In both cases, Judge Stark declined to grant fees for the appellate portion of the case. He pointed out that he could award fees for the appeals without finding the appeals themselves exceptional, but declined to do so.
In the Belcher case, he noted that "plaintiff [was] well within its rights to take the appeal," and that "it raised reasonable appellate issues."
In the Wi-Lan case, because the inequitable conduct finding was "so extraordinary and so exceptional," and because it "could have consequences for people's reputations, for companies' reputations and could adversely affect careers, and these findings are rare," Judge Stark concluded that "it was entirely understandable and reasonable for Belcher to ask a higher court to carefully review my finding of inequitable conduct." This is not the type of appeal, he explained, that he would want to deter by way of a fee award.
Judge Stark also declined to award costs other than attorneys' fees in both cases, declining to exercise his inherent authority to award sanctions.
You can get fees for the whole case, or just part of it
In the Belcher case, Judge Stark awarded defendant Hospira "every dollar that Hospira reasonably expended on counsel litigating this case to trial in this Court," including "fees incurred on motions and matters on which Hospira did not prevail." That is likely to run into the millions of dollars.
In contrast, because the offending conduct in the Wi-Lan case pertained to only one patent-in-suit and did not span the entire litigation, Judge Stark awarded defendants "the portion of their fees incurred in defending against the '654 [patent] after April 26, 2018 through the entry of final judgment on September 12, 2019." April 26, 2018 was the date that Judge Stark found Wi-Lan "had to have known it could not survive the defense motion for summary judgment of noninfringement because of its lack of critical, admissible evidence."
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