In Exceptional Cases, District Court Must Articulate Reasons for Fee Denial: Federal Circuit | Practical Law

In Exceptional Cases, District Court Must Articulate Reasons for Fee Denial: Federal Circuit | Practical Law

In Oplus Technologies, Ltd. v. Vizio, Inc., the US Court of Appeals for the Federal Circuit held that when a district court finds a case is exceptional due to litigation misconduct, the district court must identify support for denying a fee request by the aggrieved party under 35 U.S.C. § 285.

In Exceptional Cases, District Court Must Articulate Reasons for Fee Denial: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 10 Apr 2015 • USA (National/Federal)
In Oplus Technologies, Ltd. v. Vizio, Inc., the US Court of Appeals for the Federal Circuit held that when a district court finds a case is exceptional due to litigation misconduct, the district court must identify support for denying a fee request by the aggrieved party under 35 U.S.C. § 285.
On April 10, 2015, in Oplus Technologies, Ltd. v. Vizio, Inc., the US Court of Appeals for the Federal Circuit held that the US District Court for the Central District of California abused its discretion in denying a request for attorneys' and expert witness fees, noting that the district court found harassing, unprofessional and vexatious litigation conduct and failed to provide a sufficient reason for denying the fee request (No. 2014-1297, (Fed. Cir. Apr. 10, 2015)).
Oplus Technologies, Ltd. sued Vizio, Inc. and Sears Holding Corp. for patent infringement in the US District Court for the Northern District of Illinois. The Northern District of Illinois court granted Vizio's motion to transfer the case to the Central District of California. After transfer, the district court granted Vizio's motion for summary judgment of non-infringement. Vizio then moved to recover its attorneys' and expert witness fees pursuant to 35 U.S.C. § 285, 28 U.S.C. § 1927 and the court's inherent power.
Following briefing and a hearing, the district court issued an opinion finding the case exceptional under Section 285 due to an substantial pattern of litigation misconduct by Oplus, explaining that Oplus:
  • Delayed the litigation by attempting to manufacture venue in the Northern District of Illinois.
  • Ignored well-settled law by asking the Panel on Multidistrict Litigation to reconsider the case's venue after the Northern District of Illinois court transferred the case.
  • Misused and abused the discovery process.
  • Presented contradictory expert evidence and infringement contentions.
  • Misrepresented the legal and factual support for its positions.
Nonetheless, the district court denied Vizio's fee request, explaining that:
  • Fee awards must take the particular misconduct into account.
  • The case was fraught with delays and avoidance tactics on both sides, though the court did not describe these delays.
  • Each instance of motion practice occurred according to normal litigation practice.
  • Vizio did not incur significantly more fees than it would have in the absence of Oplus's vexatious behavior.
On appeal, the Federal Circuit held that the district court abused its discretion in denying Vizio's fee request. The Federal Circuit noted that, since the district court issued its opinion, the US Supreme Court's decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc. had considerably lowered the standard of proof patent litigants must satisfy to justify a fee award (134 S. Ct. 1749 (2014)). For more information on the Supreme Court's Octane Fitness decision, see Legal Update, Supreme Court Reverses Federal Circuit's Rigid Fee Shifting Standard in Patent Cases.
In reversing and remanding, the Federal Circuit held that when a district court finds a case is exceptional due to litigation misconduct, it must identify support for denying the fee request, explaining that:
  • The district court's reasons for denying the fee request lacked specificity. For example, the district court did not identify any specific delays or avoidance tactics by Vizio.
  • Nothing in the district court's decision or the record supported the denial of the fee request.
  • Oplus' misconduct had to have increased the case's expense and frustration for Vizio.