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Category: Fee Award

Attorney Fee Award Analysis in Section 285

December 10, 2019

A recent Mintz law firm blog post by Andrew H. DeVoogd and Kara E. Grogan of Mintz Levin PC, “Counterproductive and Cost-Increasing Litigation Tactics are Objectively Unreasonable in Section 285 Attorney Fee Award Analysis,” reports on attorney fee awards under Section 285.  This story was posted with permission.  The post reads:

Nearly six years ago, the Supreme Court in Octane Fitness v. ICON Health & Fitness promulgated a “totality of the circumstances test” for awarding reasonable attorney fees to the prevailing party in exceptional cases under 35 U.S.C. §285.  As lower courts have applied this standard, it has become clear that the motivation and conduct of the losing party is a focal point of the exceptionality analysis.  However, two recent decisions emphasize that bad faith arguments and litigation tactics—by both parties and in all stages of litigation—are critical to the exceptionality analysis in Section 285 attorney fee awards. 

By way of background, Section 285 permits courts, in exceptional cases, to award reasonable attorney fees to the prevailing party.  Using the totality of the circumstances test, courts consider factors such as frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case).  However, exceptional cases are rare—reserved for circumstances where a party’s unreasonable conduct—while not necessarily independently sanctionable—is nonetheless so “exceptional” as to justify an award of fees. 

First, the Western District of Louisiana in Total Rebuild Inc. v. PHC Fluid Power, LLC, concluded that although the plaintiff’s patent was found unenforceable due to inequitable conduct, the case was not exceptional, due to the defendant’s “counter-productive and cost-increasing litigation tactics.”  The defendant’s unscrupulous actions included: (1) not informing the court in its opening brief that the plaintiff proposed a “walkaway” settlement offer; (2) evidence suggesting that the defendant’s motive was to deny the “walkaway” settlement, seek judgment against the plaintiff, and file a motion for sanctions to hit the plaintiff—a competitor—with a large judgment; and (3) not engaging in any meaningful settlement discussions.  This amounted to “objective unreasonableness.”  Due these bad faith litigation tactics, the court refused to allow the defendant to “benefit from fueling an environment that increased the cost to litigate this case.”  

Second, a magistrate judge in the Southern District of New York in EMED Technologies v. Repro-Med Systems, recommended finding the case exceptional and granting nearly $1 million in attorney fees due to the plaintiff’s bad faith shortly after granting a summary judgment of noninfringement.  Surprisingly, the magistrate judge based its attorney fee analysis in large part on the plaintiff’s claim construction position.  According to the magistrate, based on Federal Circuit precedent and the patent’s prosecution history, it was bad faith to initiate the litigation despite knowing the “conventional” construction of the claim term “consisting of” as used in the claim.  And, although the court ruled in plaintiff’s favor on other claim terms, “EMED’s success in that regard does not render any less unreasonable its objectively baseless construction and application of the closed mechanical fastener element.”  The court also cited additional examples of the plaintiff’s bad faith, including: (1) filing the action in the incorrect venue; (2) filing a motion for preliminary injunction; and (3) pressing on with the litigation “even after claim construction and the Court’s ruling against it.”  Although the district court judge has yet to affirm this report and recommendation, the magistrate’s opinion is instructive.

Taken together, these cases illustrate that practitioners should be mindful of reasonableness and decorum.  Courts are unlikely to find a case exceptional and award attorney fees if the prevailing party refuses reasonable requests for extensions of time or calls opposing counsel inappropriate names, as in Total Rebuild.  Along those same lines, practitioners should also avoid counterproductive and cost-increasing litigation tactics.  Tactics such as filing useless motions, taking objectively unreasonable positions, refusing to engage in meaningful settlement discussions, and excessive billing are all not only unprofessional (and potentially unethical), but may be used as fodder by an adversary to support an exceptional case fee award.  It is important to also remember that the entire record is scrutinized in a Section 285 analysis.  Baseless or unsupportable motions or positions, even at the start of a case, may come back to bite you and your client.

Andrew H. DeVoogd is a Member at the Boston office of Mintz Levin. Drew is an experienced intellectual property litigator and trial attorney whose work encompasses a broad range of technologies.  He regularly represents clients in high stakes patent disputes, including at the International Trade Commission, involving some of the world's largest technology companies. Kara E. Grogan is an Associate at the Boston office of Mintz Levin.  Kara focuses her practice on Section 337 cases in the International Trade Commission and district court patent litigation.  She has experience in, for example, motion practice, written discovery, and drafting license agreements.

Fifth Circuit: Procedural Win is Not Grounds for Attorney Fees

December 9, 2019

A recent blog post from Proskauer’s Employee Benefits & Executive Compensation Blog by Lindsey H. Chopin, “Fifth Circuit: Procedural Win Is Not Grounds for Attorney’s Fees,” reports on a recent Fifth Circuit decision regarding fee entitlement in purely procedural wins in employment cases.  This story was posted with permission.  The post reads:

The Fifth Circuit concluded that a plan participant was not entitled to recover attorneys’ fees for obtaining a remand order requiring the district court to apply a de novo, rather than abuse of discretion, standard of review to the administrative determination of her benefit claim.  In so ruling, the Court applied the principles enunciated by the U.S. Supreme Court in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010), which held that a plan participant must have “achieved some degree of success on the merits” in order to receive a fee award under ERISA.  The Supreme Court held that, although the participant need not qualify as a “prevailing party,” she must obtain more than “trivial success on the merits or a purely procedural victory.”  The Fifth Circuit applied the “some success on the merits” standard and observed that the remand order here included no comment on the strength of the remanded claim.  The case is Ariana M. v. Humana Health Plan of Texas, Inc., No. 18-cv-20700, 2019 WL 5866677 (5th Cir. Nov. 8, 2019).

Lindsey H. Chopin is an associate at Proskauer LLP in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group, focusing on complex employee benefits litigation.

DOJ Asks Federal Circuit to Toss $7M Fee Award

December 5, 2019

A recent Law 360 story by Tiffany Hu, “DOJ Asks Fed. Circ. To Scrap Dentons’ $7M Fee Award,” reports that the U.S. Department of Justice is asking the Federal Circuit to wipe out $7.4 million in attorney fees secured by Dentons in a lawsuit accusing the Navy of infringing a company’s patents in a combat ship, saying the lower court went “too far” in its analysis.  In an opening brief, the DOJ said that the U.S. Court of Federal Claims in July incorrectly awarded attorney fees to Dentons for its work on behalf of FastShip LLC, which claimed that some of the Navy’s combat ships infringed two of its patents.

Among other things, Judge Charles F. Lettow had found that the federal government’s opposition to FastShip’s lawsuit was not “substantially justified” under a federal provision governing the amount that can be recovered in a lawsuit against the government.  That provision says a patent owner can get reasonable compensation in a suit against the government unless the government's position was substantially justified.

The DOJ argued that Judge Lettow erred in considering the government’s conduct before litigation, as the provision in question restricts the patent owners’ compensation to costs incurred “in pursuing the action,” the department said in its brief.  But even if pre-litigation conduct could be considered, the DOJ said, the judge went “too far” when he relied on certain allegations that either had nothing to do with the present lawsuit or the claimed use of the invention.

“This construct is unduly broad even if some pre-litigation conduct could be considered,” the DOJ wrote.  “The CFC’s definition goes well beyond the ‘claim’ — i.e., the facts necessary to establish infringement — and into some ill-defined totality of facts that include the procurement actions of contractors in which the government was not involved.”  The department urged the Federal Circuit to toss the lower court’s award of fees and costs and to send the case back to the court to reconsider whether the government’s position in the present action was “substantially justified.”

Judge Lettow ruled partly in favor of FastShip in 2017, finding that one ship, LCS-1, had infringed, but that a second, LCS-3, and any that followed in the class had not because they were still being manufactured when the patents expired.  The Federal Circuit in June 2018 upheld Judge Lettow’s ruling and raised the damages award slightly to $7.1 million. FastShip ultimately recovered $12.36 million for the infringement, including delay damages, Judge Lettow wrote in his July order.

Judge Lettow’s July ruling said that the “conduct of the government, both before and throughout this litigation, belies its argument that it was ‘substantially justified.’”  The judge said that among his reasons for awarding the fees and costs was that FastShip met with Lockheed during the procurement process and shared its patent technology, but that FastShip was ultimately not included as a part of the team.

“Lockheed Martin would go on to manufacture the Freedom class of ships for the government, with a completion and infringement date for LCS-1, of September 26, 2006,” Judge Lettow wrote.  The judge also questioned if the government had done a proper investigation after FastShip filed an administrative claim with the Navy in 2008.  The Navy said it did a “thorough analysis” and found no infringement after the claim was filed, although it did not share the analysis with FastShip when it wrote the company a letter after it “sat” on the claim for two years, he wrote.

“At best, this was a perfunctory response to the concerns of FastShip that ultimately proved legitimate.  At worst, it may have delayed FastShip’s filing of its claim in this court by two years,” Judge Lettow wrote.  The judge made partial adjustments to the $8.72 million of fees and costs requested by FastShip, ultimately awarding more than $7.4 million, including over $6.17 million in attorney fees and related expenses, and over $1.2 million in costs.

NALFA to Conduct 2020 Class Action Hourly Rate Survey

December 3, 2019

NALFA conducts hourly rate surveys for law firms, corporate legal departments, and government agencies.  Our surveys provide the most accurate and current hourly rates within a given geography and practice area.  We can design hourly rate surveys for specific cases.  Our hourly rate surveys assist state and federal courts in awarding attorney fees in large, complex litigation throughout the U.S.

Starting in 2020, NALFA will be conducting the 2020 Class Action Hourly Rate Survey, the nation’s most comprehensive survey of hourly rates in class action litigation.  This survey will show current, that is 2020, hourly rate data for class action litigators in the nation’s 16 largest legal markets:

1. New York, NY
2. Los Angeles, CA
3. Chicago, IL
4. Miami, FL
5. Washington, DC
6. Dallas, TX
7. Atlanta, GA
8. Boston, MA
9. Houston, TX
10. Philadelphia, PA
11. San Francisco, CA
12. Seattle, WA
13. San Diego, CA
14. New Orleans, LA
15. Tampa, FL
16. Denver, CO

This inaugural hourly rate survey will be conducted via email in early 2020.  The survey results will show the current average hourly rate range of class action litigators (plaintiff and defense) at senior partner, partner, senior associate, and associate levels in the nation’s top legal markets.  This billing rate survey may be the first ever to make a distinction between plaintiffs' rates and defense rates.  This survey will be available for purchase.

$14.1M Fee Award in Airline Price-Fixing Class Action

November 29, 2019

A recent Law 360 story by Matt Bernardini, “Flyers’ Attys Win $14.1M Award in Airline Price-Fixing Suit,” reports that a California federal judge has awarded attorneys for a group of passengers $14.1 million in fees for their work on a $58 million settlement with All Nippon Airways, which was one of several airlines accused of conspiring to fix the prices of trans-Pacific flights.

U.S. District Judge Charles Breyer granted the attorneys about 25% of the final settlement fund, which was slightly lower than the 33% that the attorneys originally asked for.  In his order, Judge Breyer noted that because this was the final settlement after two previous rounds of settlements with the airline companies, the value should be lowered slightly because the financial risk to the attorneys was lower in this phase.

Nonetheless, Judge Breyer noted that during the 12-year-long litigation, counsel for the passengers did exceptional work and that must be factored into the current fee award.  "Because it was not possible to know, in earlier rounds, that counsel's work with respect to ANA would result in the settlement ultimately achieved, it probably makes sense to consider the strength of all work retroactively," Judge Breyer said.  "It is also the case that counsel achieved excellent results for the class — this last settlement, with one defendant, was the single largest settlement in the entire litigation."

The long-running dispute dates back to 2007 when a class of flyers accused a group of airlines of conspiring to fix prices on long-haul trans-Pacific flights to several Pacific nations.  In 2014 multiple airlines including Air France, Japan Airlines International Co. and Vietnam Airlines Co. agreed to settle in deals totaling $29.6 million.  Qantas Airways and Singapore Airlines Ltd. followed suit and settled for a total of $9.8 million later that same year.