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Category: Fee Statute

Feds Urge DC Circuit to Deny Novel Fee Request in IP Case

June 12, 2020

A recent Law 360 story by Britain Eakin, “Gov’t. Urges Fed. Circ. To Deny Novel Fee Bid in IP Appeal” reports that after failing to fend off a $4.4 million fee award on top of a $200,000 judgment for infringing a metal treatment technology patent, the government has told the Federal Circuit it has no authority to grant an inventor's untested bid seeking supplemental fees for defending the fee award.

In a response filed to a May 29 request from Hitkansut LLC and Acceledyne Technologies Ltd. LLC for appellate fees — a matter the Federal Circuit hasn't addressed before under Section 1498 of the Patent Act — the government argued that only the U.S. Court of Federal Claims can grant fee requests under that provision of the law.  "There is no indication in the statute or its legislative history that Congress intended to include post-judgment attorneys' fees within the ambit of those recoverable.  By including the fees in the underlying compensation award, the statute is open to only one interpretation: that the ability to award ... attorneys' fees ends with the final judgment of the Court of Federal Claims," the response said.

The companies, owned by late inventor Donna Walker, who passed away in 2018, asked the appeals court for supplemental attorney fees after a three-judge panel on May 1 affirmed the U.S. Court of Federal Claims' March 2019 grant of fees.  The lower court found in 2017 that government researchers at the Oak Ridge National Laboratory directly took Hitkansut's patent-pending technology, which can be used to relax stressed metal in large metal structures like airplanes, without giving Walker any credit, funding or contracts.

Hitkansut and Acceledyne were able to recoup fees at the claims court under a provision of the Patent Act that allows independent inventors, nonprofits and small businesses to recover fees when the government infringes, provided they can show the position of the United States was not "substantially justified."  The Federal Circuit said in its May 1 opinion that the government's litigation position was not substantially justified because its arguments were contrary to the evidence in the case and the testimony of government employees, and that its invalidity argument was "contradicted by its own expert witness."  The court, however, instructed the parties to bear their own costs.

But Hitkansut and Acceledyne contend that the court has the authority to order the government to pay additional fees under Section 1498, which they argued is not limited to the claims court action and so entitles them to recoup all of their costs, including those associated with defending their initial fee bid.  And although the appeals court hasn't addressed whether fees for defending an initial fee bid can be recouped under Section 1498 before, Hitkansut and Acceledyne argued that the court has done so in Wagner v. Shinseki under an analogous law — the Equal Access to Justice Act.

The court in Wagner said that because he partially prevailed in defending against the government's challenge to his initial bid for fees, "he was entitled to supplemental fees."  The Wagner court reasoned that a prevailing party can recoup fees not just for underlying litigation but also for defending an initial EAJA fee request.  Hitkansut and Acceledyne urged the court to apply the same reasoning it did in Wagner to this case, but the government contends its reliance on Wagner is "misplaced" because it says the EAJA is "fundamentally different" from Section 1498, which it said doesn't give the Federal Circuit jurisdiction over supplemental fee requests.

Congress enacted the Section 1498 fee provision because it believed the EAJA was unavailable for such claims, the government said.  "Had it wanted to do so, Congress had a clear model in EAJA to insure recovery of appellate fees and costs.  But Congress selected a different path," the government said.

Federal Circuit: No Attorney Fee Awards for PTAB Cases

June 4, 2020

A recent Law 360 story by Ryan Davis, “Fed. Circ. Says It Can’t Award Atty Fees Tied to PTAB Cases” reports that the Federal Circuit said that it cannot award attorney fees for allegedly unreasonable conduct during a Patent Trial and Appeal Board case, saying such awards are only available for judicial proceedings and rejecting drugmaker Almirall's bid for fees from rival Amneal.  Almirall SA argued that Amneal Pharmaceuticals Inc.'s failed inter partes review challenge to its acne drug was so "exceptional" that it should have to pay attorney fees, which the Federal Circuit said appeared to be the first time it has been asked to consider how the fee-shifting statute applies to IPR appeals.

While Almirall said the law authorizes the Federal Circuit to award fees incurred during PTAB proceedings before an appeal is filed, the court disagreed.  It said it can award fees related to district court infringement actions, but "appeals from the board are a different matter."  The statute says "the court" may award fees, and that "speaks only to awarding fees that were incurred during, in close relation to, or as a direct result of, judicial proceedings," the Federal Circuit said.  "This language is simply inconsistent with Almirall's position that we can award fees incurred for work in patent office proceedings before this court has ever asserted its jurisdiction," it said.

Amneal had moved to voluntarily dismiss its appeal of the PTAB's decision that it hadn't shown Almirall's patent is invalid.  Almirall said it would agree on the condition that it was awarded fees, but the Federal Circuit granted the dismissal motion and denied the fee request.  As it prepared to market a generic version of Almirall's acne medication Aczone, Amneal challenged two of the patents on the drug in inter partes reviews. Almirall then filed an infringement suit in district court.

According to the Federal Circuit, Almirall offered Amneal a covenant not to sue over one of the patents during settlement talks, but the parties could not finalize a deal.  The IPR on that patent proceeded and the PTAB upheld the patent.  Amneal appealed, but then moved to dismiss the appeal.  That led Almirall to argue that Amneal should have to pay its fees associated with the IPR and the appeal, saying that because Amneal knew it wouldn't be sued over that patent, its decision to continue the IPR was "exceptional."

"It is beyond reasonable that trial was justified once Almirall offered to assure Amneal it would not sue for infringement," it said.  Amneal told the Federal Circuit that Almirall's position was "extraordinary," and that just because Almirall offered not to sue doesn't mean Amneal was bound to drop its IPR.

The Federal Circuit did not get into the merits of whether fees were warranted, and instead concluded its authority to award fees extends only to district court and appellate litigation, not PTAB cases.  "Almirall is impermissibly seeking fees that were incurred for work at the patent office before this case was commenced," it said.  It noted that the PTAB has its own means for regulating misconduct, including awards of attorney fees.

Article: Recovering Attorney Fees Under ‘Tort of Another’ in California

June 2, 2020

A recent article by Gregory G. Brown, “Recovery of Attorneys’ Fees in CA Under the ‘Tort of Another’” reports on the recovery of attorney fees under the Tort of Another doctrine in California.  This article was posted with permission.  The article reads:

Under the “American Rule” each party to a lawsuit is responsible for their own attorney’s fees and costs absent a contractual agreement or statutory exception. (Cal. Code Civ. Proc. § 1021).  This rule can often lead to inequitable results, particularly where the cost of defending a lawsuit exceeds the damages at issue.  One exception to the “American Rule” which allows a defendant to recovery their attorney’s fees is the “tort of another doctrine.”

What is the Tort of Another Doctrine?

The tort of another doctrine is an exception to the “American Rule” which allows for recovery of attorney’s fees which are incurred as a result of another party’s wrongful actions.  Consider the following scenario: a real estate agent lists a property for sale.  Buyer makes an offer to the agent, and the agent tells Buyer that the Seller has accepted.  Several months later however, the agent tells Buyer that Seller has pulled out of the deal, resulting in Buyer filing a lawsuit against Seller and the agent.  At trial the Court finds that the Seller never accepted Buyer’s offer, and the agent had lied when he had made that claim to Buyer.  Under that scenario, the tort of another doctrine would allow Buyer to recover its attorney’s fees from the real estate agent for causing Buyer to incur attorney’s fees by suing the innocent Seller.

When Does the Tort of Another Doctrine Apply?

In order for the tort of another doctrine to apply, an actual tort claim must be committed by the party required to pay attorney’s fees. If there is no tort by a third party, the tort of another doctrine does not apply.  Further, the doctrine only applies where “exceptional circumstances” are present and not where attorney’s fees are incurred by a party solely in defense of their own alleged wrongdoing.  Thus if a party’s own wrongful conduct is part of the reason it is forced to defend a lawsuit, the doctrine would not be applicable.

Who Can Seek Fees Through the Tort of Another Doctrine?

Both Plaintiffs and Defendants in a lawsuit can seek fees through the tort of another doctrine.  The doctrine applies to any person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person.

Article: Recovering Attorney Fees Just Got Easier in Georgia

May 18, 2020

A recent Barnes & Thornburg blog post by Eric S. Fisher, “Recovering Attorney's Fees Under Georgia Law Just Got Easier” reports on a recent case in Georgia.  This article was posted with permission.  The article reads:

One of the advantages to business litigation in the state of Georgia is the ability for experienced litigators to wield the state’s statute for the recovery of attorney’s fees and expenses of litigation, known as Official Code of Georgia Annotated (OCGA) Section 13-6-11, as a sword for their clients. 

The case law interpreting Section 13-6-11, specifically Byers v. McGuire Properties, Inc. and its progeny, inadvertently created an inherent conflict between Georgia’s laws favoring settlement and the responsibility of litigators to serve as effective advocates for their clients. 

On April 6, the Supreme Court of Georgia resolved that conflict.  In SRM Group, Inc. v. Travelers Property Cas. Co. of America, the court established that “a plaintiff-in-counterclaim asserting an independent claim may seek, along with that claim, attorney fees and litigation expenses under Section 13-6-11, regardless of whether the independent claim is permissive or compulsory.”

Business litigation primarily focuses on disputes that relate to a contract (i.e., an operating agreement, an asset purchase agreement, a subcontractor agreement, a promissory note, etc.) and, unless that contract contains an explicit provision for the recovery of attorney’s fees, the cost of complex litigation sometimes seems prohibitive to pursuing legitimate claims.  Enter Georgia’s Section 13-6-11, which allows a plaintiff to seek expenses of litigation if it can allege that the other side “has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense.”  In other words, even if the contract does not so provide, the plaintiff can at least attempt to recover its fees and costs under this statutory provision.

In most business litigation, each side asserts that the other side breached a contract and engaged in other illicit acts (i.e., fraud, breach of fiduciary duty, etc.).  For over a decade, until last week, the side that won the “race to the courthouse” in Georgia was not only able to seek recovery of its fees and costs under Section 13-6-11, but was able to block the other side from using the statute.  The only exception was for expenses associated solely with a “permissive” counterclaim – a claim that arose separately from or after the plaintiff’s claim. 

Thus, savvy litigators were able to use Section 13-6-11 as a shield if their client was the first to file in Georgia.  In other words, even if the other side asserted virtually identical claims in the form of counterclaims, its attempt to seek recovery would likely be subject to immediate dismissal.  

Dismissal of a counterclaim for recovery under Section 13-6-11 seemed equitable when the other side simply parroted the plaintiff’s claims in an attempt to artificially level the litigation playing field.  But, in most instances, the sword and shield aspect of the statute turned pre-litigation settlement negotiations into a game of Russian roulette in which parties sensibly worried that their decision to pull the trigger on a settlement counteroffer might kill the settlement negotiations and cause the other side to run to the courthouse and reap the spoils of being the first to file.  And, sometimes, attorneys would use settlement discussions as part of a “rope-a-dope” maneuver while they prepared their client’s pleading for filing and stealthily filed suit under the cover of settlement discussions. 

The decision in SRM Group, written by Justice Charles Bethel and joined by the seven other justices sitting at the time the case was heard, overrules Byers. As Justice Bethel succinctly explains in the opinion:

A “permissive” counterclaim is “any claim against an opposing party not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” OCGA § 9-11-13 (b).  By contrast, a “compulsory” counterclaim is “any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.” OCGA § 9-11-13 (a).  

The SRM Group decision includes insightful reviews of prior relevant cases and an interesting stare decisis analysis.  But the crux of the holding is that Byers relied upon a Georgia Court of Appeals decision that improperly equated a mere “independent claim” (a cause of action in addition to the counterclaim under Section 13-6-11) with a “permissive claim” when it held that a plaintiff-in-counterclaim cannot pursue recovery under Section 13-6-11 if its counterclaims were compulsory.  As Justice Bethel concluded, “We see no basis in the text of the statute or otherwise for such an equation,” and then went on to add, “Nothing in the text of OCGA § 13-6-11 suggests that awards of fees and expenses are limited to permissive counterclaims.  Nor as a practical matter is a distinction between permissive and compulsory counterclaims always a workable distinction ….”

The recent SRM Group decision rights a wrong that distorted the ability to use Section 13-6-11, allowing future litigants to properly include a counterclaim for recovery of fees and costs under that statute along with any other independent counterclaims.  Whether those litigants will actually be able to recover under 13-6-11 (“the jury may allow” recovery) is a subject for another review.    

Eric S. Fisher is a Partner at Barnes & Thornburg in Atlanta.  Eric serves as trusted confidant and counselor, as well as the voice of reason, to clients who are in the midst of difficult and challenging disputes and litigation.  With deep experience in federal and state trial and appellate courts, as well as with various alternative dispute resolution proceedings, Eric represents individuals and companies in a wide variety of cases.

PA Court: Workers Comp Judge Has No Authority to Award 20 Percent Fees

May 15, 2020

A recent Legal Intelligencer story by Zack Needles, “Court: WCJ Has No Authority to Assess Reasonableness of 20% Counsel Fee” reports that a divided Commonwealth Court en banc has ruled that a workers’ compensation judge had no authority under the Workers’ Compensation Act to evaluate whether a 20% counsel fee for a claimant’s medical compensation award was reasonable.

In Neves v. Workers’ Compensation Appeal Board (American Airlines), according to the Commonwealth Court’s May 14 opinion, claimant Robert Neves filed a claim petition alleging that on Jan. 5, 2015, he suffered a work-related heart attack that damaged his heart muscle while he was employed by American Airlines.  On May 3, 2016, Workers’ Compensation Judge Joseph Stokes granted the claim petition and specifically found in his decision that Neves’ attorney was entitled to “20% of any benefits awarded to be paid as counsel fees” under the fee agreement claimant signed.

American Airlines appealed to the Workers’ Compensation Appeal Board and Neves cross-appealed, arguing that Stokes had miscalculated Neves’ average weekly wage.  On Aug. 18, 2016, Neves filed a review petition and a penalty petition, alleging that his employer had refused to pay for medical treatment and withheld counsel fees.  The case was assigned to WCJ Geoffrey Lawrence.

In support of his claim for attorney fees, Neves’ counsel pointed to the fee agreement Neves signed, which stated that he agreed “to pay my attorney a sum equal to 20% of whatever may be recovered from said claim either by suit, settlement, or in any other manner or of whatever may be recovered if a second trial or appeal is taken.”

Lawrence denied Neves’ review petition, holding that his attorney was not entitled to a 20% attorney fee on Neves’ medical compensation. Lawrence held that Neves’ review petition was barred by the doctrine of res judicata because Neves did not appeal Stokes’ order that his counsel was “entitled to 20% of the compensation benefits awarded as counsel fees payable from claimant’s share of the award.”

Lawrence held that Neves failed to establish that his counsel’s fee was reasonable, relying on the Commonwealth Court’s 1993 ruling in Piergalski v. Workmen’s Compensation Appeal Board (Viviano Macaroni), which held that a contingent fee based upon an award of medical compensation will not be approved unless the fee is shown to be reasonable based on the amount and complexity of legal work involved.  Lawrence also ruled that, under 1993 amendments to the WCA, known as “Act 44,” any fee award would only apply to the indemnity award and not the medical award.

The board affirmed Lawrence’s ruling, agreeing that Neves needed to show that the fee was reasonable.  The board based its decision on the Commonwealth Court’s 2016 ruling in Righter v. Workers’ Compensation Appeal Board (Righter Parking).  On appeal to the Commonwealth Court, Neves argued that a 20% counsel fee is per se reasonable under Section 442 of the WCA, regardless of whether the award is for disability or medical compensation.  Neves also argued that Act 44 had no bearing on the matter.

Commonwealth Court President Judge Mary Hannah Leavitt, writing for the majority, agreed.  “We hold that Section 442 does not distinguish between the type of compensation awarded; does not require an inquiry into the reasonableness of a 20% fee agreement; and does not make the amount and degree of difficulty of the work performed by the attorney relevant,” Leavitt said.  “A 20% counsel fee is per se reasonable.”

Leavitt added that, “since its enactment, Section 442 has required the fact finder, now the WCJ, to approve a negotiated 20% counsel fee without regard to whether it applied to indemnity or medical compensation.”  Leavitt was joined by Judges P. Kevin Brobson, Patricia McCullough, Anne Covey and Christine Fizzano Cannon.

Judge Michael Wojcik, joined by Judge Renee Cohn Jubelirer, penned a dissenting opinion.  “In accord with the humanitarian purpose of the act, we have consistently interpreted Section 442 as requiring a WCJ’s approval of every agreement for attorney’s fees, based on a determination of reasonableness,” Wojcik wrote.  “Always, we have been mindful that ‘Section 442 evidences a legislative intent to protect claimants against unreasonable fees imposed upon them by their attorneys pursuant to improvident fee agreements.’”