A recent The Recorder story by Scott Graham, “Newegg Overcomes Acacia in Attorney Fee Fight,” reports that the Federal Circuit is putting its foot down on attorney fees. The D.C.-based appellate court on ordered U.S. District Judge Rodney Gilstrap of the Eastern District of Texas to award attorney fees in a spat between online retailer Newegg Inc. and a subsidiary of NPE Acacia Research Group LLC. Adjustacam v. Newegg marks the first substantial attorney fee win for Newegg, one of the country's most aggressive litigants against patent suits it deems abusive. The Federal Circuit indicated that Newegg is asking for $350,000.
It's also the second time the U.S. Court of Appeals for the Federal Circuit has ordered Gilstrap to consider awarding fees in the case. This time the court was more blunt, essentially directing that fees be awarded under the Supreme Court's 2014 Octane Fitness precedent. “The district court abused its discretion failing to follow our mandate to evaluate the totality of the circumstances under Octane [Fitness],” Judge Jimmie Reyna wrote. He again remanded for further proceedings, this time “including the calculation of attorneys' fees.”
Acacia subsidiary Adjustacam and Newegg have been slugging it out over fees since 2013. Newegg's outspoken general counsel, Lee Cheng, left the company last year, but outside counsel Mark Lemley of Durie Tangri continued the fight at the Federal Circuit, with Collins, Edmonds, Schlather & Tower partner John Edmonds representing Adjustacam.
Adjustacam sued 58 defendants in the Eastern District of Texas in 2010 over a patent on a rotatable camera mount. Newegg insisted there was no basis for infringement, especially after U.S. District Judge Leonard Davis construed the claims in 2012. Adjustacam continued to litigate the case for several more months before dismissing it.
Davis declined to award fees in 2013. But the following year the U.S. Supreme Court issued Octane Fitness, which liberalized fee-shifting in patent cases. The Federal Circuit instructed Davis to reconsider in light of Octane, saying Newegg's arguments "appear to have significant merit."
By then Davis had retired. His successor Gilstrap adopted almost all of Davis' findings and conclusions, saying Davis had been in the best position to evaluate the case. That led to a testy second hearing before the Federal Circuit in April, where the judges seemed angry that Gilstrap hadn't taken their hint, but also reluctant to second-guess a district judge's discretion on attorney fees.
In the ruling, they didn't hold back. “The wholesale reliance on the previous judge’s factfinding was an abuse of discretion,” Reyna wrote. “We specifically instructed the judge on remand to 'evaluate' the merits of Newegg’s motion in the first instance based on the new Octane standard, which did not occur.” Reyna wrote that the court recognizes the deference owed to district courts in deciding fees motions. “Deference, however, is not absolute,” he added.
Indeed, it's the second time in the last month that the Federal Circuit has directed Gilstrap to award fees in a case. In Rothschild Connected Devices Innovations v. Guardian Protective Services, the Federal Circuit remanded for additional proceedings, “including those pertaining to the calculation of attorney fees.”