A recent the Recorder story, “Panel Lays Out New Rule for ‘Exceptional Case’ Fee Award” reports that The U.S. Court of Appeals for the Federal Circuit has upheld one of the first "exceptional case" fee awards that followed a 2014 Supreme Court decision loosening the fee-shifting standard in patent cases.

But the appellate court rejected a fee multiplier that the district judge had awarded in the case to deter future nuisance litigation.  "Although deterrence may be a consideration when determining whether to award attorney fees" under Section 285 of the Patent Act, "it is not an appropriate consideration in determining the amount of a reasonable attorney fee, which is principally based on the lodestar method," Judge Alan Lourie wrote in Lumen View Technology v. Findthebest.com.

The Jan. 22 decision deals only a partial blow to Findthebest.com Inc.  Even though the Federal Circuit halved its $300,000 fee award, Lourie hinted that on remand U.S. District Judge Denise Cote might award additional sanctions under Rule 11.  The CEO of Findthebest told Ars Technica he considers that "a great signal."

But the decision also suggests the court may not be inclined to step outside the box on fee shifting.  For example, nonvolatile memory designer Sidense Corp. has filed briefs with the Federal Circuit saying it deserves a multiplier on the $5 million fee award it obtained against competitor Kilopass Technology Inc. because it agreed to pay a contingency fee bonus to its Kilpatrick Towsnend & Stockton attorneys.  U.S. District Judge Susan Illston turned down the additional $3 million, saying Sidense had presented no evidence that such hybrid fee agreements were commonplace in the industry.  That case is likely to be argued this spring.

At issue in Friday's decision was Lumen View Technology LLC's 8,069,073 patent for matching parties based on their preferences.  Lumen View sued some 20 companies, including several job websites that match potential employees with employers.  Findthebest, a consumer research site now known as Graphiq, argued its technology clearly wasn't covered by the patent.  Lumen View threatened "full-scale litigation" and "all motion practice as well as protracted discovery" if Findthebest refused to settle out of court.

At one point Lumen View's attorney complained that a Findthebest executive had committed a hate crime under Ninth Circuit law by calling his client a "patent troll," and that if the case wasn't settled that day they would pursue criminal charges, according to papers filed in the trial court.

The litigation was resolved fairly quickly when Cote ruled that Lumen View's patent was drawn to an abstract idea and ineligible under Section 101.  She then awarded $149,000 in attorney fees, plus an additional $149,000 on the ground that "the most basic" presuit investigation would have cleared Findthebest's technology, and that Lumen View's "predatory strategy" of baseless litigation had to be deterred.

Lourie affirmed the finding of exceptionality in Friday's appellate ruling, finding Lumen View's infringement allegations "ill-supported" even under the company's own proposed claim construction.  He further noted that a district judge may enhance the lodestar amount in "rare" cases where the lodestar is inadequate.  But, he wrote, "deterrence is not generally a factor to be considered in determining a reasonable attorney fee under Section 285."

So the $149,000 fee award was affirmed, the multiplier was lopped off, and the case was sent back to Cote with the suggestion that she consider "whether there may be other issues open for consideration relating to attorney conduct."

"Whether the court wishes to utilize Rule 11 or any other statutory framework is of course up to the district court," Lourie added.  Judges Kimberly Moore and Evan Wallach concurred.