A recent Law 360 story by Matthew Bultman, “Fed. Circ. Junks $51M Attys’ Fees Award in Rembrandt MDL,” reports that the Federal Circuit, in a ruling made public, threw out a $51 million attorneys' fee award that Comcast Corp. and other cable companies won in sprawling multidistrict patent litigation, finding a lower court failed to connect the fees to Rembrandt Technologies LP’s alleged misconduct.  The court, in a precedential opinion that had been under seal since July 27, left in place a Delaware federal judge’s ruling that Rembrandt litigated the case in an “unreasonable manner,” including improperly paying witnesses, and should have to fork over attorneys' fees.

But the law requires the amount of the award bear some relation to the extent of the misconduct, according to the Federal Circuit, which said the lower court didn’t explain why an award of almost all the fees was warranted.  “Even if Rembrandt’s misconduct, taken as a whole, rendered the case exceptional, the district court was required to establish at least some ‘causal connection’ between the misconduct and the fee award,” the court wrote.  “What the district court did here — award all fees with no explanation whatsoever of such a causal connection — was not enough.”  The case was sent back to the district court so the judge could determine how much Rembrandt should have to pay.

The ruling is the latest chapter in litigation that dates back more than a decade and includes dozens of cable providers, equipment makers and broadcast networks that Rembrandt accused of infringing several patents, most of which covered cable modem technology.  Following a claim construction ruling, which the Federal Circuit affirmed in 2012, Rembrandt asked to dismiss its claims relating to all but one of the patents.  It agreed to a judgment of non-infringement with respect to the final patent.

U.S. District Judge Judge Gregory M. Sleet later declared the case exceptional after finding, among other things, Rembrandt improperly gave witnesses payments contingent on the outcome of the litigation and engaged in, or at least failed to prevent, widespread document spoliation.  The judge also said Rembrandt should have known two of the patents were unenforceable because the company that sold it the patents, former AT&T subsidiary Paradyne Networks Inc., had not paid maintenance fees and allowed them to expire.  The judge awarded the defendants $51 million in fees — nearly everything the companies requested, excluding only expert fees.

In its ruling, the Federal Circuit said Rembrandt raised “strong arguments” about some of the district court’s findings and commented that the “remarkably terse orders shed little light on” the court’s justification for its decisions.  Still, the appeals court said Judge Sleet didn’t abuse his discretion finding the case exceptional.

“On the record before us, we cannot say that any of the district court’s findings was based ‘on an erroneous view of the law or on a clearly erroneous assessment of the evidence,’” the Federal Circuit wrote.  The problem, the court said, was with the award.  Rembrandt’s alleged misconduct didn’t affect all the patents, or all of the defendants.  By and large, the district court didn’t even attempt to determine which of the issues were affected, the Federal Circuit wrote.  “Nowhere did the district court address the requisite ‘casual connection’ it was required to find between the misconduct and the fees it awarded,” it wrote.

The case is In Re: Rembrandt Technologies LP Patent Litigation, case number 2017-1784, in the U.S. Court of Appeals for the Federal Circuit.