Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Exceptional Case

Tenth Circuit Sets Patent Standard for Trademark Attorney Fee Awards

June 13, 2021

A recent Reuters story by Blake Brittain, “10th Circuit Adopts Patent Law Standard for Trademark Attorneys’ Fees,” reports that the 10th U.S. Circuit Court of Appeals ruled Tuesday that the U.S. Supreme Court’s attorneys’ fees standard for “exceptional” patent cases also applies to trademark cases, joining every other U.S. circuit court in applying the standard to Lanham Act disputes.

The Supreme Court's 2014 decision in Octane Fitness made it easier for litigants to recover attorneys' fees under the Patent Act's fee-shifting provision, and it applies to trademark law because of the Lanham Act's identical provision, U.S. Circuit Judge Carlos Lucero wrote for a three-judge panel.

Plaintiff Derma Pen LLC and its attorney Michael Zimmerman of Zimmerman Booher didn't immediately respond to a request for comment. Jefferson Gross of Gross & Rooney, who represented defendants Joel and Sasha Marshall, also didn't immediately respond to a request for comment.

Derma Pen makes microneedles for skin treatments, and won a permanent injunction in Utah federal court in 2017 against Stene Marshall, who had been misusing the "Dermapen" name to sell his own products, to stop him from infringing its trademark.

Derma Pen later moved to hold Marshall's brother and sister-in-law Joel and Sasha Marshall in contempt for acting in concert with him to violate the injunction. They fended off Derma Pen's motion and won more than $190,000 in attorney fees in 2019 after U.S. District Judge David Nuffer in St. George, Utah found the case exceptional under Octane Fitness, which said that an exceptional case is "simply one that stands out from others" in the strength of a party's litigating position or unreasonable manner of litigation.

Nuffer noted in his decision on Derma Pen's claims against Joel and Sasha Marshall that Derma Pen provided no evidence of damages, had abandoned its trademark, and failed to comply with discovery orders, among other things.

Lucero, joined by Circuit Judges Harris Hartz and Allison Eid, decided to add to the "chorus of circuits" that have applied Octane Fitness to trademark cases, citing the relevant laws' identical language, indications in the Octane Fitness ruling that the two provisions should be interpreted the same, and Congress' reference to the Patent Act in enacting the Lanham Act provision.

SCOTUS Won’t Hear IP Attorney Fee Claim

May 17, 2021

A recent Law 360 story by Dani Kass, “’Radical’ IP Atty Fee Claim Doesn’t Strike Justices’ Interest,” reports that the U.S. Supreme Court rejected a patent-holding company's attempt to limit when district court judges can make plaintiffs in frivolous patent cases cover attorney fees.  WPEM LLC's March 16 petition had called U.S. District Judge Rodney Gilstrap's decision to make it pay fees after a failed patent suit a "radical expansion" on the court's powers.  But the justices weren't persuaded, and rejected the petition without further comment.

The petition was rejected at the high court before the opposing party, SOTI Inc., had a chance to file an opposition or waive its right to do so, according to the court's online docket.  WPEM had sued Canada-based SOTI in 2018, accusing it of infringing a patent with a manual for a product called the MobiControl Speed Lockdown.  Judge Gilstrap then dismissed the case, saying a reasonable plaintiff "conducting minimally diligent" research into the case would have found an earlier version of the manual was issued before WPEM's patent.

Looking at WPEM's own evidence, Judge Gilstrap had found it was "clear that WPEM conducted no pre-filing investigation into the validity and enforceability of the asserted patent at all," and he ordered WPEM to cover SOTI's attorney fees.  The Federal Circuit upheld that ruling in December 2020, in a nonprecedential opinion.  Three months later, WPEM told the justices the ruling reflected "a radical expansion of discretion," as Judge Gilstrap was still obligated to presume that its patent was valid.

"The district court determined petitioner's case to be frivolous because the accused technology was prior art, but the district court did not make an invalidity determination, as such would require clear and convincing evidence," the company said in its petition.  WPEM had argued that Judge Gilstrap should have done more to figure out if its patent was also invalid, and said if it wasn't invalid, that would necessitate a new ruling on those fees and whether the case was exceptional.

Federal Circuit Backs $4.2M Fee Award in IP Case

May 11, 2021

A recent Law 360 story by Adam Lidgett, “Fed. Circ. Backs Apple and Cisco’s $4.2M Fee Win in IP Case,” reports that the Federal Circuit has refused to undo a lower court order allowing Apple and Cisco to collect $4.2 million in attorney fees from tech company Straight Path in a patent case, despite arguments that a California federal judge wrongly found the case was exceptional.  In a short order, a three-judge appellate panel affirmed the California federal court's decision handing Cisco $1.9 million and Apple $2.3 million in fees from Straight Path in a dispute over internet phone patents.  The panel gave no reason behind its decision.

The order came just days after oral arguments in which the panel had a hard time believing that U.S. District Judge William Alsup — who delivered the fee award almost a year ago — lacked the discretion to do so.  Judge Alsup declared the case exceptional since Straight Path's infringement claims contradicted a position it had advocated at the Federal Circuit in appealing a Patent Trial and Appeal Board decision.

The fee dispute between the parties has been a lively one, sparking fireworks in the courtroom during a May 2020 hearing when Judge Alsup scolded Apple and Cisco for initially requesting $10 million in fees after beating the suit.  The judge said the tech giants "played games," used "abusive" tactics and were motivated by "greed, G-R-E-E-D."  He required them to resubmit their fee bids and appointed a special master to determine a reasonable amount of fees and costs.  In May of last year, the court awarded Cisco $1.9 million — half of its initial request — while Apple netted $2.3 million of its initial $3.9 million ask.

Straight Path argued that as a result, Federal Circuit precedent required it to reverse Judge Alsup's finding of exceptionality, which is required for a prevailing party in a patent dispute to get fees.  Desmarais LLP attorney Justin P.D. Wilcox, an attorney for Cisco, told Law360 that his team was "pleased with the Federal Circuit's ruling and that the Federal Circuit affirmed Judge Alsup, who down at the district court had ruled that Cisco was entitled to attorneys' fees for the exceptional case that Straight Path had brought."

$4.8M Fee Award to Fenwick in Patent Litigation

March 3, 2021

A recent Law 360 story by Hailey Konnath, “Fenwick Lands $4.6M in Fees in Amazon-PersonalWeb IP Fight, reports that the Fenwick & West LLP team representing Amazon in PersonalWeb's failed patent infringement dispute with the online retail giant will come away with a hefty $4.6 million in attorney fees plus an additional $203,000 in court costs, a California federal judge ruled.  Software developer PersonalWeb Technologies LLC took Amazon and several of its customers to court over its cloud-based storage system, which PersonalWeb claimed infringed several of its patents.  But Amazon prevailed in the dispute, with the court ruling that the claims were barred because they were the same allegations the developer previously brought and lost against Amazon.

U.S. District Judge Beth Labson Freeman approved Amazon's request for attorney fees in October, slamming the litigation as "objectively baseless."  The judge declined to determine the amount at that time, but deemed the case "exceptional."  Amazon had asked for $6.4 million in fees and court costs, a bill that PersonalWeb challenged.  Judge Freeman held that Amazon's attorneys were entitled to $4.62 million of that for their more than 9,260 hours of work on the case.

Notably, the judge reduced Amazon's requested case management fees; its fees for investigating and responding to PersonalWeb's claims; and work on its own suit against PersonalWeb, among a few other areas.  "The time that Amazon spent on the declaratory judgment complaint cannot solely be traced to PersonalWeb's misconduct," Judge Freeman said.

She also chopped about $100,000 from Amazon's court costs request, saying that some of its costs entries are redacted and that it was seeking costs for experts who didn't do work that was within the scope of an "exceptional case."  Judge Freeman rejected PersonalWeb's contention that Amazon's fee request should see a 50% to 75% cut, saying the 75% reduction in particular "borders on ridiculous."  PersonalWeb had argued that Fenwick had engaged in "unreasonable billing," misallocation of resources and bringing too many attorneys to depositions.

But Fenwick's records indicate that only one or two attorneys attended depositions, the judge said.  "And although the court is often skeptical of the value of incessant meetings involving multiple attorneys, PersonalWeb's expert has done nothing more than provide stock criticism of the meeting and conference hours without identifying any specific irregularities," the judge said.

Federal Circuit Asked in Toss Fee Award to Apple, Cisco

October 15, 2020

A recent Law 360 story by Britain Eakin, “Fed. Circ. Asked To Nix Alsup’s Fee Award to Apple, Cisco,” reports that saying its infringement suit against Apple and Cisco was reasonable, a tech company told the Federal Circuit that U.S. District Judge William Alsup wrongly determined the case was exceptional and abused his discretion by awarding them $4.2 million in fees.  In a brief, Straight Path IP Group LLC said the district court departed from an agreed-upon claim construction in granting summary judgment of non-infringement to Apple and Cisco.  It argued that as a result, Federal Circuit precedent requires it to reverse Judge Alsup's finding of exceptionality, which is required for a prevailing party in a patent dispute to get fees.

"Where a plaintiff asserts infringement under a claim construction and the district court subsequently clarifies or modifies that construction in granting summary judgment of non-infringement, this court holds that the case is not exceptional, and that a district court abuses its discretion by granting a motion for attorney's fees," Straight Path said.  In determining whether a case is exceptional, a district court considers things like whether a suit was frivolous or if a party's case was unreasonable.

Straight Path contended that it provided plenty of evidence that its case was reasonable, including a declaration from former U.S. Chief Circuit Judge Paul Michel.  The former judge testified at the district court that Straight Path had "asserted an objectively reasonable view of infringement" under the agreed-upon claim construction, which he said was supported by evidence.  While Judge Alsup called Straight Path's litigation position "a slick maneuver," the company argued in its brief that "Chief Judge Michel's view far more accurately characterized this case."

"Whether ultimately correct or not, Straight Path respectfully submits that if Chief Judge Michel concluded that the litigating position was reasonable, that is strong evidence that the litigating position was reasonable," the brief said.  Straight Path said the appeals court need not probe why Judge Alsup deemed the case an exceptional one "in such brash tones."  "It is enough to recognize that the district court's determination of exceptionality runs afoul of the limits this court has placed on the district court's discretion, and must therefore be reversed," Straight Path said.

The fee dispute between the parties has been a lively one, sparking fireworks in the courtroom during a May 7 hearing when Judge Alsup scolded Apple and Cisco for initially requesting $10 million in fees after beating the suit nearly three years ago.  The judge said the tech giants "played games," used "abusive" tactics and were motivated by "greed, G-R-E-E-D."

He required them to resubmit their fee bids and appointed a special master to determine a reasonable amount of fees and costs. On May 19, the court awarded Cisco $1.9 million — half of its initial request — while Apple netted $2.3 million of its initial $3.9 million ask.  In its brief, Straight Path — now known as SPIP Litigation Group LLC — noted that the claim construction the parties had agreed to was signed off on by the Federal Circuit when Straight Path successfully appealed Patent Trial and Appeal Board decisions invalidating various claims in the patents, which Cisco and others challenged after Straight Path initially sued in 2014.