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Category: PTAB

More Doubt if ’Exceptional’ Patent Fees Include PTAB Work

September 2, 2021

A recent Bloomberg Law story by Matthew Bultman, “Doubts Deepen if ‘Exceptional’ Patent Fees Include PTAB Work,” reports that companies that win an “exceptional” patent lawsuit can be reimbursed for their attorneys’ fees—but they can’t count on recouping money spent fighting at the Patent Trial and Appeal Board.  Patent law allows the winning side to collect fees from the losing side when a district court judge finds that the lawsuit is “exceptional,” as outlined in Section 285 of the Patent Act.  Courts are split on how the law applies to PTAB expenses.

Some courts have found the fees can include money companies spent challenging a patent at the PTAB after being sued.  Recently, however, other judges, including a magistrate judge in Delaware, have indicated those are likely sunk costs.  The U.S. Court of Appeals for the Federal Circuit has yet to provide a definitive answer, but “it is pointing in the direction, perhaps, that awards are not going to be given for proceedings that are outside of the district court case,” Akin Gump Strauss Hauer & Feld LLP attorney Rubén Muñoz said.

While PTAB reviews are a less expensive way to challenge a patent’s validity, the proceedings can still cost hundreds of thousands of dollars. In the Delaware case, a judge said PTAB fees may account for a significant portion of the $1.1 million and $1.5 million Dish Network LLC and Sirius XM Radio Inc. spent in the litigation, respectively.  For smaller businesses, in particular, that’s not an insignificant expense.  A bar on recovering those fees could be a consideration in their litigation strategies.

‘Optional’ Proceedings

Questions about whether Section 285 allows companies to recover costs at the patent office predate the 2011 America Invents Act, the law that created the popular inter partes reviews at the PTAB.  In 1988, the Federal Circuit ruled Celanese Polymer Specialties Co. could recoup fees spent opposing PPG Industries Inc.’s reissue patent applications at the agency.  Celanese had been sued for infringement, and the court said its participation in the agency proceeding wasn’t optional.  The court also said the patent office proceeding “substituted for the district court litigation” on certain issues.

How the Federal Circuit views “the relevance of that case may drive its ultimate decision on whether or not fees can be awarded for PTAB work,” said Sandip Patel, an attorney at Marshall Gerstein & Borun LLP.  Without deciding the question, the Federal Circuit said last year in the Dish and Sirius cases it saw “no basis in the Patent Act for awarding fees under § 285 for work incurred in inter partes review proceedings that the Appellants voluntarily undertook.”

While the statement wasn’t binding, Magistrate Judge Jennifer Hall in the District of Delaware agreed. In a recent report, the judge emphasized Dish and Sirius weren’t required to challenge Dragon Intellectual Property LLC’s patent at the PTAB, but rather that they chose to do so.

Some attorneys say the realities of patent litigation mean PTAB reviews aren’t that optional.  Most of the patents challenged at the PTAB are brought by a defendant that has been sued in district court on the patent, a 2016 study found.  “Because most IPRs are filed because there’s a parallel district court action and because it’s common sense to have an inexpensive determination of validity, rather than a ridiculously expensive evaluation of it, it’s not so voluntary,” Patel said.  “It’s practical,” Patel said, “and that’s the way people proceed.  That’s the way business is conducted in patent litigation after the AIA passed.”

Substituting Work

Some district courts have been more willing to allow defendants to recover fees spent at the patent office.  A judge in the Eastern District of Texas, for example, said in 2017 that My Health Inc. owed companies almost $60,000 for work on an IPR petition because the “defendants never would have sought IPR if they had not been sued for allegedly infringing.”  In another case involving Southwest Airlines Co., a judge in the Southern District of California said the airline could recover fees for reexamination proceedings at the patent office because the proceeding “essentially substituted for work that would otherwise have been done before this court.”

Hall acknowledged the My Health and Southwest cases, but said their reasoning wasn’t persuasive.  While Dish and Sirius argued they were effectively being punished for choosing the more “efficient route,” Hall said to take it up with Congress.  “Federal courts don’t make policy,” Hall wrote, recommending the companies’ fee award be limited to what they spent in the district court.

Dish and Sirius XM have objected to Hall’s report, which will be reviewed by a district court judge.  The companies argue, among other things, that inter partes reviews aren’t optional because defendants sued for infringement have one year to file for inter partes review - “a non-extendable deadline to act.”

Revisiting PPG

Questions about PTAB fees have put a spotlight on the Federal Circuit’s decision in PPG. Some legal scholars say the court took a wrong turn in its decision, and skipped an important step by looking at whether the proceedings were optional.  Megan La Belle, a law professor at Catholic University of America who studied the subject, said the U.S. Supreme Court has established a clear framework for recovering fees for work in administrative tribunals.

The first step is to look at the language of the relevant statute.  Section 285 states that courts “in exceptional cases may award reasonable attorney fees to the prevailing party.”  Administrative proceedings, like PTAB reviews, generally aren’t viewed as “cases,” La Belle said.  “You only get to that second step if there’s an argument that administrative proceedings are captured by the language of the statute,” La Belle said.  “I think clearly they’re not under 285.”

Another avenue for companies could be to pursue fees directly at the patent office.  The PTAB has the power to sanction a party for misconduct at the board, which can include frivolous arguments.  But La Belle suggested in a 2016 article that Congress pass legislation allowing for recovery of PTAB fees in exceptional cases in district court.  “From a policy perspective, to me it seems obvious that the Congress that passed the AIA, if they thought about this and if they were asked the question, ‘Can you recover fees for AIA proceedings?,’ I don’t see why they would ever say ‘No,’” La Belle 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.

PTAB: Inability to Pay Fees No Reason to Deny IPR

September 20, 2020

A recent Law 360 story by Britain Eakin, “PTAB Says Inability To Pay Legal Fees No Reason To Deny IPR,” reports that the Patent Trial and Appeal Board has agreed to review Dareltech LLC's "selfie stick" patent, rejecting the company's argument that since it can't afford to pay for counsel, Microsoft's inter partes review challenge should be denied.  The decision instituting IPR, the board said Dareltech's inability to pay to defend its patent doesn't qualify as a reason for the board to exercise its discretion to deny review, as the company had argued.

"Patent owner's current financial circumstances are not sufficient reason to preclude petitioner from pursuing its statutory rights to challenge the patentability of the claims," the decision said.  Dareltech had asserted that its lead counsel doesn't participate in post-grant matters, and that its backup counsel had been representing the company in other matters pro bono, but is unable to devote the time and resources to this IPR.

Additionally, Dareltech argued that it incurred expenses to prosecute the patent family, develop and commercialize the claimed invention without significant revenue and defend related IPRs, and so the board should deny review.  But the board was unmoved.  The PTAB also shot down Dareltech's argument that the board should deny the petition because it has no district court dispute with Microsoft, which it contends is acting as a proxy for Chinese technology company Xiaomi.

 

 

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA