Wedgetail v. Huddleston Deluxe (CAFC 2009-1045) precedential

35 U.S.C. § 285 provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." This provision is an exception to the so-called "American Rule":

Under the American Rule each party bears its own attorney fees and expenses. As an exception to that rule, courts have exercised their inherent equitable power to make whole a party injured by an egregious abuse of the judicial process. . . . Congress enacted Section 285 to codify in patent cases the "bad faith" equitable exception to the American Rule. . . . Recognizing the good faith/bad faith distinction, Congress expressly limited such awards to "exceptional cases."

Sun-Tek Indus., Inc. v. Kennedy Sky Lites, Inc., 929 F.2d 676, 678 (Fed. Cir. 1991) (internal quotation marks and citations omitted). "The determination of whether a case is exceptional and, thus, eligible for an award of attorney fees under § 285 is a two-step process. First, the district court must determine whether a case is exceptional, a factual determination reviewed for clear error. After determining that a case is exceptional, the district court must determine whether attorney fees are appropriate, a determination that we review for an abuse of discretion.

Exceptional cases are the fruits of 'bad juju,' which is pig-Latin for 'nasty doings,' or, as the religiously inclined may have it, exhibition of "bad faith."

"[T]he exceptional nature of the case must be established by clear and convincing evidence." Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048, 1050 (Fed. Cir. 1992). As this court has consistently found, however, only a limited universe of circumstances warrant a finding of exceptionality in a patent case: "inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement." Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed. Cir. 2002); see also, e.g., Brasseler, U.S.A. I, L.P., v. Stryker Sales Corp., 267 F.3d 1370, 1380 (Fed. Cir. 2001) (same); id. ("Exceptional cases are normally those involving bad faith litigation or those involving inequitable conduct by the patentee in procuring the patent."); Hoffman-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000) ("Among the types of conduct which can form a basis for finding a case exceptional are willful infringement, inequitable conduct before the P.T.O., misconduct during litigation, vexatious or unjustified litigation, and frivolous suit. Such conduct must be supported by clear and convincing evidence." (quoting Beckman Instruments, Inc., v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989))); Multiform Desiccants, Inc. v. Medzam, Ltd., 133 F.3d 1473, 1481-82 (Fed. Cir. 1998) ("Findings of exceptional case have been based on a variety of factors; for example, willful or intentional infringement, inequitable conduct before the Patent and Trademark Office, vexatious or unjustified litigation, or other misfeasant behavior."); Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1579 (Fed. Cir. 1996) ("Bad faith litigation, willful infringement, or inequitable conduct are among the circumstances which may make a case exceptional."); Cambridge Prods., 962 F.2d at 1050-51 ("In the case of awards to prevailing accused infringers . . . 'exceptional cases' are normally those of bad faith litigation or those involving fraud or inequitable conduct by the patentee in procuring the patent."); Bayer Aktiengesellschaft v. Duphar Int'l Research B.V., 738 F.2d 1237, 1242 (Fed. Cir. 1984) ("In awarding attorney fees to a prevailing accused infringer, such exceptional circumstances include, inter alia, inequitable conduct during prosecution of a patent, misconduct during litigation, vexatious or unjustified litigation, or a frivolous suit.").

Attorneys fees to a defendant are justified "only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless."

"[M]indful of the limited circumstances in which an award of attorney fees is appropriate," Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1329 (Fed. Cir. 2003), this court has rejected an "expansive reading of § 285," which would permit findings of exceptionality in circumstances other than those listed above, id., and (absent litigation misconduct or inequitable conduct before the PTO) has permitted the award of attorney fees to a prevailing accused infringer "only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless," Brooks Furniture Mfg., Inc. v. Dutailer Int'l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005) (emphasis added).

Because of the high level of deference owed to district courts on this issue and the limited circumstances that could qualify as exceptional, this court has not imposed a blanket requirement that a district court provide its reasoning in attorney fee cases.

Huddleston's attorney(s) missed the boat by not filing a motion with the district court for attorneys fees within 14 days after judgment.

Despite these requirements, Huddleston did not file a motion for attorney fees with the district court, but instead merely requested that the district court set a briefing schedule for such a motion. Nor did Huddleston state, even in its opposition papers, the amount of attorney fees sought. Accordingly, Huddleston's claim would appear to fail procedurally. See IPXL Holdings, 430 F.3d at 1386 (reversing award of attorney fees where motion for fees was not timely filed with the district court).

Simply put, Huddleston has failed to demonstrate either that the district court clearly erred in failing to find this case exceptional or that Huddleston was harmed by the district court's failure to entertain a motion for attorney fees. A remand is, therefore, unwarranted.

Huddleston out of luck and out of pocket. Affirmed.