Next week is argument week, and three cases slated to be argued attracted amicus briefs. The first is Dragon Intellectual Property v. Dish Network LLC, a patent case that drew interest from the Electronic Frontier Foundation on the issue of the district court’s prevailing party determination, a prerequisite for attorney fee awards. Here is our argument preview.
Dish Network LLC and Sirius XM Radio Inc. filed the appeal. In their joint opening brief, they present three questions:
- “Whether the district court erred as a matter of law in determining that defendants who prevailed on two grounds—by obtaining (1) a final judgment based on a stipulation of noninfringement, and (2) a final decision of unpatentability before the PTAB, which this Court affirmed—were not a ‘prevailing party’ under 35 U.S.C. § 285 solely because the defendants obtained one form of relief in a different forum than the district court.”
- “Whether fees awarded for ‘exceptional cases’ under 35 U.S.C. § 285 may include fees incurred in related proceedings, including parallel post-grant proceedings under the AIA and appeals.”
- “Whether fees for ‘exceptional cases’ under 35 U.S.C. § 285 may be awarded against counsel of record as jointly and severally liable with a party.”
On the first issue, the appellants contend that “[o]btaining final judgment of noninfringement before any intervening act of mootness [as a result of prevailing at the PTAB] satisfies the prevailing party requirement.” On the second, they argue that “the Court should clarify that, in determining § 285 fee awards, district courts have discretion to determine whether fees incurred for ancillary proceedings, such as PTAB actions or Federal Circuit appeals, are eligible for inclusion.” And on the third, they suggest that “the Court should clarify that district courts also have discretion to assess § 285 fees against attorneys as jointly and severally liable with the parties they represent, when the circumstances so warrant.”
In response, the appellees (Dragon Intellectual Property and its attorneys and law firm) argue that “[t]his case presents an occasion for the straightforward application of the settled rules that govern situations in which a case becomes moot during the appellate process.” They contend that the settled rules reflect “the simple idea that it is not appropriate to allow the judgment of a district court, a ‘preliminary’ resolution of a dispute in the statutory scheme, to result in ‘any legal consequences’ when review of the judgment is prevented by mootness not caused by the appellant.” Moreover, they say, “[s]uccess before the Patent Trial and Appeal Board does not make a litigant a ‘prevailing party’ under section 285” and “[t]he appellants’ assertion that this Court has decided otherwise is incorrect.” Likewise, “[t]he appellants’ suggestion that lawyers are subject to section 285 is also mistaken.”
In their reply brief, Dish Network and Sirius XM Radio argue that “Dragon ignores that Appellants were prevailing parties for two reasons: (1) this Court upheld the PTAB’s determination that all asserted claims were invalid; and (2) the district court adjudged the patent not infringed.” They maintain that “Dragon attacks [only] the second basis for Appellants’ prevailing-party status under § 285” and “sidesteps the fact that its patent has been found invalid by this Court.” Moreover, according to their brief, “[t]he law is . . . replete with examples where courts have found that parties facing mootness or vacatur still prevailed, and where neither mootness nor vacatur deprived district courts of jurisdiction to resolve ancillary issues, such as granting attorneys’ fees under § 285.”
As mentioned, the Electronic Frontier Foundation filed an amicus brief in the case. In it, the EFF argues that “[t]he District Court’s decision is as contrary to law as it is to common sense” because “[w]hen one party successfully proves non-infringement in district court and invalidity at the Patent Office, it is the prevailing party under 35 U.S.C. § 285 as long as its adversary wins no relief from either judgment on appeal.” The EFF goes on to say that, “[i]f approved, the approach taken here will erode the AIA’s structural mechanisms for encouraging PTAB challenges and discouraging unnecessary district court litigation.” And, it adds, “[f]ee awards must remain available in cases mooted due to invalidity to ensure adequate incentives for defensive litigation remain.” That is so, the EFF says, because, “[o]therwise, even those defendants who choose not to initiate post-grant review will face greater risk because of the possibility that another party’s appeal will vitiate the significance of relief already won.”
Notably, after all the briefs were submitted, the appellants sent a letter to the court notifying it about the relevance of the precedential opinion the court issued in B.E. Technology, L.L.C. v. Facebook, Inc. According to the appellants, in that opinion “the Court confirmed that a party who obtains cancellation of claims before the PTAB, thereby mooting the underlying litigation, prevails by altering the parties’ legal relationship.” In response, Dragon and its attorneys argued that the opinion “does not overcome the controlling authority requiring affirmance, and does not support an argument that a party can obtain ‘prevailing party’ status based on success in another forum.” They also argue that the conclusion “that the mootness dismissal of a district court proceeding made Facebook a prevailing party . . . . is inconsistent with” Supreme Court authority on point.
The primary dispute in this case regarding a prevailing party determination is confined to what might be thought of as a rather unique circumstance: where an alleged patent infringer’s success in litigation becomes moot given cancellation of the underlying patent in post-issuance proceedings in front of the PTAB. But given the prevalence of parallel cancellation proceedings and the high affirmance rate of PTAB judgments canceling patent claims, this case (or B.E. Technology, if the outcome here is indeed controlled by that decision) may have more significant impact than one might initially think.
As with other cases including amicus briefs, we will continue to follow this case, update its case page (which you can find in our list of important panel cases labeled Other Cases) with the relevant filings, and post updates as appropriate.