Understanding attorneys’ fees awards in patent cases

In a recent Federal Circuit Opinion, the Court performed a detailed analysis of when a litigant is entitled to a fee award in a patent infringement case under section 285.  In other words, when will a litigants claim or defense of a patent infringement actions amount to exceptional misconduct to justify a fee award. 

In summary, the Court requires both an objective and subjective analysis of a litigant’s conduct to determine, if the case warrants an exceptional finding to justify a fee award.  In this case, the Federal Circuit reversed the trial court’s fee award based on its determination that Old Reliable’s (Patentee) assertions regarding validity of the ‘950 patent were not objectively unreasonable in light of the inventor’s statements that a prior art reference did the “same thing” as the commercial embodiment of the ‘950 patent. 

For a prior art reference to anticipate a patent claim, it must expressly or inherently teach all the limitations of the claim–not merely provide another invention that does the same thing.  Since, the prior art reference did not teach the structural limitations contained in claim 1 of the ‘950 patent, it Old Reliable did not objectively commit misconduct by continuing to assert validity and infringement of the ‘950 patent in the face of the inventor’s objections regarding the invention doing the “same thing” as the prior art reference.   

Nor, was it appropriate to find exceptional misconduct based on statements relating to equivalency of the felt facing with the OSB insulating material in the V2 reference, because it does not become the main part of the insulating material.  Moreover, the USPTO on reexamination sustained the validity of the ‘950 Patent in spite of the V2 reference, thus, the patentee’s arguments relating to main part of the insulating material (felt facing) layer being different from the non-integral (main part) of the insulating material (OSB layer) were not objectively unreasonable. 

The Federal Circuit went on to hold that a subjective inquiry of misconduct warranting an exceptional finding was unnecessary.  Thus, both objective and subjective misconduct is required and to assert misconduct based on invalidity premised on anticipation a thourough consideration of all limitations must be considered.  See Old Reliable 

Attorneys’ fees awards in patent cases can be significant and understanding the parameters of an exceptional misconduct determination are crucial to arguments relating to infringement, invalidity, non-infringement and variety of business and litigation matters.

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