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NPEs Under Fire for Attorney Fees

A few of recent cases of interest to patent owners deal with attorney’s fees under 35 USC § 285. First, Rothschild Connected Devices is notable because the CAFC instructed the trial court to order payment of fees despite the fact that the patent owner withdrew its complaint within the 21-day safe harbor period under Rule 11. Judge Payne’s decision stressed what may litigants would expect, “Plaintiff’s decision to voluntarily withdraw its complaint within the safe harbor period is the type of reasonable conduct Rule 11 is designed to encourage.” However, as I explained in a post on IPWire:

the CAFC chastised [Rohtschild’s] attorney for submitting unsupported, conclusory declarations to the district court in support of their arguments on pre-filing diligence.  While the CAFC’s written opinion mentions this multiple times, an exchange between Rothschild’s counsel and the CAFC panel during oral argument is far more compelling. Rothschild was told, “The statements in your affidavit lack foundation. You’re telling me you [reviewed these prior art references]. I don’t see it in your affidavit. Does the record contain any evidence demonstrating that you did what you say you did?”

In fact, the record did not and Rothschild lacked critical evidentiary basis, to which the CAFC paid particular attention.

In another case, Acacia subsidiary Adjustacam was criticized by the CAFC for their aggressive litigation posture in the face of a claim construction that putatively ended any hope of successfully proving infringement. Here, again, the district court justified Adjustacam’s position because, in its view, credible arguments for infringement remained despite the adverse claim construction. Unfortunately, the CAFC ruled that it was improper for the lower court to rely on this position since it was never actually advanced by Adjustacam itself.

In an IPWire post, I compared this case with a non-precedential opinion denying fees in Parallel Networks litigation (a campaign that involved over 100 defendants) to reiterate that there no bright-line rule that singles out low litigation settlements as an automatic trigger for fee shifting. In fact, there are many reasons why a litigation settlement might be low, and fee-shifting decisions can and should continue to rest on the totality of the circumstances, and not elevate any one factor above the others.

Please visit these IPWire posts (here and here) for a more detailed breakdown and links to the decisions.



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