Federal Circuit Held District Court Abused Discretion in Refusing to Award Attorneys’ Fees

On April 10, 2015, in a precedential opinion, the Federal Circuit Court of Appeals–Judge Moore writing–vacated and remanded U.S. District Court Judge Mariana R. Pfaelzer’s 2014 decision denying fees, finding that it “cannot find a basis to support the court’s refusal to award fees” and instructing the district court to reconsider its earlier decision under the Supreme Court’s recent Octane Fitness case.[1]  The Federal Circuit also found that VIZIO had incurred additional fees caused by Oplus’ litigation misconduct.

This appeal originated from a lawsuit filed by Oplus in 2011, alleging patent infringement against VIZIO and its customer Sears.  After the district court granted summary judgment of noninfringement, VIZIO moved to recover attorneys’ fees pursuant to, inter alia, 35 U.S.C. § 285 and 28 U.S.C. § 1927.  As the Federal Circuit pointed out, “[t]he course of this litigation was anything but ordinary as the district court’s opinion thoughtfully chronicles.”[2]  Some examples documented by the district court and cited by the Federal Circuit in its opinion included “Oplus misus[ing] the discovery process to harass Vizio by ignoring necessary discovery, flouting its own obligations, and repeatedly attempting to obtain damages information to which it was not entitled” and “Oplus us[ing] improper litigation tactics including presenting contradictory expert evidence and infringement contentions as well as misrepresenting legal and factual support.”[3]  Despite finding “the case exceptional under 35 U.S.C. § 285 and that Oplus and its counsel were vexatious litigants and engaged in litigation misconduct[,]” the district court denied VIZIO’s request for fees, noting that “each instance of motion practice occurred according to normal litigation practice . . . [t]here is little reason to believe that significantly more attorney fees or expert fees have been incurred than would have been in the absence of Oplus’s vexatious behavior.”[4]

The Federal Circuit disagreed with the district court’s decision, stating that it “cannot find a basis to support the court’s refusal to award fees.”[5]  The Federal Circuit further found that “[g]iven that the district court found counsel’s behavior ‘inappropriate,’ ‘unprofessional,’ ‘vexatious,’ and ‘harassing,’ it is difficult to imagine how Vizio had not incurred additional expenses defending against such filings . . . . The discovery abuses, unprofessionalism, and changing litigation positions described by the court had to have increased expense and frustration for all concerned.”[6]

The Federal Circuit also noted that the U.S. Supreme Court’s recent Octane Fitness decision, issued three months after the district court’s decision denying VIZIO’s fees, made it easier for judges to award attorneys’ fees to prevailing parties under Section 285 of the Patent Act.[7]  “In light of the court’s fact findings regarding the extent of harassing, unprofessional, and vexatious litigation, the change in legal standard by the Supreme Court, and the lack of sufficient basis to deny fees under Section 285, we vacate and remand for the district court to consider whether and the extent to which fees are warranted.”[8]

This case is the first Federal Circuit opinion providing substantive guidance on the application of the Supreme Court’s 2014 decision in Octane Fitness, where the High Court relaxed the standard for awarding attorney fees under the Patent Act. As the Federal Circuit noted here, once “a court finds litigation misconduct and that a case is exceptional, the court must articulate the reasons for its fee decision.”[9]

VIZIO is represented by Adrian M. Pruetz, Charles C. Koole, Mieke K. Malmberg and Dan Liu of Glaser Weil Fink Howard Avchen & Shapiro LLP.

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[1] Oplus Technologies, Ltd. v. Vizio, Inc., __ F.3d. __, No. 2014-1297, 2015 WL 1600056, at *3-4 (Fed. Cir. Apr. 10, 2015).

[2] Id. at 1.

[3] Id. at 1-2.

[4] Id. at 2.

[5] Id. at 4.

[6] Id. at 3-4.

[7] Id. at 3.

[8] Id. at 4.

[9] Id..

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Dan Liu

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