CAFC Affirms Attorney Fees Awarded Under ‘Holistic and Equitable’ Evaluation of Case

Bayer CropScience AG v. Dow AgroSciences LLC, (Fed. Cir. Mar. 17, 2017) (Before Newman, Chen, and Stoll, J.) (Opinion for the court, Stoll, J.)

Bayer appealed the district court’s award of attorney fees under 35 U.S.C. § 285 to Dow.  The district court awarded fees because it found that the case stood out from others, and was “exceptional” under the statute.

Bayer alleged that Dow infringed certain of its patents for soybeans genetically engineered to tolerate herbicide. Bayer licensed the patents to M.S. Technologies, LLC (“MS Tech”), which sublicensed them to Dow. Bayer alleged that the license was limited to non-commercial exploitation, e.g. in-house research, and that no rights to make, use, and sell a soybean product covered by the patents had been transferred to Dow. Dow answered that the MS Tech sublicense did transfer such rights, and was an affirmative defense. Additionally, the license specified that it was to be construed according to the laws of England.

MS Tech prevailed on summary judgment. The district court rejected language in the license that arguably supported Bayer, by acknowledging commercial rights granted to a third party that Bayer argued were exclusive. Bayer’s own witnesses testified that no one would enter into a non-commercial license, as Bayer argued at trial, nor did Bayer really do so.

Following an appeal of the summary judgment, the district court awarded Dow attorney fees under 35 U.S.C. § 285. The court emphasized that “Bayer’s own witnesses as well as key documents contradicted Bayer’s contorted reading of the contract” and its reading of the contract was “objectively unreasonable.”

The Federal Circuit reviewed the district court’s opinion for abuse of discretion pursuant to Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). From the totality of the circumstances, including its interpretation of English law, the Court affirmed the award of fees. It relied on the district court’s thorough opinion “detailing the reasons why Bayer’s positions on the merits and litigation tactics coalesced in making this case, in [the district court’s] judgment, exceptional.”

The Court considered each of Bayer’s arguments in turn. First, Bayer argued that the district court erred because “Bayer had an objectively reasonable case on the merits.”  However, the Supreme Court rejected such a “rigid approach” and “holding that whether a party’s merits position was objectively reasonable is not dispositive under § 285.” The Supreme Court instructs a “holistic and equitable approach in which a district court may base its discretionary decision on other factors, including the litigant’s unreasonableness in litigating the case, subjective bad faith, frivolousness, motivation, and ‘the need in particular circumstances to advance considerations of compensation and deterrence.’”  Next, Bayer argued that the district court erred because one of Bayer’s experts, a former Justice of the Supreme Court of the United Kingdom, supported Bayer’s interpretation of the MS Tech license.  However, Bayer’s English-contract-law expert admitted that his analysis was incomplete because he was unaware of the factual matrix of the case. Finally, Bayer sought reweighing of evidence in a manner inconsistent with precedent and other factual arguments that the Court found unpersuasive.

In conclusion, the Court held the district court did not abuse its discretion in determining that, under the totality of circumstances, this was an exceptional case, and affirmed the district court’s grant of § 285 fees.

The Supreme Court’s totality of the circumstances analysis for fees under § 285 is a “holistic and equitable approach in which a district court may base its discretionary decision on other factors, including the litigant’s unreasonableness in litigating the case, subjective bad faith, frivolousness, motivation, and ‘the need in particular circumstances to advance considerations of compensation and deterrence.’” 

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