Defendant is Prevailing Party for Awarding Attorney’s Fees if Case Dismissed with Prejudice

Raniere v. Microsoft Corp., Nos. 2017-1400, 2017-1401, 2018 U.S. App. LEXIS 9775 (Fed. Cir. Apr. 18, 2018) (Before Lourie, O’Malley, and Wallach, J.) (Opinion for the court, O’Malley, J.).

The Federal Circuit affirmed a district court’s award of attorney’s fees to Appellees Microsoft and AT&T (collectively, “Microsoft”). Raniere sued Microsoft for patent infringement, claiming to be the owner of the asserted patents. However, Raniere previously assigned his rights in the patents to a third party, which dissolved before suit. Raniere argued that the rights had been transferred back to him, but was unable to provide any proof. Microsoft filed a motion to dismiss for lack of standing, and the district court dismissed the case with prejudice.

The district court awarded attorney’s fees to Microsoft pursuant to 35 U.S.C. § 285, which allows fees to be awarded to the prevailing party in “exceptional cases.” The district court found that Microsoft was a prevailing party under § 285 because “[a] dismissal with prejudice alters the relationship between the parties and is sufficient to confer prevailing party status for purposes of considering a claim for fees under section 285.” The district court also found that the case was exceptional because Raniere engaged in a pattern of bad faith conduct that demonstrated the case was litigated in an “unreasonable manner.”

On appeal, the Federal Circuit found that that the district court did not abuse its discretion in its “prevailing party” analysis. Rather, Microsoft “won” when the district court dismissed Raniere’s case with prejudice, which prevented Raniere from “achieving a material alteration of the relationship between [the parties].” When the district court’s dismissed Raniere’s case with prejudice, it gave Microsoft the full relief to which it was legally entitled, and it, therefore, was a prevailing party.

The Federal Circuit also affirmed that the case was exceptional under § 285 because the court properly examined the totality of the circumstances in making its determination that Raniere litigated the case in an unreasonable manner.

Take Away

If an action is dismissed with prejudice for lack of standing, the defendant will be considered the prevailing party and attorney’s fees can be awarded under 35 U.S.C. § 285.

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Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

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Discuss this

There are currently 8 Comments comments.

  1. Tesia Thomas May 1, 2018 12:32 pm

    Wow.
    The Federal Circuit awards damages to the plaintiff for lack of standing.
    And the PTAB damages the defendant despite any plaintiff’s lack of standing.

    No one is consistent…except consistently punishing anyone who tries to defend their franchise.

  2. Tesia Thomas May 1, 2018 12:58 pm

    Wow.
    The Federal Circuit awards damages to the plaintiff for lack of standing.
    And the PTAB damages the defendant despite any plaintiff’s lack of standing.

    No one is consistent…except consistently punishing anyone who tries to defend their franchise.

  3. Anon May 1, 2018 6:08 pm

    Tesia @ 2,

    That difference is not as “sinister” as you may think.

    The fact of the matter is that the difference branches of the government have “built-in” differences as to “standing.”

    The Executive branch – of which the PTAB is a part of – has no legal requirement for standing. Such just does not exist.

    The Judicial branch – of which the Federal Circuit is a part of – most definitely has legal requirements for standing (and I would add and stress: this requirement is for BOTH parties – and I stress this as the fact that Congress set up the IPR system that involves both different forums cannot legislate away this standing requirement for the judicial branch.

    Which is ALSO part and parcel as to why the “flavor” of property that patents are “designated” matters.

    Certain flavors may enjoy MORE Constitutional protections (based at least on this notion of the separation of powers and the different branches of the government, and the respective limits of power to which those branches may employ themselves).

  4. Tesia Thomas May 1, 2018 6:14 pm

    I never said it was sinister. I said it was inconsistent.
    Inconsistent =/= sinister

    To suggest that the Fed. Circuit and PTAB are joining forces to screw over inventors was not my intent.
    I was just pointing out how inventors are harmed both ways – having standing and not having standing – because it’s an inconsistent view from the perspective of the patent owner that’s trying to sue for infringement.

  5. Tesia Thomas May 1, 2018 6:18 pm

    franchise owner/designee*

  6. Tesia Thomas May 1, 2018 6:39 pm

    Note:
    I do agree that if the guy couldn’t prove the rights were his then he didn’t have them. I think the decision is fine.

    I was speaking of context with everything else going on in suing for infringement/defending patent franchises.

    It just opens up the fact that this is absurd in light of what the Executive branch allows to get to the same conclusion of no infringement.

    The facts are, from the inventors perspective:
    Whether invalid IP/IF (PTAB) or IP/IF not properly owned by the plaintiff (Fed. Circuit), that means you lose your case for infringement.

    And the fact that you can lose your case in one by not having standing and in the other by the infringing party not having standing is just… irritating and inconsistent.

    It’s not a sinister scheme because the Fed. Circuit has always been there and been that way. It’s just another juxtaposition that illustrates the corruption of PTAB.

  7. Anon May 1, 2018 7:06 pm

    Tesia – my apologies for over-reading your post.

    If all that you were pointing out was that the different branches are not consistent one to another, then you have pointed to something that was built that way by design.

    We are not supposed to have “consistency” of the nature that you are looking at here.

    As to “To suggest that the Fed. Circuit and PTAB are joining forces to screw over inventors was not my intent.” – and neither was it mine – and my post here should not be taken as such. The different forums simply have different ground rules – as has been well recognized in law.

    I “get” that you may want this to be “simpler,” and to that I would reply with one of my favorite Einstein quotes:

    Everything should be made as simple as possible, but not simpler.

  8. Tesia Thomas May 1, 2018 7:11 pm

    @Anon,

    I totally understand. I am completely angry with the US govt.
    But, I pretty much always say exactly what I mean and so if I wanted to call them all evil then I would’ve. haha

    It’s not even the simplicity; it’s that anyone can invalidate a patent but not everyone can defend it…even if you *want* to defend it.

    Get 100 people to gang up on an IPR…but only one entity can pay thousands, millions, quadrillions to defend the IP in an actual court (and maybe even the PTAB too – can’t only the inventor contest the IPR?)

    It could be 1 VS. 1 Million