“The CAFC explained that it does not appear that it has ‘had occasion to consider to what extent section 285 applies to IPR appeals’ and said that the plain meaning of section 285’s reference to “the court”, suggests that fees should only be awarded if they ‘were incurred during, in close relation to, or as a direct result of, judicial proceedings,’ which did not include USPTO proceedings.”
On June 4, the U.S. Court of Appeals for the Federal Circuit (CAFC) denied a request by Almirall for attorney fees incurred for work on an inter partes review (IPR) and for work done in connection with a motion before the Federal Circuit in Amneal Pharmaceuticals v. Almirall.
Background and USPTO Proceedings
Almirall owns U.S. Patent No. 9,161,926 (the ’926 patent) and U.S. Patent No. 9,517,219 (the ’219 patent), which are directed to a prescription topical gel medication used to treat acne. In February and October of 2018, Amneal filed IPR petitions challenging claims of the ’926 patent and the ’219 patent, respectively.
Almirall later filed an infringement suit against Amneal in district court, alleging infringement of the ’219 patent. In response, Amneal filed a counterclaim seeking declaratory judgment that the ‘926 patent was invalid. Shortly thereafter, the parties engaged in settlement discussions. Although Amneal and Almirall had differing accounts of the discussions, they apparently agreed that Almirall offered to enter into a covenant-not-to-sue on the ’926 patent contingent on dismissal of the IPR.
When the parties were unable to reach a settlement agreement, the IPR of the ’926 patent proceeded to trial in June of 2019 and the Patent Trial and Appeal Board (PTAB) determined that the subject claims of the ’926 patent were valid. Amneal appealed to the Federal Circuit in October 2019 and then filed a motion to voluntarily dismiss its appeal in March 2020. Almirall agreed that the appeal should be dismissed but argued that “Amneal litigated this matter in an unreasonable manner by continuing to litigate the IPR after the covenant-not-to-sue was offered”. In particular, Almirall sought fees and costs incurred between the date settlement negotiations were terminated and the date of trial in the underlying IPR, “along with the fees and costs for filing the opposition to this motion.”
Section 285 Does Not Pertain to USPTO Proceedings
Noting that section 285 of the Patent Act states that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party”, the CAFC explained that it does not appear that it has “had occasion to consider to what extent section 285 applies to IPR appeals.” The CAFC further noted that it is well known that the CAFC may award attorney fees for work done in district court proceedings because in that context a case can be viewed as an “‘inclusive whole’ rather than as a piecemeal process when analyzing fee-shifting under § 285.” The CAFC also explained that its predecessor court, i.e. the Court of Customs and Patent Appeals, refused to read section 285 as pertaining to USPTO administrative proceedings.
The CAFC then turned to the plain meaning of section 285’s reference to “the court”, which suggests that fees should only be awarded if they “were incurred during, in close relation to, or as a direct result of, judicial proceedings”. According to the CAFC, that did not include USPTO proceedings. The CAFC explained that the cases cited by Almirall, including Sullivan v. Hudson, were fully consistent with its conclusion because Sullivan only described a “narrow class of qualifying [administrative] proceedings” wherein fees could be awarded because the proceedings were “intimately tied to the resolution of the judicial action”, such as “where ‘a suit has been brought in a court,’ and where ‘a formal complaint within the jurisdiction of a court of law’ remains pending and depends for its resolution upon the outcome of the administrative proceedings.”
Citing PPG Indus., Inc. v. Celanese Polymer Specialties Co., the CAFC explained that the court allowed for the award of fees where Patent Office “proceedings substituted for the district court litigation on all issues considered by the PTO and the Board, but only with respect to fees incurred after the filing of a civil action.” The CAFC further explained that in PPG the USPTO “proceedings were found by the district court to be intimately tied to the resolution of that action.” The CAFC reasoned that the present case did not consist of USPTO proceedings that were “intimately tied” to the resolution of the district court action and stated in a footnote that “the Board has its own means for regulating litigation misconduct”, including the imposition of attorney fees.
In conclusion, the CAFC noted that Almirall impermissibly requested attorney fees incurred at the USPTO prior to the filing of the suit with the CAFC. Further, Almirall’s reasoning for requesting attorney fees, i.e. that Amneal acted unreasonably, pertained entirely to conduct during the USPTO proceedings, so awarding attorney fees in connection with the preparation of the motion before the CAFC was also improper. Thus, the CAFC denied Almirall’s request for fees and granted the motion to dismiss.
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