Just afore the holidays, the Supreme Cloister and Federal Circuit issued three opinions accompanying to the accolade of advocate fees in apparent cases. The decisions affirm that the “American Rule”—under which anniversary ancillary in a case pays its own advocate fees—remains the norm, unless a approved or acknowledged barring applies. These opinions additionally affirm that appellate courts will abide to anxiously analyze these fee awards, but will additionally advocate them back appropriate.
Litigation in the United States frequently operates beneath the “American Rule,” beneath which anniversary affair to a case typically—win, lose, or draw—pays its own advocate fees, unless a approved or acknowledged barring applies. See, e.g., Hardt v. Reliance Accepted Life Ins. Co., 560 U.S. 242 (2010). This access is in adverse to the “English Rule,” beneath which the accident affair by absence pays the added party’s acknowledged fees.
Three Supreme Cloister and Federal Circuit opinions issued in December abode assertive exceptions to the American Rule actualization in the Apparent Act: 35 U.S.C. §145 and 35 U.S.C. §285. In Peter v. NantKwest, the Supreme Cloister addressed 35 U.S.C. §145, which provides that apparent applicants who are annoyed with a accommodation of the Apparent Balloon and Address Board (PTAB) to adios a apparent appliance may claiming that accommodation in a federal commune court, and “[a]ll the costs of the affairs shall be paid by the applicant.” Here, the U.S. Patent and Trademark Appointment (USPTO) prevailed in a case brought beneath this section, and for the aboriginal time back the accouterment was allowable 170 years ago, approved to balance its advocate fees. See 589 U.S. __, 140 S. Ct. 365 (2019).
Separately, two Federal Circuit decisions in December addressed addition approved barring to the American Rule, 35 U.S.C. §285, which provides that a “court in aberrant cases may accolade reasonable advocate fees to the prevailing party.” See Blackbird Tech LLC v. Health In Motion LLC, 944 F.3d 910 (Fed. Cir. 2019); see additionally Bookish Ventures I LLC v. Trend Micro Inc., 944 F.3d 1380 (Fed. Cir. 2019).
These decisions accommodate advice on commune cloister awards of fees in apparent cases, and additionally on appellate cloister assay of such awards.
On Dec. 11, 2019, the Supreme Cloister absitively NantKwest, 140 S. Ct. 365, and reaffirmed the American Rule. In NantKwest, an appliance for apparent was alone by the USPTO, and the bounce was afterwards affirmed by the PTAB. In response, NantKwest filed a commune cloister case adjoin the USPTO beneath §145 to claiming the decision. The USPTO prevailed on a motion for arbitrary judgment, and the Federal Circuit affirmed.
The USPTO afresh requested its advocate fees beneath §145—the actual aboriginal time it had fabricated such a address in the 170-year history of this provision—seeking agreement for the pro rata salaries of USPTO attorneys who formed on the case.
The commune cloister denied the address for fees, and a console of the Federal Circuit reversed. See id. at 370. The en banc Federal Circuit afresh reheard the case sua sponte and alone the USPTO’s address for advocate fees, captivation that the American Rule anticipation activated to §145, and that the accouterment in the statute which directed “[a]ll the costs of the affairs shall be paid by the applicant” was not a abundantly “specific and explicit” charge from Congress to additionally accreditation alive advocate fees (as adjoin to added items about declared as “expenses,” such as abroad costs like artful costs and able attestant fees). Id.
The Supreme Cloister absolutely affirmed the abnegation of fees. The cloister aboriginal assured the American Rule applies to all statutes, alike those like §145 that do not absolutely accolade advocate fees to prevailing parties. See id. at 371. The cloister afresh looked to the approved accent and assured that the advertence to “expenses” in the statute did not accommodate a abundantly “specific and explicit” aldermanic charge to affected the presumption. Id. at 372.
The cloister added begin that the appellation “expenses of the proceedings” in §145, agnate to the appellation “expenses of the litigation,” would not accept been frequently accepted to accommodate advocate fees. Id. Finally, the cloister assured that back Congress intends to about-face fees, for archetype in 35 U.S.C. §285, it has declared so absolutely in the provision. See id. at 373. Ultimately, the cloister captivated fast to the American Rule presumption, and accepted that exceptions administer alone area Congress manifests a bright absorbed to aberrate from that presumption. See id. at 374.
On Dec. 16, the Federal Circuit issued its assessment in Blackbird, 944 F.3d 910, which provides a abundant assay of the appliance of §285.
Patent holder Blackbird Tech LLC filed a clothing for apparent contravention and, afterwards added than 19 months of litigation, voluntarily absolved its clothing with ageism and accomplished a agreement not to sue, aloof afore the defendants’ motion for arbitrary acumen was to be decided, and after advice the defendants beforehand. The defendants afresh approved advocate fees beneath §285, and the commune cloister accepted the motion. Blackbird appealed.
The Federal Circuit affirmed the accolade of advocate fees because it begin the case to be exceptional. Citing the Supreme Court’s contempo booty on the law in Octane Fitness, LLC v. ICON Health & Fitness, 572 U.S. 545, 554 (2014), the cloister afresh that an aberrant case “is artlessly one that stands out from others with account to the absolute backbone of a party’s litigating position … or the absurd address in which the case was litigated.” Blackbird, 944 F.3d at 914. The cloister additionally acclaimed this is a case-specific assay that considers the accumulation of the circumstances. See id.
The Federal Circuit begin the case aberrant based both on Blackbird’s anemic action position and the absurd address in which it litigated the case. The cloister begin that Blackbird’s action positions lacked absolute strength, because Blackbird aloft awry affirmation architecture and contravention positions. See id. Furthermore, the Federal Circuit begin Blackbird’s conduct in action to be unreasonable, because it fabricated a alternation of nuisance amount adjustment offers, foolishly delayed bearing documents, and bootless to acquaint the defendants of its ambition to abolish the case. See id. at 916-17. Finally, the Federal Circuit begin it aural the commune court’s acumen to additionally accede “the charge to avert approaching calumniating litigation,” decidedly accustomed that Blackbird had filed over one hundred apparent contravention lawsuits, and not one had been absitively on the merits. Id. at 917.
Three canicule later, the Federal Circuit absitively Bookish Ventures, 944 F.3d 1380, in which the cloister afresh advised in on the appliance of §285. Bookish Ventures (IV) filed a alternation of apparent contravention suits, including one adjoin Trend Micro Inc. A aboriginal balloon proceeded adjoin addition defendant, during which balloon IV’s able attestant afflicted his testimony; the balloon cloister begin the afflicted able assessment to be “a abruptness inconsistent with the representations from [IV].” Id. at 1382. Based on this afflicted position, Trend Micro confused for description of the commune court’s affirmation construction, and afresh for affliction of the asserted patents beneath 35 U.S.C. §101, which motion was accepted in part.
Trend Micro afresh approved its advocate fees beneath §285, arguing that the case was aberrant because IV’s able afflicted his assessment in the average of balloon in the above-mentioned proceeding. The commune cloister assured that the case was aberrant “solely with account to this accumulating of affairs apropos [IV’s expert’s] afflicted testimony.” Id. at 1382. However, the cloister added bent that the “case overall” was not exceptional. See id. at 1383.
On appeal, the Federal Circuit bent that the commune cloister did not administer the actual acknowledged accepted because, rather than assessing whether the case “overall” stood out from added cases, the cloister instead focused on whether this one accurate allotment of the case—the afflicted affidavit of IV’s expert—stood out from added cases. See id. As a result, the Federal Circuit alone the fee accolade and adjourned the case to the commune cloister to accede whether the case as a accomplished was exceptional. See id. In so doing, the Federal Circuit fabricated bright that, in some cases, a “single, abandoned act” may be abundant to acquisition a case exceptional, but that a cloister charge still accede the accumulation of the circumstances. Id. at 1384.
Ultimately, the American Rule still rules the day in apparent cases—appellate courts will abide to ensure that awards of fees appropriately abatement aural a approved barring to the anticipation adjoin fee awards, and that such awards chase the law of Octane Fitness. But such awards abide to abide available, and will be upheld back acceptable by the accumulation of the circumstances.
Rob Maier is an bookish acreage accomplice in the New York appointment of Baker Botts, and the arch of its bookish acreage group. Kyle Xu, an bookish acreage law agent at the firm, assisted with the alertness of this article.
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