Thursday, August 10, 2017

Federal Circuit: No Right to a Jury Trial on Awards of Attorneys' Fees Under § 285

This morning the Federal Circuit handed down an opinion, AIA America, Inc. v. Avid Radiopharmaceuticals, holding that there is no right to a jury trial on awards of attorneys' fees under § 285 of the Patent Act.  The underlying case was an action for infringement relating to two patents "directed to research technologies stemming from the discovery of the 'Swedish mutation,' a genetic mutation that is associated with early-onset familial Alzheimer’s disease" (p.2).  The district court held a jury trial on the issue of whether AIA had standing to assert its claims, which resulted in a judgment that it did not.  The Federal Circuit summarily affirmed this judgment in 2014, and the litigation then moved to the issue of whether the defendants were entitled to an award of fees under § 285 ("The court in exceptional cases may award reasonable attorney fees to the prevailing party").  The district court awarded fees in the amount of almost $4 million, and AIA appealed, arguing that it was entitled to a jury determination.  Not surprisingly, in my view, the Federal Circuit thinks not:
We first address AIA’s argument that the Seventh Amendment requires a jury trial to decide the facts forming the basis to award attorney’s fees under § 285 of the Patent Act. Specifically, AIA argues that when an award of attorney’s fees is based in part or in whole on a party’s state of mind, intent, or culpability, only a jury may decide those issues. . . .  
A litigant has a right to a jury trial if provided by statute, or if required by the Seventh Amendment. . . . 
The Seventh Amendment preserves the right to a jury trial for “[s]uits at common law.” U.S. Const. amend. VII. The phrase “suits at common law” refers to suits in which only legal rights and remedies were at issue, as opposed to equitable rights and remedies. . . . A legal remedy requires a jury trial on demand, while an equitable remedy does not implicate the right to a jury trial. . . .  A two-step inquiry determines whether a modern statutory cause of action involves only legal rights and remedies. Tull v. United States, 481 U.S. 412, 417–18 (1987). First, we must “compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity.” Id. at 417. “Second, we examine the remedy sought and determine whether it is legal or equitable in nature.” Id. at 417–18. The Supreme Court has stressed the second step of this test is the more important of the two. . . .
Turning to the first step, the nature of the claim, English courts for centuries have allowed claims for attorney’s fees in both the courts of law and equity. . . . 
As to the second step, the nature of the remedy, the fact that the relief sought is monetary does not necessarily make the remedy “legal.” . . . In the context of attorney’s fees, when attorney’s fees are themselves part of the merits of an action, they are regarded as a “legal” remedy. For example, a lawyer’s fee claim against a client is a question for the jury, Simler v. Conner, 372 U.S. 221, 223 (1963) (per curiam), and a claim for attorney’s fees under a contractual indemnification provision is a contractual “legal right” that is also a question for the jury, McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1315–16 (2d Cir. 1993). By contrast, when attorney’s fees are awarded pursuant to a statutory prevailing party provision, they are regarded as an “equitable” remedy because they raise “issues collateral to and separate from the decision on the merits.” . . . 
Despite the foregoing, AIA argues that if a decision on attorney’s fees involves considerations of a party’s state of mind, intent, and culpability, then those questions must be presented to a jury under the Seventh Amendment. AIA, however, has pointed to no cases finding that once an issue is deemed equitable, a Seventh Amendment right to a jury trial may still attach to certain underlying determinations. . . .
The court also rejects AIA's arguments that the district judge was precluded from "making factual findings on issues that were not considered by the jury," and that AIA was denied its right to due process of law.  Opinion by Judge Hughes, joined by Judges Newman and Lourie.

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