Federal Circuit Affirms Award of Attorneys' Fees Where Action Was Dismissed for Lack of Standing

This morning the Federal Circuit issued its decision in Rainiere v. Microsoft Corp. (opinion by Judge O'Malley, joined by Judges Lourie and Wallach) affirming an award of attorneys' fees in an action against Microsoft and AT&T.  The district court dismissed the action with prejudice on the ground that the plaintiff lacked standing to assert claims for the infringement of the five patents in suit, and the Federal Circuit affirmed this decision ijn 2017.  (According to today's opinion, the plaintiff and his coinventors at some point assigned their rights to a firm named Global Technologies, Inc.  The facts are complicated, but ultimately the district court wasn't convinced that the plaintiff had reacquired those rights, and thus it dismissed the action for lack of standing.)  From the opinion:

[Plaintiff] first disputes whether Appellees are prevailing parties under § 285. [Plaintiff] contends that dismissal with prejudice for lack of standing is not an adjudication on the merits, as he contends is required to find that a defendant is a “prevailing party” under our case law.  [Plaintiff] also asserts that dismissal with prejudice, without adjudication of a patent infringement claim, should preclude finding that a defendant has prevailed in a litigation.  We disagree with these statements, particularly in light of the Supreme Court’s recent decision in CRST Van Expedited, Inc. v. EEOC, which held that a favorable judgment on the merits is not necessary for a defendant to be deemed a prevailing party for purposes of statutory fee-shifting. 136 S. Ct. 1642, 1651 (2016). Even without CRST, we conclude that the district court’s dismissal with prejudice of [plaintiff’s] case for lack of standing is tantamount to a judgment on the merits. Under either of these rationales, Appellees have in fact prevailed in this case. . . (p.9).

The court also finds no abuse of discretion based on the district court's findings that the plaintiff

employed “a pattern of obfuscation and bad faith,” and that this behavior caused Appellees to incur significant fees and costs to oppose [plaintiff’s] positions. These positions, in the district court’s view, “were made in bad faith to vexatiously multiply these proceedings and avoid early dismissal”—in effect, to stall the termination of the proceedings.  Fees Decision, 2016 WL 4626584, at *5.  “Because the district court lives with the case over a prolonged period of time, it is in a better position to determine whether a case is exceptional and it has discretion to evaluate the facts on a case-bycase basis.”  SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1351 (Fed. Cir. 2015) (internal quotations, alterations, and citations omitted).  The district court properly examined the totality of the circumstances in this case and found the case to be exceptional. We see no reason to disturb the district court’s well-reasoned determination (p.19).

Finally, the court finds no abuse as to the amount ("$300,295.71 to AT&T and $143,719.26 to  Microsoft in attorney fees and costs" (p.7)).