Federal Circuit Affirms Denial of Attorneys’ Fees Following Dismissal Without Prejudice

The case is Giesecke & Devrient GmbH v. United States, nonprecedential opinion authored by Judge Stoll, joined by Judges Prost and Hughes.  The case is an appeal from the United States Court of Federal Claims, which hears claims against the federal government.  Patentee G&D filed suit against the U.S. claiming infringement of a patent directed to a “contactless data carrier,” which according to the patent includes “readable identification documents, such as passports and identity cards” (p.2).  HID, which provides the U.S. with permanent resident cards and global entry cards, joined the case and moved to dismiss with prejudice.  G&D then “sought leave to amend its complaint to drop the claims against HID’s card-based products.”  The court granted leave to amend and denied the motion to dismiss as moot, after which it “voluntarily dismissed the withdrawn claims without prejudice” (p.3).  HID moved for attorney fees, which the court initially granted pursuant to 35 U.S.C. § 285 on the grounds that HID was the prevailing party and the case exceptional.  The case was then transferred to a new judge, Judge (and former law professor) Ryan Holte, who after additional briefing concluded that the court lacked jurisdiction to consider the motion for fees under § 285.

The Federal Circuit affirms, reasoning that “the touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties” (p.4, quotation omitted), and that under Federal Circuit precedent defendants are not prevailing parties if the plaintiff voluntarily dismisses the case without prejudice (but would be if the dismissal were with prejudice) (p.5).  From the opinion:

We hold that, under our precedent, HID cannot be a “prevailing party” because the Court of Federal Claims permitted G&D to withdraw the claims then dismissed them without prejudice and, thus, G&D may refile or reassert the withdrawn claims against HID. See O.F. Mossberg & Sons, 955 F.3d at 991, 993. Like O.F. Mossberg & Sons and RFR, this case “involve[s] voluntary rather than involuntary dismissal[s] without prejudice.” Oscar, 541 F.3d at 981. But regardless of whether the dismissal is voluntary or involuntary, “the risk of re-filing underlying their reasoning applies in both procedural postures.” Id. Indeed, the Court of Federal Claims’ decision to dismiss without prejudice lacks “an adjudication on the merits,” Raniere, 887 F.3d at 1308, and therefore is not the “judicially sanctioned change in the legal relationship of the parties” that “effects or rebuffs a plaintiff’s attempt to effect a ‘material alteration in the legal relationship between the parties.’” Id. at 1306 (quoting CRST, 578 U.S. at 432) (p.6).

I’m not sure if the above language, suggesting that a dismissal “on the merits” is a prerequisite, is necessarily accurate in view of other Federal Circuit precedent, but this case is consistent with precedent indicating that, for the Federal Circuit, the key distinction appears to be whether the dismissal is with or without prejudice.  For previous discussion on this blog, see here and here. 

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In other news, Florian Mueller's new blog notes two potentially very far-reaching developments, one in Germany relating to extraterritorial damages stemming from domestic infringement, and one from China regarding the jurisdiction of Chinese courts to set FRAND royalties for patent pools.  I will have more to say about the first and possibly the second next week.