Federal Circuit: No Fee Award Following Voluntary Dismissal

The Federal Circuit this morning handed down a short precedential opinion in O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC.  The opinion is by Judge Hughes, joined by Judges Lourie and Reyna.  The basic facts are as follows.  The patent owner filed suit against the defendant in 2012.  The defendant responded by filing a petition for reexamination with the USPTO, after which the district court stayed the action.  Eventually, the PTAB concluded that the challenged claims were invalid, and the plaintiff voluntarily dismissed the district court action pursuant to Federal Rule of Civil Procedure 41.  The district court entered an order dismissing the action without prejudice.  The defendant then filed a motion for attorneys' fees, which was denied.  The Federal Circuit affirms, concluding that in cases like this one there is no final judgment which could provide a basis for characterizing the action as an exceptional case:

Under § 285, a court may award reasonable attorney’s fees to the prevailing party in an exceptional patent infringement case. 35 U.S.C. § 285; see also Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 553−54 (2014). The Supreme Court has said that “the touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties. This change must be marked by judicial imprimatur.” CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642, 1646 (2016) (internal quotation marks and citation omitted). In CRST, in the context of a claim for attorney’s fees under Title VII, the Court held that a defendant may be “prevailing” for purposes of attorney’s fees “even if the court’s final judgment rejects the plaintiff’s claim for a nonmerits reason.” Id. at 1651. . . .

But the issue here is not whether there was a final decision on the merits. It is whether there was a final decision at all. Neither CRST, nor Raniere, nor B.E. Technology went so far as to hold that one could become a prevailing party without a final court decision. E.g., CRST, 136 S. Ct. at 1651 (holding that a “defendant has . . . fulfilled its primary objective whenever the plaintiff’s challenge is rebuffed, irrespective of the precise reason for the court’s decision,” and that a “defendant may prevail even if the court’s final judgment rejects the plaintiff’s claim for a nonmerits reason” (emphases added)).

In this case, there was no such final court decision. A properly filed Rule 41(a)(1)(A)(i) voluntary dismissal becomes effective immediately upon plaintiff’s filing of the notice of dismissal. See Fed. R. Civ. P. 41(a)(1)(A) (for voluntary dismissals by the plaintiff “Without a Court Order,” the plaintiff may “dismiss an action without a court order” (emphasis added)). Although the district court in this case entered a dismissal order after Timney filed its notice of voluntary dismissal, that dismissal order had no legal effect. That leaves only the stay, which cannot “change . . . the legal relationship of the parties,” Raniere, 887 F.3d at 1306, because it remained in place while the parties de-termined the patent’s validity in a separate venue—the Patent Office. And the stay did not change the legal relationship between the parties; the Board’s invalidity decision and Mossberg’s voluntary Rule 41(a)(1)(A)(i) dismissal did. A stay, standing alone, is simply not a final court decision capable of establishing the judicial imprimatur required for a litigant to emerge as the prevailing party under § 285.

Update (4/14/2020):  Dennis Crouch has an interesting post on this case over at Patently-O.  Professor Crouch notes some tension between the outcome in this case and another Federal Circuit decision handed down last week, Keith Mfg. Co. v. Butterfield, which however involved a dismissal with prejudice.  For his post on Keith, see here.  Tiffany Hu also has an extensive analysis of Mossberg on Law360, here.