Wednesday, May 24, 2023

Federal Circuit Affirms Denial of Attorneys’ Fees

The precedential decision, handed down yesterday, is OneSubsea IP UK Ltd v. FMC Techs., Inc., opinion by Judge Clevenger, joined by Chief Judge Moore and Judge Dyk.  The patents in suit relate to the ”subsea recovery of production fluids from an oil or gas well” (p.3).  The case was ultimately decided in favor of FMC, on noninfringement grounds, at least in part because the trial court found the plaintiff’s expert testimony in support of its theory of liability inadmissible.  The facts of the case, including its tortuous procedural history, are exceptionally prolix and exceptionally boring, but unfortunately for FMC that doesn’t make this an “exceptional case” meriting attorneys’ fees under 35 U.S.C. § 285.

For present purposes, I’ll just note a couple of takeaways.  First, according to the Supreme Court’s decision in Highmark Inc. v. Allcare Health Mgt. Sys. Inc., 572 U.S. 559 (2014), the standard of review on appeal from an order denying an award of fees is abuse of discretion.  The rationale for this standard is that “the district court ‘is better positioned’ to decide whether a case is exceptional . . . because it lives the case over a prolonged period of time.”  FMC argued that this standard doesn’t apply where, as here, the district judge who decided the fee motion took over the case at its end, after the original judge had retired (p.16).  Not surprisingly, the Federal Circuit doesn’t buy it.  Second, the fact that the original district judge had indicated skepticism that he was going to grant FMC’s motion for summary judgment following the Markman hearing, after which the case was stayed for three years while the PTAB decided various IPRs, itself suggests that this wasn’t an exceptional case (p.20).  Third, this wasn’t a case, the Federal Circuit says, in which the plaintiff “produced no evidence at all to support its case” (p.21).  Specifically:     

OSS produced evidence from two experts, with the evidence based on the first expert’s declaration sufficient to undermine FMC’s initial summary judgment motion. The second expert’s report, on which OSS’s challenge to FMC’s 2020 summary judgment motion relied, repeated the same theory of infringement as the first expert. The second expert, however, emphasized the retrievability of FMC’s Flow Module, leading the expert into the error of failing to appreciate the stipulated construction of “tree,” which in turn led to the district court’s exclusion of the expert’s report. As the district court noted, OSS adduced evidence to support its infringement theory, but the shortcomings of its expert undermined the admissibility of that evidence. In the district court, FMC did not offer any authority for finding a case exceptional simply because a party offered and relied on evidence that was ultimately found to be inadmissible. FMC has likewise produced no such authority here. There was no abuse of discretion in the district court’s finding that OSS’s reliance on inadmissible evidence failed to make this case exceptional (p.21).

Finally, the court rejects arguments that the plaintiffs engaged in litigation misconduct, and that the district court misapplied the Octane Fitness standard for finding a case exceptional (pp. 21-22).

Dennis Crouch has a very good analysis of the case on Patently-O.

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