03/17/14

Therasense, Inc. v. Becton, Dickinson and Co.: En Banc Appeal and Remand Costs do not make case Exceptional with regards to Attorney’s Fees Award


Category: Damages
 
 
 
 By: Jesus Hernandez, Blog Editor/Contributor 
 
TitleTherasense, Inc. v. Becton, Dickinson and Co., No. 2012-1504 (Fed. Cir. March 12, 2014).
Issues
[1] Becton and Nova first contend that they are entitled to itemized appellate and remand fees because the district court’s August 21, 2008 exceptional case finding “permeated” the appeal and remand phases. They argue that these additional fees and costs should receive treatment independent of those awarded at the trial phase.
Therasense at *5.
[2] As an alternative theory, Becton and Nova assert that Abbott’s appeal and petition for rehearing en banc qualify independently as exceptional circumstances [that justify additional itemized appellate and remand fees].
Id. at *6 (text added).
Holdings
[1] [T]he district court did not err in denying Becton and Nova’s motion for additional fees predicated on the vacated determination of inequitable conduct [because the district court’s pre-existing inequitable conduct ruling was not “upheld on appeal” as required by its district court fee order].
Id. at *6 (text added).
[2] Becton and Nova present zero evidence of bad faith. Expressions of outrage and suspicion in the form of attorney argument are not evidence of bad faith. Nor does the mere act of pursuing appellate review—available as a matter of right and frequently necessary to preserve future rights of appeal—by itself suggest an abuse of the legal system.
Id. at *7.
 
Procedural HistoryBecton, Dickinson and Company (Becton) and Nova Biomedical Corporation (Nova) appeal the denial of various fees sought based on an eight-year long patent infringement suit in the United States District Court for the Northern District of California involving patents owned by Therasense, Inc. (now known as Abbott Diabetes Care, Inc.) and Abbott Laboratories (collectively, Abbott).
Therasense at *2.
 
 
Legal Reasoning (Rader, CJ, Newman)
Background
Factual Background
Alteration of inequitable conduct standard necessitated remandSitting en banc, this court reinstated, and affirmed, the panel decision regarding the district court’s judgment of obviousness, noninfringement, and anticipation. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1297 (Fed. Cir. 2011) (en banc). However, after altering the standard for inequitable conduct, the en banc court vacated the district court’s inequitable conduct judgment and remanded for further proceedings. Id. at 1285.
Therasense at *4.
Becton adds additional fees as part of damagesApplying the new standard on remand, the district court concluded anew that the ’551 patent was procured through inequitable conduct. […] Becton and Nova then moved to supplement the original fee award with (1) appellate and remand fees and expenses; (2) fees spent seeking additional fees; (3) pre-judgment interest on fees; and (4) post-judgment interest calculated from the 2.18% rate effective August 21, 2008, i.e., the date the district court found this case to be exceptional. On May 22, 2012, the district court reinstated its March 19, 2009 fee award and added post-judgment interest calculated from May 22, 2012. The district court denied Becton and Nova’s motion for additional fees and interest in all other respects. […]
Id. at *4 (internal citations omitted).
Legal BackgroundAttorney’s fees are authorized by statute upon a district court’s finding that a case is exceptional. 35 U.S.C. § 285. A finding that a case is “exceptional” involves underlying factual determinations which are reviewed for clear error. […] Willfulness and litigation misconduct are among the reasons that a court may find a case to be exceptional. […]
Id. at *4-5 (internal citations omitted).
[1] Itemized appellate and remand fees do not permeate to appeal and remand phases of litigation
Legal StandardCivil litigation often includes numerous phases. But a case should be viewed more as an “inclusive whole” rather than as a piecemeal process when analyzing fee-shifting under § 285. […]. As this court observed in Rohm & Haas Co. v. Crystal Chemical Co., parties often task the trial court with allocating costs and attorney’s fees, how- ever, “[n]either § 285 nor its legislative history distinguishes between awarding attorney fees in the district court and in the appellate court.” […]. Indeed, § 285 does not bar the trial court from awarding fees
Therasense at *5-6.
No error by district courtIn this case, the district court’s March 19, 2009 fee order expressly contemplated an appeal. Indeed, the district court determined that Abbott owed $5,949,050 “following the exhaustion of all appeals . . . [and only] if the Court’s inequitable conduct judgment is upheld on appeal.” […] This court vacated the district court’s inequitable conduct judgment, thereby vacating the March 19, 2009 order by its express terms. […] While the district court still found inequitable conduct on remand, its pre-existing inequitable conduct ruling was not “upheld on appeal” as required by the March 19, 2009 fee order. As such, the district court did not err in denying Becton and Nova’s motion for additional fees predicated on the vacated determination of inequitable conduct.
Id. at *6 (internal citations omitted).
[2] Appeal for en banc rehearing not tantamount to an exceptional case
Legal Standard The law provides for appellate and remand fees where those stages of litigation are deemed independently exceptional within the meaning of § 285. See Rohm & Haas, 736 F.2d at 692–93 (interpreting § 285 as applicable only where the appeal itself is exceptional, and declining to award such fees where the court did not feel that the litigant truly “frustrated presentation of this case”); see also Mathis, 857 F.2d at 752 (finding the appeal itself to be exceptional and observing that the patentee in requesting rehearing exhibited “ignorance of reality and a persistent penchant for wasting judicial resources”).
Therasense at *6-7.
No Bad Faith in Seeking en banc AppealAnalogizing Abbott’s conduct to that of the patentee in Mathis, Becton and Nova characterize Abbott’s continued pursuit of appellate review as a deliberate and malicious attempt to prolong the litigation and to deceive the district court. In Mathis, the appeal “lack[ed] even a minimally arguable basis and . . . [wa]s in major part frivolous . . . [because of] record distortions, manufactured facts, and implausible and unsupportable legal arguments.” 857 F.2d at 761. In contrast, Becton and Nova present zero evidence of bad faith. Expressions of outrage and suspicion in the form of attorney argument are not evidence of bad faith. Nor does the mere act of pursuing appellate review—available as a matter of right and frequently necessary to preserve future rights of appeal—by itself suggest an abuse of the legal system.
Id. at *7.
Conclusion
For the foregoing reasons, the district court’s decision to reinstate its award of attorney’s fees under § 285 and to deny Becton and Nova’s motion for piecemeal fees beyond the original award amount is affirmed.
Therasense at *9.
 
 
 
DYK, Circuit Judge, dissenting in part. Therasense, Dyk Op., at *1.
Grounds for Dissent, generally[T]he district court concluded in the remand order that it could not award appellate fees unless the appeal was independently exceptional. The majority agrees. This holding, it seems to me, is contrary to Supreme Court precedent, and will potentially cause problems in future cases. I would reverse and remand for the district court to reconsider the appellate fee requests under the correct legal standard.
Therasense, Dyk Op., at *2.
No reason to deny Attorney's Fees for not prevailing in initial appealThe majority affirms the district court’s denial of fees in part on the basis that Becton Dickinson and Nova were not “prevailing parties” in the original appeal and en banc proceedings. […]. But the Supreme Court has held that the phrase “prevailing party” applies to any party “who has established his entitlement to some relief on the merits of his claims.” […] Becton Dickinson and Nova prevailed on invalidity and noninfringement at both stages of the appeal. They ultimately prevailed on inequitable conduct as well. By establishing their entitlement to relief on the merits of their claims, Becton Dickinson and Nova were thus “prevailing parties” under the standard set forth by the Supreme Court even if they did not completely prevail at each stage.
Id. at *3 (internal citations omitted).
Fees for Succesful Fee Petitions (Fees-for-Fees) should be allowedThe majority also upholds the district court’s refusal to allow any fees accrued in the process of securing an award of fees. The Supreme Court in Jean made clear that awards of such fees-for-fees should reflect the degree to which the original fee request was successful. See 496 U.S. at 163 n.10 (“[F]ees for fee litigation should be excluded [only] to the extent that the applicant ultimately fails to prevail in such litigation.” (internal quotation marks omitted)). It follows that fees for successful fee petitions should be allowed.
Id. at *4.
 
 
 
 
 
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