LARGE AUDIENCE DISPLAY v. TENNMAN.: Oct. 20, 2016. Before Moore, Linn, and O’Malley, per curiam. (nonprecedential)

The Takeaway:

• The record must support the circumstances upon which a district court relies in finding a case exceptional and awarding fees.

• Courts should use the lodestar method as a presumptively reasonable method for calculating attorney’s fees, by multiplying the number of reasonable hours billed by a reasonable hourly billing rate.

Procedural Posture:

On appeal from C.D. Cal., the CAFC reviewed the district court’s determination for an abuse of discretion, vacated the award of attorney’s fees and costs, and remanded for reconsideration.

Analysis:

• Attorney’s fees—exceptionality of case: Reasonable attorney’s fees may only be awarded to the prevailing party under § 285 in exceptional cases. Under the Octane standard, a totality of the circumstances is used to determine whether a case is exceptional. Here, the CAFC found that the district court’s ruling was based in part on a misunderstanding of what factors are relevant to determining exceptionality and on a clearly erroneous view of the record.  The district court erroneously found that plaintiff’s corporation was formed with the sole intent to creation jurisdiction in E.D. Tex. because specific jurisdiction is based on the defendant’s contacts with the forum state, not the plaintiff’s contacts. The district court’s determination that plaintiff’s claim was frivolous based on the cancellation of the asserted claims during reexamination, without more, was also erroneous. Further, the district court erroneously found that the patentee refused to present a piece of prior art that was dispositive to the case because, as the defendants agreed, the PTO had rejected all of the claims without relying on that piece of prior art.

• Attorney’s fees—amount of award: The lodestar method is a presumptively reasonable method for calculating attorney’s fees which multiplies the number of reasonable hours billed by a reasonable hourly billing rate. Here, the district court did not use this method, but instead erroneously accepted the defendant’s calculation since according to a survey, the total amount sought was “below average” for typical patent infringement suits. The CAFC noted that case was dismissed before trial with little discovery, while the survey relied on only provided benchmarks for fee averages at the end of discovery and through trial. The CAFC ordered that the lodestar method be used and suggested that, on remand, the district court examine whether it was reasonable for seven partners bill to bill 79% of the total hours on the case for tasks such as the electronic filing of documents when there were twelve associates billing on the case.