Addressing whether attorneys’ fees may be awarded in a patent infringement lawsuit where an accused infringer successfully invalidates claims in an inter partes review (IPR) proceeding, the US Court of Appeals for the Federal Circuit found that the accused infringer is considered the “prevailing party” for purposes of 35 U.S.C. § 285, but remanded for consideration on whether fees incurred in IPR proceedings can be awarded. Dragon Intellectual Property, LLC v. DISH Network LLC, et al., Case No. 19-1283 (Fed. Cir. Apr. 22, 2020) (Moore, J.).

Dragon sued DISH, Sirius and others for patent infringement. DISH responded by filing an IPR petition attacking the validity of the patent. The district court stayed the proceedings as to DISH and Sirius, who joined the IPR, but proceeded with claim construction as to the other defendants. Following claim construction, the district court entered a judgment of noninfringement as to all defendants. The Patent Trial and Appeals Board (PTAB) subsequently issued a final written decision canceling all of the asserted claims. DISH and Sirius moved for attorneys’ fees under § 285.

Before the fees motions were resolved, Dragon appealed the district court’s judgment of noninfringement and the PTAB’s final written decision. The Federal Circuit affirmed the PTAB’s decision and dismissed the district court action as moot. On remand, the district court vacated the judgment of noninfringement as moot, but retained jurisdiction to resolve the attorneys’ fees motion. The district court denied the motions, finding that because DISH and Sirius were not granted relief on the merits of the case in district court, neither was considered a “prevailing party” for purposes of § 285. DISH and Sirius appealed.

The Federal Circuit found the district court erred, explaining that under its recent precedent B.E. Technology v. Facebook, “a defendant can be deemed a prevailing party even if the case is dismissed on procedural grounds rather than on the merits. The Court noted that while B.E. Technology involved the interpretation of prevailing party under Fed. R. Civ. P. 54(d)(1), there is no meaningful distinction that would warrant a different interpretation under § 285. Therefore, once DISH and Sirius successfully invalidated the asserted claims, they were the prevailing parties.

DISH and Sirius argued that fees awarded under § 285 may include fees incurred in related proceedings, such as PTAB proceedings, and that such fees can be awarded against counsel of record as jointly and severally liable with a party. The Federal Circuit declined to address this issue in the first instance, but noted that it saw no basis for awarding fees under § 285 for fees incurred in an IPR proceeding that DISH and Sirius voluntarily undertook. The Court remanded to the district court for consideration on the issue of whether an exceptional case exists, and if so, which fees are appropriate for purposes of fee-shifting.