United States Court of Appeals for the Federal Circuit
2009-1045
WEDGETAIL, LTD. and BOBBY D. KING,
Plaintiffs-Appellees,
v.
HUDDLESTON DELUXE, INC.,
Defendant-Appellant.
Andy Tindel, Provost Umphrey Law Firm, LLP, of Tyler, Texas, argued for
plaintiffs-appellees.
Marc M. Gorelnik, Townsend and Townsend and Crew LLP, of San Francisco,
California, argued for defendant-appellant. With him on the brief were Nancy L.
Tompkins, and Megan M. Chung.
Appealed from: United States District Court for the Eastern District of Texas
Judge David Folsom
United States Court of Appeals for the Federal Circuit
2009-1045
WEDGETAIL, LTD. and BOBBY D. KING,
Plaintiffs-Appellees,
v.
HUDDLESTON DELUXE, INC.,
Defendant-Appellant.
Appeal from the United States District Court for the Eastern District of Texas in
case no. 07-CV-0202, Judge David Folsom.
______________________
DECIDED: August 12, 2009
______________________
Before SCHALL, GAJARSA, and DYK, Circuit Judges.
GAJARSA, Circuit Judge.
Huddleston Deluxe, Inc. appeals from an order of the U.S. District Court for the
Eastern District of Texas that dismissed with prejudice Wedgetail Ltd.’s claims of
infringement and Huddleston’s declaratory judgment counterclaims, and established
that each party was to bear its own costs and legal fees. Specifically, Huddleston
appeals the district court’s decision not to award attorney fees under 35 U.S.C. § 285.
Because we find that the district court’s decision was not an abuse of discretion and, at
most, amounts to harmless error, we affirm.
BACKGROUND
Wedgetail is the assignee of U.S. Patent No. 6,857,220 B2, which is directed to
“flexible fishing lure tails and appendages”—i.e., fishing lures that simulate swimming
motions when dragged through water. Wedgetail filed suit against Huddleston for
infringement of the ’220 patent; Huddleston, in turn, filed counterclaims of non-
infringement and invalidity.
After the district court held a claim construction hearing and issued its claim
construction order, Wedgetail determined “that it may be difficult to establish
infringement under certain of the Court’s constructions.” Wedgetail thus filed a motion
to dismiss all claims with prejudice, in which it granted Huddleston a covenant not to
sue. Huddleston opposed solely on the ground that Wedgetail’s proposed order of
dismissal would deprive Huddleston of the opportunity to seek attorney fees as the
prevailing party.
The district court granted Wedgetail’s motion, dismissed all claims with prejudice,
and ordered “that each party shall bear their own costs and attorney’s fees.”
Huddleston immediately appealed to this court. We have jurisdiction over the appeal of
the district court’s final judgment under 28 U.S.C. § 1295(a)(1).
DISCUSSION
35 U.S.C. § 285 provides that “[t]he court in exceptional cases may award
reasonable attorney fees to the prevailing party.” This provision is an exception to the
so-called “American Rule”:
2009-1045 2
Under the American Rule each party bears its own attorney fees and
expenses. As an exception to that rule, courts have exercised their
inherent equitable power to make whole a party injured by an egregious
abuse of the judicial process. . . . Congress enacted Section 285 to codify
in patent cases the “bad faith” equitable exception to the American Rule.
. . . Recognizing the good faith/bad faith distinction, Congress expressly
limited such awards to “exceptional cases.”
Sun-Tek Indus., Inc. v. Kennedy Sky Lites, Inc., 929 F.2d 676, 678 (Fed. Cir. 1991)
(internal quotation marks and citations omitted). “The determination of whether a case
is exceptional and, thus, eligible for an award of attorney fees under § 285 is a two-step
process. First, the district court must determine whether a case is exceptional, a factual
determination reviewed for clear error. After determining that a case is exceptional, the
district court must determine whether attorney fees are appropriate, a determination that
we review for an abuse of discretion. A district court abuses its discretion when its
decision is based on clearly erroneous findings of fact, is based on erroneous
interpretations of the law, or is clearly unreasonable, arbitrary or fanciful.” Cybor Corp.
v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc) (citations omitted).
“[T]he exceptional nature of the case must be established by clear and
convincing evidence.” Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048,
1050 (Fed. Cir. 1992). As this court has consistently found, however, only a limited
universe of circumstances warrant a finding of exceptionality in a patent case:
“inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and
otherwise bad faith litigation; a frivolous suit or willful infringement.” Epcon Gas Sys.,
Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed. Cir.
2009-1045 3
2002); see also, e.g., Brasseler, U.S.A. I, L.P., v. Stryker Sales Corp., 267 F.3d 1370,
1380 (Fed. Cir. 2001) (same); id. (“Exceptional cases are normally those involving bad
faith litigation or those involving inequitable conduct by the patentee in procuring the
patent.”); Hoffman-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000)
(“Among the types of conduct which can form a basis for finding a case exceptional are
willful infringement, inequitable conduct before the P.T.O., misconduct during litigation,
vexatious or unjustified litigation, and frivolous suit. Such conduct must be supported by
clear and convincing evidence.” (quoting Beckman Instruments, Inc., v. LKB Produkter
AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989))); Multiform Desiccants, Inc. v. Medzam, Ltd.,
133 F.3d 1473, 1481–82 (Fed. Cir. 1998) (“Findings of exceptional case have been
based on a variety of factors; for example, willful or intentional infringement, inequitable
conduct before the Patent and Trademark Office, vexatious or unjustified litigation, or
other misfeasant behavior.”); Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1579 (Fed. Cir.
1996) (“Bad faith litigation, willful infringement, or inequitable conduct are among the
circumstances which may make a case exceptional.”); Cambridge Prods., 962 F.2d at
1050–51 (“In the case of awards to prevailing accused infringers . . . ‘exceptional cases’
are normally those of bad faith litigation or those involving fraud or inequitable conduct
by the patentee in procuring the patent.”); Bayer Aktiengesellschaft v. Duphar Int’l
Research B.V., 738 F.2d 1237, 1242 (Fed. Cir. 1984) (“In awarding attorney fees to a
prevailing accused infringer, such exceptional circumstances include, inter alia,
inequitable conduct during prosecution of a patent, misconduct during litigation,
vexatious or unjustified litigation, or a frivolous suit.”).
2009-1045 4
“[M]indful of the limited circumstances in which an award of attorney fees is
appropriate,” Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1329 (Fed. Cir. 2003),
this court has rejected an “expansive reading of § 285,” which would permit findings of
exceptionality in circumstances other than those listed above, id., and (absent litigation
misconduct or inequitable conduct before the PTO) has permitted the award of attorney
fees to a prevailing accused infringer “only if both (1) the litigation is brought in
subjective bad faith, and (2) the litigation is objectively baseless,” Brooks Furniture Mfg.,
Inc. v. Dutailer Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005) (emphasis added).
Because of the high level of deference owed to district courts on this issue and
the limited circumstances that could qualify as exceptional, this court has not imposed a
blanket requirement that a district court provide its reasoning in attorney fee cases.
See, e.g., Serio-US Indus., Inc. v. Plastic Recovery Techs. Corp., 459 F.3d 1311, 1322
(Fed. Cir. 2006) (upholding denial of fees despite no statement of reasons, because
“the record as a whole in this case adequately supports the denial of attorney fees”);
Carroll Touch, Inc. v. Electro Mech. Sys., Inc., 15 F.3d 1573, 1584 (Fed. Cir. 1993)
(upholding denial of fees despite no statement of reasons, because record “provide[s] a
sufficient basis upon which we can review the exercise of the trial court’s discretion”).
Instead, we have held only that a statement of the district court’s reasoning is generally
necessary to enable review when an attorney fees motion is granted, see, e.g.,
Innovation Tech., Inc. v. Splash! Med. Devices, LLC, 528 F.3d 1348, 1350–51 (Fed. Cir.
2008); Stephens v. Tech Int’l, Inc., 393 F.3d 1269, 1276 (Fed. Cir. 2004) (reversing
award of fees because a “district court must provide reasoning for its determination that
a case is exceptional for us to provide meaningful review”), or when attorney fees are
2009-1045 5
denied despite the presence of one or more of the circumstances listed above, see,
e.g., Superior Fireplace Co. v. Majestic Prods. Co., 270 F.3d 1358, 1377 (Fed. Cir.
2002) (remanding unexplained denial of fees where record reflected “serious and open
questions” as to whether plaintiff “ever had a good faith belief in its claim”); Tate Access
Floors, Inc. v. Maxcess Techs., Inc., 222 F.3d 958, 972 (Fed. Cir. 2000) (“While a
finding of willful infringement does not mandate that damages be increased or that
attorneys fees be awarded, after an express finding of willful infringement, a trial court
should provide reasons for not increasing a damages award or for not finding a case
exceptional for the purpose of awarding attorneys fees.” (internal quotation marks and
citations omitted)); U.S. Envtl. Prods. Inc. v. Westall, 911 F.2d 713, 718 (Fed. Cir. 1990)
(“Under . . . circumstances . . . where the court did find misconduct in determining
substantive issues, we conclude that we require the benefit of the court’s analysis . . . in
order to review the court’s ruling.”). As discussed below, Huddleston directs us to
nothing in the record here that could compel a finding of exceptionality or would
otherwise suggest a need for the district court to provide its reasoning. Accordingly, the
lack of detailed analysis by the district court in this case does not warrant reversal.
Huddleston argues that the district court committed reversible error by failing to
entertain a motion for attorney fees pursuant to § 285. We disagree.
As this court stated in IPXL Holdings, L.L.C. v. Amazon.com, Inc., “[n]o provision
in section 285 exempts requests for attorney fees thereunder from compliance with Rule
54(d)(2)(B).” 430 F.3d 1377, 1386 (Fed. Cir. 2005). Rule 54(d)(2)(B), in turn, states:
Unless otherwise provided by statute or order of the court, the motion [for
attorney fees] must be filed no later than 14 days after entry of judgment;
must specify the judgment and the statute, rule, or other grounds entitling
2009-1045 6
the moving party to the award; and must state the amount or provide a fair
estimate of the amount sought.
Fed. R. Civ. P. 54(d)(2)(B). Despite these requirements, Huddleston did not file a
motion for attorney fees with the district court, but instead merely requested that the
district court set a briefing schedule for such a motion. Nor did Huddleston state, even
in its opposition papers, the amount of attorney fees sought. Accordingly, Huddleston’s
claim would appear to fail procedurally. See IPXL Holdings, 430 F.3d at 1386
(reversing award of attorney fees where motion for fees was not timely filed with the
district court).
Huddleston insists, however, that the filing of a separate motion for attorney fees
with the district court would have been futile in light of the district court’s order. It thus
urges this court to treat the district court’s order either as a prejudicial deprivation of
Huddleston’s right to file a motion or as an erroneous determination that fees are not
owed. Because there is substantial overlap among the facts relevant to each of these
arguments, we consider them together.
The Supreme Court has summarized the doctrine of harmless error in the
following manner:
In ordinary civil appeals, . . . the appellant will point to rulings by the trial
judge that the appellant claims are erroneous, . . . . Often the
circumstances of the case will make clear to the appellate judge that the
ruling, if erroneous, was harmful and nothing further need be said. But, if
not, then the party seeking reversal normally must explain why the
erroneous ruling caused harm.
Shinseki v. Sanders, 129 S.Ct. 1696, 1706 (2009). The burden similarly rests on the
appellant to prove that the district court clearly erred in failing to find a case exceptional
or abused its discretion in failing to award attorney fees. See Carroll Touch, 15 F.3d at
1584.
2009-1045 7
Here, Huddleston seeks attorney fees after Wedgetail voluntarily dismissed its
claim with prejudice and granted a covenant not to sue. The record on appeal presents
neither any apparent misconduct nor any judicial findings of misconduct on Wedgetail’s
part. To the contrary, the record reflects that Wedgetail immediately sought dismissal of
its infringement claims upon determining that it could not prevail under the district
court’s claim construction. Huddleston, meanwhile, has not provided this court with any
reason to believe that it might successfully obtain an attorney fee award if it were
afforded the opportunity to present evidence to the district court on remand. To the
district court, Huddleston merely stated: “Huddleston believes this is one of those
exceptional and rare cases.” And to this court, Huddleston has offered a vague
assertion that Wedgetail’s pre–claim construction infringement contentions were
deficient. But it has provided no support whatsoever for its claims.
Simply put, Huddleston has failed to demonstrate either that the district court
clearly erred in failing to find this case exceptional or that Huddleston was harmed by
the district court’s failure to entertain a motion for attorney fees. A remand is, therefore,
unwarranted. See Consol. Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804, 814 (Fed.
Cir. 1990) (“A remand, with its accompanying expenditure of additional judicial
resources in a case thought to be completed, is a step not lightly taken and one that
should be limited to cases in which further action must be taken by the district court or in
which the appellate court has no way open to it to affirm or reverse the district court's
action under review. Though findings on ‘exceptional case’ and reasons underlying the
discretionary action on fees are helpful to an appellate court, remand should not be a
matter of rote in every case in which findings and reason are not expressly set forth. An
2009-1045 8
appellate court need not close its eyes to the record where . . . there is a way clearly
open to affirm the district court’s action.”); see also Carroll Touch, 15 F.3d at 1584
(“There is no evidence of record that [the plaintiff] pursued its patent infringement claim
without a reasonable belief in its merits. [The prevailing defendant] has thus not shown
that the court’s implicit finding that this was not an exceptional case under section 285
was clearly erroneous or that the court abused its discretion in denying its motion for
attorney fees.”).
CONCLUSION
Accordingly, because the district court’s decision, although lacking explanation, is
supported by the record, “[n]o useful purpose would be served by a remand to enable
the district court to tell us in express terms what we already know from the record.”
Consol. Aluminum, 910 F.2d at 815. We thus affirm the district court’s decision.
AFFIRMED
COSTS
No costs.
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