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Denial of Attorneys’ Fees Is Reversed for Abuse of Discretion

ADJUSTACAM, LLC v. NEWEGG, INC.: July 5, 2017. Before Reyna, Mayer, Hughes.

Takeaway:

  • Denial of attorneys’ fees under § 285 is reviewed under an abuse of discretion standard.

  • While district courts are owed deference in deciding fees motions, that deference is not absolute, and the CAFC will not defer to conclusions based on a clear error of judgment.

  • A weak infringement case that became baseless after Markman, low and erratic settlements, and repeatedly serving expert reports and declarations at the last minute support a conclusion of unreasonableness under a totality of the circumstances analysis under Octane Fitness.

Procedural Posture:

Defendant-Appellant Newegg appealed E.D. Tex.’s denial of a motion for attorney fees.  CAFC reversed and remanded.

Synopsis:

  • Standard of Review: The CAFC held that, per its recent decision in University of Utah, it will continue to defer to a district court’s § 285 ruling that is based on independent evaluation of the evidence before it. The CAFC will not defer, however, to conclusions based on a clear error of judgment in weighing relevant factors, as was the case in AdjustaCam.  The lower court’s analysis did not follow the CAFC’s instructions on remand to evaluate in the first instance whether the case was exceptional under the totality of the circumstances.

  • Attorney Fees – Totality of the Circumstances: A weak infringement case that became baseless after the Markman order, irregular damages model, and last-minute filing of expert reports and declarations collectively support a conclusion of unreasonableness denoting an exceptional case. AdjustaCam asserted nuisance-value damages against many defendants, settling with individual defendants for widely varied royalty rates.  AdjustaCam unreasonably litigated the case by repeatedly serving expert reports and declarations at the last minute.  Based on these circumstances, the lower court’s denial of Newegg’s motion for fees was an abuse of discretion based on clearly erroneous findings.

© 2017 Andrews Kurth Kenyon LLP

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About this Author

Sheila Mortazavi, Andrews Kurth Law Firm, Intellectual Property and Litigation Attorney
Partner

Sheila’s practice covers all facets of intellectual property litigation and counseling, with a particular emphasis on patent infringement litigation across a wide range of technologies.

Sheila has handled all phases of litigation before federal and state courts, the International Trade Commission and arbitration panels, including pre-trial investigation, fact and expert discovery, motion practice, trial and appellate practice. She advises clients on litigation strategy in complex patent cases, and has represented both plaintiffs and defendants...

212-908-6346
Lee Davis, Andrews Kurth Law Firm, Patent Attorney
Associate

Lee's practice focuses on intellectual property (IP) and technology and includes advice and counseling, procurement, licensing and acquisition, and litigation regarding all aspects of patents, trademarks, copyrights, and trade secrets. Lee is a registered patent attorney and has substantial experience preparing and prosecuting both domestic and foreign patent applications. He has technical experience in a variety of fields, including technology relating to downhole tools, drilling assemblies, drill bits, oilfield tubulars and premium threaded connections, coiled tubing, shaker screens, subsea pumping systems, internal combustion engines, Web server software, data redundancy and directory services.

713-220-4394
Ian Moore, Andrews Kurth Law Firm, Intellectual Property Attorney
Associate

Ian is an Associate in the Intellectual Property section of the firm’s New York – Battery Park office. Ian’s practice is focused on patent litigation and PTAB proceedings relating to mechanical and electrical engineering technologies, as well as to software.

212-908-6306