No Judgment On Merits Necessary To Achieve Prevailing Party Status
The US Court of Appeals for the Federal Circuit affirmed a district court finding that an accused infringer was the “prevailing party” entitled to fees under Rule 54(d)(1) when the patent owner’s claim was dismissed for mootness following a Patent Trial and Appeal Board (PTAB) finding of unpatentability. B.E. Tech., L.L.C. v. Facebook, Inc., Case No. 18-2356 (Fed. Cir. Oct. 9 2019) (Lourie, J) (Plager, J, concurring).
B.E. filed a patent infringement suit against Facebook. The district court stayed the suit pending inter partes review of all asserted claims by the PTAB. Ultimately, the PTAB found the asserted claims of B.E.’s patent to be unpatentable. The Federal Circuit subsequently affirmed the PTAB’s finding. The district court dismissed B.E.’s patent infringement claims as moot, found Facebook to be the “prevailing party” and awarded costs under Rule 54(d). B.E. appealed.
On appeal, B.E. argued that Facebook did not “prevail” because the case was dismissed as moot, and the dismissal “lacked the requisite judicial imprimatur to render Facebook the prevailing party.” Relying on the Supreme Court of the United States’ decision in CRST Van Expedited v. E.E.O.C., Facebook argued that it had successfully rebuffed B.E.’s claims. In CRST, the Supreme Court considered whether, in the context of a statute that allowed fees to the “prevailing party,” a defendant could be declared as such absent a judgment on the merits. The Supreme Court found that a decision on the merits is not a prerequisite to a finding of prevailing party status.
The Federal Circuit agreed with Facebook, relying on CRST’s “common-sense approach,” in which a defendant can be deemed a prevailing party even if a case is dismissed on procedural grounds. The Court explained that identification of a prevailing party requires consideration of whether the district court’s decision rebuffs a plaintiff’s attempt to effect a “material alteration in the legal relationship between the parties.” In affirming the district court, the Federal Circuit found that Facebook, via inter partes review before the PTAB, successfully rebuffed B.E.’s claims, and that the district court’s dismissal for mootness placed the requisite judicial imprimatur upon the claims.