Nothing Exceptional About Litigation Costs Exceeding Potential Damages
Addressing the issue of whether litigation costs that exceed potential damages necessarily render a case exceptional, the US Court of Appeals for the Federal Circuit affirmed a district court’s decision that they did not. ATEN Int’l Co., Ltd. v. Uniclass Technology Co. Ltd., Case No. 18-1922 (Fed. Cir. Aug. 6, 2019) (Moore, J).
The patent-in-suit involves technology for switching between computers that share a monitor, mouse and keyboard. After Uniclass ceased making payments on a license agreement it entered with ATEN, ATEN sued for patent infringement. After the district court granted summary judgment of no lost profits, the case proceeded to trial. A jury found that Uniclass did not infringe and the asserted patent claim was invalid. Uniclass then moved for attorneys’ fees, seeking to have the case declared exceptional under 35 USC § 1295(a)(1). The district court denied Uniclass’s motion.
On appeal, the Federal Circuit panel affirmed the district court’s ruling that the case was not exceptional. Uniclass first argued that the case was exceptional because the litigation costs exceeded ATEN’s potential reasonable royalty damages. The Court explained that there “is no per se rule that a case is exceptional if litigation costs exceed the potential damages,” noting that there are many reasons for bringing a lawsuit, monetary damages being just one. Further, in many cases, no damages are at issue and only an injunction is sought. In this case, ATEN sought injunctive relief, which as the Court explained, undermined Uniclass’s argument.
Uniclass also argued that the district court’s comments during trial about public resources supported an exceptional case finding. The Federal Circuit rejected the argument, stating that it was not an abuse of discretion for the district court to deny attorneys’ fees after commenting on public resources expended during trial.
The Federal Circuit also rejected Uniclass’s contention that the district court should have weighed the strength of ATEN’s lost profits theory in its opinion, simply noting that the district court had considered the argument but deemed it as non-exceptional behavior. Further, a party does not need to ultimately prevail on an issue for its behavior to not “stand out,” and the district court’s opinion did not have to include an assessment of every consideration that went into its decision.