VoxerNet Fee Recovery.
On November 6, 2014, a California federal district judge awarded VoxerNet, an application development start-up company, $820,000 in attorney’s fees for prevailing in a voice mail patent infringement suit against it. The U.S. Supreme Court’s Octane/Highmark cases led to this ruling, with this precedential duology seeming to be used more and more in patent fee recovery situations.
Fifth Circuit Grants Rehearing to Look at Older Pro-Snax Decision.
In Matter of Pro-Snax Distributors, Inc., 157 F.3d 414 (5th Cir. 1997), the Fifth Circuit decided that Bankruptcy Code section 330 only allows compensation to bankruptcy fee applicants demonstrating a tangible benefit to an estate in certain separate litigation matters which were not so successful for the Chapter 11 debtor. Pro-Snax was followed in Barron & Newburger, P.C. v. Texas Skyline Ltd., 758 F.3d 693 (5th Cir. 2014), where bankruptcy counsel only was awarded under $20,000 under a $130,000 fee application request for work on separate litigation for the Chapter 11 estate. Barron did draw a concurring opinion questioning Pro-Snax, with many other courts not accepting its reasoning because the Fifth Circuit Pro-Snax standard is in the minority, rejected by the Second, Third, and Ninth Circuits. See In re Ames Department Stores, Inc., 76 F.3d 66 (2d Cir. 1996), abrogated on other grounds by Lamie v. U.S. Trustee, 540 U.S. 526 (2004); In re Top Grade Sausage, Inc., 227 F.3d 123, 132 (3d Cir. 2000), abrogated on other grounds by Lamie, 540 U.S. 526; In re Smith, 317 F.3d 918, 926 (9th Cir. 2002); see also In re Taxman Clothing Co., 49 F.3d 310, 314–16 (7th Cir. 1995) (bankruptcy court abused discretion granting fees for a performance action that was not reasonably likely to benefit the estate). The concurring opinion sought Fifth Circuit reconsideration of the Pro-Snax standard en banc.
The concurring justice in Barron was persuasive, because the Fifth Circuit agreed to a rehearing en banc very recently in the appellate case.