Exceptionality Standard Presents A High Obstacle For PTAB Fee Recovery.
In American Vehicular Sciences LLC v. Autoliv Inc., 2019 U.S. Dist. LEXIS 164343 (E.D. Mich. Aug. 30, 2019), report and recommendation adopted in 2019 U.S. Dist. LEXIS 162914 (E.D. Mich. Sept. 24, 2019), U.S. Magistrate Judge Anthony P. Patti explored what circumstances might warrant a district court to award attorney’s to prevailing parties for Patent Trial and Appeal Board (PTAB)-related work which was successful in invalidating several patents after inter parties review (IPR) before the PTAB.
What happened here is that a plaintiff sued numerous defendants for patent infringement, with the district court case eventually stayed during the pendency of the IPR process based on IPR petitions filed by several defendants. The IPR petitions resulted in invalidity determinations for several patents, with the prevailing parties then turning to the federal magistrate for an award of discretionary attorney’s fees relating to PTAB work based on the case being “exceptional” in nature under the Octane standard.
Magistrate Judge Patti recognized that “exceptional” cases can include (1) when PTAB proceedings play a central role in the federal case outcome, or (2) there was a stay of the related district court case, such that the PTAB proceedings effectively took the place of the federal court (with this second situation being present). However, he still determined that the circumstances did not support a fee award in a report and recommendation to the district judge, which was adopted, based on the following factors: (1) the jurist did not see any bad faith arguments being presented before the PTAB; (2) the validity challenges had not been found persuasive earlier by the USPTO examining corps; and (3) the PTAB refused to sanction the losing party, although it has power to do so.
For an excellent article on this issue and the magistrate judge’s decision, see a November 9, 2019 post on the Finnegan & Henderson website.
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