Beth Z. Shaw, Brake Hughes Bellermann LLP
A court may award attorneys’ fees to the prevailing party in “exceptional” patent cases. One purpose of such an award is to counter nuisance lawsuits, yet research shows that attorney’s fees are awarded infrequently. See Colleen V. Chien, Reforming Software Patents.
In a recent opinion, Monolithic Power Systems, Inc. v. O2 Micro International, Ltd., the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s award of over $9,000,000 in attorneys’ fees for a pattern of vexatious litigation. In this case, the district court found various instances of litigation misconduct, including a pattern of suing MPS’s customers to prompt MPS to file declaratory judgment actions.
According to the district court, in each of the cases brought by O2 Micro, O2 Micro withdrew its claims only after substantial litigation had taken place. Moreover, O2 Micro repeatedly misrepresented evidence regarding the dates of certain schematics relevant to the case.
The Federal Circuit affirmed, holding that litigation misconduct and unprofessional behavior suffice, by themselves, to make a case “exceptional” under 35 U.S.C. § 285. The opinion, authored by Judge Prost and joined by Judges Mayer and Reyna, noted that neither bad faith nor objectively baseless litigation are requirements under the law. A pattern of unprofessional behavior alone is enough to make a case exceptional.
With this opinion, the court has reinforced that an exceptional case resulting in fee-shifting does not require a party to establish that the case was “frivolous” suit or brought in “bad faith”—elements which are difficult to prove. Still, it may also be difficult for the prevailing party to establish a “pattern” of bad behavior. After all, this award came only after over a decade of litigation between O2 Micro and MPS.
Some prominent patent attorneys, scholars, and advocates, as well as Federal Circuit Chief Judge Rader in a New York Times op-ed, have argued that district court judges should more liberally award fees in cases of vexatious patent litigation, especially in cases brought by patent assertion entities or trolls. This case did not involve a patent assertion entity or troll. Yet, as evidenced by this case, judges do have the power to make any badly behaved litigants pay for their behavior.