June 29, 2020Client Alert

In an IPR Appeal, the CAFC Will Not Award Fees Under 35 U.S.C. § 285

The U.S. Court of Appeals for the Federal Circuit (CAFC) recently determined that 35 U.S.C. § 285 does not authorize it to award fees for work performed at the Patent Trial And Appeal Board (the PTAB) on appeal from an IPR. Amneal Pharmacueticals LLC v. Almirall, LLC, No. 20-1106, (Fed. Cir. 2020).

Almirall (Patent Owner) sold a prescription medication, which is covered by U.S. Patent No. 9,161,926 (the ‘926 Patent).  Amneal (Petitioner) filed an IPR petition challenging the claims of the ‘926 Patent before seeking regulatory approval for a generic version of the medication. Ultimately, the parties entered into settlement discussions. While no particular agreement was reached, there was evidence that Patent Owner offered a covenant-not-to-sue on the ‘926 Patent contingent on the dismissal of the IPR for the ‘926 Patent. With the parties unable to reach a settlement, the underlying IPR on the ‘926 Patent went to trial, resulting in the PTAB finding claims 1-6 of the ‘926 Patent not unpatentable. Petitioner appealed the final written decision of the IPR to the CAFC, but then filed a motion to voluntarily dismiss its appeal. 

In response to the motion to voluntarily dismiss, Patent Owner sought its attorney fees under § 285, arguing it was unreasonable for Petitioner to continue litigating the IPR after the covenant-not-to-sue was offered, and therefore sought fees and costs from the date settlement negotiations were terminated through the conclusion of the IPR. Patent Owner contended that the Federal Circuit is a “court” authorized by § 285 of the Patent Act to award fees in exceptional cases, and that the Federal Circuit has the authority to award fees that were incurred during the entirety of this matter, including for work at the PTAB. The CAFC disagreed.

The CAFC determined that § 285 does not authorize it to award fees for work done at the PTAB on appeal from an IPR. The court first relied on several binding decisions by the Court of Customs and Patent Appeals (C.C.P.A.), which heard appeals from the Patent Office but not from district courts. In these decisions, the C.C.P.A. refused to read § 285 as pertaining to administrative proceedings because § 285 is in the chapter of Title 35 concerning infringement actions. 

The CAFC then analyzed the language of § 285 and determined that the plain meaning of “[t]he court” speaks only to awarding fees that were incurred during, in close relation to, or as a direct result of judicial proceedings. Here, in contrast to prior cases cited by the Patent Owner, the CAFC found that the administrative proceedings were not intimately tied to the resolution of a judicial action. See Sullivan v. Hudson, 490 U.S. 877 (1989); Therasense, Inc. v. Becton, Dickinson & Co., 745 F.3d 513, 516–17 (Fed. Cir. 2014). By way of example, and in contrast to the facts here, the CAFC pointed to a case in which the court allowed for the award of fees where (i) the Patent Office proceedings substituted for the district court litigation on all issues considered by the PTO and the Board, (ii) the fees were incurred after the filing of a civil action, and (iii) the fees were awarded in that district court proceeding. See PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1569 (Fed. Cir. 1988). The CAFC finally noted that the PTAB has its own means for regulating misconduct under 37 C.F.R. § 42.12.

In summary, the CAFC held that § 285 does not authorize the Federal Circuit to award work that was done at the PTAB on appeal from an IPR.

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