On May 20, 2024, the Federal Circuit Court of Appeals affirmed the district court’s exercise of discretion to deny recovery of attorneys’ fees from a parallel IPR proceeding and from counsel under 35 U.S.C. § 285, despite finding that the case was extraordinary and warranted an award of reasonable attorneys’ fees to the prevailing party. Dragon Intell. Prop. LLC v. DISH Network L.L.C., 101 F.4th 1366 (Fed. Cir. 2024)
The underlying case arose from Dragon Intellectual Property LLC (“Dragon”) suing DISH Network L.L.C. (“DISH”), Sirius XM Radio Inc. (“SXM”), and eight other defendants for alleged infringement of U.S. Patent No. 5,930,444 (“the ’444 patent”). DISH petitioned for inter partes review of the ’444 patent, and SXM joined. The district court stayed proceedings as to DISH and SXM pending resolution of the Board’s review, but proceeded with claim construction as to the other defendants. Dragon, 101 F.4th at 1369.
Following the claim construction order, all parties stipulated to noninfringement as to the accused products. Subsequently, the Board found all asserted claims unpatentable. DISH and SXM moved for attorneys’ fees under 35 U.S.C. § 285 and 28 U.S.C § 1927. Dragon, 101 F.4th at 1369. 35 U.S.C. § 285 awards attorneys’ fees to the prevailing party in exceptional cases, whereas 28 U.S.C § 1927 imposes attorneys’ fees on counsel for unreasonable and vexatious cases.
The district court found that the underlying case was indeed exceptional, but denied-in-part DISH and SXM’s motion to the extent they sought (1) attorneys’ fees incurred solely during the IPR proceedings, and (2) recovery from Dragon’s counsel, holding § 285 does not permit either form of recovery. The Federal Circuit Court of Appeals affirmed, holding that “[i[n cases where a party voluntarily elects to pursue an invalidity challenge through IPR proceedings,” the Court saw no basis for awarding IPR fees under § 285. The Court also affirmed that § 285 does not “identify counsel as liable for a fee award,” noting that § 285 is silent as to who can be liable for a fee award, while other statutes, such as 28 U.S.C. § 1927, explicitly allow parties to recover costs and fees from counsel. Those statutes, the Court instructed, “are more appropriate vehicles to recover fees from counsel.” Dragon, 101 F.4th at 1372-73.