In Oplus Technologies, Ltd. v. Vizio, Inc., No. 14-1297 (Fed. Cir. Apr. 10, 2015), the Federal Circuit vacated the district court's denial of attorneys' fees, holding that the district court abused its discretion in denying fees in view of the Supreme Court's decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).

Oplus Technologies, Ltd. ("Oplus") sued Vizio, Inc. ("Vizio") and Sears Holdings Corporation for patent infringement in the Northern District of Illinois.  The case was transferred to the Central District of California, and the district court entered SJ of noninfringement.  Vizio moved to recover attorneys' fees pursuant to 35 U.S.C. § 285 and 28 U.S.C. § 1927.  In deciding Vizio's motion for attorneys' fees, the district court found the case exceptional under § 285 based on Oplus's litigation misconduct, including (1) "delay[ing] the litigation by strategically amending its claims to manufacture venue"; (2) "misus[ing] the discovery process to harass Vizio by ignoring necessary discovery, flouting its own obligations, and repeatedly attempting to obtain damages information to which it was not entitled"; and (3) "us[ing] improper litigation tactics including presenting contradictory expert evidence and infringement contentions as well as misrepresenting legal and factual support."  Slip op. at 3-4 (citation omitted).

The district court denied Vizio's request for fees under § 285, however, cautioning that "[t]here is little reason to believe that significantly more attorney fees or expert fees have been incurred than would have been in the absence of Oplus's vexatious behavior," because the "case has been fraught with delays and avoidance tactics to some degree on both sides" and "each instance of motion practice occurred according to normal litigation practice."  Id. at 5 (alteration in original) (citation omitted).  Similarly, the district court denied fees under § 1927 and under the court's inherent power, reasoning that "there is no evidence suggesting that Oplus's behavior stemmed from bad faith or a sufficient intent to harass," and that "it would be a mistake for the Court to use its inherent power" where "other tools for sanctioning behavior exist and apply to the party's misconduct."  Id. (citation omitted).  Vizio appealed.

"Although the award of fees is clearly within the discretion of the district court, when, as here, a court finds litigation misconduct and that a case is exceptional, the court must articulate the reasons for its fee decision." 
Slip op. at 8.

On appeal, the Court reviewed the denial of fees for abuse of discretion and vacated the district court's order denying Vizio's request for fees.  The Federal Circuit noted that shortly after the district court's decision to deny fees, the Supreme Court rejected the Federal Circuit's strict requirement that a party's entitlement to fees under § 285 be established by clear and convincing evidence, holding that "nothing in § 285 justifies such a high standard of proof."  Id. at 5-6 (quoting Octane Fitness, 134 S. Ct. at 1758). Given the change in law, the Court held that the district court's errancy on the side of caution against awarding fees in the face of "ample evidence" of Oplus's litigation misconduct warranted vacating and remanding the case.  Id. at 5 (citation omitted).  The district court's fact findings of Oplus's misconduct, of which the Court took particular note, included constantly changing litigation positions, misusing the discovery process, and filing "contradictory and unreasonable" motions to compel.  Id. at 6-7 (citation omitted).  In view of such "detailed" findings of an egregious pattern of litigation misconduct, the Court concluded that Vizio would have likely incurred additional litigation expenses.

The Court also found insufficient the district court's reason that both sides were responsible to some degree for delays and avoidance tactics, and that motion practice followed normal litigation practice in denying an award of fees.  In doing so, the Court observed no unusual delay on Vizio's part, but rather found that Oplus's conduct "caused additional process and wasted party and judicial resources" by, for instance, insisting in opposition to Vizio's SJ motion that the Court consider multiple noninfringement contentions grounded upon contradictory expert evidence.  Id. at 7.  Similarly, the Court was unconvinced that the lack of objective baselessness in Oplus's allegations against Vizio should weigh against awarding fees, because the record independently supported material inappropriate conduct such as "discovery abuses, unprofessionalism, and changing litigation positions."  Id. at 8. 

Accordingly, the Court remanded the case to the district court to reconsider whether and to what extent awarding fees is warranted under Octane Fitness.  It also provided guidance to the district court regarding its reasons for its fee decision, stating, "Although the award of fees is clearly within the discretion of the district court, when, as here, a court finds litigation misconduct and that a case is exceptional, the court must articulate the reasons for its fee decision."  Id.

Judges:  Prost, Moore (author), O'Malley

[Appealed from C.D. Cal., Senior Judge Pfaelzer]

This article previously appeared in Last Month at the Federal Circuit, May, 2015.

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