attorney’s fees Archives

attorney’s fees

No escape from fees and sanctions for reckless litigation conduct

by Hannah Hurley | Dec 4, 2025 | Patents

The US Court of Appeals for the Federal Circuit affirmed attorneys’ fees awards against EscapeX IP, LLC, finding the case “exceptional” under 35 U.S.C. § 285, and upheld sanctions under 28 U.S.C. § 1927 based on counsel’s reckless litigation conduct. EscapeX IP, LLC v. Google LLC, Case No. 24-1201 (Fed. Cir. Nov. 25, 2025) (Taranto, Stoll, Stark, JJ.)

EscapeX brought suit against Google in the Western District of Texas, alleging that Google’s YouTube Music product infringed its patent directed to systems for generating artist-specified dynamic albums. After Google pointed out that the accused features were absent from YouTube Music and later demonstrated that the accused “Auto-Add” feature predated the patent’s priority date, EscapeX amended its complaint to list the correct product and refused to dismiss the case.

Shortly after EscapeX sued Google, its patent was invalidated under § 101 in a separate litigation. EscapeX did not appeal that ruling, and Google requested that EscapeX dismiss the case. In response, EscapeX filed what it characterized as a “joint stipulation of dismissal,” which Google contested because it had not agreed to such a filing. Google moved for attorneys’ fees under § 285, arguing that EscapeX had filed frivolous claims and unreasonably prolonged the litigation. The district court agreed, awarding Google its fees.

EscapeX then filed a Rule 59(e) motion to amend the judgment, attaching declarations from its CEO and an engineer to show pre-suit diligence. The district court denied the motion, finding that the evidence was not “newly discovered” and the motion was frivolous. Google successfully sought additional fees and sanctions under § 1927, resulting in an additional $63,525 jointly and severally against EscapeX and its attorneys. EscapeX appealed.

The Federal Circuit affirmed the district court decisions and found no abuse of discretion. The Court concluded that the record supported the finding that EscapeX had not conducted any pre-suit investigation and that the case was “frivolous from the start.” This conclusion was also supported by Google’s early, detailed warnings against filing the suit and EscapeX’s general nonresponsiveness.

Regarding the Rule 59(e) motion, the Federal Circuit agreed that the declarations were not “newly discovered evidence” because they were always within EscapeX’s control and knowledge. The Court rejected arguments of “manifest injustice,” which were not raised in district court and had no merit.

Finally, the Federal Circuit affirmed the sanctions under § 1927, finding that EscapeX’s counsel acted recklessly by filing a frivolous motion that multiplied proceedings. The Court noted that zealous advocacy does not excuse filing baseless motions. The Court upheld Google’s fees and sanctions in their entirety, with costs related to the appeal also awarded to Google.

Ain’t worried about local rules: Scope of sound recording protection is narrow

by Connor M. Larson | Oct 30, 2025 | Copyrights

Addressing for the first time what evidence is required to prove infringement of a sound recording copyright, the US Court of Appeals for the Seventh Circuit affirmed a district court’s decision to grant summary judgment to the defendant, finding that the plaintiff’s copyright registration of his work as a sound recording required proof of actual sampling to establish infringement. Richardson v. Kharbouch, Case No. 24-1119 (7th Cir. Oct. 16, 2025) (Brennan, Jackson-Akiwumi, Pryor, JJ.)

In 2012, then-16-year-old Eddie Richardson created a hip-hop beat titled “*Hood* Pushin Weight” (HPW). Months later, while listening to the hit song “Ain’t Worried About Nothin” (AWAN) by Karim Kharbouch, who is better known by his stage name French Montana, Richardson believed that he recognized his own HPW beat. The next day, Richardson registered a sound recording copyright with the US Copyright Office. Richardson did not obtain a copyright registration for his musical composition. After Richardson’s attempts to negotiate with French Montana and his representatives failed, Richardson filed a copyright infringement lawsuit.

The district court conducted two rounds of summary judgment briefing. In both rounds, neither party complied with a local rule that required each side to respond to the opposing party’s statement of material facts. The court, in its discretion, declined to deem the unopposed facts admitted. After French Montana’s reply brief in the first round included a “passing comment” on the nature of Richardson’s copyright, raising a potentially dispositive issue, the district court ordered supplemental briefing.

In the second round of briefing, the district court determined that because Richardson had registered his copyright as a sound recording rather than a musical composition, he was required to show duplication or sampling, not mere imitation. Finding no such evidence, the court granted summary judgment in favor of French Montana. The district court then awarded costs to French Montana but denied attorneys’ fees. Richardson appealed the grant of summary judgment and the court’s decision not to enforce the local rules against French Montana while French Montana cross-appealed the denial of attorneys’ fees.

Richardson argued that the district court abused its discretion by failing to deem his unopposed factual statements admitted under the local rules. The Seventh Circuit found no abuse of discretion by the district court, reasoning that because neither party complied with the local rules, the district court acted appropriately in declining to enforce them against only one side.

The Seventh Circuit also affirmed the district court’s grant of summary judgment in favor of French Montana, explaining that “sound recording copyrights only protect those sounds that directly or indirectly recapture the actual sounds fixed in the recording from infringement.” Mere imitation, even if indistinguishable to the listener, is not infringement, and Richardson failed to present evidence of actual duplication of the sound recording.

Finally, the Seventh Circuit affirmed the district court’s denial of attorneys’ fees to French Montana. Although there is a “strong presumption in favor of awarding fees in copyright infringement cases,” the Seventh Circuit held that the district court properly applied the four-factor Fogerty [...]

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Failure to reassess subject matter eligibility after similar claims invalidated justifies attorneys’ fees

by Amol Parikh | Oct 30, 2025 | Patents

Following a dismissal on the pleadings, the US District Court for the Southern District of New York granted the defendant’s motion for attorneys’ fees under 35 U.S.C. § 285 after concluding that the asserted patent was objectively invalid under 35 U.S.C § 101. Linfo, LLC v. Aero Global, LLC, Case No. 24-cv-2952 (S.D.N.Y. Oct. 15, 2025).

Linfo sued Aero Global alleging infringement of a patent directed to a system with methods and a user interface for discovering and presenting information in text content with different view formats. The patented system would allow a user to sort through online hotel reviews, for example, by toggling a button to show only positive comments, or only comments related to room service.

One week after filing its complaint, Linfo proposed an early-stage settlement of $49,000, which Aero Global did not accept. Subsequently, in a separate case involving the same patent, another judge in the Southern District of New York found the patent invalid. After Aero notified the court of the decision, Linfo sought to dismiss the case without prejudice, and Aero opposed. Linfo then requested a stay pending appeal of the other’s judge’s decision, which the court denied. Linfo then contacted Aero to propose the parties “walk away to close the matter.” Aero responded that it would agree to dismissal if Linfo reimbursed Aero for its fees incurred. Linfo did not respond, after which the court concluded that Linfo was collaterally estopped from asserting infringement of the patent and granted Aero’s motion for judgment on the pleadings.

Aero thereafter sought attorneys’ fees under § 285, arguing that the asserted patent was objectively invalid under § 101. The district court agreed, finding that the litany of cases published after the Supreme Court’s 2014 Alice v. CLS decision should have made clear to Linfo and its counsel that the asserted patent was directed precisely to the kind of abstract concept that Alice deemed unpatentable. Linfo argued that since the patent was issued after the Alice decision, it was reasonable for Linfo to assume the patent examiner considered Alice as part of the USPTO’s decision-making process. The district court rejected this argument, finding no evidence that the USPTO evaluated whether the patent was directed to patent eligible subject matter and, more importantly, finding that numerous cases post-dating the patent’s issuance invalidated patents similar to Linfo’s patent.

Linfo argued that it was reasonable for it to continue the case because it received favorable claim construction rulings and litigated against other defendants that had not filed § 101 challenges. The court rejected this argument, explaining that judicial construction of a patent claim after a claim construction hearing says little about whether that claim is eligible under § 101, given that claim construction and patent eligibility are distinct inquiries.

The court considered Linfo’s and its attorney’s litigation history and found several indicia suggesting that Linfo and its counsel brought this case to induce settlement rather than to reach the merits. The court noted that Linfo had asserted the challenged patent [...]

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Prevailing party: Dismissal with prejudice will do it

by Kyle Sorenson, PhD | Sep 18, 2025 | Patents

The US Court of Appeals for the Federal Circuit found that a district court erred in denying fees and costs to the prevailing party (here, the defendant), but upheld the district court’s denial of Rule 11 sanctions. Future Link Sys., LLC v. Realtek Semiconductor Corp., Case Nos. 23-1056; -1057 (Fed. Cir. Sept. 9, 2025) (Stoll, Reyna, Bryson, JJ.)

Future Link sued Realtek for patent infringement in the Western District of Texas. Realtek challenged service and personal jurisdiction and subsequently moved for Rule 11 sanctions. During discovery, Future Link produced a licensing agreement with a third party, under which the third party had agreed to pay a lump sum if Future Link sued Realtek. Shortly afterward, Future Link entered into a separate licensing agreement with Realtek covering the accused products and voluntarily dismissed the case.

Realtek moved for attorneys’ fees under 35 U.S.C. § 285 and costs under Rule 54(d)(1), and asserted that Future Link had filed objectively baseless lawsuits. The district court denied Realtek’s motions for fees and sanctions, did not address the motion for costs, and converted Future Link’s voluntary dismissal to a dismissal with prejudice.

Fees and costs

To seek fees and costs, a party must qualify as “the prevailing party.” In reviewing the district court’s decision on fees and costs, the Federal Circuit addressed Realtek’s prevailing party status under both § 285 and Rule 54(d).

Applying de novo review, the Federal Circuit concluded that Realtek was the prevailing party, despite the voluntary dismissal, because the district court had converted that dismissal to one with prejudice. The Federal Circuit emphasized that prevailing party analysis turns on whether there has been a material alteration of the legal relationship between the parties. Citing its own precedent, the Court explained that a dismissal with prejudice constitutes such a change because it bars the plaintiff from reasserting the same claims against the same products.
The Court explained that a favorable ruling on the merits is not required. A defendant that successfully avoids liability, such as through dismissal with prejudice, can still be deemed the prevailing party.

Since the dismissal with prejudice prevented Future Link from reasserting its patent claims against the accused products, Realtek was the prevailing party. The Federal Circuit vacated the district court’s denial of attorneys’ fees under § 285 and remanded the issue for consideration of whether the case was exceptional and fees were warranted. It likewise remanded the Rule 54(d) costs issue for initial determination.

Rule 11 sanctions

The Federal Circuit affirmed the district court’s denial of Rule 11 sanctions. Realtek had argued that Future Link’s prefiling investigation was inadequate and that the lawsuit was improperly motivated by a third-party payment arrangement, making that arrangement the but-for cause of the lawsuit.

The Federal Circuit rejected both arguments. First, it found that Future Link’s pre-suit investigation met Rule 11 standards: Future Link obtained and analyzed three accused products, prepared claim charts comparing asserted patent claims to the accused products, and investigated relevant optional features that it reasonably believed [...]

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Wrestling with prevailing defendant’s post-trial fee request in copyright dispute

by Christian Tatum | Aug 21, 2025 | Copyrights, Trademarks

The US Court of Appeals for the Fifth Circuit affirmed a district court’s denial of attorneys’ fees to the defendant after it prevailed at trial in a copyright infringement suit, concluding that the district court adequately addressed the Supreme Court’s Fogarty factors and did not abuse its discretion. Booker T. Huffman v. Activision Publ’g, Inc., et al., Case No. 22-40072 (5th Cir. Aug. 6, 2025) (Richman, Elrod, Oldham, JJ.) (Oldham, J., dissenting) (nonprecedential).

Booker Huffman, a retired professional wrestler, alleged that Activision’s “Prophet” character in Call of Duty: Black Ops IV infringed his G.I. Bro comic book poster. The case proceeded to trial, and the jury returned a verdict in favor of Activision. Activision then sought attorneys’ fees under 17 U.S.C. § 505, arguing that Huffman’s claims were frivolous, objectively unreasonable, and brought in bad faith, citing a lack of supporting evidence and substantial proof of independent creation. The district court found that the claims involved unsettled areas of law and were neither frivolous nor objectively unreasonable. Applying the factors the Supreme Court outlined in Fogarty v. Fantasy (1994), the district court concluded that an award of attorneys’ fees was not warranted. Activision appealed.

Activision argued that the district court failed to follow Fifth Circuit precedent, which holds that fee awards are “the rule rather than the exception” for prevailing parties in copyright actions. Activision contended that Huffman’s claims were meritless due to a lack of evidence establishing access, striking similarity, or causation. The Fifth Circuit rejected these arguments, emphasizing that there is no automatic entitlement to fees and that the district court’s six-page Fogerty analysis was more thorough than in other cases in which the Fifth Circuit has sustained lower court fee decisions. The Fifth Circuit highlighted that the district court carefully analyzed whether Huffman’s claims were objectively unreasonable, noting that the case implicated areas of unsettled law. The panel emphasized the district court’s denial of Activision’s pretrial motions, the evidence supporting Huffman’s access and similarity, and the district court’s evaluation of the evidentiary record.

The Fifth Circuit also rejected Activision’s argument that the district court abused its discretion by failing to analyze each of the Fogerty factors separately, finding that the judge recited the parties’ arguments for the relevant factors and that it could be inferred that the district court did not find Activision’s arguments persuasive. Throughout its analysis, the Court emphasized that a district court’s attorneys’ fees decision is reviewed only for abuse of discretion and not to relitigate the merits.

Judge Oldham dissented, concluding that Huffman’s claims were “speculation piled on fantasy piled on a pipe dream” and that overwhelming evidence of independent creation made the suit clearly unreasonable. Judge Oldman would have awarded fees to compensate Activision for defending against what he characterized as a baseless $32 million claim and to deter similarly unmeritorious lawsuits in the future.

To kill a derivative: Licensee has no post-termination copyright control

by Rick Evans | Aug 7, 2025 | Copyrights

Addressing a dispute concerning two derivative stage adaptations of Harper Lee’s To Kill a Mockingbird, the US Court of Appeals for the Second Circuit affirmed the district court’s grant of declaratory relief, finding that the plaintiff did not infringe any copyright interest in derivative works following the termination of the defendant’s exclusive licensing grant. Atticus Limited Liability Company v. The Dramatic Publishing Company, Case No. 23-1226 (2d Cir. July 29, 2025) (Wesley, Chin, Perez, JJ.)

In 1969, Harper Lee granted Dramatic an exclusive license to create and license a derivative work stage adaptation of To Kill a Mockingbird for non-first-class productions (e.g., amateur and community theater). Lee terminated that grant in 2011 under the Copyright Act’s termination provisions, effective in 2016. In 2015, Lee granted exclusive rights to develop and perform a second derivative stage adaptation to Atticus.

In 2019, Dramatic initiated arbitration against Lee’s estate asserting continued exclusive rights to non-first-class productions despite the termination. The arbitrator ruled in favor of Dramatic. Subsequently, Atticus, which was not a party to the arbitration, sought declaratory judgment that performances of its play did not infringe any rights held by Dramatic. The district court ruled in favor of Atticus and awarded Atticus more than $200,000 in attorneys’ fees. Dramatic appealed the judgment and the parties cross-appealed the award of fees.

Dramatic argued that its exclusive right to stage non-first-class productions of To Kill a Mockingbird survived Lee’s termination of the 1969 grant under the Copyright Act’s derivative works exception. The Second Circuit rejected this argument, finding that Dramatic improperly equated its rights in the derivative work with ownership rights in the original copyrighted work. While Dramatic could continue using its play under the original grant, it could not prevent the creation or authorization of new adaptations. Those exclusive rights belonged to Lee and reverted to her upon termination of the grant.

Dramatic also argued that:

Lee’s grant to Atticus was invalid because it preceded the effective termination date of Dramatic’s grant.
Atticus’ claim was untimely.
Atticus’ claims were barred by res judicata based on the earlier arbitration.

The Second Circuit disposed of each of these arguments, explaining that:

The grant date was irrelevant because Dramatic no longer held exclusive rights.
The statute of limitations did not toll because Atticus’ claim was for noninfringement, not ownership.
The claims were not barred by res judicata because Atticus was not a party to the arbitration.

Regarding the award of attorneys’ fees, the Second Circuit agreed that Dramatic’s statute of limitations and res judicata defenses were objectively unreasonable, justifying a fee award, but found no basis for fees based on an alleged forfeiture of Dramatic’s statute of limitations defense since it was properly raised in the answer, even if not included in its opposition to Atticus’ pre-answer motion for summary judgment. The Court further found that Atticus was not entitled to attorneys’ fees for Dramatic’s limited discovery efforts to determine Atticus’ involvement in the arbitration or for the current appeal. Accordingly, the [...]

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For Deterrence: Inherent Power to the Rescue to Punish Meritless Lawsuit

by James M. Oehler | Dec 19, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to use its inherent power to award deterrence sanctions for filing a nuisance patent infringement lawsuit. PS Products Inc. v. Panther Trading Co. Inc., Case No. 2023-1665 (Fed. Cir. Dec. 6, 2024) (Moore, Stoll, Cunningham, JJ.)

PSP filed a design patent infringement lawsuit against Panther. PSP voluntarily dismissed the case with prejudice after Panther threatened to seek Rule 11 sanctions for the filing of a frivolous lawsuit. After the case was dismissed, Panther filed a motion seeking its attorneys’ fees under 35 U.S.C. § 285 and $100,000 in deterrence sanctions under the court’s inherent power. The district court found the case exceptional under § 285 and awarded Panther its attorneys’ fees. The district court also found PSP and its counsel joint and severally liable for $25,000 in deterrence sanctions. PSP did not appeal the finding that the case was exceptional or the decision to grant attorneys’ fees, but it did appeal the award of deterrence sanctions under the court’s inherent power.

Design patent infringement requires showing that an ordinary observer would find the accused product and claimed design “substantially the same” such that the observer would be deceived into believing that the accused product was the patented design. However, in some cases the accused product and the patented design are “plainly dissimilar” such that it would be clear to an ordinary observer the two designs were not “substantially the same.”

The Federal Circuit affirmed the district court’s award of deterrence sanctions, finding that the district court did not err by inferring PSP’s bad faith conduct based on the clear lack of legal merit of the case against Panther. The Court found that Panther’s accused product was “plainly dissimilar” to the patented design (shown below), such that PSP’s case was a nuisance lawsuit.

The Federal Circuit found that bad faith was also reasonably inferred based on PSP’s history of filing 25 meritless lawsuits in the same district, even though the district court did not analyze each suit. PSP cited the general venue statute in all 25 lawsuits rather than the required patent-specific venue statute, and PSP did not have proper venue in the lawsuit against Panther.

The Federal Circuit also found no abuse of discretion when the district court imposed sanctions under its inherent power. Rule 11 sanctions were unavailable since the case was already dismissed, but the district court had no other mechanism to sanction PSP’s bad faith conduct of filing multiple meritless lawsuits except the court’s inherent power. Finally, the Court found that imposing deterrence sanctions under the district court’s inherent power was proper even when it had already awarded attorneys’ fees and costs under § 285 because the statute does not preclude separate sanctions.

The Federal Circuit declined to award Panther its attorneys’ fees for the appeal because while PSP’s [...]

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Creative License: Fair Use Defense Paints Over Infringement Battle

by Kyle Sorenson, PhD | Oct 3, 2024 | Copyrights, Trademarks

Affirming the application of the fair use defense to copyright infringement, the US Court of Appeals for the Fifth Circuit determined that a district court’s sua sponte invocation of a fair use defense to parallel trademark claims was harmless error. The Court also affirmed that the district court did not abuse its discretion in awarding attorneys’ fees based on the prevailing party standard for copyright claims. Keck v. Mix Creative Learning Ctr., L.L.C., Case No. 23-20188 (5th Cir. Sept. 18, 2024) (Jones, Smith, Ho, JJ.)

Michel Keck, a multimedia artist, sued Mix Creative Learning Center, a Texas-based art studio, for copyright and trademark infringement after Mix Creative sold art kits featuring Keck’s dog-themed artwork and a brief biography, intended for at-home learning during the pandemic. Keck had registered her Dog Art series (in the form of decorative works) with the US Copyright Office and her name as a trademark with the US Patent & Trademark Office. Keck claimed that Mix Creative’s art kits violated her rights. After receiving notice of the lawsuit, Mix Creative promptly ceased selling its kits.

Following discovery, both parties filed cross-motions for summary judgment. The district court granted summary judgment in favor of Mix Creative on Keck’s copyright claim, finding fair use, and also granted summary judgment on the trademark claim sua sponte, as both parties had agreed that the fair use defense applied to both claims. The district court further awarded Mix Creative more than $100,000 in attorneys’ fees and costs, although it declined to hold Keck’s attorneys jointly and severally liable.

Keck appealed, challenging the copyright fair use finding and the district court’s sua sponte application of the fair use defense to the trademark claim. Mix Creative challenged the district court’s refusal to hold Keck’s attorneys jointly and severally liable for fees.

The Fifth Circuit affirmed the district court’s application of the fair use defense to Keck’s copyright claims. The Court focused on the first and fourth factors of the fair use defense (respectively, the purpose and character of the use and the effect of the use on the potential market for or value of the original work), noting that the courts typically give these two factors special attention.

On the first factor, the Fifth Circuit found Mix Creative’s use to be transformative. Although Mix Creative is a commercial enterprise, the art kits served an educational purpose, distinct from the decorative purpose of Keck’s original works. As a result, the likelihood of Mix Creative’s kits serving as a substitute for Keck’s original works in the market was low.

The fourth factor also favored Mix Creative, as the Fifth Circuit found no evidence that Mix Creative’s kits would harm the market value of Keck’s original decorative works. In fact, the Court suggested that the kits might enhance Keck’s reputation and sales by providing her with free advertising. Furthermore, Mix Creative operated in a different market (educational rather than decorative), and Keck had not demonstrated any history of selling derivative works for children’s art lessons. The [...]

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Go Home: No “Prevailing Party” Status After Voluntary Dismissal Without Prejudice

by Kavya Rallabhandi | Aug 15, 2024 | Copyrights

The US Court of Appeals for the Eleventh Circuit affirmed a district court’s ruling that a copyright holder’s voluntary dismissal of its claims did not render the defendant a prevailing party entitled to attorneys’ fees under the Copyright Act. Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC, Case No. 23-12563 (11th Cir. July 30, 2024) (Wilson, Grant, Lagoa, JJ.)

Affordable Aerial Photography (AAP) filed suit against Property Matters and Home Junction over alleged copyright infringement of a 2010 photograph titled “Presidential Place Front Aerial 2010 AAP,” which provides an aerial view of a residential condominium complex. AAP owns all real estate photos and related products (slide shows, virtual tours, stock photography) of Robert Stevens and licenses them for limited use by customers, such as luxury real estate companies. Property Matters is a real estate brokerage, and Home Junction is a real estate marketing solutions and services provider that designed and maintained Property Matters’ website.

The work was posted with copyright management information and registered with the Copyright Office in April 2018. During or before April 2017, the work appeared on Property Matters’ website without authorization, but AAP did not discover the alleged infringement until February 2022. After AAP filed suit, Property Matters filed a motion to dismiss arguing (in relevant part) that 17 U.S.C. § 507(b) sets a three-year statute of limitations from when the claim accrued (i.e., April 2017) to bring civil action and, therefore, AAP’s suit was untimely by more than two years. The district court denied the motion without prejudice. AAP then filed a notice of voluntary dismissal without prejudice under Rule 41(a)(1)(A)(i) with respect to its action against Property Matters and filed a joint notice of settlement with Home Junction soon after, which closed the case.

Property Matters then moved for attorneys’ fees under 17 U.S.C. § 505, asserting that “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” AAP argued that Property Matters was not the prevailing party because the voluntary dismissal was without prejudice and the limitations period had not yet expired. The district court found that the voluntary dismissal did not materially alter the legal relationship between the parties. The district court applied the “discovery rule” to conclude that AAP’s copyright infringement claim did not accrue until it discovered the alleged infringement in February 2022 and therefore AAP was not time-barred from raising its copyright infringement claim in a separate suit against Property Matters through February 2025. Property Matters appealed.

Reviewing the legal question on appeal de novo, the Eleventh Circuit affirmed. The Court reasoned that a defendant is not the prevailing party when a plaintiff’s action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i). This is true regardless of whether a statute of limitations has expired. The Court explained that a defendant does not attain prevailing party status merely because, as a practical matter, a plaintiff is unlikely or unable to refile its claims. Instead, the district court itself must act to reject [...]

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Don’t Mess With Anna: Texas Town Schools Patent Owner on § 101

by Tessa Kroll | Aug 1, 2024 | Patents

On cross-appeals from a granted Fed. R. of Civ. Pro. 12(c) motion on subject matter eligibility, the US Court of Appeals for the Federal Circuit found that a patent directed to a method for “assist[ing] an investigator in conducting a background investigation” did not claim patent-eligible subject matter, but that the mere assertion of the patent did not render the case “exceptional” for the purposes of attorneys’ fees. Miller Mendel, Inc. v. City of Anna, Texas, Case No. 22-1753 (Fed. Cir. July 18, 2024) (Moore, C.J.; Cunningham, Stoll, JJ.)

Miller Mendel sued the City of Anna, Texas, for infringement of claims directed to software for managing pre-employment background investigations based on the Anna police department’s use of the Guardian Alliance Technologies (GAT) software platform. Miller Mendel’s complaint asserted “at least claims 1, 5, and 15” of the patent, each of which generally recited a “method for a computing device with a processor and a system memory to assist an investigator in conducting a background investigation” comprising the steps of receiving data identifying the applicant, storing the data, transmitting an applicant hyperlink to the applicant’s email address and receiving an applicant’s response.

Anna moved for judgment on the pleadings, alleging that the patent claims were ineligible for patent protection under 35 U.S.C. § 101. After the district court granted the motion, Miller Mendel filed a motion for reconsideration, arguing that the district court lacked jurisdiction to invalidate any unasserted patent claims. The district court denied the reconsideration motion but clarified that its decision was limited to asserted claims 1, 5 and 15. Anna also filed a motion for attorneys’ fees, which the district court denied, finding that the case was not exceptional. Miller Mendel appealed the § 101 issue, and Anna cross-appealed on the unasserted claims and attorneys’ fees issues.

The Federal Circuit first addressed Miller Mendel’s argument that the district court erred in relying on a declaration filed by Anna in ruling on the Rule 12(c) motion. The Court acknowledged that a Rule 12(c) motion must be treated as one for summary judgment if matters outside the pleadings are presented to and not excluded by the court. However, the district court explained that the declaration was not relevant to its decision, and it did not rely on any material outside the pleadings in its § 101 analysis. Thus, the Federal Circuit found that any error in failing to explicitly exclude the declaration was harmless.

Turning next to the patent eligibility analysis, the Federal Circuit agreed with the district court that under Alice step one, the asserted claims were directed to the abstract idea of performing a background check. The claims and specification emphasized that the invention was a system to “help a background investigator more efficiently and effectively conduct a background investigation” by “automating a majority of the tasks of a common pre-employment background investigation so that fewer hardcopy documents are necessary.” In other words, the problem facing the inventor was the abstract idea of performing background checks more efficiently [...]

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