Newegg wins appeal at CAFC

The outcome:


AdjustaCam sued Newegg and dozens of other defendants for patent infringement. Although AdjustaCam voluntarily dismissed most defendants early in the litigation, it continued to litigate against Newegg, including through a Markman order and extended expert discovery. Just before summary judgment briefing, AdjustaCam voluntarily dismissed its infringement claims against Newegg with prejudice. Newegg then filed a motion for attorneys’ fees. The district court denied Newegg’s motion, and Newegg appealed to this court.

We remanded to the district court in light of intervening Supreme Court precedent.
On remand, the district court again denied Newegg’s motion for fees. Newegg then filed this appeal.
Because the district court erred in denying Newegg’s motion, we reverse.



Of abuse of discretion


Despite this considerable latitude in making fees determinations, an appellate court may correct a district court’s legal or factual error. Highmark, 134 S. Ct. at 1748 n.2. A district court abuses its discretion when its ruling rests on an erroneous legal conclusion or on a clearly erroneous assessment of the evidence. Id.; see also Apple Inc. v. Samsung Elecs. Co., 809 F.3d 633, 639 (Fed. Cir. 2015). The court also abuses its discretion when it makes a “‘clear error of judgment in weighing relevant factors.’” Bayer CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302, 1306 (Fed. Cir. 2017) (quoting Mentor Graphics Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374, 1377 (Fed. Cir. 1998)).

B. The District Court Abused Its Discretion

We hold that the district court abused its discretion by not awarding fees to Newegg for two independent reasons:

(1) it failed to follow our mandate on remand; and

(2) its decision was based on “a clearly erroneous assessment of the evidence.” Highmark, 134 S. Ct. at 1748 n.2. We recognize the deference owed to district courts in deciding fees motions. See Univ. of Utah v. MaxPlanck-Gesellschaft zur Foerderung der Wissenschaften e.V., 851 F.3d 1317 (Fed. Cir. 2017) (affirming decision not to award fees); Bayer, 851 F.3d at 1303 (affirming decision to award fees). Deference, however, is not absolute. Apple, 809 F.3d at 639; see also Highmark, 134 S. Ct. at 1748 n.2; Checkpoint Sys., Inc. v. All-Tag Sec. S.A., __ F.3d __, 2017 WL 2407853 (Fed. Cir. June 5, 2017) (reversing fee award); Rothschild Connected Devices Innovations, LLC v. Guardian Prot. Servs., Inc., __ F.3d __, 2017 WL 2407870 (Fed. Cir. June 5, 2017) (reversing decision not to award fees). When a district court bases its decision on a clearly erroneous view of the evidence, as it did here, the court abuses its discretion in denying fees.



Note


Octane disclosed another reason why this case is exceptional that was not considered by the district court: AdjustaCam litigated the case in an “unreasonable manner.” Octane, 134 S. Ct. at 1756. This measure of exceptionality is evident through AdjustaCam’s repeated use of after-the-fact declarations. In 2012, AdjustaCam served a new expert report on Newegg the day of that expert’s deposition. J.A. 8. AdjustaCam claims it did not realize that it had inadvertently served a draft report until the day of the deposition. But as Newegg argued to the district court, had AdjustaCam served an earlier draft of Dr. Muskivitch’s report on June 25, AdjustaCam would have been aware of this error when Newegg’s expert served his rebuttal report on July 27, 2012. J.A. 1789. AdjustaCam certainly would have known of its error well before Newegg’s expert’s deposition in August 2012. Id.