On January 5, a district court denied defendant Westlake Services, LLC’s Motion for recovery of costs related to CBM petitions that invalidated certain of the patent claims asserted in the pending litigation and prompted plaintiff to voluntarily dismiss the district court case. Credit Acceptance Corp. v. Westlake Services, LLC, Case 13cv01523 (C.D. Cal. January 5, 2016). The court’s decision was governed by the language of the local rules identifying taxable costs. Because the local rules provided only recovery for “filing fees paid to the Clerk” and not filing fees paid to other entities, the request to recover the filing fees of $73,200 paid to the USPTO as part of the CBM Proceedings was denied. Order at p. 5-6. Similarly, the court declined to allow recovery of costs related to deposition expenses incurred solely in connection with the CBM that were never cited in the district court for any substantive purpose because they were not “used for any purpose in connection with the case” as required by the Local Rules. Order at p. 7-8.

The plaintiff, Credit Acceptance Corp., filed a complaint alleging infringement of U.S. Patent No. 6,950,807 in March 2013. In October 2013, Westlake filed a first CBM petition with the PTAB seeking review of the ‘807 Patent, arguing invalidity under §§ 101 and 112. On defendant’s opposed motion, the district court stayed the litigation. The PTAB declined institution as to claims 10-12 and 14-33. Westlake filed an unsuccessful Motion for Reconsideration, then a second CBM Petition. In connection with the first CBM, the PTAB issued a Final Written Decision in March 2015, finding claims 1-9, 13, and 34-42 unpatentable under § 101. Plaintiff filed a Motion to Voluntarily Dismiss the Complaint with Prejudice, which the court granted over Westlake’s Objection.

Westlake filed a motion seeking a declaration that the case was exceptional within the meaning of 35 U.S.C. § 285 and requesting fees and costs. The Court refused to find the case exceptional, but did not address whether Westlake was the prevailing party for purposes of costs in its initial order. The Clerk of Court entered an Award and determined that no costs were to be taxed. Defendant Westlake then filed a Motion to Tax Costs against Plaintiffs. While the court agreed that Westlake was the prevailing party, it denied any recovery of costs related to the CBM.

Westlake has filed a Notice of Appeal of the Order denying its Motion for Attorneys’ Fees. At least one court has allowed recovery of PTAB-related fees in connection with related district court litigation in an exceptional case, reasoning that the IPR was related to the suit because it was initiated in reaction to the litigation and essentially substituted for work that would otherwise have been done before the district court.  (Deep Sky Software v. Southwest Airlines Co., No. 10cv1234 at p. 4 (S.D. Cal. August 19, 2015) (granting request for PTAB fees and costs totaling nearly $400,000)). If Westlake’s appeal proceeds to a decision, we may see the Federal Circuit weigh in on the appropriateness of awarding related PTAB fees in a district court proceeding.