Biax Corp. v. Nvidia Corp.

Addressing the award of attorneys’ fees by the district court, the U.S. Court of Appeals for the Federal Circuit reversed the district court’s grant of fees under § 285 and affirmed the district court’s denial of fees under § 1927, finding that the district court’s claim construction ruling did not foreclose an infringement theory.  Biax Corp. v. Nvidia Corp., Case Nos. 13-1649; -1653; -1654 (Fed. Cir., Feb. 24, 2015) (Dyk, J.) (non-precedential).

Biax sued Nvidia and Sony for infringement of its patents related to parallel processing computer systems, specifying Nvidia’s and Sony’s graphic systems, which employ a plurality of condition code registers.  The district court construed the asserted claims to require condition code registers be shared by all processor elements.  After expert discovery, the district court granted Nvidia’s and Sony’s motions for summary judgment of non-infringement based on this construction.  Nvidia and Sony moved for attorneys’ fees under § 285 and § 1927 based on Biax’s continued claim of infringement after the district court’s claim construction.  The district court granted Nvidia’s and Sony’s motion for attorneys’ fees under § 285, but denied the motion for fees under § 1927.  Applying the standard underBrooks Furniture, the district court found Biax’s continued assertion of an objectively baseless infringement claim under the district court’s claim construction was in bad faith.  Specifically, the district court awarded attorneys’ fees for the period between Biax’s expert’s deposition and the district court’s summary judgment decision, as Biax’s expert unequivocally stated that the defendants’ devices could not infringe under the district court’s claim construction.  Biax appealed the award of attorneys’ fees under § 285 and Nvidia and Sony cross-appealed the district court’s denial of attorneys’ fees under § 1927.

During the pendency of this appeal, the Supreme Court rejected the Brooks Furniture standard for awarding attorneys’ fees under § 285 in Octane Fitness, holding it is a case-by-case determination based on the totality of the circumstances and such an exceptional case is “rare.”  (See IP Update, Vol. 17, No. 5.)  Additionally, during this pendency, the Supreme Court in Highmark also held that the standard of review for all aspects of a district court’s § 285 determination is abuse of discretion (IP Update, Vol. 17, No. 5).

Applying the Octane Fitness and Highmark standards, the Federal Circuit concluded that the district court’s award of attorneys’ fees under § 285 was improper.  Specifically, the Federal Circuit found that the district court’s claim construction did not foreclose Biax’s infringement theory, as Biax asserted that the sub-units (“shaders”) within the accused graphic processors infringed the claims.  The Federal Circuit also found that Biax’s expert’s testimony confirmed this infringement theory and only conceded that the accused graphic processors did not meet the claim limitation, but the “shader” sub-units did.  Thus, the Federal Circuit found that this was a reasonable, not objectively baseless non-infringement theory, especially as the district court did not clarify its claim construction until its summary judgment decision.  Instead of remanding to the district court to determine whether attorneys’ fees were proper, the Federal Circuit reversed the grant of attorneys’ fees.

Finally, the Federal Circuit affirmed the district court’s denial of attorneys’ fees under § 1927, concluding Biax’s counsel did not exceed the bounds of zealous advocacy.  Specifically, the Federal Circuit held that under U.S. Court of Appeals for the Tenth Circuit case law the denial of fees under § 1927 is proper for the same reasons it denied fees under § 285, as § 1927 is “inapplicable when a lawyer puts forth only objectively reasonable arguments in the absence of bad faith.”