The U.S. Court of Appeals for the Federal Circuit reversed a district court’s award of attorney fees to a defendant who filed and faxed its answer to a complaint for patent infringement. RFR Industries, Inc. v. Century Steps, Inc., Case Nos. 05-1610, 06-1285 (Fed. Cir., Feb. 16, 2007) (Prost J.).

In 1998, RFR sued Century for infringing two patents related to an embedded railway track system. As part of the settlement of the 1998 lawsuit, Century promised to purchase a certain amount of the patented product from RFR. In 2004, Century refused to pay for some of the product that it had ordered and received. RFR again filed suit, alleging infringement of the same two patents. In its answer to the complaint, Century admitted that it had withheld payment on at least one order of flangeway filler, but asserted that RFR’s claims were “barred by the doctrines of patent exhaustion and implied license.” Century faxed a copy of the answer to RFR’s attorney notwithstanding Fed. R. Civ. P. 5(b)(2), which permits service by fax only when it is “consented to in writing by the person served.” RFR had not consented to fax service.

RFR decided not to pursue the case and filed a document seeking dismissal of its claims without prejudice under Fed. R. Civ. P. 41(a)(1)(i), which provides that an action may be dismissed by plaintiff without court order “by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment.” The district court denied RFR’s motion to dismiss, deeming that Century had answered and that RFR therefore could not dismiss the case without prejudice absent an order from the court. The district court further granted Century’s motion for judgment on the pleadings and motion for attorney fees.

Applying the law of the Fifth Circuit, the Federal Circuit vacated the district court’s grant of judgment on the pleadings, finding it “both improper and without effect.” The Court held that RFR’s case was dismissed upon its filing of a notice of dismissal, noting that a defendant’s mere filing of an answer, without service on the plaintiff, is not enough to prevent a plaintiff from dismissing its action under Rule 41(a)(1)(i). Finally, because RFR’s voluntary dismissal without prejudice did not constitute a change in the legal relationship of the parties (RFR was free to re-file its case), Century was not a “prevailing party” under 35 U.S.C. § 285 and was not entitled to attorney fees.

Practice Note: This case illustrates the importance of reading, then re-reading, the Federal Rules of Civil Procedure. Many a litigant has learned to its dismay that what it thinks is acceptable under the Rules is, in fact, not.