Holding

In Dragon Intellectual Pro. v. Dish Network, Civ. No. 13-2066-RGA, 2021 U.S. Dist. LEXIS 215347 (D. Del. Nov. 8, 2021), the District of Delaware found that the case was an exceptional one and awarded attorney’s fees to the Defendants. Those fees, however, did not extend to fees incurred by the Defendants during their inter partes review.

Dragon filed suit against Dish Network and Sirius XM (“SXM”) for allegedly infringing US Patent No. 5,930,444, which is directed to a recording device. Dish and SXM subsequently sent separate letters to Dragon’s counsel asserting that their products, which record continuously from the time viewing or listening begins, could not infringe the asserted claims, which require that a user initiate a recording by pressing a record key. Dish and SXM also noted that Dragon had disclaimed continuous recording devices during prosecution to overcome the examiner’s rejections. Dish then filed a petition for inter partes review of the asserted patent, which SXM later joined. While the IPR was pending, the district court held a claim construction hearing and determined that Dragon had, indeed, disclaimed continuous recording devices during prosecution, and the parties stipulated to non-infringement. Dish and SXM then filed motions for attorney’s fees under, inter alia, 35 U.S.C. § 285.

Under 35 U.S.C. § 285, a court may award reasonable attorney’s fees to the prevailing party “in exceptional cases.” The district court J found this to be an exceptional case. Because of Dragon’s “clear disclaimer in the intrinsic evidence” and its knowledge of non-infringement, this case “stood out from others with respect to Dragon’s substantive litigating position and was thus exceptional,” which allowed for an award of reasonable attorney’s fees.[1]

The attorney’s fees, however, did not include those fees incurred during voluntary IPR proceedings. Citing to Federal Circuit case law,[2]the Defendants argued that a “case” should be viewed as an “inclusive whole” and fees should be awarded.

However, the district court found clarification in a later Federal Circuit decision that “inclusive whole” only referred to district court and appellate proceedings.[3]Turning to the Defendant’s arguments that the IPR was filed because they “thought it was the most cost-effective way to resolve the case,” the district court found that the IPR was a voluntary, nonjudicial proceeding. Therefore, the court found no persuasive legal analysis authorizing attorney’s fees for the IPR proceedings.

Lastly, Defendants argued that Dragon’s former attorneys should be jointly and severally liable for any fee awards. Disagreeing, the court noted that federal courts follow a presumption that if the statute “does not explicitly permit a fee award against counsel, it prohibits it.” Because § 285 does not explicitly permit a fee award against counsel, the court found no basis to impose liability.