Case: Buckhorn Inc. v. Orbis Corp., No. 2012-1643 (Fed. Cir. Sept. 19, 2013) (non-precedential). On appeal from S.D. Ohio. Before Rader, O’Malley, and Reyna.
Procedural Posture: Defendant accused-infringer appealed denial of its motion for fees, costs, reasonable attorney’s fees, and expenses. CAFC reversed and remanded (for reasonableness of any fee award).
- Contract: The predecessor-in-interest of the plaintiffs and the predecessor-in-interest of the defendant entered into a settlement and license agreement. The agreement included a reciprocal fee-shifting provision where, should a future dispute arise out of the agreement, the prevailing party is entitled to recover all fees, costs, reasonable attorney’s fees, and other expenses. Applying California state law, the CAFC held that the district court erred in denying fees and costs based solely on the fact that plaintiffs were unaware of the agreement when they filed suit. The agreement eliminated the majority of the asserted infringement claims, therefore the suit was a controversy arising “in connection with” the agreement, per the broad language of the fee-shifting provision. Moreover, awarding fees and costs would not be unconscionable, and the district court erred by basing its finding of unconscionability on events taking place after the parties entered into the agreement rather than at the time they entered into it. On remand, the district court could factor in defendants’ alleged dilatory conduct in determining the reasonableness of any fee award, but could not refuse the make an award given the unambiguous terms of the contract.