The US Court of Appeals for the Federal Circuit affirmed the district court judge’s award of attorneys’ fees, denying AIA’s argument that it was entitled to a jury trial on that issue. AIA Am., Inc. v. Avid Radiopharmaceuticals, Case No. 16-2647 (Fed. Cir., Aug. 10, 2017) (Hughes, J).
The patents at issue relate to genetic markers for Alzheimer’s disease. Years before the present action, a jury found that AIA’s founder and two scientists at universities in the United Kingdom and Florida had “orchestrated a scheme” to dishonestly procure the patents for AIA, unjustly carving the universities out of the deal. The Federal Circuit upheld that verdict, and the district court judge awarded attorneys’ fees to the defendants under § 285. AIA again appealed.
AIA did not appeal the amount of the attorneys’ fees award, but instead argued that the Seventh Amendment and due process clauses of the US Constitution required a jury trial to decide the facts underpinning the award.
The Federal Circuit disagreed. The Court found that the Seventh Amendment preserves the right to a jury trial for “suits at common law” that involve only legal rights and remedies, and that there is no such right for equitable rights and remedies. To determine whether a modern cause of action involves only legal rights and remedies, the Federal Circuit applied the two-step test articulated by the Supreme Court of the United States in Tull v. United States (1987):
- Evaluate how the cause of action had been handled in 18th century courts.
- Determine whether the remedy sought is “legal or equitable in nature.”
The second prong of this inquiry is deemed to be more important than the first. Under the first step, the Court explained that judges—not juries—have determined attorneys’ fees for centuries. Under the second step, the Court noted that attorneys’ fees are an “‘equitable remedy’ because they raise ‘issues collateral to and separate from the decision on the merits.’”
Relying on Federal Circuit precedents, AIA next argued that the district court erred by making additional fact findings beyond those the jury had previously found concerning fraud in procuring the patents. The Federal Circuit disagreed, explaining that when deciding equitable issues, a judge can make additional factual findings so long as they are not contrary to or inconsistent with any issues that had been previously resolved by a jury. The Court concluded that the district court judge “was not foreclosed” in making any additional factual findings.
Finally, regarding AIA’s argument that its due process rights were violated because the district court did not allow it to submit evidence concerning its “intent, state of mind, or culpability,” the Federal Circuit noted that the district court had given both parties the opportunity to fully brief and submit evidence and affidavits concerning the attorneys’ fees motion. The Court further noted that the district court held a hearing on the motion during which AIA had an opportunity to present argument. Thus, the Court concluded that AIA’s due process was not violated.