The District of New Jersey denied defendants' motion for attorneys fees after judgment of invalidity in their favor and despite the Federal Circuit's indication in a prior litigation that the asserted patent may be obvious, in Teva Women's Health, Inc. v. Lupin, Ltd., Case No. 10-cv-0603, slip op. (D.N.J. Nov. 13, 2012) (Sheridan, J.).

Defendants' argued that Teva should have withdrawn its claim after the Federal Circuit inidcated in a prior appeal that the patent-in-suit may be obvious and that Teva's failure to do so made this case exceptional under 35 U.S.C. 285.  The Court disagreed because Teva presented a strong case supported by expert testimony and reasonable arguments in favor of validity.  Thus, the Court held that the case was not exceptional and, even if it were, the Court exercised its discretion in denying an award of attorneys fees.

Attorneys fees are recoverable in "exceptional cases" where the prevailing party can show that it was "injured by an egregious abuse of the judicial process."  The court must first determine if a case is exceptional and then determine if an award of fees is appropriate.  A party asserting that a case is exceptional must prove by clear and convincing evidence that there has been "litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement."  Absent such litigation or prosecution misconduct, legal fees may be imposed against a patentee plaintiff only if both (1) the litigation is brought in subjective bad faith and (2) the litigation is objectively baseless.