Despite the Supreme Court's Octane Fitness decision making it easier to award attorneys’ fees, the Federal Circuit has overturned a sanctions ruling against Biax Corp., a patent holding company that is now bankrupt. Earlier this week, the three-judge panel said that district judge Philip Brimmer of the district of Colorado had wrongly ordered Biax in 2013 to pay about $2 million in attorneys' fees to defendants Nvidia Corp. and Sony Corp. after losing its patent case against them.

Biax initiated the lawsuit by suing Nvidia, graphics chipmaker, and Sony in 2009 for infringement of two patents. Judge Brimmer dismissed the case in 2012 but granted defendants' request to force Biax to pay their attorneys' fees. Biax subsequently filed for Chapter 11 bankruptcy protection. Judge Brimmer ruled at the time that Biax had shown bad faith in pressing forward with its case even though his claim construction left open no possibility for infringement, making the case exceptional. Last year, the Supreme Court issued two cases—Octane Fitness v. Icon Health & Fitness and Highmark v. Allcare—which relaxed the standard for finding a case exceptional. Although Judge Brimmer made his ruling under a higher bar for fee shifting, the Federal Circuit stated that Biax rightfully pursued its lawsuit due to uncertainty in Judge Brimmer’s Markman order, and the sanctions could not stand even under the easier standard outlined by the Supreme Court decisions. 

The Federal Circuit found that defendants did not prove the case was “objectively baseless” or that it was brought in bad faith. The court stated that “[b]ecause neither the expert testimony nor the claim construction orders foreclosed Biax’s position and there was nothing unreasonable about Biax's infringement position, the basis for the district court’s award of fees no longer exists.” The Federal Circuit ultimately found that “even applying the deferential standard of review under Highmark, the district court's fee award must be set aside.”

Biax Corp v. Nvidia Corp., No. 13-1649 (Fed. Cir. Feb. 24, 2015).