Title 35 of the U.S. Code, Section 285, in its entirety, states that ” [t]he court in exceptional [patent] cases may award reasonable attorney fees to the prevailing party.” This means that if a party prevails in an “exceptional” case, the court may award it upwards of millions of dollars in attorney fees.
Federal Rule of Civil Procedure 11 requires plaintiffs to perform a reasonable prefiling investigation before bringing suit, and given that Rule 11 violations are extremely rare, it stands to reason that the majority of plaintiffs perform the required due diligence. Moreover, 35 U.S.C. Section 285 allows courts in patent cases to award reasonable ...
Failure to make an adequate prefiling investigation can lead to a violation of Rule 11, and trial courts may grant sanctions, including expenses and attorneys’ fees.
Under Rule 11, there is an affirmative duty to investigate both as to law and as to fact before a complaint is filed. All pleadings, motions, papers, and representations to the court must also meet the requirements of Rule 11 or risk triggering sanctions against the offending parties and their attorneys. Failure to make an adequate prefiling investigation can lead to a violation of Rule 11, and trial courts may grant sanctions, including expenses and attorneys’ fees.
Instead, the court gave leniency to the patents invalidated under Section 101 because “the legal landscape surround Section 101 was evolving,” and thus, the court “could not conclude that IV’s ’positions on its patents were at the time objectively unreasonable.” 11.
One of the proposed bills, the Innovation Act (H.R. 9)—originally introduced by Representative Bob Goodlatte (R-Va.) in October 2013 and advanced as “the solution to the problem of abusive patent litigation” 7 —swiftly passed the House in December 2013.
Although this case seemingly harkens back to the subjective-bad-faith requirements of the pre- Octane test, the facts demonstrated to the court, which has wide discretion in making these decisions, that IV’s conduct simply was not “exceptional.” And although the purpose of a fee award under Section 285 is to prevent “exceptional conduct” and to compensate the prevailing party for its resultant fees—which a complaint filed without Rule 11’s required pre-suit investigation would seemingly trigger—without more, a court may not award attorneys’ fees on a Rule 11 violation alone.
The Federal Circuit affirmed the Patent Trial and Appeal Board’s decision holding two of the patents unpatentable, but at the time of the District Court of Missouri’s order, IV’s time to appeal the Southern District of New York’s decision had not yet elapsed.