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Dismissal with prejudice for lack of standing makes defendant a prevailing party for attorney fees

Dismissal with prejudice for lack of standing makes defendant a prevailing party for attorney fees

Raniere v. Microsoft was decided on April 18, 2018 on appeal from the Northern District of Texas. The district court dismissed plaintiff Raniere’s action with prejudice for lack of standing for Raniere’s failure to show ownership interest. Defendants, including Microsoft, moved for attorney fees under §285. The district court award fees and costs to defendants, and in the alternative sanctioned Raniere’s conduct under its inherent authority. Raniere appealed.

The Federal Circuit affirmed the award of attorney fees and costs under §285.

Microsoft was the prevailing party. Under 35 U.S.C. §285, a district court “in exceptional cases may award reasonable attorney fees to the prevailing party.” To be a prevailing party in patent litigation, “one must receive at least some relief on the merits, which alters the legal relationship of the parties.” The Federal Circuit rejected Raniere’s argument that “dismissal with prejudice, without adjudication of a patent infringement claim, should preclude finding that a defendant has prevailed in a litigation.”

As an initial matter, “a favorable judgment on the merits is not necessary for a defendant to be deemed a prevailing party for purposes of statutory fee-shifting.” The defendant “may prevail even if the court’s final judgment rejects the plaintiff’s claim for a nonmerits reason.” This is logical “because the defendant has fulfilled its primary objective whenever the plaintiff’s challenge is rebuffed, irrespective of the precise reason for the court’s decision.” Thus, “if a defendant succeeds on a jurisdictional issue, it may be a prevailing party.” And here, Microsoft “won through the court’s dismissal of Raniere’s case with prejudice.” The defendants  “received all relief to which they were entitled.” And this entitles defendants “to a finding that they have prevailed in this litigation, such that an award of attorney fees would be appropriate.”

Alternatively, “the district court’s dismissal with prejudice of Raniere’s case for lack of standing [was] tantamount to a judgment on the merits.” Here, “the district court found explicitly that the standing defect was unlikely to be curable, based on Raniere’s repeated failures to correct the defect.” The dismissal of a claim with prejudice “is a judgment on the merits under the law of the Federal Circuit.” Thus, “to the extent any relief on the merits remains a necessary predicate to prevailing-party status,” the dismissal with prejudice here was such a judgment.

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Under either of these rationales, the defendants had “in fact prevailed in this case.”

The district court did not abuse its discretion in finding the case exceptional, and in awarding fees and costs. “The district court specifically found that Raniere’s behavior throughout the litigation employed a pattern of obfuscation and bad faith, and that this behavior caused [the defendants] to incur significant fees and costs to oppose Raniere’s positions.” The “determination of fees and costs is well-supported and reflects the court’s careful consideration of the relevant billing rates, invoices, and records.”

 

Raniere v. Microsoft Corp., 887 F.3d 1298 (Fed. Cir. 2018)