Keith Manufacturing v. Butterfield was decided on April 7, 2020, on appeal from the District of Oregon. Plaintiff Keith Manufacturing brought a lawsuit against Defendant and former employee Butterfield after Butterfield filed a patent application. Keith alleged that the patent was based on inventions made during Butterfield’s employment and sought a declaration of non-infringement, a declaration of invalidity, breach of contract, misappropriation of trade secrets, and correction of inventorship. Butterfield sent Keith a covenant not to sue and then filed a motion to dismiss the first four claims. The district court dismissed the declaratory judgment claims, but allowed the state claims to proceed. The parties then filed a stipulation of dismissal with prejudice under Rule 41(a)(1)(A)(ii). The stipulation was silent as to costs and attorney fees. Twelve days later Butterfield moved for fees. The district court denied the motion, holding “that the parties’ stipulation to dismiss with prejudice did not satisfy Rule 54’s judgment requirement” because “a stipulation to dismiss with prejudice is not an appealable order.” Butterfield appealed.
The Federal Circuit vacated the denial of attorney fees and remanded.
Under FRCP 54, a claim for attorney fees “must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages.” Rule 54 motions must: “(i) be filed no later than 14 days after the entry of judgment; and (ii) specify the judgment and the statute, rule, or other grounds entitling the movant to the award.” “Judgment as used in these rules includes a decree and any order from which an appeal lies.”
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The district court erred in finding that the stipulated dismissal with prejudice cannot constitute a judgment for the purposes of Rule 54. “The definition of judgment in Rule 54 indicates that some non-appealable orders can still constitute a judgment.” Rule 54(a) states that judgment “includes . . . any order from which an appeal lies,” (emphasis in opinion), not that judgment is any order from which an appeal lies. “This inclusive language reveals that Rule 54 ‘judgment’ includes more than just appealable orders. The Federal Circuit thus vacated and remanded.