Lumen View Tech. v. Findthebest.com was decided on January 22, 2016 on appeal from the Southern District of New York. There, the district court held that plaintiff-Lumen View’s patent was directed to an abstract idea, and therefore was invalid under § 101. Defendant Findthebest then moved for an award of attorney fees under § 285. Applying Octane Fitness the district court held the case exceptional and awarded attorney fees, finding that “the most basic” pre-suit investigation would have shown that the accused feature did not infringe, and that Lumen filed the suit to extract a nuisance settlement from Findthebest. As to the fee amount, the district court enhanced the sum by two, holding that the lodestar amount was uncharacteristically low, and thus would not sufficiently deter similar misconduct in the future. Lumen appealed the finding of exceptionality and the award of attorney fees.
The Federal Circuit affirmed the finding of exceptionality, vacated the attorney fee award, and remanded.
Citing Octane Fitness, the Federal Circuit laid out the law on exceptionality: “[a]n exceptional case is one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” (parenthesis in original). This determination is committed to the discretion of the district court.
Finding no abuse of discretion, the Federal Circuit affirmed the district court’s finding of exceptionality. “The allegations of infringement were ill-supported,” the Federal Circuit held, “particularly in light of the parties’ communications and the proposed claim constructions, and thus the lawsuit appears to have been baseless.” Findthebest’s attorneys had informed Lumen of the baselessness of the suit from the onset of litigation, and had repeatedly sought clarification as to the nature of the alleged infringement.
The Federal Circuit then stated the standard for calculating an attorney-fee award under Perdue v. Kenny A. “[A] district court usually applies the lodestar method, which provides a presumptively reasonable fee amount, … by multiplying a reasonable hourly rate by the reasonable number of hours required to litigate a comparable case.” “In rare and exceptional cases, a district court may enhance the lodestar amount based on various factors, provided they are not adequately taken into account by the lodestar calculation.” These factors must relate to the prevailing party’s attorney’s performance or conduct (e.g., the lodestar doesn’t adequately measure the attorney’s true market value; the attorney is subjected to “extraordinary outlaw of expenses” for protracted litigation; or “exceptional delay” in payment of fees).
The Federal Circuit held that the district court failed to properly justify the enhancement of the attorney fee award by two. The district court reasoned that the lodestar amount was “extremely low” because of the court’s proactive case management and expeditious resolution of the merits. Such an analysis, emphasizing the results obtained, is disfavored by Supreme Court precedent. The results-obtained factor is generally subsumed within the lodestar calculation and thus shouldn’t provide an independent basis for enhancing the lodestar sum. The district court also reasoned that the calculated lodestar sum would be an insufficient deterrent to predatory baseless litigations. This was error because deterrence is relevant when determining whether to award attorney fees, but not when determining the amount of a reasonable attorney fee.
The Federal Circuit thus vacated the attorney fee award and remanded the case for recalculating a reasonable award.
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