Lodestar Attorney Fee Made Easy California 2019
The Federal Circuit vacated the finding of exceptionality, and remanded.
To award attorney fees under § 285, a district court must first determine whether a case is exceptional. If the court finds the case exceptional, it must calculate the amount of the attorney-fees award. On appeal, all aspects of the § 285 determination are reviewed for abuse of discretion.
The Federal Circuit vacated the trial court's finding of exceptionality. The district court found (1) that Large Audience was a shell corporation, formed with the sole intent to create jurisdiction in the E.D. of Tex. (where the case originated before a 2011 transfer to the C.D. Cal.) , (2) that Large Audience's claim was frivolous, and (3) that Large Audience prolonged reexamination by refusing to present the PTO with additional dispositive prior art. The Federal Circuit held these findings were either irrelevant or not justified by the record.
First, specific jurisdiction is based on the defendant's contacts with the forum state, not the plaintiff's. So where Large Audience is incorporated is irrelevant to whether the trial court may exercise jurisdiction. Second, Large Audience's claim was not frivolous. That the PTO cancelled the asserted claims, without more, does not support a finding of frivolousness. Given that the PTAB gives claims their broadest reasonable construction, and given that no presumption of validity attaches to the claims, a reexamination rejection may be relevant in finding frivolousness, but the rejection isn't dispositive. Third, the record did not support the district court's finding that withheld prior art was dispositive in the reexamination.
The Federal Circuit thus held that the three noted factors were given undue weight, and vacated the exceptionality finding.
Should the district court find the case exceptional on remand, the panel gave guidance for calculating the attorney-fee amount. Under the lodestar method, the court calculates attorney fees by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate, one reflecting the prevailing market rate based on the attorneys' skill, experience, and reputation. The panel criticized the district court for accepting the attorney-fees amount proposed by Defendants as reasonable—without performing a lodestar calculation.
On remand, if the district court finds the case exceptional, it must use the lodestar method to calculate attorney fees. Although Defendants were represented by New York attorneys, the litigation occurred in a California court, so "California fee rates should be used to calculate the lodestar figure unless there is some special expertise [Defendants's] counsel had that warrants a different rate, or a showing is made that there is a prevailing national rate applicable in patent cases." The district court should also scrutinize the billing entries, to determine whether they were unreasonable.
, 660 F. App'x 966 (Fed. Cir. 2016)
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Source: http://www.fedcirdamages.com/in-calculating-attorney-fees-under-the-lodestar-method-the-trial-court-should-use-market-rates-of-the-forum-state/
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