United States: Attorney Fees For Post-Grant Patent Challenge Proceedings Before The USPTO May Be Recoverable In Exceptional Cases Under 35 U.S.C. § 285

Last Updated: August 27 2015
Article by Hans P. Smith

Parties accused of patent infringement are turning more and more to post-grant challenge proceedings at the United States Patent and Trademark Office ("USPTO") as a faster and cheaper means for invalidating the asserted claims. A recent federal district court order indicates that the fees and costs associated with such proceedings may be recoverable if the underlying infringement suit is declared "exceptional" under 35 U.S.C. § 285.

On August 19, 2015, the United States District Court of the Southern District of California awarded defendant Southwest Airlines Co. nearly $400,000 in attorney fees and costs related to an inter partes reexamination of U.S. Patent No. 6,738,770 (the "'770 patent"). Order Granting Def'ts Application for Fees and Costs, Deep Sky Software, Inc. v. Southwest Airlines Co., Case No. 10-cv-1234-CAB, Dkt. No. 49 (S.D. Cal. Aug. 19, 2015). Southwest was sued for infringement of the '770 patent in June 2010 by patent owner Deep Sky. Southwest filed a request for inter partes reexamination in April 2011, and the parties jointly moved for a stay pending the outcome of the reexamination, to which the court agreed. The reexamination concluded in December 2014, with all of the asserted claims of the '770 patent found invalid by the Patent Trial and Appeal Board.

The court previously declared the case exceptional under § 285 on June 1, 2015. Order Granting Def'ts Mot. to find this an "Exceptional Case," Deep Sky Software, Inc. v. Southwest Airlines Co., Case No. 10-cv-1234-CAB, Dkt. No. 44 (S.D. Cal. June 1, 2015). During the '770 patent reexamination proceedings, the patent owner submitted a declaration by the inventor to attempt to establish that the conception and reduction to practice of the invention had predated a potentially invalidating reference. As part of the declaration, the inventor stated that "[a] key moment" in the development of the invention "occurred when [Deep Sky] purchased the Flexgrid product in 1999, as this provided tools enabling further development." The examiner in reexamination found that the Flexgrid product, a software program, itself disclosed the claimed subject matter of the '770 patent and indicated that the inventor did not in fact invent the claimed invention. Importantly, the content of the Flexgrid product was never disclosed to the USPTO during the initial prosecution of the patent, and was never disclosed by Deep Sky to Southwest during the district court proceedings.

The court declared the case exceptional due to Deep Sky's failure to timely disclose material prior art (i) to the USPTO during prosecution and (ii) to Southwest in compliance with the patent local rules of the court. The court noted that the inequitable conduct in prosecution was a valid basis for finding the case exceptional, and that based on the record, it was clear that the inventor knew of the prior art Flexgrid product and its materiality to patentability, the inventor intentionally withheld its disclosure from the USPTO, and the reference would have been material to prosecution. The court further explained that Deep Sky had been required but failed to disclose the Flexgrid product to Southwest during the early stages of the litigation. Southern District of California Patent Local Rule 3.2.b requires plaintiffs to produce documentation related to the conception and development of the invention that predate the filing date of the patent application, which would have included documentation related to the Flexgrid product. The court explained that Deep Sky's failure to disclose had violated the good-faith requirements of the local rule and had likely lengthened the litigation and reexamination proceedings to Southwest's detriment. Following the finding of an exceptional case, the court turned to Southwest's application for attorney fees and costs related to the reexamination.

The court noted that the "issue of whether a prevailing party in an exceptional case may recover fees for proceedings before the PTO, when the case was stayed due to the PTO proceedings, has received little attention." The Federal Circuit has interpreted attorney fees to include "those sums that the prevailing party incurs in the preparation for and performance of legal services related to the suit." Cent. Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1578 (Fed. Cir. 1983). The district court found that "the reexamination proceeding essentially substituted for work that would otherwise have been done before this court" and was "related to the suit" because the reexamination was initiated during and in reaction to the plaintiff's infringement action. Further, the reexamination proceeding led to the cancellation of all of the asserted claims, disposed of Deep Sky's complaint, and made Southwest the prevailing party. Accordingly, the court found that "under the unique circumstances of this case," Southwest could recover fees for the reexamination proceeding.

The court's logic would similarly apply to an application for § 285 fees for the AIA post-grant proceedings of inter partes reviews, post-grant reviews, and transitional post-grant review proceedings of covered business method patents. Of course, the threshold determination that the underlying district court litigation is exceptional must be met. But if the court finds the case exceptional, the challenger appears to have a good chance of recovering fees related to a successful post-grant proceeding challenge that invalidates all of the asserted claims-in-suit and effectively disposes of the entire complaint.

The Deep Sky decisions serve as a stark reminder of the importance of complying with USPTO Rule 56's duty of candor and good faith in dealing with the patent office, which includes the duty to disclose all known information that may be material to patentability. For computer-implemented inventions, this may include disclosure of prior-art software packages utilized in development to provide any underlying functionality. The decisions also underscore the importance of proper pre-suit diligence by patent owners and their litigation teams to investigate the history of conception, reduction to practice, and commercialization of patents-in-suit. By failing to do so, patent owners increase the risks of facing a fee award under § 285 and effectively paying for an accused infringer to invalidate pieces of their patent portfolios. Conversely, for accused infringers this case may provide additional leverage in settlement discussions, as a favorable decision in a post-grant proceeding provides additional evidence that the case is exceptional under § 285, and the threat of attorney fees awards for AIA proceedings now appears more serious.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.