United States: Recovering Attorneys' Fees For AIA Proceedings

The U.S. Supreme Court recently confronted the ever-increasing concerns regarding frivolous patent infringement suits by clarifying the requirements of 35 U.S.C. § 285, the fee-shifting statute, which allows prevailing parties to recover attorneys' fees in "exceptional" cases. In its 2014 Octane Fitness, LLC v. ICON Health & Fitness, Inc. decision, the Supreme Court addressed the statutory term "exceptional," lowering the threshold for determining the types of patent cases in which attorneys' fees should be awarded. Parties seeking attorneys' fees in patent cases were previously required to show that a case was exceptional because "there has been some material inappropriate conduct" or because the litigation was "brought in subjective bad faith" and is "objectively baseless."

However, in Octane, the court explained that "an 'exceptional' case is simply 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."1 In addition, the Octane court made it easier for parties to prove "exceptional case" status by relaxing the evidentiary standard from "clear and convincing evidence" to a "preponderance of the evidence." Importantly, the Octane court also affirmed that district courts had the discretion to determine whether or not a case is "exceptional" based on the totality of the circumstances.

Amidst a litigation landscape in which an increasing number of patents were being asserted, including those owned by non-practicing entities, many criticized the pre-Octane fee recovery requirement as overly restrictive, especially since there existed few other procedural mechanisms to curb questionable patent suits. Indeed, since the U.S. Court of Appeals for the Federal Circuit first set the restrictive standard for determining which cases would qualify as "exceptional," Congress has cautiously considered several patent reform bills and changes to federal court practice rules (including the recent 2016 updates to the Federal Rules of Civil Procedure) to create more stringent requirements for filing patent suits and to make the recovery of attorneys' fees easier for prevailing parties in patent cases.2,3 However, the Supreme Court's ruling in Octane instantly changed the game, immediately making it easier for prevailing parties in patent infringement suits to recover their attorneys' fees.

Although Octane relaxed the standard for what types of cases are deemed exceptional, the case left open the question of exactly what fees associated with "exceptional" cases are recoverable—for example, are fees expended in AIA challenges recoverable?

After their creation by the America's Invents Act, post-grant proceedings—including inter partes review (IPR), covered business method review (CBM) and post-grant reviews (PGR)—are becoming increasingly common defensive responses to district court litigation. IPRs, CBMs and PGRs challenge patent validity before the Patent and Trademark Office's Patent Trial and Appeal Board (PTAB). These hybrid litigation-administrative proceedings allow parties to use traditional litigation tools, such as limited discovery, motion practice and hearings, to argue the validity of patents in a new and highly-tailored forum before administrative judges who are well-trained in patent law.

Arguing validity of patents before the PTAB provides an opportunity for the merits of a patent case to be decided by technically savvy decision makers, the proceedings are often resolved far more quickly than through district court litigation (i.e., generally within a year from institution), and a resolution can often be reached at a much lower cost relative to litigation (especially given the PTAB's strict adherence to limited discovery during its proceedings). In fact, litigation may be stayed pending the outcome of a concurrent PTO proceeding, reducing costs for both parties. Given the numerous benefits, district court defendants in patent infringement suits turn to these post-grant proceedings at an extremely high rate, with exemplary statistics showing that halfway through 2015, approximately 87 percent of IPR and CBM proceedings involved patents that were also being litigated in district court proceedings.4

As one of the motivations for creating post-grant proceedings was to drive down traditional litigation costs by giving parties an alternative avenue to resolve matters without extensive and expensive discovery, motions and trial in district court, it seems natural that those fees would be recoverable in view of the Octane decision. Indeed, Section 285 does not expressly limit fee recovery to district court litigation expenses. But not every district court judge agrees with this rationale. Just recently, two district courts have opined on this very issue—each court reaching substantially different conclusions.

In Deep Sky Software, Inc. v. Southwest Airlines Co.,5,6 parties jointly moved to stay a proceeding in which the defendant filed for inter partes reexamination of the sole asserted patent asserted, which the U.S. District Court for the Southern District of California granted. After all claims of the asserted patent were found to be invalid, and the PTAB affirmed the decision on appeal, the district court lifted the stay, and defendant Southwest Airlines moved for an "exceptional" case finding on the basis of inequitable conduct and violations of local rules. The court granted that motion, predicating the court's later decision to award Southwest Airlines its attorneys' fees, including fees associated with the PTAB proceedings, under Section 285. In granting Southwest Airlines' application for its PTAB fees, the court noted that "[r]eexamination was initiated during and in reaction to plaintiff's action here. Further, the PTO's cancellation of the asserted [] [p]atent claims on grounds of invalidity disposed of plaintiff's complaint here and made the defendant the prevailing party. Thus . . . the reexamination proceedings essentially substituted for work that would have otherwise been done before this court." For these reasons, the court ruled that fees for PTO proceedings were recoverable under Section 285.

The Central District of California came to a different outcome in Credit Acceptance Corp. v. Westlake Services, LLC.7 Defendant Westlake Services filed a CBM petition shortly after being accused of patent infringement in district court, and the court stayed the case. The PTAB ultimately issued a final written decision in the CBM proceeding invalidating certain claims of the asserted patent, leading patent owner/plaintiff Credit Acceptance to file a voluntary motion to dismiss its district court complaint with prejudice. Westlake Services subsequently moved to recover its CBM fees under Section 285, but the court denied this motion after finding that the case was not "exceptional." The court's clerk determined that no costs would be taxed, so Westlake Services moved to retax costs, again arguing that its CBM fees should be recoverable. Noting that Westlake Services failed to provide specific arguments as to why its CBM fees should be recoverable, the court held that despite being the prevailing party, making it eligible for costs under Federal Rule of Civil Procedure 54(d) and the court's corresponding local rules for the taxing of costs, Westlake Service's CBM fees were still not recoverable. In reaching this decision, the court reasoned that the local rules expressly provide for recovery of fees that were paid to the court's clerk, which prevented recovery of CBM fees paid to the PTO, particularly given that the court had already determined that this was not an exceptional case under Section 285.

Despite the different outcomes of these cases, the analysis of both courts makes it clear that a case deemed exceptional under Section 285 could reasonably lead to an award for PTO fees. As the Southwest Airlines court explained, the reality is that PTO proceedings substitute for work that would have otherwise been done in the litigation, and this fact alone makes the incurred fees apt for recovery. This analysis, although easily applicable to district court defendants prevailing in PTO proceedings, is also arguably applied to district court plaintiffs who prevail in PTAB attacks on their patents.

In the end, the Supreme Court's Octane ruling has created a lower threshold for determining which cases are exceptional and, consequently, whether attorneys' fees will be granted to a prevailing party. Because fees associated with post-grant proceedings in the PTAB substitute for work that would have otherwise been performed during the district court litigation, and in some cases create work in addition to that which is done before the district court, prevailing parties are arguably entitled to recover these fees. Thus, prevailing parties seeking PTAB fees should consider taking advantage of the more relaxed post-Octane Section 285 standard to convince the district court that the case should be considered "exceptional."

Once a case is deemed exceptional, parties should take great care to show the court how the PTAB fees substituted for, or added to, work that would have otherwise been performed during the litigation in order to put forth a strong case for recovering PTAB fees.


1 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756, 2014 BL 118431, 110 U.S.P.Q.2d 1337 (2014) (88 PTCJ 28, 5/2/14).

2 Lionel Lavenue, R. Benjamin Cassady, and Michael Su, A Review of Patent Bills in the 114th Congress, http://www.finnegan.com/resources/articles/articlesdetail.aspx?news=c211bd3f-6ab9-4ab4-9489-4717c937fb60.

3 Lionel Lavenue, Michael Su, and R. Benjamin Cassady, 2015 Is Almost Over—What Happened to Patent Reform?, http://www.finnegan.com/resources/articles/articlesdetail.aspx?news=c211bd3f-6ab9-4ab4-9489-4717c937fb60.

4 Saurabh Vishnubhakat, Arti K. Rai, and Jay P. Kesan, Strategic Decision Making in Dual PTAB and District Court Proceedings, http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=6267&context=faculty_scholarship.

5 No. 10-cv-1234-CAB (S.D. Cal. June 1, 2015) (order granting motion to find case "exceptional" under Section 285).

6 No. 10-cv-1234-CAB (S.D. Cal. Aug. 19, 2015) (order granting fees).

7 No. 13-cv-1523-SJO (MRWx) (C.D. Cal. Jan. 5, 2016).

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.

Events from this Firm
18 Sep 2018, Webinar, Washington, DC, United States

The program will examine lessons learned through CCPA and early Federal Circuit decisions and offer strategies to overcome the challenges of §112. For more information, or to register, please see Strafford Publications’ website.

23 Sep 2018, Seminar, Chicago, United States

Finnegan is a sponsor of the Intellectual Property Owners Association Annual Meeting, supporting the Women in IP Networking Brunch.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions