United States: Federal Circuit: No Right to a Jury Trial for Attorney's Fees Awarded in Patent Cases

In an August 10, 2017 opinion, AIA America, Inc. v. Avid Radiopharmaceuticals, a Federal Circuit panel held that 35 U.S.C. § 285 does not establish a right to a jury trial when attorney's fees are requested.1 The case began after AIA America, Inc. ("AIA") sued Avid Radiopharmaceuticals and The University of Pennsylvania (collectively, "Avid") for infringement of the patents-in-suit, which are "generally directed to research technologies stemming from the discovery of . . . a genetic mutation that is associated with early-onset familial Alzheimer's disease." In a prior ruling, the Federal Circuit affirmed the district court's finding that AIA lacked standing to assert the patents-in-suit and judgment was entered in favor of Avid. Afterwards, Avid requested attorney's fees. The district court allowed the submission of "extensive briefing, evidence, and declarations on the issue of fees" and held a hearing on the issue before awarding over $3.9 million in attorney's fees to Avid. AIA appealed, arguing that: (1) "the Seventh Amendment requires a jury trial to decide the facts forming the basis to award attorney's fees," (2) "the district court erred by making factual findings on issues that were not considered by a jury," and (3) due process was violated because AIA was denied "the opportunity to submit evidence regarding its intent, state of mind, or culpability." Disagreeing with AIA's arguments, the Federal Circuit affirmed the attorney's fee award.

First, AIA argued that the Seventh Amendment requires a jury trial to decide facts forming the basis for an attorney's fees award under § 285. The panel explained that "[t]he Seventh Amendment preserves the right to a jury trial for '[s]uits at common law,'" which refers to "suits in which [] legal rights and remedies were at issue, as opposed to equitable rights and remedies."2 Thus, "[a] legal remedy requires a jury trial on demand, while an equitable remedy does not implicate the right to a jury trial."3 To determine whether a grant of attorney's fees implicates "legal rights and remedies," the panel applied the two-step inquiry set out in Tull v. United States, 481 U.S. 412 (1987).

Step one of the Tull inquiry "compare[s] the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity."4 Applying this step, the panel found that English courts traditionally allowed judges-not juries-to determine attorney's fees. Accordingly, step one of the Tull inquiry "implies that attorney's fees generally do not involve legal rights."5

The panel then turned to step two of the Tull inquiry, which "examine[s] the remedy sought [to] determine whether it is legal or equitable in nature."6 While noting that attorney's fees may constitute legal remedies in certain circumstances (i.e., when fees "are themselves part of the merits of an action"), the panel found that attorney's fees under § 285 are an equitable remedy. The panel reasoned that § 285, like some other statutory provisions awarding attorney's fees, provides an equitable remedy because it "raise[s] 'issues collateral to and separate from the decision on the on the merits.'"7 Thus, the panel decided that "[b]oth steps of the Tull test reflect that requests for attorney's fees under § 285 are equitable and do not invoke the Seventh Amendment right to a jury trial." Accordingly, "AIA's right to a jury trial under the Seventh Amendment was not violated."

Second, AIA argued that the attorney's fees award was improper because the district court made factual findings on issues that were not considered by a jury. Specifically, AIA argued that two Federal Circuit cases "precluded the district court from making factual determinations about AIA's state of mind, intent, and culpability since those questions were never presented to the jury." The panel, though, found that these cases stood for "the straight-forward proposition that after a trial on legal issues, a court may not make findings contrary to or inconsistent with the resolution of any issues necessarily and actually decided by the jury."8 "Thus, the district court was not foreclosed from making additional findings about AIA's state of mind, intent, and culpability" when determining whether to award attorney's fees.

Finally, AIA argued that the district court violated AIA's due process rights by failing to give it opportunity to submit evidence regarding its state of mind, intent, or culpability. The panel disagreed, noting that "the district court provided both parties the opportunity to fully brief the motion seeking attorney's fees and allowed both parties to submit any additional evidence and affidavits." Additionally, the panel stated that "[t]o the extent AIA believes its due process was violated because the district court did not allow it to present evidence regarding intent to a jury, AIA was not entitled to a jury trial on the issue of attorney's fees."9 Thus, there were no due process violations regarding the district court's granting of attorney's fees.

In sum, under the facts of this case, the panel held that "[b]ecause the Seventh Amendment right to a jury trial does not apply to requests for attorney's fees under § 285 of the Patent Act, the district court did not err by making factual findings not foreclosed by the jury's [prior] verdict."

Footnotes

1 AIA America, Inc. v. Avid Radiopharmaceuticals, No. 16-2647, Slip Op. at 2 (Fed. Cir. Aug. 10, 2017).

2 Slip Op. at 5 (citing U.S. Const. amend. VII; Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989)).

3 Slip Op. at 5 (citing Curtis v. Loether, 415 U.S. 189, 196 n.11 (1974)).

4 Slip Op. at 5 (quoting Tull, 481 U.S. at 417).

5 Slip Op. at 6.

6 Id. at 5 (quoting Tull, 481 U.S. at 417-18).

7 Slip Op. at 6 (quoting Budinich v. Becton Dickinson & Co., 486 U.S. 196, 200 (1988)).

8 Slip Op. at 7 (citations omitted).

9 Id. at 8.

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