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By Kurt J. Niederluecke & Adam R. Steinert

In a lawsuit that redefined the standard for an exceptional case under 35 U.S.C. § 285, the District Court awarded defendant Octane Fitness $1,778,030 in fees and costs. The District Court initially denied Octane Fitness’ motion for fees. But after the Supreme Court redefined the standard on appeal, reversed and remanded the case (Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014)), the District Court found the case exceptional under the new standard.

In the Court’s September 1 Order, Judge Ann D. Montgomery allowed the majority of the requested fees, and in doing so helped define the envelope of recoverable fees. Judge Montgomery addressed whether appellate fees are recoverable, finding that an appeal must be found separately exceptional to allow fees. In this case, Judge Montgomery found the plaintiff’s appeal of her original summary judgment order to be separately exceptional, because the plaintiff’s appeal relied on the same “exceptionally weak” infringement arguments the plaintiff made in opposition to summary judgment. Judge Montgomery denied appellate fees for the appeal related to her original denial of attorneys’ fees under the old standard, however, because it was not unreasonable for the plaintiff to believe that the Supreme Court would uphold the Federal Circuit’s existing § 285 standard.

Judge Montgomery also found that Defendant’s distribution of legal work to senior level attorneys was appropriate, and their rates were reasonable. Her reliance on the bi-annual AIPLA Report of the Economic Survey in evaluating the reasonableness of fees suggests that the AIPLA resource continues to be valuable evidence on the reasonableness of fees. Judge Montgomery also awarded electronic legal research costs, but ruled that expert witness fees are not recoverable under § 285.

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