Before Lourie, O’Malley, and Wallach. Appeal from the United States District Court for the Northern District of Texas
Summary: When a case is dismissed with prejudice for lack of standing, the defendant is the prevailing party for purposes of fee-shifting under 35 U.S.C. § 285.
Mr. Raniere sued Microsoft and AT&T for patent infringement. Raniere asserted he was the sole owner of the patents-in-suit. But years earlier, Raniere and his co-inventors had assigned all rights in the patents to an entity that was dissolved before Raniere sued. Defendants moved to dismiss for lack of standing. Despite the district court providing Raniere multiple opportunities to establish his ownership interest, he failed. The district court found Rainere was “wholly incredible and untruthful,” that he demonstrated “a clear history of delay and contumacious conduct,” and was unlikely to be able to cure the standing defect. The district court dismissed the suit with prejudice and awarded Microsoft and AT&T over $440,000 in fees under 35 U.S.C. § 285.
On appeal, Raniere argued that Microsoft and AT&T were not prevailing parties and the district court abused its discretion finding the case exceptional. The Federal Circuit held that that Microsoft and AT&T were prevailing parties. Microsoft and AT&T “won” because the dismissal “prevented Raniere from achieving a material alteration in the relationship between them,” and the dismissal “was tantamount to a decision on the merits.” The Federal Circuit also determined the district court did not abuse its discretion in finding the case exceptional and awarding defendants the majority of the requested fees.