Justia U.S. Federal Circuit Court of Appeals Opinion Summaries

Articles Posted in Legal Ethics
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PS Products, Inc. and Billy Pennington (collectively, PSP) own a U.S. Design Patent for a long-spiked electrode for a stun device. They filed a lawsuit in the Eastern District of Arkansas against Panther Trading Company, Inc. (Panther) for patent infringement. Panther responded with a Rule 11 letter and a motion to dismiss, arguing the infringement claims were frivolous and the venue was improper. PSP did not respond to these communications and later moved to voluntarily dismiss the case with prejudice. Panther then sought attorney fees and sanctions, claiming the lawsuit was frivolous.The United States District Court for the Eastern District of Arkansas dismissed the case with prejudice and awarded Panther attorney fees and costs under 35 U.S.C. § 285, deeming the case exceptional. The court also imposed $25,000 in deterrence sanctions on PSP under its inherent power, citing PSP's history of filing meritless lawsuits. PSP filed a motion for reconsideration of the sanctions, which the district court denied.The United States Court of Appeals for the Federal Circuit reviewed the case. PSP appealed the $25,000 sanctions, arguing the district court lacked authority to impose them in addition to attorney fees and that the court applied the wrong legal standard. The Federal Circuit held that the district court did not err in imposing sanctions under its inherent power, even after awarding attorney fees under § 285. The court found that PSP's conduct, including filing a meritless lawsuit and citing the wrong venue statute, justified the sanctions. The Federal Circuit affirmed the district court's decision and declined Panther's request for attorney fees for the appeal, determining the appeal was not frivolous as argued. View "PS Products, Inc. v. Panther Trading Co., Inc." on Justia Law

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Backertop Licensing LLC and Lori LaPray appealed the U.S. District Court of Delaware’s orders requiring LaPray to appear in-person for testimony regarding potential fraud and imposing monetary sanctions for her failure to appear. The District Court identified potential misconduct in numerous related patent cases involving IP Edge and Mavexar, which allegedly created shell LLCs, assigned patents for little consideration, and directed litigation without disclosing their ongoing rights. The court was concerned that this arrangement concealed the real parties in interest and potentially perpetrated fraud on the court.The District Court ordered LaPray, the sole owner of Backertop, to produce documents and appear in-person to address these concerns. LaPray moved to set aside the order, citing travel difficulties and requesting to appear telephonically, which the court denied. The court rescheduled the hearing to accommodate her schedule but maintained the requirement for in-person testimony to assess her credibility. LaPray did not attend the rescheduled hearing, leading the court to hold her in civil contempt and impose a daily fine until she appeared.The United States Court of Appeals for the Federal Circuit reviewed the case. The court held that the District Court’s orders were within its inherent authority and not an abuse of discretion. The court found that Federal Rule of Civil Procedure 45, which limits the geographic range of subpoenas, did not apply to the court’s sua sponte orders. The court affirmed the District Court’s orders, emphasizing the necessity of in-person testimony to investigate potential misconduct and assess credibility. The monetary sanctions for LaPray’s failure to appear were also upheld. View "BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. " on Justia Law

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This case revolves around the dispute between Daniel Bader, a military officer who previously held the rank of Colonel but had attained the rank of Brigadier General at the time of his application for retirement in 2012, and the United States. Bader was found to have violated ethical standards set forth in 18 U.S.C. § 207(c) and 5 C.F.R. § 2635, which led to his retirement at the rank of Colonel, affecting his rate of retirement pay. Bader brought suit in the Court of Federal Claims seeking compensation for his allegedly lost pay. The court, however, ruled against him, finding no error in the decision to retire him at the lower rank of Colonel.Bader appealed to the United States Court of Appeals for the Federal Circuit, arguing that he was unfairly penalized for holding both a military and civilian employment concurrently, which was permissible. He also contended that he was acting in accordance with multiple ethics opinions that he believed permitted his actions, and that his employer's operation through an Other Transactions Authority allowed him to engage in the conduct he was penalized for.The Appeals Court, however, affirmed the lower court's decision, stating that Bader's simultaneous employment in military and civilian capacities did not exempt him from ethical obligations. His reliance on ethics opinions didn't change the fact that he used his government position to benefit his private employer. The court also clarified that the Other Transactions Authority doesn't exempt government employees from generally applicable ethics regulations. Therefore, Bader's retirement at the rank of Colonel was deemed appropriate given his violations of ethical standards. View "BADER v. US " on Justia Law

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In 2011, PersonalWeb sued Amazon in Texas, alleging that Amazon’s S3 technology infringed PersonalWeb’s “True Name” patents. After the court construed the claim terms, PersonalWeb stipulated to dismissal. In 2018, PersonalWeb asserted the same patents against 85 Amazon customers for their use of Amazon S3. Amazon intervened and filed a declaratory judgment action. The customer cases and Amazon’s declaratory judgment action were consolidated. PersonalWeb represented that if it lost its “Twitch” customer case, it could not prevail in the other customer cases. The court stayed the other cases; the Twitch case and Amazon’s declaratory judgment action proceeded. PersonalWeb counterclaimed against Amazon, alleging that Amazon S3 infringed its True Name patents and accused another Amazon product, CloudFront, of infringement.The Federal Circuit affirmed partial summary judgment of non-infringement of the S3 product, based on claim preclusion and summary judgment of non-infringement as to CloudFront because, under the earlier claim construction, PersonalWeb admittedly could not prove infringement. The district court granted Amazon and Twitch attorneys’ fees and costs, 35 U.S.C. 285, determining that the case was exceptional because PersonalWeb’s claims related to Amazon S3 were objectively baseless in light of the Texas Action; PersonalWeb frequently changed positions; PersonalWeb unnecessarily prolonged litigation after claim construction foreclosed its infringement theories; PersonalWeb’s positions regarding the customer cases were unreasonable; and PersonalWeb submitted declarations that it should have known were not accurate. The Federal Circuit affirmed an award of $5,401,625.06, including $5,187,203.99 in attorneys’ fees. View "In re PersonalWeb Techs., LLC" on Justia Law

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FMC and OSS own patents that cover structures for subsea oil and gas recovery. OSS sued, alleging that FMC’s Enhanced Vertical Deepwater Tree equipped with FMC’s Retrievable Choke and Flow Module infringed 95 claims across 10 OSS patents. The infringement question in the suit boiled down to whether fluid flows through FMC’s accused device as required by the OSS Patents. Finding that OSS failed to raise a genuine issue of material fact regarding whether FMC’s accused devices met the “divert” limitations of the OSS Patents, the district court granted FMC summary judgment.FMC sought Attorneys’ Fees and Non-Taxable Costs under 35 U.S.C. 285, which applies to “exceptional cases.” FMC argued that the Markman Order foreclosed any legitimate diverter infringement claims going forward, making OSS’s litigation position on infringement objectively baseless and that the substantive weakness of OSS’s infringement claims is shown by OSS’s failure to produce any admissible evidence. FMC alleged litigation misconduct by OSS as unreasonably prolonging the case.Applying the Supreme Court's “Octane Fitness” test the district court denied FMC’s motion. The Federal Circuit affirmed, rejecting FMC’s arguments that OSS’s case was objectively baseless after the claim construction order and that rejection of OSS’s evidence demonstrated the substantive weakness of OSS’s case. OSS that it had no obligation to revise its litigation strategy just because the Patent Board had invalidated diverter claims in different patents. View "OneSubsea IP UK Ltd. v. FMC Technologies, Inc." on Justia Law

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UCANN sued Hemp for infringing its patent, entitled “Cannabis Extracts and Methods of Preparing and Using the Same.” UCANN filed for bankruptcy, which automatically stayed the litigation. After the bankruptcy petition was dismissed, the parties stipulated to the dismissal of the patent case. UCANN’s infringement claims were dismissed with prejudice; Hemp’s invalidity and inequitable conduct counterclaims were dismissed without prejudice.Hemp sought attorney fees under 35 U.S.C. 285, 28 U.S.C. 1927, and the court’s inherent authority, claiming that UCANN’s prosecution counsel had committed inequitable conduct by copying text from a piece of prior art into the specification of the patent and not disclosing it to the Patent and Trademark Office as prior art and UCANN’s litigation counsel purportedly took conflicting positions in its representation of UCANN and another client (the owner of the prior art). Hemp expressly notified the court that it did not seek any further proceedings, including a trial or evidentiary hearing, in connection with its motion. The district court denied the motion based on the existing record.The Federal Circuit affirmed upholding findings that Hemp failed to establish that it is the prevailing party under section 285, that this is an “exceptional” case warranting an attorney’s fee award, or that UCANN’s counsel acted in a vexatious or otherwise unreasonable manner. While Hemp’s position was extremely weak, it was neither “frivolous as filed” nor “frivolous as argued.” View "United Cannabis Corp. v. Pure Hemp Collective Inc." on Justia Law

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Crawford served in the U.S. Army and Florida National Guard for two decades. He was discharged in 2011 due to his service-connected PTSD. Crawford’s PTSD began after his second tour of duty in Iraq. The Florida State Surgeons Medical Discharge Review Board (SSMDRB) found Crawford did not meet medical retention standards and that his PTSD was incurred in the line of duty. It recommended a fitness determination by a Physical Evaluation Board (PEB), a prerequisite for medical retirement, 10 U.S.C. 1201. Crawford was not referred to a PEB but was discharged as if his PTSD was not service-related, without medical retirement.Crawford sought correction of his records and retroactive benefits before the Army Board for the Correction of Military Records (ABCMR). Notwithstanding the SSMDRB’s findings and the fact that Crawford was discharged for failure to meet medical retention standards, a doctor opined Crawford met retention standards at the time of his discharge. Crawford filed suit. On the government's motion, the court remanded for a fitness determination and development of the record. On remand, the ABCMR found Crawford was entitled to medical retirement based solely on the evidence available at the time of his separation and granted him complete relief, including the correction of his records and retroactive medical retirement benefits.The Federal Circuit reversed the denial of Crawford’s subsequent motion for attorneys’ fees and expenses under the Equal Access to Justice Act. Crawford was a prevailing party. View "Crawford v. United States" on Justia Law

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Pitts, the surviving spouse of an Army veteran, filed for dependency and indemnity compensation from the VA in 2001. The Board of Veterans’ Appeals affirmed. In 2012, Pitts employed attorney Viterna. Their fee agreement was filed with the VA and provided that Viterna was owed 20% of any past-due benefits Pitts recovered, less certain expenses but applied only to claims for which a notice of disagreement was filed after June 20th, 2007; the NOD covering the 2001 claim was filed in 2005. Viterna asserts that this was an “unintentional drafting error.”In 2014, Viterna secured past-due benefits for Pitts, which related back to the 2005 NOD. The agency refused to pay Viterna 20% of those benefits. The Board affirmed. Before the Veterans Court, Viterna argued that Congress only gave the VA the power to assess whether a fee agreement was valid and if its terms were excessive or unreasonable—not whether the agreement covered the claim at issue.The Veterans Court and Federal Circuit disagreed. There was no qualifying agreement between Viterna and Pitts providing for payment of a fee for the claim in question. The court noted that between 1988-2006, attorneys could only charge fees for representing claimants after the Board’s “final decision.” In 2006, Congress amended 38 U.S.C. 5904, effective June 20th, 2007, to allow attorneys to charge for VA representation as soon as a claimant had filed a NOD seeking review of a regional office decision. View "Viterna v. McDonough" on Justia Law

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The 2010 ACA (Patient Protection and Affordable Care Act; Health Care and Education Reconciliation Act) created a three-year Risk Corridors program with the creation of new health-insurance marketplaces, which presented uncertain risks for participating health-insurance companies. Qualified health-plan issuers (QHP issuers) that offered their products in the new marketplaces were entitled to payments from HHS if they suffered sufficient losses, 42 U.S.C. 18062(b).The government failed to make those payments. QHP issuers sued under the Tucker Act, 28 U.S.C. 1491(a)(1). In two such lawsuits, the Quinn law firm was lead counsel for classes of QHP issuers seeking payments. In the opt-in notices sent to potential class members with court approval, Quinn represented that it would seek attorney’s fees out of any recovery, that it would seek no more than 5% of any judgment or settlement, and that the Claims Court would determine the exact amount by considering how many issuers participated, the amount at issue, and a “lodestar cross-check” (based on hours actually worked). Meanwhile, the Supreme Court, in other cases, held that QHP issuers were entitled to collect ACA-promised payments.The Claims Court entered judgments in favor of the classes, totaling about $3.7 billion, then awarded Quinn 5% of the common funds, rejecting objections. The total fee was about $185 million. The Federal Circuit vacated. The Claims Court’s analysis was inconsistent with the class opt-in notices and did not adequately justify the extraordinarily high award. View "Health Republic Insurance Co. v. United States" on Justia Law

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Realtime filed patent infringement actions against Netflix in the District of Delaware. While that action was ongoing, Netflix filed petitions for inter partes review (IPR) and moved to dismiss the complaint, arguing patent ineligibility under 35 U.S.C. 101. Following the institution of the IPR proceedings and a recommendation from the Delaware magistrate finding certain claims ineligible, Realtime voluntarily dismissed the Delaware action—before the district court ruled on the magistrate’s findings. The next day, Realtime reasserted the same patents against Netflix in the Central District of California—despite having previously informed the Delaware court that transferring the Delaware action to the Northern District of California would be an unfair burden on Realtime. Netflix then moved for attorneys’ fees and to transfer the actions back to Delaware. Before a decision on either motion, Realtime again voluntarily dismissed its case.Netflix renewed its motion for attorneys’ fees for the California actions, the Delaware action, and IPR proceedings. The district court awarded fees for both California actions under 35 U.S.C. 285, and, alternatively, the court’s inherent equitable powers. The court declined to award fees for the Delaware action or IPR proceedings The Federal Circuit affirmed. The district court did not abuse its discretion in awarding fees under its inherent equitable powers or in denying fees for the related proceedings The court did not address whether the award satisfies section 285's requirements. View "Realtime Adaptive Streaming LLC v. Netflix, Inc." on Justia Law