Court: Court of Appeals for the Federal Circuit; October 29, 2001; Federal Appellate Court
OEA, Inc. appeals a decision from the U.S. District Court for the Central District of California, which deemed its patent infringement suit exceptional, warranting an award of attorney fees to Special Devices, Inc. The district court initially invalidated OEA's U.S. Patent 5,404,263 under the on-sale bar of 35 U.S.C. § 102(b), referencing prior sales between OEA and Coors Ceramics Co. that occurred before the patent application's critical date. The court further found OEA engaged in litigation misconduct and inequitable conduct in securing the '263 patent from the Patent and Trademark Office (PTO). The court did not specify the attorney fee amount, leading to a lack of jurisdiction for the Federal Circuit to hear the appeal, resulting in its dismissal. The patent, which pertains to an all-glass header assembly for airbag inflation, was issued to OEA despite the law firm representing both OEA and Coors being aware of the prior sales but failing to disclose them. Coors, which also sought patent protection, ultimately abandoned its reissue application after facing rejection due to the same on-sale bar issue. Special Devices, asserting noninfringement, brought suit against OEA, which culminated in a partial summary judgment favoring Special Devices, reinforcing the patent's invalidity.
Two weeks after the judgment in Special Devices I, Special Devices filed for attorney fees, which the district court granted, designating the case as exceptional under 35 U.S.C. § 285 due to OEA's inequitable conduct, including failure to disclose relevant transactions and misrepresentation of inventorship, as well as litigation misconduct involving the nonproduction of documents. The court, lacking evidence on the specific amount of fees, deferred the quantification of the award pending further evidence and briefing. An appeal was filed before this quantification process began.
Jurisdiction is a critical issue that the court can raise on its own. The appeal's jurisdiction is established under 28 U.S.C. § 1295(a)(1), which grants the Federal Circuit exclusive jurisdiction over appeals from final district court decisions based on patent jurisdiction. The key question is whether an unquantified attorney fee award under 35 U.S.C. § 285 constitutes a final decision. The conclusion reached is that it does not. The court applies Federal Circuit law, as the awarding of attorney fees under § 285 is specific to patent law, reaffirming its authority to determine jurisdiction based on its own legal standards.
The determination of whether an award of attorney fees under 35 U.S.C. § 285 is final and appealable prior to quantification remains unresolved. However, a precedent from View Engineering indicates that decisions imposing sanctions under Federal Rule of Civil Procedure Rule 11 are not final for appeal until the liability amount is set. This reasoning applies similarly to attorney fees under § 285, emphasizing judicial efficiency and the prevention of piecemeal appeals. The final judgment rule aims to avoid the costs and delays associated with multiple appeals within the same case. Furthermore, the analysis of § 285 entails determining both the case's exceptional nature and the corresponding fee amount, with the two components being interrelated. The fee amount should reflect the extent to which a party prevailed and, in cases of misconduct, may even be zero despite an exceptional ruling. Overall, the interconnectedness of the exceptional finding and fee determination supports a unified review process.
Most circuits have established that an award of unquantified attorney fees, whether concerning Rule 11 sanctions or other statutory provisions, is not considered a final decision. Key cases include Gilda Marx, Inc. v. Wildwood Exercise, Inc., where the court lacked jurisdiction for a cross-appeal based solely on unquantified fees, and Century 21 Real Estate Corp. v. Century 21 Real Estate, Inc., which dismissed an appeal regarding unquantified fees under the Lanham Act. Other cases, such as Commonwealth of Penn. v. Flaherty and S. Travel Club, Inc. v. Carnival Air Lines, Inc., reinforce that an order awarding fees without a specific amount is not final and thus not appealable. The distinction in statutory provisions (35 U.S.C. 1291 vs. 35 U.S.C. 1295(a)(1)) does not affect the application of the final decision rule. The court concluded that decisions to award unquantified attorney fees in exceptional cases under 35 U.S.C. 285 are not final. Following oral arguments, Special Devices referenced Budinich v. Becton Dickinson Co. to support their position, but the court found this case distinguishable, emphasizing that Budinich does not support jurisdiction over appeals concerning unquantified attorney fees.
Johannsen established that the 'final except for an accounting' provision of 28 U.S.C. 1292(c)(2) does not apply to judgments related to non-patent claims. Majorette Toys is also distinct as it determined that an appeal concerning validity, infringement, and attorney fees maintains finality despite the lack of a precise attorney fee amount. The reasoning suggests that if a patent case can be appealed under 1292(c)(2) after determining validity and infringement, it would similarly be logical to allow an appeal after settling validity, infringement, damages, and attorney fees, even if the specific fee amount is undetermined. If any rulings on validity or infringement are overturned, quantifying attorney fees may become irrelevant. Therefore, permitting the appeal can prevent unnecessary delays and complications related to sensitive attorney records if the case's merits or fee award are reversed.
Majorette Toys distinguished Gilbreth Int'l Corp., where the sole issue was unquantified attorney fees without prior determinations on validity or infringement. Thus, Majorette Toys' ruling does not apply to the current appeal, which is more aligned with the precedent set in View Engineering. Although Akron Polymer Container Corp. allowed review of attorney fees without a specified amount, it did not address the same finality issue, and therefore does not serve as precedent. Consequently, the court concludes it lacks jurisdiction to address the appeal's merits, resulting in its dismissal.
The court may award reasonable attorney fees to the prevailing party in exceptional cases under 35 U.S.C. 285. However, 28 U.S.C. 1292(c)(2) does not apply to this appeal, which concerns a judgment in an exceptional case rather than a judgment for patent infringement. The accounting exception in 1292(c)(2) is not relevant as it pertains exclusively to infringement damages under 35 U.S.C. 284, which are not in question here. Furthermore, when a patent owner loses in district court, as in this instance, 1292(c)(2) is not applicable. A contrasting case, Bittner v. Sadoff, Rudoy Indus., allows for reviewing judgments that do not quantify attorney fees under the principle of judicial administration despite the absence of direct appellate jurisdiction.
