Keith Raniere v. Microsoft Corp., AT&T Corp. (“Appellees”)

Docket No. 2017-1400, -1401

April 18, 2018

Brief summary: DC’s award under § 285 affirmed since “dismissal with prejudice…is tantamount to a judgment on the merits”.

Summary: Raniere appealed DC award of attorney’s fees and costs under § 285 to the Appellees following a suit alleging infringement of five patents against AT&T and three of the five against MSFT. The inventors, including Raniere, assigned their rights in the patents to Global Technologies, Inc. (GTI) in 1995, which was “administratively dissolved in May 1996”. “Raniere was not listed on GTI’s incorporation documents as an officer, director, or shareholder” and, in 2014, “executed a document on on behalf of GTI, claiming to be its ‘sole owner,’ that purportedly transferred the [patents] fom GTI to himself.” In front of the DC, Raniere was ordered to produce documentation proving ownership of the patents but did not. The suit was eventually dismissed with prejudice and affirmed by an FC panel in 2017. While the appeal was pending, Appellees requested attorney’s fees and costs pursuant to § 285, and the DC awarded Appellees approximately $450,000. The FC panel explained that a DC may “in exceptional cases may award reasonable attorney fees to the prevailing party”, an exceptional case being “simply one that stands out from others with respect to the substantive strength of a party’s litigating position…or the unreasonable manner in which the case was litigated” which the DC “may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances” (Octane, US 2014; Highmark, US 2014; Univ. Utah, FC 2017). Raniere disputed “whether Appellees are prevailing parties under § 285” and argued “that dismissal with prejudice, without adjudication of a patent infringement claim, should preclude finding that a defendant has prevailed in a litigation”. The FC panel disagreed, however, “in light of the Supreme Court’s recent decision in CRST Van Expedited…which held that a favorable judgment is not necessary for a defendant to be deemed a prevailing party” (US 2016), and concluded that the DC’s “dismissal with prejudice…is tantamount to a judgment on the merits” (Rice Servs., FC 2005 (“at least…a court order materially changing the legal relationship of the parties”) clarified Inland Steel, FC 2004 (“to be a prevailing party, one must receive at least some relief on the merits, which alters…the legal relationship of the parties”); Small Justice, 1st Cir. 2017 (fees properly awared when court “resolved the parties’ copyright dispute on standing without reaching the merits of ownership”); Amphastar, FC 2017 (“fees should be awarded to deter future frivolous filings”); Highway Equip., FC 2006 (dismissal with prejudice “constitute[s] a judicially sanctioned change in the legal relationship of the parties”)). Thus, the FC panel affirmed the DC’s finding that the Appellees are “‘prevailing parties’ for the purposes of § 285”. The FC panel also agreed with the DC’s did not abuse its discretion in finding that this case is exceptional based on, e.g., “Raniere’s behavior throughout the litigation [that] employed ‘a pattern of obfuscation and bad faith,’ and that this behavior caused Appellees to incur significant fees and costs” (SFA Sys., FC 2015). It therefore affirmed the DC’s finding on the award of fees.

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