Federal Circuit Serves Dish Network a Victory in Fee Dispute

The Court of Appeals for the Federal Circuit has issued its opinion in Dragon Intellectual Property’s case against satellite TV provider DISH Network and Sirius XM Radio. The case was appealed from the Delaware District Court. DISH and Sirius XM Radio (SXM) appealed the court’s order denying their motion for attorney’s fees. The Federal Circuit reversed the Delaware court, holding that “[b]ecause the district court erred in holding that [DISH and Sirius] are not prevailing parties under §285, we vacate and remand.”

Dragon Intellectual Property sued DISH and SXM separately in 2013 for infringing its patent. DISH filed for inter partes review of the patent and SXM filed a joinder, and the court stayed waiting for the Patent Trial and Appeal Board’s decision. After the PTAB held the asserted claims unpatentable, the district court issued a judgment of noninfringement. DISH and SXM then moved to attorneys’ fees, but Dragon appealed the district court and PTAB’s decisions.

The Federal Circuit affirmed the PTAB decision and dismissed a similar appeal as moot. Dragon then moved to vacate the district court’s noninfringement decision and to dismiss the case as moot. The district court vacated this decision, but retained jurisdiction for the motion for fees.

The district court denied the motion for attorneys’ fees because, while “DISH and SXM ‘achieve[d] a victory’ over Dragon but held that neither DISH nor SXM is a prevailing party because they were not granted ‘actual relief on the merits.’” The court added, “success in a different forum is not a basis for attorneys’ fees.” DISH and SXM appealed this decision, stating that the district court made a mistake stating they “are not prevailing parties.”

The Federal Circuit, referring to §285, notes the “district court ‘in exceptional cases may award reasonable attorney fees to the prevailing party.’” They agree with DISH and SXM that the district court erred declaring them not prevailing parties “because they were not awarded ‘actual relief on the merits.’” The Federal Circuit stated that it has previously held that “a defendant can be deemed a prevailing party even if the case is dismissed on procedural grounds rather than on the merits.”

The decision was made in B.E. Technology v. Facebook, in which the Federal Circuit stated, “we see no meaningful distinction that would warrant a different interpretation under §285.” In B.E. Technology, the Court held that “‘even though the mootness decision was made possible by winning a battle on the merits before the PTO’ Facebook was a prevailing party because it ‘rebuffed B.E.’s attempt to alter the parties’ legal relationship in an infringement suit.’” Similarly, DISH and SXM “successfully rebuffed Dragon’s attempt to alter the parties’ legal relationship in an infringement suit.” Dragon attempted to differentiate this case from the B.E. Technology case on the grounds that the district court “here vacated the judgment of noninfringement previously entered in favor of Appellants instead of merely dismissing the case as moot.” The Federal Circuit notes that this argument puts “form over substance and is inconsistent with the reasoning set forth in B.E. Technology.”

The Federal Circuit states that the noninfringement judgment was vacated, which meant Dragon’s argument was moot because of DISH and SXM’s victory to invalidate the asserted patent claims. As a result, this victory supports that DISH and SXM are prevailing parties. The Federal Circuit vacates and remans the district court’s order to deny DISH and SXM’s motions for attorneys’ fees.

Dragon Intellectual Property is represented by in-house counsel and DISH Network is represented by Baker Botts. Sirius XM Radio is represented by Kramer Levin Naftalis & Frankel.