An Award of Exceptional Case Fees Under the Patent Act for an Appeal

Apr 6, 2017

On top of $2 million in attorneys’ fees and over $4 million in trebled damages, MGA Entertainment, Inc. (the maker of Bratz dolls) has to pay Innovention Toys LLC’s attorneys’ fees for appellate proceedings that went to the Federal Circuit Court of Appeals and then up to the United States Supreme Court.

Innovention Toys originally filed the lawsuit against MGA in 2007 for patent infringement of a strategy board game called “Khet,” which uses laser beams to “fire” at opposing movable pieces. The game was a finalist for the 2007 Toy of the Year Awards. In 2012, a jury found that MGA was liable for infringement due to its similar, competing game, “Laser Battle,” and awarded $1.6 million in damages. The Louisiana federal judge found that the infringement was “willful” under the Patent Act and awarded enhanced damages, as well as attorneys’ fees under the “exceptional case” provision of 35 U.S.C. § 285.

The Federal Circuit reversed the jury verdict and the district court’s finding of willful infringement and vacated the award of attorneys’ fees against MGA. Innovention and MGA both petitioned for rehearing; both requests were denied. Innovention petitioned the United States Supreme Court for a writ of certiorari, arguing that the Federal Circuit’s reversal of the district court’s finding of willfulness and enhancement of damages was erroneous. The Supreme Court granted the writ of certiorari, vacated the Federal Circuit’s judgment and remanded the case to the Federal Circuit for further consideration in light of its Halo Electronics, Inc. v. Pulse Electronics, Inc. decision (which replaced the Federal Circuit’s Seagate test for enhanced patent damages with a test that is easier for patent owners to meet). The Federal Circuit remanded the case to the district court on the issue of enhanced damages and attorneys’ fees.

In March 2017, United States District Court Judge Susie Morgan decided the case was “exceptional” under the holding of Halo and again awarded enhanced damages and attorneys’ fees to Innovention. Subsequently, Innovention asked Judge Morgan for an award of its attorneys’ fees for the appellate proceedings.

MGA argued that the court needed to make a separate finding that the appeal itself was “exceptional” in order to award appellate attorneys’ fees to Innovention. Judge Morgan disagreed.

On April 5, 2017, Judge Morgan ruled that although an award of attorneys’ fees is not automatic upon an unsuccessful appeal, the appeal does not need to be “independently exceptional” to justify an award of exceptional case fees under section 285. Instead, Judge Morgan ruled that it was appropriate to look at the “totality of the circumstances” in her exercise of discretion to award fees to Innovention for its prosecution of the “entire action,” including MGA’s appeal.

Judge Morgan also awarded Innovention its “fees for fees,” i.e. the fees it incurred to prepare its claim for attorneys’ fees.

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An Award of Exceptional Case Fees Under the Patent Act for an Appeal

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