Therasense, Inc. v. Becton, Dickinson and Company

United States Court of Appeals
for the Federal Circuit
______________________
THERASENSE, INC. (now known as Abbott Diabe-
tes Care, Inc.) AND ABBOTT LABORATORIES,
Plaintiffs-Appellees,
v.
BECTON, DICKINSON AND COMPANY AND
NOVA BIOMEDICAL CORPORATION,
Defendants-Appellants,
AND
BAYER HEALTHCARE LLC,
Defendant.
______________________
2012-1504
______________________
Appeal from the United States District Court for the
Northern District of California in Nos. 04-CV-2123, 04-
CV-3327, 04-CV-3732 and 05-CV-3117, Judge William H.
Alsup.
______________________
Decided: March 12, 2014
______________________
CLARA J. SHIN, Covington & Burling, LLP, of San
Francisco, California, argued for plaintiffs-appellees.
With her on the brief was PHILIP A. SCARBOROUGH.
2 THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY
BRADFORD J. BADKE, Ropes & Gray, LLP, of New
York, New York, argued for defendants-appellants Bec-
ton, Dickinson and Company, et al. With him on the brief
was SONA DE.
______________________
Before RADER, Chief Judge, NEWMAN, and DYK, Circuit
Judges.
Opinion for the court filed by Chief Judge RADER.
Dissenting-in-part opinion filed by Circuit Judge DYK.
RADER, Chief Judge.
Becton, Dickinson and Company (Becton) and Nova
Biomedical Corporation (Nova) appeal the denial of vari-
ous fees sought based on an eight-year long patent in-
fringement suit in the United States District Court for the
Northern District of California involving patents owned
by Therasense, Inc. (now known as Abbott Diabetes Care,
Inc.) and Abbott Laboratories (collectively, Abbott). Be-
cause this court agrees with the district court that Becton
and Nova are not entitled to fees on fees, pre-judgment
interest, and post-judgment fees calculated specifically
from the date the district court deemed the case excep-
tional, this court affirms.
I.
In March 2004, Becton sued Abbott in the United
States District Court for the District of Massachusetts
seeking a declaratory judgment of noninfringement of
U.S. Patent Nos. 6,143,164 (’164 patent) and 6,592,745
(’745 patent). The product at issue was Becton’s blood
glucose test strip, called the BD Test Strip. In response,
Abbott sued Becton for patent infringement in the North-
ern District of California alleging that Becton’s BD Test
Strip infringed the ’164 patent, the ’745 patent, as well as
U.S. Patent No. 5,820,551 (’551 patent). The district court
in Massachusetts transferred its case to the Northern
THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY 3
District of California. Abbott then sued Nova, Becton’s
supplier, alleging infringement of the same patents. In
August 2005, Abbott sued Bayer Healthcare LLC (Bayer),
alleging that Bayer’s Microfill and Autodisc blood glucose
strips infringed the ’551 and ’745 patents. The Northern
District of California consolidated all of the cases.
The district court granted summary judgment of non-
infringement for all defendants with respect to all assert-
ed claims of the ’164 and ’745 patents. Therasense, Inc. v.
Becton, Dickinson & Co., 560 F. Supp. 2d 835, 854, 880
(N.D. Cal. 2008). The district court also found nearly all of
the asserted claims of the ’745 patent to be invalid due to
anticipation. Id. Following a bench trial, the district court
determined that claims 1–4 of the ’551 patent were inva-
lid due to obviousness. Therasense, Inc. v. Becton, Dickin-
son & Co., 565 F. Supp. 2d 1088, 1127 (N.D. Cal. 2008),
vacated in part, 649 F.3d 1276, 1296 (Fed. Cir. 2011) (en
banc). The district court also held the ’551 patent unen-
forceable for inequitable conduct. Id. On August 21, 2008,
the district court found the case concerning the ’551
patent to be exceptional and awarded Becton and Nova
costs and fees under 35 U.S.C. § 285. On March 19, 2009,
the district court determined that Abbott owed Becton
and Nova $5,949,050 in attorney’s fees with payment
specifically due “following the exhaustion of all appeals
. . . regarding the validity and unenforceability of the ’551
patent, if the Court’s inequitable conduct judgment is
upheld on appeal.” J.A. 14578.
Abbott appealed the district court’s judgments of inva-
lidity, unenforceability, and noninfringement. Abbott did
not appeal the August 21, 2008 exceptional case finding or
the March 19, 2009 fee award. On appeal, a panel of this
court unanimously upheld the judgments of noninfringe-
ment and invalidity. Therasense, Inc. v. Becton, Dickinson
& Co., 593 F.3d 1289, 1311 (Fed. Cir. 2010), vacated, 374
Fed. App’x. 35 (Fed. Cir. 2010). On the issue of unenforce-
ability, a divided panel affirmed. Id. at 1312-25 (Linn, J.,
4 THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY
dissenting). Abbott then petitioned for rehearing en banc,
which was granted. Therasense, 374 Fed. App’x. at 35.
Sitting en banc, this court reinstated, and affirmed,
the panel decision regarding the district court’s judgment
of obviousness, noninfringement, and anticipation. The-
rasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276,
1297 (Fed. Cir. 2011) (en banc). However, after altering
the standard for inequitable conduct, the en banc court
vacated the district court’s inequitable conduct judgment
and remanded for further proceedings. Id. at 1285.
Applying the new standard on remand, the district
court concluded anew that the ’551 patent was procured
through inequitable conduct. Therasense v. Becton, Dick-
inson and Co., 864 F. Supp. 2d 856, 858 (N.D. Cal. 2012).
Becton and Nova then moved to supplement the original
fee award with (1) appellate and remand fees and expens-
es; (2) fees spent seeking additional fees; (3) pre-judgment
interest on fees; and (4) post-judgment interest calculated
from the 2.18% rate effective August 21, 2008, i.e., the
date the district court found this case to be exceptional.
On May 22, 2012, the district court reinstated its March
19, 2009 fee award and added post-judgment interest
calculated from May 22, 2012. The district court denied
Becton and Nova’s motion for additional fees and interest
in all other respects. J.A. 1.4–1.5. On December 3, 2012,
Abbott paid Becton and Nova the balance specified in the
reinstated March 19, 2009 fee award plus $6,389.12 in
post-judgment interest.
Becton and Nova appealed the district court’s denial
of additional fees. This court has jurisdiction pursuant
to 28 U.S.C. § 1295(a)(1).
II.
Attorney’s fees are authorized by statute upon a dis-
trict court’s finding that a case is exceptional. 35 U.S.C.
§ 285. A finding that a case is “exceptional” involves
THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY 5
underlying factual determinations which are reviewed for
clear error. Wedgetail Ltd. v. Huddleston Deluxe, Inc., 576
F.3d 1302, 1304 (Fed. Cir. 2009). This court reviews a
district court’s award or denial of such fees for an abuse of
discretion. Id. Willfulness and litigation misconduct are
among the reasons that a court may find a case to be
exceptional. Kilopass Tech., Inc. v. Sidense Corp., 738
F.3d 1302, 1311 (Fed. Cir. 2013); MarcTec, LLC v. John-
son & Johnson, 664 F.3d 907, 916 (Fed. Cir. 2012). This
court reviews a district court’s denial of fees on fees for an
abuse of discretion. Mathis v. Spears, 857 F.2d 749, 761
(Fed. Cir. 1998). This court reviews de novo a determina-
tion of post-judgment interest. Taltech Ltd. v. Esquel
Enters. Ltd., 604 F.3d 1324, 1335 (Fed. Cir. 2010).
III.
Becton and Nova first contend that they are entitled
to itemized appellate and remand fees because the district
court’s August 21, 2008 exceptional case finding “perme-
ated” the appeal and remand phases. They argue that
these additional fees and costs should receive treatment
independent of those awarded at the trial phase. For the
appeal and remand phases, Becton and Nova claim fees
and costs totaling $70,591 for the appeal, $927,093 for
rehearing en banc, and $354,213 for remand. Becton and
Nova also claim that the cost of pursuing these additional
fees before the district court was $17,700, not including
the present appeal. Thus, Becton and Nova seek at least
an additional $1,347,297, to which they would add
$569,861 in post-judgment interest calculated specifically
from August 21, 2008 as well as any pre-judgment inter-
est, yet to be determined.
Civil litigation often includes numerous phases. But a
case should be viewed more as an “inclusive whole” rather
than as a piecemeal process when analyzing fee-shifting
under § 285. Comm’r, INS v. Jean, 496 U.S. 154, 161–62
(1990) (“Any given civil action can have numerous phases.
6 THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY
While the parties’ postures on individual matters may be
more or less justified . . . fee-shifting statutes[] favor[]
treating a case as an inclusive whole, rather than as
atomized line-items.”). As this court observed in Rohm &
Haas Co. v. Crystal Chemical Co., parties often task the
trial court with allocating costs and attorney’s fees, how-
ever, “[n]either § 285 nor its legislative history distin-
guishes between awarding attorney fees in the district
court and in the appellate court.” 736 F.2d 688, 692 (Fed.
Cir. 1984). Indeed, § 285 does not bar the trial court from
awarding fees for the entire case, including any subse-
quent appeals. Jean, 496 U.S. at 160 (“[I]t is appropriate
to allow the district court discretion to determine the
amount of a fee award, given its ‘superior understanding
of the litigation and the desirability of avoiding frequent
appellate review of what essentially are factual matters.’”)
(quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)).
In this case, the district court’s March 19, 2009 fee or-
der expressly contemplated an appeal. Indeed, the district
court determined that Abbott owed $5,949,050 “following
the exhaustion of all appeals . . . [and only] if the Court’s
inequitable conduct judgment is upheld on appeal.” J.A.
14578. This court vacated the district court’s inequitable
conduct judgment, thereby vacating the March 19, 2009
order by its express terms. Therasense, 649 F.3d at 1296.
While the district court still found inequitable conduct on
remand, its pre-existing inequitable conduct ruling was
not “upheld on appeal” as required by the March 19, 2009
fee order. As such, the district court did not err in denying
Becton and Nova’s motion for additional fees predicated
on the vacated determination of inequitable conduct.
As an alternative theory, Becton and Nova assert that
Abbott’s appeal and petition for rehearing en banc qualify
independently as exceptional circumstances. The law
provides for appellate and remand fees where those
stages of litigation are deemed independently exceptional
within the meaning of § 285. See Rohm & Haas, 736 F.2d
THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY 7
at 692–93 (interpreting § 285 as applicable only where the
appeal itself is exceptional, and declining to award such
fees where the court did not feel that the litigant truly
“frustrated presentation of this case”); see also Mathis,
857 F.2d at 752 (finding the appeal itself to be exceptional
and observing that the patentee in requesting rehearing
exhibited “ignorance of reality and a persistent penchant
for wasting judicial resources”).
Analogizing Abbott’s conduct to that of the patentee in
Mathis, Becton and Nova characterize Abbott’s continued
pursuit of appellate review as a deliberate and malicious
attempt to prolong the litigation and to deceive the dis-
trict court. In Mathis, the appeal “lack[ed] even a mini-
mally arguable basis and . . . [wa]s in major part frivolous
. . . [because of] record distortions, manufactured facts,
and implausible and unsupportable legal arguments.” 857
F.2d at 761. In contrast, Becton and Nova present zero
evidence of bad faith. Expressions of outrage and suspi-
cion in the form of attorney argument are not evidence of
bad faith. Nor does the mere act of pursuing appellate
review—available as a matter of right and frequently
necessary to preserve future rights of appeal—by itself
suggest an abuse of the legal system.
Here, a dissent and this court’s later decision to grant
Abbott’s petition for rehearing en banc both demonstrate
that Abbott’s appeal was not frivolous. Therasense, 593
F.3d at 1311 (Linn, J., dissenting), vacated, 374 Fed.
App’x. 35 (Fed. Cir. 2010). Abbott developed its appeal
based on the facts and reasonable legal arguments. And
Abbott did, in fact, ultimately succeed on appeal in vacat-
ing the underlying judgment of inequitable conduct.
Therasense, 649 F.3d at 1296. In this regard, § 285 only
awards fees to the “prevailing” party. 35 U.S.C. § 285
(“The court in exceptional cases may award reasonable
attorney fees to the prevailing party.”) (emphasis added).
Abbott prevailed on appeal with respect to inequitable
conduct. Thus, even if the appeal itself is deemed excep-
8 THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY
tional, Becton and Nova cannot be deemed the “prevail-
ing” parties.
For all the foregoing reasons, the district court did not
abuse its discretion by declining to award fees for appeal,
rehearing, and remand on the basis that Becton and Nova
failed to establish that the appeal itself was exceptional.
Becton and Nova also argue that Abbott forced them
to incur additional legal expenses on appeal and remand
before paying the fees owed through trial. Citing to
Mathis, Becton and Nova claim that Abbott owes fees and
expenses for pursuing these additional fees, and any fees
for the appeal regarding fees. 857 F.2d at 756 (awarding
attorney’s fees expressly for the preparation of the fee
submission). But see Jean, 496 U.S. at 163 (noting that
such “fees for fee litigation should be excluded to the
extent that the applicant ultimately fails to prevail in
such litigation” and that such exceptions to fee litigation
“theoretically can spawn a ‘Kafkaesque judicial night-
mare’ of infinite litigation to recover fees for the last
round of litigation over fees”) (citing Hensley, 461 U.S. at
437 (explaining that a request for attorney’s fees should
not result in a second major litigation)).
Regardless, a district court may exercise broad discre-
tion in awarding fees and setting the amounts of fees. See
Kilopass, 738 F.3d at 1312; Mathis, 857 F.2d at 754. In
this case, the district court specifically declined to find the
appeal exceptional within the meaning of § 285 because
the appeal itself was not frivolous and Becton and Nova
presented no evidence of bad faith. To the contrary, the
district court found that “Abbott had a legitimate interest
to appeal the six million dollars in attorney’s fees. . . .
There was no litigation misconduct nor any other reason
to find that Abbott’s appeal was an exceptional case
warranting supplemental fees . . . .” J.A. 1.4.
Moreover, the question of whether to award “fees for
fees,” beyond the context of § 285, is not unique to patent
THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY 9
law. It therefore bears additional consideration that the
Ninth Circuit, in keeping with Jean, recognizes that fees
on fees are deemed “excludable” and that no award of fees
is “automatic.” Thompson v. Gomez, 45 F.3d 1365, 1368
(9th Cir. 1995) (citing Jean, 496 U.S. at 164 n.10). As
such, the district court retains substantial discretion in
fixing the amount of any award. Jean, 496 U.S. at 163.
For all the foregoing reasons, the district court’s decision
not to award fees on fees to Becton and Nova is affirmed.
Becton and Nova also seek post-judgment interest cal-
culated specifically from August 21, 2008, the date the
district court found this case to be exceptional. However,
where a previous judgment is vacated, any post-judgment
interest must be determined based on the more recent
judgment. Taltech, 604 F.3d at 1334–35. The district court
therefore did not err in concluding that post-judgment
interest should accrue only from the date of its order
reinstating the prior fee award of $5,949,050. Nor did the
district court err in denying Becton and Nova pre-
judgment interest. Appellants’ remaining arguments have
been fully considered but are unpersuasive.
IV.
For the foregoing reasons, the district court’s decision
to reinstate its award of attorney’s fees under § 285 and to
deny Becton and Nova’s motion for piecemeal fees beyond
the original award amount is affirmed.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
______________________
THERASENSE, INC. (now known as Abbott Diabe-
tes Care, Inc.) AND ABBOTT LABORATORIES,
Plaintiffs-Appellees,
v.
BECTON, DICKINSON AND COMPANY AND
NOVA BIOMEDICAL CORPORATION,
Defendants-Appellants,
AND
BAYER HEALTHCARE LLC,
Defendant.
______________________
2012-1504
______________________
Appeal from the United States District Court for the
Northern District of California in Nos. 04-CV-2123, 04-
CV-3327, 04-CV-3732 and 05-CV-3117, Judge William H.
Alsup.
______________________
DYK, Circuit Judge, dissenting in part.
This appeal raises two principal questions: first,
whether the district court erred in concluding that an
award of appellate attorney’s fees “is only warranted
where the appeal itself is an exceptional case,” and sec-
ond, whether the district court erred in denying fees
2 THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY
incurred in securing a fee award without explanation. The
majority affirms the district court on both questions. I
respectfully dissent.
I. FEES FOR THE APPEAL
The district court limited its original fee award to fees
incurred before the appeal and in that order did not
address fees for the appeal. After the appeal and remand,
the district court denied appellate fees because it conclud-
ed the appeal was not exceptional. I recognize that a
district court has considerable discretion to reduce a fee
award, see generally Bywaters v. United States, 670 F.3d
1221, 1228-32 (Fed. Cir. 2012), and if I were sitting as a
district judge, I too might be reluctant to award fees for
our en banc proceeding. But the district court here did not
exercise its discretion either in the original order (where
the issue was not decided) or in the remand order. Rather,
the district court concluded in the remand order that it
could not award appellate fees unless the appeal was
independently exceptional. The majority agrees. This
holding, it seems to me, is contrary to Supreme Court
precedent, and will potentially cause problems in future
cases. I would reverse and remand for the district court to
reconsider the appellate fee requests under the correct
legal standard.
The district court concluded that section 285 requires
a party seeking fees to establish that each stage of the
litigation for which it requests fees is independently
exceptional. With respect to other fee-shifting statutes,
the Supreme Court has held that all phases of litigation,
including appellate proceedings, are to be treated as a
unitary whole, not parsed into discrete parts. Comm’r,
INS v. Jean, 496 U.S. 154, 161–62 (1990) (“Any given civil
action can have numerous phases. While the parties’
postures on individual matters may be more or less justi-
fied, the [Equal Access to Justice Act, 28 U.S.C.
§ 2412(d)]—like other fee-shifting statutes—favors treat-
THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY 3
ing a case as an inclusive whole, rather than as atomized
line-items.”). In view of the Court’s admonition that all
fee-shifting statutes should be interpreted in the same
way, Indep. Fed’n of Flight Attendants v. Zipes, 491 U.S.
754, 758 n.2 (1989), and in the absence of any textual
support, I see no reason why section 285 should be inter-
preted differently. Nor has the majority identified any
such reason.
Of course, for our court to award appellate fees, we
must find the appeal itself to be exceptional. See Rohm &
Haas Co. v. Crystal Chem. Co., 736 F.2d 688, 692 (Fed.
Cir. 1984). But nothing in Rohm & Haas suggested that
the trial court must find an appeal exceptional to award
appellate fees. In another case, we ordered a district court
to award appellate fees where the “totality of proceedings”
constituted an exceptional case. PPG Indus., Inc. v. Cela-
nese Polymer Specialties Co., 840 F.2d 1565, 1569 (Fed.
Cir. 1988). And Jean, a later case by the Supreme Court,
reaffirmed that multi-stage litigation should be treated as
a unitary whole, and that appellate fees should be treated
as part of the whole.
The majority affirms the district court’s denial of fees
in part on the basis that Becton Dickinson and Nova were
not “prevailing parties” in the original appeal and en banc
proceedings. Majority Op. at 7-8 (internal quotation
marks omitted). But the Supreme Court has held that the
phrase “prevailing party” applies to any party “who has
established his entitlement to some relief on the merits of
his claims.” Hanrahan v. Hampton, 446 U.S. 754, 756–57
(1980); see also Hensley v. Eckerhart, 461 U.S. 424, 433 &
n.7 (1983) (“prevailing party” is “a generous formulation
that brings the plaintiff only across the statutory thresh-
old”). Becton Dickinson and Nova prevailed on invalidity
and noninfringement at both stages of the appeal. They
ultimately prevailed on inequitable conduct as well. By
establishing their entitlement to relief on the merits of
their claims, Becton Dickinson and Nova were thus “pre-
4 THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY
vailing parties” under the standard set forth by the Su-
preme Court even if they did not completely prevail at
each stage.
II. FEES FOR FEES
The majority also upholds the district court’s refusal
to allow any fees accrued in the process of securing an
award of fees. The Supreme Court in Jean made clear
that awards of such fees-for-fees should reflect the degree
to which the original fee request was successful. See 496
U.S. at 163 n.10 (“[F]ees for fee litigation should be ex-
cluded [only] to the extent that the applicant ultimately
fails to prevail in such litigation.” (internal quotation
marks omitted)). It follows that fees for successful fee
petitions should be allowed.
No case of which I am aware has upheld the blanket
denial of such fees. Even the Ninth Circuit case on which
the majority relies made clear that fees should be allowed
for successfully securing fees. Thompson v. Gomez, 45
F.3d 1365, 1368 (9th Cir. 1995) (“Fees for fee litigation are
excludable . . . ‘to the extent that the applicant ultimately
fails to prevail in such litigation.’” (quoting Jean, 496 U.S.
at 163 n.10)). In an earlier opinion, the Ninth Circuit
surveyed fees-for-fees precedent extensively and conclud-
ed that “federal courts . . . have uniformly held that time
spent in establishing the entitlement to and amount of
the fee is compensable.” In re Nucorp Energy, Inc., 764
F.2d 655, 659–60 (9th Cir. 1985). The court explained that
this was because “it would be inconsistent with the pur-
pose of the [act authorizing fees] to dilute a fees award by
refusing to compensate the attorney for the time reasona-
bly spent establishing and negotiating his rightful claim
to the fee.” Id. at 660 (alteration and internal quotation
marks omitted). Here, even under the majority’s view,
Becton Dickinson and Nova were entitled to substantial
fees. The district court was required to allow fees to
secure those fees.
THERASENSE, INC. v. BECTON, DICKINSON AND COMPANY 5
I would remand to the district court to reconsider Bec-
ton Dickinson and Nova’s fees requests. I respectfully
dissent from the majority’s affirmance. 1
1 I agree with the majority on the issues of pre-
judgment and post-judgment interest.