Romag Fasteners, Inc. v. Fossil, Inc.

United States Court of Appeals
for the Federal Circuit
______________________
ROMAG FASTENERS, INC.,
Plaintiff-Cross-Appellant
v.
FOSSIL, INC., FOSSIL STORES I, INC., MACY'S,
INC., MACY'S RETAIL HOLDINGS, INC.,
Defendants-Appellants
DILLARD'S, INC., NORDSTROM, INC., THE BON-
TON STORES, INC., THE BON-TON DEPARTMENT
STORES, INC., BELK, INC., ZAPPOS.COM, INC.,
ZAPPOS RETAIL, INC.,
Defendants
______________________
2016-1115, 2016-1116, 2016-1842
______________________
Appeals from the United States District Court for the
District of Connecticut in Nos. 3:10-cv-01827-JBA, 3:11-
cv-00929-CFD, Judge Janet Bond Arterton.
______________________
Decided: August 9, 2017
______________________
JONATHAN FREIMAN, Wiggin and Dana LLP, New
Haven, CT, argued for plaintiff-cross-appellant. Also
represented by TONIA A. SAYOUR, NORMAN H. ZIVIN,
Cooper & Dunham, LLP, New York, NY.
2 ROMAG FASTENERS, INC. v. FOSSIL, INC.
LAWRENCE BROCCHINI, Reavis Parent LLP, New York,
NY, argued for defendants-appellants. Also represented
by JEFFREY E. DUPLER, Gibney Anthony & Flaherty, LLP,
New York, NY; LAUREN ALBERT, The Law Offices of
Lauren S. Albert, New York, NY; NICHOLAS GEIGER,
Cantor Colburn LLP, Hartford, CT.
______________________
Before NEWMAN, DYK, and HUGHES, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK.
Opinion concurring-in-part, dissenting-in-part filed by
Circuit Judge NEWMAN.
DYK, Circuit Judge.
Romag Fasteners, Inc. (“Romag”) owns U.S. Patent
No. 5,722,126 (“’126 patent”) on magnetic snap fasteners,
which it sells under its registered trademark, ROMAG,
U.S. Trademark Reg. No. 2,095,367 (“’367 trademark”).
Romag sued Fossil, Inc. and various retailers (together,
“Fossil”) for, inter alia, patent infringement, trademark
infringement, and violation of the Connecticut Unfair
Trade Practices Act (“CUTPA”) in the U.S. District Court
for the District of Connecticut (“district court”). The jury
returned a verdict for Romag, finding that Fossil had
engaged in patent and trademark infringement and in
unfair trade practices. A two-day bench trial resolving
other issues followed, after which the district court en-
tered judgment on the jury verdict. This court affirmed
the judgment of patent and trademark infringement;
other aspects of the judgment were not appealed. See
Romag Fasteners, Inc. v. Fossil, Inc., Nos. 2014-1896,
ROMAG FASTENERS, INC. v. FOSSIL, INC. 3
2014-1897, 2017 WL 1906904 (Fed. Cir. May 3, 2017)
(“Romag II”). 1
Romag sought attorney’s fees under the Patent Act,
35 U.S.C. § 285, Lanham Act, 15 U.S.C. § 1117(a), and
CUTPA. The district court granted fees under the Patent
Act and CUTPA, but not under the Lanham Act. Fossil
appeals and Romag cross-appeals. We vacate and re-
mand.
BACKGROUND
Romag owns the ’126 patent and the ’367 trademark,
which are both directed to magnetic snap fasteners.
Romag licensed the ’126 patent and the ’367 trademark to
a Chinese manufacturer, which supplied authentic
ROMAG magnetic snaps for use in handbags manufac-
tured and distributed by Fossil. In 2010, a batch of Fossil
handbags appeared to contain counterfeit ROMAG mag-
netic snaps, which led Romag to sue Fossil for, inter alia,
patent and trademark infringement and violation of the
CUTPA. The details of Romag’s infringement suit are
described in our prior opinion, Romag I, 817 F.3d at 783–
84. The jury found Fossil liable for patent and trademark
infringement, as well as for engaging in unfair trade
practices under the CUTPA. The patent and trademark
1 The Supreme Court’s decision in SCA Hygiene
Products Aktiebolag v. First Quality Baby Products, LLC,
137 S. Ct. 954, 967 (2017), held that laches is no longer a
defense to patent infringement during the statutory
period. In light of this, we vacated and remanded section
I of our 2016 opinion, Romag Fasteners, Inc. v. Fossil, Inc.,
817 F.3d 782 (Fed. Cir. 2016) (“Romag I”), which affirmed
the district court’s reduction of the jury awarded patent
damages by eighteen percent due to the defense of laches.
See Romag II, 2017 WL 1906904, at *1. We otherwise
reinstated our prior opinion in all other respects. Id.
4 ROMAG FASTENERS, INC. v. FOSSIL, INC.
infringement verdicts were appealed, and we affirmed the
judgment of liability. Id. After the trial on the merits,
Romag requested attorney’s fees under the Patent Act,
Lanham Act, and CUTPA.
Under the Patent Act and the Lanham Act, “[t]he
court in exceptional cases may award reasonable attorney
fees to the prevailing party.” 35 U.S.C. § 285; 15 U.S.C.
§ 1117(a). In Octane Fitness, LLC v. ICON Health &
Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court
held that under 35 U.S.C. § 285, “an ‘exceptional’ case is
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
. . . , considering the totality of the circumstances.” 134 S.
Ct. at 1756.
Applying the Octane standard, the district court found
that Romag was entitled to attorney’s fees under § 285 of
the Patent Act because Fossil did not “withdraw [antici-
pation and obviousness] defenses with prejudice until
after trial,” and because Fossil’s “patent invalidity defense
of indefiniteness bordered on frivolous.” J.A. 6. The
district court also found that Fossil’s non-infringement
position (as opposed to its invalidity position) was not “so
frivolous or groundless as to justify an award of fees.”
J.A. 5. Finally, the district court declined to consider
Romag’s conduct as part of the totality of circumstances
because it had already penalized Romag for the timing of
Romag’s infringement suit and Romag’s misconduct
during the TRO filing. The district court concluded that it
saw “no need to further sanction Plaintiff by denying an
award of fees in this case.” J.A. 7.
With respect to the Lanham Act, the district court ap-
plied the prevailing Second Circuit precedent with respect
to 15 U.S.C. § 1117(a) that “allows recovery of a reasona-
ble attorney’s fee only on evidence of fraud or bad faith.”
ROMAG FASTENERS, INC. v. FOSSIL, INC. 5
Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83,
111 (2d Cir. 2012) (citations, quotation marks, and altera-
tions omitted). Under this standard, the district court
found that “in the absence of bad faith, fraud, or willful-
ness on part of the Defendants, this case is not ‘exception-
al’ within the meaning of the Lanham Act and Plaintiff is
not entitled to recover its reasonable attorney’s fees.”
J.A. 9. The district court also awarded Romag attorney’s
fees under the CUTPA.
Fossil appeals the award of fees under the Patent Act.
Romag cross-appeals the denial of fees under the Lanham
Act. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
We review a district court’s grant of attorney’s fees for
an abuse of discretion. Highmark Inc. v. Allcare Health
Mgmt. Sys., Inc., 134 S. Ct. 1744, 1747 (2014) (Patent Act
standard); Milo & Gabby LLC v. Amazon.com, Inc., No.
2016-1290, 2017 WL 2258605, at *3 (Fed. Cir. May 23,
2017) (Lanham Act standard). A district court abuses its
discretion if it rules based “on an erroneous view of the
law or on a clearly erroneous assessment of the evidence.”
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
(1990).
DISCUSSION
I
We first address Romag’s contention that the district
court erred in not awarding attorney’s fees under the
Lanham Act, and that the Octane standard applies to
both the award of fees under the Patent Act and under
the Lanham Act. The district court here concluded that
although this “case is ‘exceptional’ under the more lenient
Patent Act standard announced in Octane Fitness, it d[id]
not find that Defendant acted fraudulently or in bad faith
[under the Louis Vuitton standard] . . . with respect to
trademark infringement . . . to recover its reasonable
6 ROMAG FASTENERS, INC. v. FOSSIL, INC.
attorney’s fees under” the Lanham Act. J.A. 9. We con-
clude that the district court erred and that the Octane
standard applies to the Lanham Act.
Before Octane, the Second Circuit allowed recovery of
attorney’s fees under 15 U.S.C. § 1117(a) only if there was
bad faith or willful infringement on the part of the de-
fendants. See Louis Vuitton, 676 F.3d at 111. The ques-
tion is whether this standard survives after Octane.
There have been no Second Circuit decisions on this issue
since Octane. 2 In Romag I, we followed the prevailing
Second Circuit rule with respect to the award of infringer
profits under the Lanham Act, after finding that there
were no Supreme Court cases on this issue. See 817 F.3d
at 785. Here, however, there is intervening relevant
Supreme Court authority which, we think, would lead the
Second Circuit to follow other circuits which have held
that the Octane standard applies to the Lanham Act. See
Badalamenti v. Dunham’s, Inc., 896 F.2d 1359, 1362 (Fed.
Cir. 1990) (“[I]f the regional circuit court has not spoken,
we must predict how that court would decide the issue
. . . .”).
Since Octane was decided, the Third, Fourth, Fifth,
Sixth, and Ninth Circuits have all held that the Octane
“Court was sending a clear message that it was defining
‘exceptional’ not just for the fee provision in the Patent
Act, but for the fee provision in the Lanham Act as well.”
Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 315 (3d
2 The Second Circuit in Penshurst Trading Inc. v.
Zodax L.P., 652 F. App’x 10 (2d Cir. 2016), held that “[w]e
have not yet decided whether [the Octane] rule applies in
the context of the Lanham Act, but we need not do so here
. . . [because] we [would] affirm the district court’s denial
of attorney’s fees” under either Octane or Louis Vuitton.
Id. at 12.
ROMAG FASTENERS, INC. v. FOSSIL, INC. 7
Cir. 2014); see also SunEarth, Inc. v. Sun Earth Solar
Power Co., 839 F.3d 1179, 1181 (9th Cir. 2016); Baker v.
DeShong, 821 F.3d 620, 623–24 (5th Cir. 2016); Slep-Tone
Entm’t Corp. v. Karaoke Kandy Store, Inc., 782 F.3d 313,
318 (6th Cir. 2015); Georgia-Pacific Consumer Prods. LP
v. von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015).
Indeed, no circuit has specifically considered Octane and
then declined to apply it to the Lanham Act.
This is unsurprising, as the language of the Patent
Act and the Lanham Act for attorney’s fees is identical.
Both statutes provide that “[t]he court in exceptional
cases may award reasonable attorney fees to the prevail-
ing party.” 35 U.S.C. § 285; 15 U.S.C. § 1117(a). “[W]hen
Congress uses the same language in two statutes having
similar purposes, . . . it is appropriate to presume that
Congress intended that text to have the same meaning in
both statutes.” Smith v. City of Jackson, 544 U.S. 228,
233 (2005). In fact, in determining what constitutes an
“exceptional” case under the Patent Act, the Octane Court
looked to Noxell Corp. v. Firehouse No. 1 Bar–B–Que
Restaurant, 771 F.2d 521, 526 (D.C. Cir. 1985), a Lanham
Act case, explaining that “the term ‘exceptional’ in the
Lanham Act’s identical fee-shifting provision, 15 U.S.C.
§ 1117(a), . . . [also] mean[s] ‘uncommon’ or ‘not run-of-
the-mill.’” Octane, 134 S. Ct. at 1756.
The legislative history of 15 U.S.C. § 1117(a) further
supports using the same standard. The Senate Commit-
tee Report amending the Lanham Act to allow recovery of
attorney’s fees—changing the rule enunciated in the
Supreme Court decision Fleischmann Distilling Corp. v.
Maier Brewing Co., 386 U.S. 714 (1967)—discussed the
strong connection to the Patent Act:
The federal patent and copyright statutes express-
ly provide for reasonable attorney fees . . . . Prior
to 1967, the courts in trademark infringement . . .
8 ROMAG FASTENERS, INC. v. FOSSIL, INC.
cases had developed an equitable doctrine holding
the attorney fees are recoverable by a successful
plaintiff, notwithstanding the absence of express
statutory authority under the Lanham Act. This
doctrine was overruled, however, by the Supreme
Court decision in Fleischmann. Trademark and
unfair competition cases brought under the [Lan-
ham Act], however, present a particularly compel-
ling need for attorney fees, which are denied
under the Fleischmann doctrine. . . . The pro-
posed amendment would limit attorney fees to ‘ex-
ceptional cases’ and the award of attorney fees
would be within the discretion of the court.
S. Rep. No. 93-1400, at 5, as reprinted in 1974
U.S.C.C.A.N. 7132, 7135–36.
Thus, we conclude that the Second Circuit would hold
that, in light of Octane, the Lanham Act should have the
same standard for recovering attorney’s fees as the Patent
Act.
Fossil contends that the district court would not have
awarded attorney’s fees under the Lanham Act even if it
had applied the Octane standard. Fossil argues that
Romag’s only theory for attorney’s fees under the Lanham
Act was that Fossil’s non-infringement defense—that the
magnetic snaps at issue here were actually authentic
ROMAG snaps—was objectively unreasonable. And since
the district court had already found that this defense was
not unreasonable with respect to patent infringement,
Fossil argues that the district court would make “the
same finding under the Lanham Act.” Appellant Resp. &
Rep. Br. 47. However, we think this issue is best left to
the district court in the first instance on remand.
ROMAG FASTENERS, INC. v. FOSSIL, INC. 9
II
We next address whether the district court erred in
awarding fees under 35 U.S.C. § 285 to Romag in this
case.
Fees may be awarded under 35 U.S.C. § 285 if a par-
ty’s arguments are objectively unreasonable or if the case
was litigated in bad faith. Octane, 134 S. Ct. at 1756;
Nova Chem. Corp. (Canada) v. Dow Chems. Co., 856 F.3d
1012, 1016–17 (Fed. Cir. 2017). Whether a case is excep-
tional is viewed under the totality of the circumstances of
the case, Octane, 134 S. Ct. at 1756, for which we defer to
the district court’s judgment under abuse of discretion
review, Highmark, 134 S. Ct. at 1749. However, we are
obligated to find an abuse of discretion if a district court
“based its ruling on an erroneous view of the law or on a
clearly erroneous assessment of the evidence.” Cooter,
496 U.S. at 405. We conclude that the district court here
made several errors.
A
In response to Romag’s patent infringement allega-
tion, Fossil initially presented invalidity defenses of
anticipation and obviousness. Fossil subsequently decid-
ed to not continue to pursue these defenses, as the patent
infringement claim amount was relatively small. Howev-
er, the district court concluded that Fossil declined to
abandon these defenses until after the trial, and consid-
ered this to be a key factor for awarding fees to Romag.
Specifically, the district court held that Fossil’s “failure to
formally withdraw its [anticipation and obviousness]
invalidity defenses until after the close of evidence weigh
in favor of an award of fees in this case.” J.A. 6–7. The
10 ROMAG FASTENERS, INC. v. FOSSIL, INC.
record establishes that the defenses were withdrawn
before trial. 3
First, during the March 5, 2014, pre-trial conference,
the following two exchanges occurred which indicate that
the district court was aware that Fossil would not be
pursuing invalidity defenses.
Court: [A]re the defendants asserting the affirma-
tive defenses to the patent claim of obviousness
and prior art?
Fossil: At this point, your Honor, we are not going
to assert those defenses.
Court: Okay.
J.A. 2107.
Fossil: I think we indicated that validity defenses
would not be asserted.
Court: And obviousness.
Fossil: Yes.
J.A. 2190–91.
Second, during the March 18, 2014, pre-trial confer-
ence, the district court specifically stated that “we clari-
fied in our last hearing that there’s no invalidity defense
being advanced.” J.A. 2255.
Third, the following exchange—which took place the
day before the district court ruled on Romag’s Rule 50
motion on patent validity—indicates that the court and
the parties were aware of the invalidity defenses’ with-
drawal prior to trial:
3 Contrary to the dissent, we do not conclude that
Fossil withdrew its invalidity defenses at the February 12
teleconference. See Dissent Op. 4, 6.
ROMAG FASTENERS, INC. v. FOSSIL, INC. 11
Romag: Your Honor, plaintiff moves for judgment
as a matter of law under Rule 50 . . . . [T]he de-
fendant has not put on any evidence with respect
to the invalidity . . . . And since that was one of
their defenses, it seems to us we’re entitled to
judgment on that. . . .
Court: I thought the defendant at our pretrial con-
ference indicated [it] would not be pursuing the
invalidity defense.
Fossil: On trademark and on patent, that’s cor-
rect, your Honor.
....
Court: . . . If they’re not pursuing it, why isn’t
your motion moot?
Romag: . . . We’ve gone all the way through this
case . . . , and now they decided right before trial
that they don’t wish to pursue it; and I think we’re
entitled to a judgment.
Court: Any problem with that, Mr. Cass [Fossil
counsel]? I don’t think the plaintiff wants to see
this again.
Fossil: I think it’s a moot issue. We didn’t raise
it. . . . And then I think at the pretrial stage we
indicated we weren’t going to . . . .
Court: So if the defendants have clarified that
they’re not claiming invalidity . . . [,] the charge
should properly instruct that the patent is a valid
patent, that the parties do not dispute that.
Fossil: I believe we already addressed it . . . , your
Honor.
....
12 ROMAG FASTENERS, INC. v. FOSSIL, INC.
Romag: Your Honor, . . . they’ve never withdrawn
these claims. They’re in their answer. They’ve
gone up to trial with all this information. At the
last moment they withdraw it. I don’t think that
makes it moot. . . .
....
Fossil: Your Honor, I believe somewhere in the
record . . . it was already dismissed. We did not go
to trial on those claims.
Court: Well, that’s sort of what I thought had
happened . . . .
J.A. 3865–68 (emphasis added). The following day, the
district court clarified that “a portion of [Romag’s] motion
yesterday was seeking a judgment against the defendant
on the invalidity. The defendants represent that they
have withdrawn their invalidity defense. In the interest
of justice, that defense . . . [is] withdrawn with prejudice.”
J.A. 2426.
Significantly, Fossil also made no reference to antici-
pation and obviousness in the preliminary jury instruc-
tions, opening statement, witness testimony, proposed
verdict form, and final jury instructions.
Thus, Romag’s claim that “Fossil did not withdraw its
invalidity defenses until after testimony was complete,”
Appellee Br. 55, is misleading and contradicted by the
record. We conclude that there appears to be full aware-
ness between the parties and the district court that the
patent invalidity defenses were withdrawn before trial,
and that the Rule 50 motion only reaffirmed that common
understanding. The district court clearly erred in con-
cluding that Fossil “did not formally withdraw these
defenses with prejudice until after [the] trial.” J.A. 6.
Nor is there any support for the district court’s finding
ROMAG FASTENERS, INC. v. FOSSIL, INC. 13
that Fossil “aggressively pursue[d] invalidity counter-
claims in an attempt to prolong litigation.” J.A. 7.
Finally, we note that the district court made no find-
ing that Fossil’s defenses of anticipation and obviousness
were objectively unreasonable.
B
In response to Romag’s patent infringement allega-
tion, Fossil also presented the invalidity defense of indefi-
niteness, arguing that the ’126 patent’s claim term
“rotatable” was indefinite because the patent does not
specify the “degree of force necessary to rotate.”
J.A. 1752. On September 19, 2012, Fossil moved for
partial summary judgment on this ground. While the
motion was pending, Judge Young, who at the time was
presiding over the case, 4 held a Markman hearing on
April 9, 2013, and construed “rotatable” to mean “capable
of being rotated and not rigidly secured.” J.A. 1682. This
construction appeared to define the force necessary for
making the fasteners “rotatable.” Indeed, on October 23,
2013, Judge Young granted, sua sponte, summary judg-
ment for Romag on the indefiniteness issue, holding that
the ’126 patent was definite because “rotatable” can be
construed to mean “capable of being rotated.” J.A. 1753.
During the attorney’s fees proceedings, the district
court here concluded that “[b]ased on the tenor of Judge
Young’s [summary judgment] opinion, it [was] clear . . .
that Defendants’ argument with respect to their patent
4 Judge Young, from the U.S. District Court for the
District of Massachusetts, was sitting by designation in
the District of Connecticut. He presided over the early
stages of this litigation, but did not preside over the
subsequent phases, including the pre-trial conferences,
jury trial, and attorney’s fees proceedings.
14 ROMAG FASTENERS, INC. v. FOSSIL, INC.
invalidity defense of indefiniteness bordered on frivolous.”
J.A. 6. Specifically, the district court found that Judge
Young had “likened Defendants’ evidence in support of its
indefiniteness defense to a ‘woefully inadequate show-
ing.’” Id. The district court also concluded that “[i]n light
of Judge Young’s ruling, . . . [the] Defendants’ indefinite-
ness defense was entirely meritless and was raised for
improper purposes.” J.A. 38 (citation and internal quota-
tion marks omitted). These findings are erroneous as-
sessments of the record.
First, the district court erred in concluding that Judge
Young had found Fossil’s indefiniteness evidence to be
“woefully inadequate.” The relevant portion of Judge
Young’s opinion states:
[A] party that moves for summary judgment
runs the risk that if it makes a woefully inade-
quate showing, not only might its own motion for
summary judgment be denied, the court may
grant summary judgment sua sponte against the
movant. [Citations to six cases from the Second
Circuit and four cases from the First Circuit sup-
porting this proposition.]
This body of precedent constitutes more than
adequate notice that the Court may enter sum-
mary judgment against the moving party. Such
action is proper here. Fossil . . . proffer[s] Freder-
ick Kucklick . . . as [its] expert on indefinite-
ness. . . . Kucklick opines only that
the ’126 patent does not provide an ac-
ceptable way to quantify the degree of
force necessary to consistently define the
term ‘rotatable’ for invalidity and in-
fringement purposes. The ’126 patent is
silent regarding the degree of force neces-
ROMAG FASTENERS, INC. v. FOSSIL, INC. 15
sary to qualify the attachment legs as ‘ro-
tatable’ relative to the base washer.
That’s it. While these statements are true, this
Court’s construction of “rotatable” renders them
immaterial. What is more, these opinions are
nothing more than an ipse dixit, and the Federal
Circuit has concluded that such general and con-
clusory testimony “does not suffice as substantial
evidence of invalidity” sufficient to carry the de-
fendants’ burden of proof. In the absence of suffi-
cient evidence of indefiniteness, Fossil[’s] claim
must fail and the Court declares that the ’126 pa-
tent withstands the indefiniteness challenge and
that defense is no longer in this case.
J.A. 1753–57 (emphases added) (citations omitted).
Based on this passage, we do not read Judge Young’s
opinion to be describing Fossil’s indefiniteness defense as
“woefully inadequate” in the sense that Fossil’s theory
was objectively unreasonable. The cases upon which
Judge Young relied do not suggest otherwise; they deal
simply with the procedural requirements for granting
summary judgment against the moving party. The inad-
equacy of the movant’s showing is merely a necessary
predicate for the grant of summary judgment against the
moving party, just as it is a requirement for summary
judgment under any circumstances. Rather, Judge Young
concluded that while it was “true” that the patent had not
quantified the amount of force necessary, “this Court’s
construction of ‘rotatable’ renders [Fossil’s indefiniteness
evidence] immaterial.” J.A. 1756. Thus, Judge Young’s
opinion appears to grant sua sponte summary judgment to
Romag because Fossil’s indefiniteness argument was
precluded by the claim construction. We also do not read
Judge Young’s summary judgment opinion to have a
“tenor” that indicates that Fossil’s indefiniteness defense
“bordered on frivolous.”
16 ROMAG FASTENERS, INC. v. FOSSIL, INC.
Second, we note that it was Fossil, not Romag, who
moved for summary judgment on the indefiniteness issue.
Although not dispositive, we find this to suggest that
Romag did not always view Fossil’s indefiniteness argu-
ment as frivolous.
For these reasons, we conclude that the district court,
relying on Judge Young’s ruling, erred in holding that
Fossil’s indefiniteness defense bordered on frivolous.
C
In awarding attorney’s fees under the Patent Act, the
district court declined to consider Romag’s conduct earlier
during the litigation that the district court had sanc-
tioned. With respect to the timing of the merits suit,
Romag was aware of Fossil’s infringement by May of
2010, but did not commence its lawsuit until November of
2010. The district court thus found that “Romag’s delay
was unreasonable.” J.A. 67. Because of this delay, Fossil
had “suffered material economic prejudice as a result.”
J.A. 68. These findings led the district court to the “ines-
capable conclusion . . . that Plaintiff carefully timed this
suit to take advantage of the imminent holiday shopping
season to be able to exercise the most leverage over De-
fendants in an attempt to extract a quick and profitable
settlement.” J.A. 67. In fact, Romag moved for a TRO
and a preliminary injunction on November 23, 2010, three
days before Black Friday, using a declaration that the
district court found to be “sparse” and which contained
“misleading representations.” J.A. 78. Based on all of
this, the district court sanctioned Romag because it had
“acted in bad faith.” Id.
However, during the proceedings for attorney’s fees,
the district court concluded that because “the Court ha[d]
already ordered that Plaintiff may not recover its fees in
connection with the TRO and reduced the jury’s reasona-
ble royalty award in light of Plaintiff’s laches . . . [and]
ROMAG FASTENERS, INC. v. FOSSIL, INC. 17
[b]ecause these issues were limited in scope . . . , [it saw]
no need to further sanction [Romag] by denying an award
of fees in this case.” 5 J.A. 7. The district court erred in
reaching this conclusion.
In determining whether a case is exceptional for 35
U.S.C. § 285 fees, a district court must “consider[] the
totality of the circumstances.” Octane, 134 S. Ct. at 1756.
This includes the conduct of the prevailing party that is
seeking attorney’s fees. In Gaymar Industries v. Cincin-
nati Sub-Zero Products, Inc., 790 F.3d 1369 (Fed. Cir.
2015), we clarified that “the conduct of the parties is a
relevant factor under Octane’s totality-of-the-
circumstances inquiry, including the conduct of the mo-
vant.” Id. at 1373. For this proposition, Gaymar cited
Power Mosfet Technologies, LLC v. Siemens AG, 378 F.3d
1396 (Fed. Cir. 2004), which affirmed a district court’s
denial of § 285 fees “because all of the parties had con-
ducted themselves without the decorum required when
practicing before a federal court . . . and credited each of
the parties with some share of the bad behavior.” Id. at
1415 (emphasis in original).
The district court therefore erred in declining to con-
sider, in connection with its totality of circumstances
analysis, Romag’s earlier litigation misconduct. Romag’s
misconduct cannot be disregarded on the theory that
failure to award fees is equivalent to double-sanctioning
Romag. Indeed, the fact that this misconduct has already
5 As stated earlier, SCA Hygiene held that laches is
not a defense to patent infringement during the statutory
period. 137 S. Ct. at 967 (2017). However, no party
contends that SCA Hygiene makes the district court’s
sanctions in connection with Romag’s TRO misconduct
inappropriate.
18 ROMAG FASTENERS, INC. v. FOSSIL, INC.
been sanctioned should be weighed more heavily, rather
than be excluded, in the 35 U.S.C. § 285 analysis.
D
One other alleged error by the district court was not
in fact an error. In response to Romag’s patent and
trademark infringement allegations, Fossil presented a
non-infringement defense, where it asserted that the
batch of magnetic snaps at issue were in fact genuine
ROMAG snaps. After the trial, Romag moved for judg-
ment as a matter of law with respect to this non-
infringement position. The court denied this motion and
allowed the jury to decide the issue. During the proceed-
ings for attorney’s fees, the district court found that “this
Court’s ruling denying Plaintiff’s Rule 50(a) motion pre-
cludes a finding that Defendant[’s] [non-infringement]
argument was so frivolous or groundless as to justify an
award of fees.” J.A. 5.
On appeal, Romag contends that the district court
erred in concluding that the refusal to grant a Rule 50(a)
motion precludes awarding attorney’s fees. We agree
with Romag that Rule 50(a) motions are often denied as a
matter of course without resolving the merits of the
motion. “Thus, while a district court is permitted to enter
judgment as a matter of law when it concludes that the
evidence is legally insufficient, it is not required to do so.”
Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S.
394, 405 (2006); see also 9B Wright & Miller, Federal
Practice and Procedure § 2533 (3d ed. 2017 update) (“The
trial judge is not required to grant judgment as a matter
of law even in a case in which it has the power and it
might be appropriate to do so.”). This is especially true
here, where the district court denied Romag’s Rule 50(a)
motion without “dissect[ing] the evidence.” J.A. 2425.
Thus, the district court’s denial of Romag’s Rule 50(a)
ROMAG FASTENERS, INC. v. FOSSIL, INC. 19
motion does not preclude a finding that Fossil’s non-
infringement position was frivolous.
However, here, the district court relied on more than
its Rule 50(a) ruling to deny attorney’s fees on this issue.
The district court also found that Fossil’s “arguments
with respect to non-infringement were not entirely
groundless.” J.A. 6. Thus, as required by Octane, the
district court properly evaluated “the substantive
strength of a party’s litigating position.” 134 S. Ct. at
1756. Based on this finding, we see no error in the dis-
trict court’s refusal to consider this issue as an adverse
factor in the totality of circumstances, because “[a] party’s
position on issues of law ultimately need not be correct for
them to not ‘stand[ ] out,’ or be found reasonable.” SFA
Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir.
2015) (alteration in original). It is not relevant that
Fossil’s non-infringement defense may have been weak, if
it did not rise to the level of being objectively unreasona-
ble. See Univ. of Utah v. Max-Planck-Gesellschaft zur
Foerderung der Wissenschaften e.V., 851 F.3d 1317, 1323
(Fed. Cir. 2017).
E
The district court, under its inherent powers, awarded
Romag the portion of its expert witness fees incurred in
connection with Fossil’s motion for summary judgment on
indefiniteness. This was based on the finding that Fos-
sil’s indefiniteness argument was without merit according
to Judge Young’s decision. Because we have set aside
that finding, we also set aside the expert witness fee
award.
The supplemental fees awarded in connection with
the application for attorney’s fees are also set aside in
light of our conclusions.
20 ROMAG FASTENERS, INC. v. FOSSIL, INC.
CONCLUSION
This case is remanded to the district court to consider
the Lanham Act and the Patent Act attorney’s fees and
the claimed expert fees under the correct standard, free of
the errors identified above. On remand, based on a cor-
rect analysis, the district court should evaluate whether
an award of fees is appropriate.
VACATED AND REMANDED
COSTS
Costs to neither party.
United States Court of Appeals
for the Federal Circuit
______________________
ROMAG FASTENERS, INC.,
Plaintiff-Cross-Appellant
v.
FOSSIL, INC., FOSSIL STORES I, INC., MACY'S,
INC., MACY'S RETAIL HOLDINGS, INC.,
Defendants-Appellants
DILLARD'S, INC., NORDSTROM, INC., THE BON-
TON STORES, INC., THE BON-TON DEPARTMENT
STORES, INC., BELK, INC., ZAPPOS.COM, INC.,
ZAPPOS RETAIL, INC.,
Defendants
______________________
2016-1115, 2016-1116, 2016-1842
______________________
Appeals from the United States District Court for the
District of Connecticut in Nos. 3:10-cv-01827-JBA, 3:11-
cv-00929-CFD, Judge Janet Bond Arterton.
______________________
NEWMAN, Circuit Judge, concurring-in-part, dissenting-
in-part.
The sole issue is the award of attorney fees, on appli-
cation of the Supreme Court’s adjusted standard as set
forth in Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 134 S. Ct. 1749 (2014) and Highmark Inc. v. Allcare
Health Management System, 134 S. Ct. 1744 (2014).
2 ROMAG FASTENERS, INC. v. FOSSIL, INC.
I
In the initial ruling on Romag’s motion for attorney
fees with respect to the issue of trademark infringement,
the district court applied the Second Circuit’s pre-Octane
Fitness attorney fee standard requiring “evidence of fraud
or bad faith.” Louis Vuitton Malletier S.A. v. LY USA,
Inc., 676 F.3d 83, 111 (2d Cir. 2012). I agree with my
colleagues that the general adoption by the regional
circuits, in trademark cases, of the patent-based attorney
fee standard set forth in Octane Fitness, renders it more
likely than not that the Second Circuit would also take
this path in trademark cases.
Thus I share the view that remand is appropriate for
determination by the district court of whether, on the
Octane Fitness standard, attorney fees are warranted for
the trademark infringement here found.
II
I do not, however, share my colleagues’ view that the
district court abused its discretion in awarding attorney
fees with respect to the patent issues.
The district court observed that Fossil pressed its in-
validity theories, including anticipation and obviousness
arguments, until the eve of trial, at which time Fossil
seemed to offer assurance that these aspects would not be
pursued. Nonetheless, Fossil did not withdraw either its
invalidity defenses or its invalidity counterclaims, main-
tained its patent expert on its witness list, and kept “prior
art” on its trial exhibit list. I take note of the representa-
tions quoted by my colleagues, but such representations
at the eve of trial and after trial had begun were reasona-
bly viewed by the district court as too tardy and too
equivocal to negate the assessment of attorney fees.
The district court recognized that withdrawal of the
invalidity counts was not achieved until after trial had
begun, when the district court effectively granted Romag’s
ROMAG FASTENERS, INC. v. FOSSIL, INC. 3
Rule 50 motion. Tr. Charge Conference, April 1, 2014,
45:3-11, ECF No. 439. As the district court observed,
Romag and its witnesses had been required to prepare
and to remain prepared on the patent invalidity issues
throughout extensive pre-trial proceedings and until “the
eve of trial.” Dist. Ct. Op. 6.
I do not discern where, or how, the district court
abused its discretion, for the district court reasonably
observed that this case “stood out from the others,” in the
words of Octane Fitness, concluding that Fossil “aggres-
sively pursue[d] invalidity counterclaims in an attempt to
prolong litigation and exponentially increase the cost and
risk of pursuing a lawsuit.” Dist. Ct. Op. 7.
My colleagues nonetheless second-guess the district
court’s observations and depart from the required defer-
ential review of discretionary rulings. I respectfully
dissent from Part II of the court’s opinion.
A
The standard for award of attorney fees is whether
the case “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 litigat-
ed.” Octane Fitness, 134 S. Ct. at 1756. We review the
district court’s action for abuse of discretion. Highmark,
134 S. Ct. at 1747. My colleagues acknowledge this
standard and its highly deferential review, yet substitute
their interpretation of the events that the trial judge
experienced first-hand.
For instance, my colleagues state that “[t]he record
establishes that the [invalidity] defenses were withdrawn
before trial.” Maj. Op. 9-10. That is incorrect. The record
establishes that the defenses were not withdrawn until
after trial had begun, when the district court withdrew
them on Romag’s Rule 50 motion. Tr. Charge Conference,
April 1, 2014, 45:3-11, ECF No. 439. Thus Romag was
4 ROMAG FASTENERS, INC. v. FOSSIL, INC.
required to prepare, and remain prepared, for these
invalidity issues, as the district court observed. Dist. Ct.
Op. 6 (“Romag’s decision to continue to present evidence
to counter [Fossil’s] invalidity defenses until the claims
were formally withdrawn with prejudice was entirely
foreseeable.”).
The district court did not abuse its discretion in im-
posing attorney fee recovery for this aspect of the litiga-
tion, for Fossil persisted in retaining the invalidity
defenses and counterclaims for over three years, and
repeatedly equivocated as the trial date approached. On
the uncertainty and obfuscation that existed, the trial
court did not abuse its discretion in determining that the
case was litigated in a manner that “stands out from
others.” Octane Fitness, 134 S. Ct. at 1756.
B
In response to Romag’s complaint, which was filed in
December 2010, Fossil pled patent invalidity as an af-
firmative defense and counterclaimed for a declaratory
judgment of patent invalidity. Defs.’ Answer, Affirmative
Defenses, & Countercls., Dec. 15, 2010, 6, 8, ECF No. 31.
These responses led to extensive preparatory activity by
the parties, to attack and defend what the district court
referred to as “Romag’s principal business asset.” Dist.
Ct. Op. 6. Fossil’s invalidity challenges included an
expert report concerning invalidity, expert witness deposi-
tion, discovery, the listing of purportedly invalidating
prior art, a motion for summary judgment, and other pre-
trial proceedings. The jury trial was scheduled to start on
March 24, 2014.
As the trial date neared, at a court status teleconfer-
ence on February 12, 2014 Romag pointed out that Fos-
sil’s proposed jury instructions and trial brief did not
mention patent invalidity. Romag requested that Fossil
declare its intentions regarding its invalidity defenses and
counterclaims:
ROMAG FASTENERS, INC. v. FOSSIL, INC. 5
Romag’s counsel: There is nothing in the docu-
ment . . . about patents. When we asked [Fossil’s
counsel] in a phone conversation last week in a
meet and confer whether they were pursuing any
patent defense at all, he refused to answer saying
he’ll determine it at trial . . . . [I]t’s very difficult
to go to trial on a patent case as it is . . . and it’s
even more difficult when we don’t even know
whether the defendant is putting in a defense. Ei-
ther they’re putting in one or they’re not.
Tr. Teleconference, Feb. 12, 2014, 39:7-40:2, ECF No. 324.
Romag elaborated on its concerns:
Romag’s counsel: If they are not putting it in, I
think we’re entitled to a judgment on the plead-
ings, particularly on their counterclaim, and . . . if
they are putting it in, we need to know. We need
the experts. We need to be prepared for their re-
sponse at trial. This is not a guessing game. I
think at this point, this goes to trial, we’re entitled
to know whether those patent issues are still be-
fore the Court or whether they are withdrawn.
Id. at 40:2-11. Fossil’s counsel responded by offering to
present Romag with a stipulation later in the week, and
the “hope” that some of these issues could be eliminated.
Fossil’s counsel: So I think that I can get some-
thing to them by the end of this week and hopeful-
ly we can maybe even eliminate some of those
issues in some sort of stipulation.
Id. at 41:14-17. Romag continued to press for specificity:
Romag’s counsel: . . . but as to the merits of the
patent claim, either [Fossil’s] pursuing it or [Fos-
sil’s] not pursuing it, and I don’t see why we’re not
entitled to know at this late stage whether [Fos-
sil’s] pursuing it or not or whether we have to file
a motion.
6 ROMAG FASTENERS, INC. v. FOSSIL, INC.
Id. at 42:10-15.
The judge asked if Fossil “intend[ed] to include in
[the] stipulation whether [it was] pursuing or abandoning
either of [its] invalidity or noninfringement claims.” Id. at
42:16-19. Fossil then requested more time, but made no
commitment:
Fossil’s counsel: I would like until next Friday,
but I think we might be able to stipulate some-
thing along the lines that, you know, if they’re es-
tablished to be counterfeits, then, you know, we’re
not contesting infringement. If they’re—you
know, on validity, I don’t know, I have got to re-
circle back with all of the defendants, but in my
view it’s a $28,000 claim. So I’m sort of in agree-
ment it’s a waste of everybody’s time to litigate it
at this point.
Id. at 43:11-20. Fossil’s counsel did not answer either the
trial judge’s or Romag’s questions regarding the invalidity
claims. This discussion does not support the majority’s
conclusion that the trial judge and Romag knew that the
invalidity counts were withdrawn. 1 It was already the
“eve of trial,” after more than three years of pre-trial
proceedings, yet Fossil equivocated.
The panel majority also focuses on the exchange at a
further pre-trial conference, held March 5, 2014. On
being pressed by the trial judge, Fossil stated that “at this
point” it would not assert the invalidity defenses:
1 This portion of the record does not show that Fos-
sil withdrew its invalidity defenses at this teleconference.
Maj. Op. 10 n.3. However, Fossil stated that it would
determine its intentions regarding invalidity “at trial”—it
did not withdraw the invalidity defenses before trial,
leading to withdrawal by the district court on Romag’s
motion during trial.
ROMAG FASTENERS, INC. v. FOSSIL, INC. 7
Court: . . . are the defendants asserting the af-
firmative defenses to the patent claim of obvious-
ness and prior art?
Fossil’s counsel: At this point, your Honor, we
are not going to assert those defenses.
Court: Okay.
Tr. Pretrial Conference, Mar. 5, 2014, 7:6-12, ECF No.
359. Does “at this point” mean that Fossil could not
change its mind at a later point? One cannot fault Romag
for uncertainty, given that Fossil had previously told
Romag that Fossil would “determine it at trial.” And
despite this exchange, Fossil still did not withdraw the
invalidity defenses or counterclaims. The district court
recognized the uncertainty, stating “Romag’s decision to
continue to present evidence to counter Defendants’
invalidity defenses until the claims were formally with-
drawn with prejudice was entirely foreseeable.” Dist. Ct.
Op. 6.
The panel majority focuses on the trial judge’s ques-
tion about the exhibit list at the March 18, 2014 confer-
ence, with trial set to start on March 24:
Court: And then there’s several exhibits about
prior art that -- since we clarified in our last hear-
ing that there’s no invalidity defense being ad-
vanced, are they artifacts that aren’t really going
to be offered? Let me see if I can find my notes on
that.
Tr. Pretrial Conference, Mar. 18, 2014, 155:6-11, ECF No.
370. The exhibits about prior art related to Fossil’s
invalidity defenses, yet they remained on the Exhibit list
a week before the scheduled trial, and the purported
withdrawal still had not been implemented.
The panel majority also states that a colloquy con-
cerning a motion filed by Romag on March 31, 2014,
8 ROMAG FASTENERS, INC. v. FOSSIL, INC.
“indicates that the court and the parties were aware of
the invalidity defenses’ withdrawal prior to trial.” Maj.
Op. 10. However, the trial had begun a week earlier. The
next day, at the April 1, 2014 charge conference, the
district court effectively granted the motion and withdrew
Fossil’s invalidity defenses with prejudice:
Court: . . . a portion of [Romag’s] motion yester-
day was seeking a judgment against the defend-
ant on the invalidity. The defendants represent
that they have withdrawn their invalidity defense.
In the interest of justice, that defense may be
withdrawn, but it is withdrawn with prejudice,
and therefore, no judgment will enter. But the ef-
fect is the same for [Romag].
Tr. Charge Conference, April 1, 2014, 45:3-11, ECF No.
439.
The portions of the record cited by the panel majority
do not impugn the district court’s discretion regarding
events the trial judge observed first hand. The pleadings,
the years of trial preparation, and the vacillation until
after trial had begun, all support the district court’s
discretion in finding that this case “stands out from
others” in the manner of its litigation. Romag was surely
required to prepare for trial on the validity issues, includ-
ing discovery, depositions, experts, etc.
C
In finding an abuse of discretion by the trial judge,
the majority has given inadequate countenance to the
Court’s guidance in Octane Fitness, that
an “exceptional” case is simply one that stands out
from others with respect to the substantive
strength of a party’s litigating position (consider-
ing both the governing law and the facts of the
case) or the unreasonable manner in which the
case was litigated. District courts may determine
ROMAG FASTENERS, INC. v. FOSSIL, INC. 9
whether a case is “exceptional” in the case-by-case
exercise of their discretion, considering the totali-
ty of the circumstances.
Octane Fitness, 134 S. Ct. at 1756. The majority also
ignores the Court’s guidance in Highmark, that
as a matter of the sound administration of justice,
the district court is better positioned to decide
whether a case is exceptional, because it lives
with the case over a prolonged period of time . . . .
[T]he question is multifarious and novel, not sus-
ceptible to useful generalization of the sort that de
novo review provides, and likely to profit from the
experience that an abuse-of-discretion rule will
permit to develop.
Highmark, 134 S. Ct. at 1748-49 (internal quotations and
citations omitted).
The district court did not abuse its discretion in the
assessment of attorney fees. “Abuse of discretion is a
highly deferential standard of appellate review.” Bayer
CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302,
1306 (Fed. Cir. 2017). In matters of judicial discretion,
especially with respect to litigation procedures, the appel-
late court should exercise restraint in substituting its
view for that of the judge who was on the spot. See gener-
ally Motorola, Inc. v. Interdigital Tech. Corp., 121 F.3d
1461, 1468 (Fed. Cir. 1997) (“Questions of misconduct
often involve the tone and tenor of advocacy, rather than
the literal words of the advocate. In such instances, a cold
printed record cannot fully convey the aspects of conduct
that a trial court might find egregious. Thus, this court is
careful to avoid substituting its assessment of facts for
those of the judge who experienced them firsthand.”).
This court has long recognized that “[t]he trial judge is
better able to assess the conduct of parties appearing
before it than is this court.” Id.
10 ROMAG FASTENERS, INC. v. FOSSIL, INC.
No abuse of discretion has been shown, no “definite
and firm conviction that a mistake has been made.” Univ.
of Utah v. Max-Planck-Gesellschaft Zur Foerderung der
Wissenschaften e.V., 851 F.3d 1317, 1322 (Fed. Cir. 2017)
(citing Insite Vision, Inc. v. Sandoz, Inc., 783 F.3d 853,
858 (Fed. Cir. 2015)). It is not disputed that Romag
incurred significant expense and burden in preparing to
defend patent validity, much of which could have been
spared had Fossil been more straightforward concerning
its litigation intentions. The district court, having ob-
served these tactics, did not abuse its discretion in its
limited award of attorney fees. From my colleagues’
contrary ruling, I respectfully dissent.