In Amneal Pharmacueticals LLC v. Almirall, LLC, the Federal Circuit professed to address a question it had not considered before:  whether attorney's fees and a exceptional case determination was available for fees and costs incurred when a patent owner defended an inter partes review (IPR) challenge before the Patent Trial and Appeal Board.  The Court decided they were not, based on Court of Claims and Patent Appeals (CCPA) precedent and its plain meaning reading of the statute.

The case arose over Almirall's U.S. Patent Nos. 9,161,926 and 9,517,219, which were listed in the Orange Book with regard to Almirall's ACZONE (dapsone) prescription acne treatment.  Prior to filing an ANDA, Amneal petitioned the PTAB for IPR individually against the '926 and '219 patents (the latter IPR and patent not being part of this appeal).  Thereafter, Amneal filed its ANDA and Almirall filed suit, alleging infringement only of the '219 patent.  Amneal filed a declaratory judgment counterclaim against the '926 patent (the subject of this appeal) and the parties attempted to settle, which negotiations included Almirall's offer to give Amneal a covenant-not-to-sue on the '926 patent.  The parties being unable to agree on settlement terms, the IPR was allowed to proceed to Final Written Decision, where the PTAB found Amneal had not established that the challenged '926 patent claims were unpatentable.  Amneal appealed but then moved the Federal Circuit for voluntary dismissal.

Almirall did not challenge the dismissal but moved that the Court grant it attorney's fees and costs incurred but only during the time between when the settlement negotiations broke down and the trial date in the IPR, as well as the fees and costs involved in defending against Amneal's motion to dismiss.  Almirall's argument that the case was exceptional and thus that fees and costs should be assessed against Amneal was that it was unreasonable for Amneal to have continued to pursue the IPR against the '926 patent after Almirall offered the covenant-not-to-sue and to remove the '926 patent from the Orange Book.

In an Opinion and Order issued by Judge Dyk, joined by Judges Lourie and Reyna the Federal Circuit refused to assess attorney's fees and costs against Amneal.  The panel based its decision, first, on the "American Rule" that generally in the U.S. (unless there is a recognized or statutory exception) "each party in a lawsuit ordinarily shall bear its own attorney's fees," quoting Hensley v. Eckerhart, 461 U.S. 424, 429 (1983).  The Court recognized that Congress has provided such an exception under the Patent Act, in Section 285, where (should a court find the case is exceptional) reasonable attorney's fees can be awarded to the prevailing party.  The opinion states that the Court finds no authorization in the statute for awarding such fees for proceedings before the Patent Office in an appeal to the Federal Circuit.

The Court reasoned that, first, being bound by CCPA precedent (under S. Corp. v. United States, 690 F.2d 1368, 1370 (Fed. Cir. 1982) (en banc)) the several occasions where that Court considered and denied attorney's fees petitions were binding.  These decisions include Reddy v. Dann, 529 F.2d 1347, 1349 (C.C.P.A. 1976), where the CCPA reasoned that the placement of Section 285 in Chapter 29 of the statute, which is concerned with infringement, indicated that such attorney's fees petitions were "clearly inapplicable to this court."  The CCPA reached the same conclusion in Meitzner v. Mindick, 549 F.2d 775, 784 (C.C.P.A. 1977), regarding an "exceptional interference," which precedent was followed by the district court in Bowmar Instr. Corp. v. Tex. Instr., Inc., No. F74-137, 1978 WL 21733, at *1 (N.D. Ind. Aug. 1, 1978).

The opinion also found no support for Almirall's petition in the plain meaning of the statute.  The determinative terms were that reference to "[t]he court" was limited to "judicial proceedings," relying on Blyew v. United States, 80 U.S. (13 Wall.) 581, 595 (1872), for meaning of terms like "case and "cause" as being limited to proceedings before a court, in a suit or action.

The opinion also finds support for analogous "fee-shifting" provisions in other statutes involving administrative proceedings, citing Kahane v. UNUM Life Ins. Co. of Am., 563 F.3d 1210, 1215 (11th Cir. 2009), regarding 29 U.S.C. § 1132(g)(1) and W. Watersheds Project v. U.S. Dep't of the Interior, 677 F.3d 922, 926–27 (9th Cir. 2012), regarding the Equal Access to Justice Act, 28 U.S.C. § 2412(d)).  The Court did not credit Almirall's cases asserted in support of its opinion to lead to a contrary result.  In Sullivan v. Hudson, 490 U.S. 877 (1989), the panel interprets the Supreme Court's decision permitting attorney's fees for administrative proceedings to be limited to cases "where 'a suit has been brought in a court,' and where 'a formal complaint within the jurisdiction of a court of law' remains pending and depends for its resolution upon the outcome of the administrative proceedings" (emphasis in opinion), which was not the case here.  And in its own Therasense v Becton Dickenson, the panel states that "we were clearly only referring to district court and appellate court proceedings."  (The panel also notes that PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1569 (Fed. Cir. 1988), not cited by Almirall, is consistent with its views, wherein the fees awarded were limited to those fees "incurred after the filing of a civil action, and the fees were awarded in that district court proceeding" and because the proceedings before the PTO were "intimately tied to the resolution of that action.")

There has been an increase in motions for attorney's fees and awards of such fee since the Supreme Court's decisions in Octane Fitness, LLC v. ICON Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.  This decision by the Federal Circuit draws a line limiting such awards for fees and costs incurred in PTAB proceedings (although the opinion notes is a footnote that sanctions provisions exist under PTAB rule for misconduct should the need for such sanctions arise).

Amneal Pharmaceuticals LLC v. Almirall, LLC (Fed. Cir. 2020)
Panel: Circuit Judges Lourie, Dyk, and Reyna
Opinion by Circuit Judge Dyk