Despite the Supreme Court's admonition, in Octane Fitness, LLC v. ICON Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., that attorney's fees and other measures of enhanced damages be granted, in a district court's discretion, only in rare cases (in keeping with the statutes requirement for "exceptional" cases; 35 U.S.C. § 285), the lure of exacting such fees, particularly by a prevailing defendant, is proving to be almost irresistible.

Such appears to have been the case in University of Utah v. Max-Planck-Gesellschaft Zur Foerderung der Wissenschatfen E.V.  This case involved an inventorship dispute between universities regarding "interfering RNA" (RNAi or siRNA technology) developed and patented by a collection of inventors having patents referred to in the opinion as the "Tuschl II" patents, including U.S. Patent Nos. 7,056,704; 7,078,196; 8,329,463; 8,362,231; 8,372,968; 8,445,237; 8,765,930; 8,778,902; 8,796,016; and 8,853,384.  These patents are owned in varying combinations by Max-Planck-Gesellschaft Zur Foerderung der Wissenschatfen E.V.; Max-Planck-Innovation GmbH; the Whitehead Institute for Biomedical Research; the Massachusetts Institute of Technology; Alnylam Pharmaceuticals Inc.; and the University of Massachusetts; these were the defendants named in Utah's complaint, as well as several officials of these institutions named in their official capacities.  The dispute involved whether Dr. Brenda Bass of the University of Utah should have been named, solely or jointly, as an inventor on one or more of the Tuschl II patents.  Her claim arose from a paper she published in the journal Cell prior to the filing date of the earliest of the Tuschl II patents, and on evidence that she originated a hypothesis that siRNA species should include a 3' overhang at the 3' end of double-stranded RNA molecules used in RNAi technology.  It was undisputed that the principal named inventor, Dr. Thomas Tuschl, had discussed siRNA technology with Dr. Bass and had read the Cell paper prior to filing the earliest of the patents-in-suit; indeed, the opinion states that Dr. Tuschl "transitioned to a new line of research that would result in the patented Tuschl II invention" thereafter.  And this line of research included the discovery that dsRNA molecules containing such 3' overhangs were more active in RNAi than those without them.

In the ensuing litigation the District Court denied defendants' motion to dismiss, and during discovery Dr. Bass in deposition made a number of admissions relevant to the Court's decision on the merits against Utah.  These included that she never performed any of the experiments supporting the invention claimed in any of the Tuechl patents; nor that she ever performed experiments relating to introducing siRNAs into cells or "making [RNAi] work"; and that she never tested siRNAs for targeting mRNA to have a phenotypic effect.  Even her testimony regarding her behavior in claiming credit for being a discoverer of siRNA species containing 3' overhangs was unsupportive of Utah's position, wherein she stated that "I don't think it would have ever crossed my mind to say [I was the discoverer]."  In addition, the only allegation made by Utah in support of its allegation that Dr. Bass was a sole or co-inventor was her testimony that she had discussed Dr. Tuschl's research with him, and her appreciation of the importance of 3' overhangs in siRNAs, over dinner at a scientific conference.

Utah withdrew its allegations that Dr. Bass was the sole inventor with prejudice before trial, and the Court granted defendants' motion for summary judgment on their joint inventorship claim.  The District Court also denied defendants' motion for $8 million in attorney fees under 35 U.S.C. § 285, which was the basis for their appeal.  The District Court found that the record supported Utah's contention in its complaint that Dr. Tuschl "incorporated Dr. Bass' hypothesis into his research," corroborated by Dr. Bass's Cell paper.  The Court also found that the legal basis for Utah's inventorship claim was consistent with the Federal Circuit's decision in Kimberly-Clark Corp. v. Proctor & Gamble Distributing Co., 973 F.2d 911, 917 (Fed. Cir. 1992), that an inventor building upon a "relevant report" on another could raise an inventorship interest in the report's author.  The fact that Utah was unable to muster sufficient evidence to prevail was not enough to establish this as an exceptional case, and with regard to Utah's damages position the court said "[a]lthough Utah may have been asking for pie in the sky, that does not differentiate this case from most patent cases" in denying defendants' motion.

The Federal Circuit affirmed in an opinion by Judge Reyna, joined by Judges O'Malley and Wallach.  Defendants' allegation that the District Court had not properly applied the Supreme Court's opinion on how courts should find a case exceptional in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  The panel found that the District Court's denial of defendants' motion was within its sound discretion, and that the Supreme Court's Octane Fitness decision imposed "no specific evidentiary burden, much less a high one" for finding a case exceptional.  Moreover, this discretion must be exercised on a "case-by-case manner" and thus is not subject to "precise rule or formula for making these determinations" under Octane Fitness.  Defendants' arguments that the District Court abused its discretion failed at the Federal Circuit because the panel believed they are based on there being a "framework" for determining that a case is exception that is set out in Octane Fitness; the opinion bluntly states that this is incorrect.  The panel also affirmatively declined defendants' invitation to second guess the District Court in the exercise of its discretion, saying:

Max Planck presents evidence from the record suggesting that the district court failed to take certain facts into account and overstated the factual and legal strength of UUtah's position.  UUtah presents evidence from the record suggesting the contrary and defending its litigation strategy.  We should be wary to wade in such circumstantial waters.  The trial judge was in the best position to understand and weigh these issues.  She had no obligation to write an opinion that reveals her assessment of every consideration.  This court will not second guess her determination.

This case illustrates the expected effect of the Court's Octane Fitness decision:  by insulating district courts' decisions on finding an exceptional case to the exercise of its sound discretion, it is likely that only the most exceptional of putatively exceptional cases will be at risk of being overturned by the Federal Circuit.

University of Utah v. Max-Planck-Gesellschaft Zur Foerderung der Wissenschatfen E.V. (Fed. Cir. 2017)
Panel: Circuit Judges O'Malley, Reyna, and Wallach
Opinion by Circuit Judge Reyna