HITKANSUT LLC, ACCELEDYNE TECHNOLOGIES, LTD, LLC v. UNITED STATES
2019-1884
United States Court of Appeals for the Federal Circuit
May 1, 2020
Appeal from the United States Court of Federal Claims in No. 1:12-cv-00303-CFL, Senior Judge Charles F. Lettow.
JOHN S. ARTZ, Dickinson Wright PLLC, Ann Arbor, MI, argued for plaintiffs-appellees. Also represented by ROBERT AVERS; FRANK MICHAEL SMITH, Troy, MI.
GARY LEE HAUSKEN, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by JOSEPH H. HUNT.
Before PROST, Chief Judge, CLEVENGER and MOORE, Circuit Judges.
The United States appeals from a decision of the United States Court of Federal Claims (“Claims Court”) awarding attorneys’ fees and costs to Hitkansut LLC and Acceledyne Technologies, Ltd., LLC (collectively, “Hitkansut”) under
I
Hitkansut owns United States Patent No. 7,175,722 (“the ’722 patent”), entitled “Methods and Apparatus for Stress Relief Using Multiple Energy Sources.” While the application that later issued as the ’722 patent was pending, Hitkansut entered into a non-disclosure agreement with Oak Ridge National Laboratory (“ORNL”) and provided ORNL with a copy of the then-unpublished patent application. As the Claims Court found, ORNL staff “prepared various research reports, received funding, authored multiple publications, and received awards” for rеsearch “which was based upon unauthorized use of the ’722 patent.” Hitkansut LLC v. United States, 142 Fed. Cl. 341, 346 (2019) (“Fees Decision”).
Following the issuance of the ’722 patent, Hitkansut brought suit alleging infringement by the United States (acting through ORNL) pursuant to
Following our affirmance of the merits, Hitkansut moved for an award of attorneys’ fees and expenses pursuant to
II
On appeal, the United States makes three challenges to the award of attоrneys’ fees. First, it argues that the Claims Court erred in statutory interpretation by determining
We review the Claims Court’s statutory interpretation de novo. Quaker State Oil Refining Corp. v. United States, 994 F.2d 824, 827 (Fed. Cir. 1993). We review the Claims Court’s determination of whether the government’s position was substantially justified, as well аs its determination of the proper amount of attorneys’ fees, for an abuse of discretion. See Pierce v. Underwood, 487 U.S. 552, 559 (1988); Biery v. United States., 818 F.3d 704, 710 (Fed. Cir. 2016).
A
Title 28, Section 1498 of the United States Code provides that when the United States uses a patented invention “without license . . . or lawful right,” the patent owner may bring suit to recover “his reasonable and entire compensation for such use.”
The Claims Court, at Hitkansut’s urging, concluded that “the position of the United States” as used in
1
Although we have never before interpreted this clause of
Tasked with interpreting “the position of the United States” in EAJA, we concluded that “[a] fair and reasonable reading of those words is that the position referred to
It would strain the normal meaning of language to cоnstrue the statutory words to cover the position the United States took in the administrative proceedings that led to the civil action in which the attorney’s fees were incurred. The petitioner here seeks attorney’s fees and expenses only for services rendered in the proceedings before the Court of Claims, and it would inappropriate to look at the position the United States took in other forums to determine whether to award fees for those services.
Id. The Second, Fourth, and Tenth Circuits reached the same conclusion. See Boudin v. Thomas, 732 F.2d 1107, 1115–16 (2d Cir. 1984) (“[W]e look only to the government’s position in the litigation . . . to determine whether its actions were ‘substantially justified.’”); United States v. 2,116 Boxes of Boned Beef, 726 F.2d 1481, 1487 (10th Cir. 1984) (“[T]he position of the United States, for purposes of this Act, means the arguments relied upon by the government in litigation.”); Tyler Bus. Servs., Inc. v. NLRB, 695 F.2d 73, 75–76 (4th Cir. 1982) (“We believe ‘position’ should be read to mean the government’s position as a party in prosecuting or defending the litigation.”). In 1985, however, Congress amended EAJA to include a broader express definition of the term:
“position of the United States” means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based.
Eleven years after amending EAJA, Congress amended
2
Statutory interpretation begins with the ordinary meaning of the language chosen by Congress. Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 101 (2011). “[W]here Congress uses a common-law term in a statute, we assume the term comes with a common law meaning, absent anything pointing another way.” Id. (internal quotation marks omitted). In evaluating the language of
Hitkansut argues, and the Claims Court concluded, that the existence of a broad express definition of the term in EAJA provides a reason to ignore the ordinary meaning оf the language of
Nor does anything in the legislative history indicate such an intent. It is true, as the Claims Court pointed out, that during the legislative process the Department of Justice expressed the view that
Accordingly, we hold that “the position of the United States” as used in
Hitkansut argues that this statutory interpretation cannot be correct because it would “preclude a trial court from considering whether the [g]overnment’s position during the litigation is supportable based on the unique facts and context underlying the litigation.” See Appellees’ Br. 21. That concern is misguided. We hold today that “thе position of the United States” refers only to its litigation positions. But nothing in our holding prevents the Claims Court from looking to the facts of an individual case, including facts that occurred pre-litigation, when deciding whether those litigation positions were substantially justified.
As the Supreme Court has explained, the “substantially justified” test asks whether a position is “justified in substancе or in the main—that is, justified to a degree that would satisfy a reasonable person.” Comm’r, I.N.S. v. Jean, 496 U.S. 154, 158 n.6 (1990) (quoting Pierce v. Underwood, 487 U.S. 552, 565–566 (1988)). That requires the position to have a “reasonable basis both in law and fact.” Id. (emphasis added). The Claims Court explained this point well:
As a practical matter, the court cannot determine whether the government’s position during litigation was justified without examining the underlying facts rеlating to the government’s conduct. A reasonable basis requires more than conceptual arguments germane to the subject matter; arguments must also hue to the facts. That a litigation position may be reasonable in the abstract, i.e., has a reasonable basis in law, does not mean that the litigation position as applied to a specific case remains reasonable when contradicted or unsupported by the factual record.
Fees Decision at 357. We agree with the Claims Court that, although “the position of the United States” refers to litigation positions, those positions “lack[] substantial
B
Applying our interpretation of
The “position of the United States” in this case includes its invalidity and non-infringement positions, as well as its discovery responses and other positions expressed during litigation. It does not include the act of infringement itself, the purported breach of contract, or any other underlying governmental actions. To the extent the Claims Court concluded that ORNL “breach[ing] the [non-disclosure] agreement and infring[ing] the invention” were positions of the United States that needed to be substantially justified, Fees Decision at 358, that was error, and we do not rely on these statements.
Relying solely on the Claims Court’s statements regarding litigation positions, however, the record before us nonetheless reflects that the position of the United States was not substantially justified. As the Claims Court found, the United States maintained non-infringement positions that were factually incоnsistent with the actions ORNL took after having learned of the ’722 patent. Id. at 359. For example, ORNL provided interrogatory responses that were contrary to both documentary evidence and the deposition testimony of its employees. Id. at 359. Its obviousness arguments “failed to address an essential element of each of the three assertеd claims or to demonstrate any motivation to combine the prior art.” Id. (internal quotation marks omitted). And its enablement argument was contradicted by its own expert witness, who conceded that “a person of ordinary skill in the art could account for the errors in the patent without undue experimentation and perform all necessary calculations within approximately one hour.” Id. In light of these findings, each of which relates to the positions of the United States under a correct interpretation of that term, the Claims Court did not abuse its discretion in concluding that the government’s position was not substantially justified.
C
Separately from its statutory interpretation argument, the United States argues that the Claims Court erred by failing to further reduce the attorneys’ fees awarded to Hitkansut. It contends that because Hitkansut originally sought $5.6 million in damages, but was awarded only $200,000, Hitkansut achieved only “limited success” in its lawsuit, and the Claims Court erred by declining to reduce its fee award accordingly. Appellant’s Br. 37–38. We disagree. The Claims Court has “broad discretion” to determine the amount of a fee award. See Biery, 818 F.3d at 714 (citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)). None of the cases cited by the government require the Claims Court to reduce a fee award where the plaintiff succeeded on its sole claim and recovered the maximum amount of damages allowable by law.
The United States cites Hensley and Farrar v. Hobby, 506 U.S. 103, 114 (1992), for the proposition that “the most critical factor in determining the reasonableness of a fee award is the degree of success obtained,” and therefore “fee awards must be scaled to approximate the results obtained.” Appellant’s
Hensley concerns reduction of awards where “a plaintiff has achieved only partial or limited success” due to prevailing on less than all of its causes of action. 461 U.S. at 436, 440. In such a case, “the hours spent on the unsuccessful claim should be excluded in considering the amount of a reasonable fee.” Id. at 440. In this case, however, Hitkansut brought exactly one claim—infringement of the ’722 patent—and prevailed on it. The fact that it obtained less monetary relief than it may have hoped does not mean that it obtained “limited success” as the term is used in Hensley.
The United States’ reliance on Farrar is similarly founded on a quotation taken out of context. Farrar states that “where recovery of private damages is the purpose of . . . litigation, a district court, in fixing fees, is obligated to give primary consideration to the amount of damages awarded as compared to the amount sought.” 506 U.S. at 114–15. That statement, however, referred to a plaintiff who obtained only nominal damages. As the Supreme Court explained, “[a] plaintiff who seeks compensatory damages but receives no more than nominal damages” often “should receive no attorney’s fees at all.” Id. at 115. This was true in Farrar because “[i]n a civil rights suit for damages . . . the awarding of nominal damages also highlights the plaintiff’s failure to prove actual, compensablе injury.” Id. (emphasis added). Because damages awarded under
Unlike the plaintiff in Farrar, Hitkansut did not “fail[] to prove actual, compensable injury.” At trial, it proved compensable injury based on expert testimony from both parties that the United States would have paid $200,000 fоr a one-time license to the ’722 patent in a hypothetical negotiation. Merits Decision at 391–92. This was not a “technical, insignificant victory.” Farrar, 506 U.S. at 113 (internal quotation marks omitted). Therefore, the portion of Farrar relied upon by the United States, which is based on a plaintiff’s failure to prove actual injury, is inapplicable.
Accordingly, because Hitkansut succeeded on its sole claim, and proved a material amount of actual, compensable damages, the Claims Court did not abuse its discretion by declining to further reduce its award of attorneys’ fees.
III
We have considered the parties’ remaining arguments and find them unpersuasive. For the foregoing reasons, we conclude that “the position of the United States” as used in
AFFIRMED
COSTS
The parties shall bear their own costs.