1. Comparative IP Law : Attorneys’ fee awards in patent litigation in the US, UK, Germany, and Canada
Michael Tomsa, Michael Carter, Will Boyer

2. Outline For US, UK, DE, CA… Proper venues for patent disputes;
Starting assumptions for attorneys’ fee awards in patent cases;
Factors considered in awarding attorneys’ fees and quantum of awards; and
Process for obtaining an attorneys’ fee award.

3. Jurisdiction: United States
U.S. District Court (Federal Court)
A patent infringement case can be filed in any district in the United States that has personal jurisdiction over the defendant (28 U.S.C. § 1338)
U.S. International Trade Commission
Patent damages are not recoverable in an action before the ITC
ITC can issue either a general or limited exclusion order

4. Costs Analysis: United States
Starting assumption:
Each party pays its own fees
Prevailing party may seek attorney fees under Section 285:
“The court in exceptional cases may award reasonable attorney fees to the prevailing party”
Section 285 is limited to attorney fees

5. Standard of Review: United States
Pre-2014:
“The Brooks Furniture Test”
Exceptional cases must be established by clear and convincing evidence to overcome the presumption that patent litigation was brought in good faith.
Standard: clear and convincing evidence

6. Brooks Furniture Test A case is “exceptional” if:
Material Inappropriate Conduct
Willful infringement
Fraud or inequitable conduct during prosecution
Misconduct during litigation
Vexatious or unjustified litigation
Conduct that violates Rule11 or similar infractions
-OR-
Litigation was “brought in subjective bad faith” and “objectively baseless”
Litigation is “so unreasonable that no reasonable litigant could believe it would succeed”
Plaintiff “actually know[s]’ that its position is objectively baseless”

7. Standard of Review: United States
Post-2014:
Highmark and Octane Fitness
Brooks Furniture test is too restrictive and impermissibly encumbers the statutory grant of discretion to district courts
Standard: Preponderance of the evidence

8. Octane v. Icon (USSC)
Exceptional cases are cases that stand out due to:
Substantive strength of a party’s litigation position
Unreasonable manner in which the case litigated
Case-by-case determination by the District Court based on the totality of the circumstances

9. Octane v. Icon (USSC) Factors to consider:
Frivolousness
Motivation
Objective unreasonableness
Compensation and deterrence
Rule 11 still provides an adequate remedy for sanctions
Attorney fees can be recovered in a motion under Rule 11 itself for filing a baseless infringement claim

10. Highmark v. Allcare (USSC)
On appeal, appellate courts must apply an abuse-of-discretion standard when reviewing Section 285 determinations.
District court is better positioned to decide exceptionality because it has lived with the case for a prolonged period.

11. Process: United States
Court renders Judgment
Prevailing Party files Motion For Attorney Fees setting forth amount sought (Rule 54)
Parties submit briefing and hold a hearing
Court renders decision on Motion For Attorney Fees
Appeal (Optional)

12. Reasonable Fees: United States
The Court has discretion to determine an appropriate attorney fees award
The court must consider the fee award in light of the conduct that makes the case exceptional, including the closeness of the case, and the conduct of counsel and the parties
Many courts rely on the lodestar calculation, which calculates the total amount of fees by multiplying the reasonable number of hours worked by a reasonable hourly rate 

13. Reasonable Fees: United States
Factors to determine whether fees were reasonable:
Time and labor expended
Novelty and difficulty of the questions raised
Skill required to properly perform legal services rendered
Attorneys’ opportunity costs in pressing the litigation
Customary fee for like work
Attorneys’ expectation at the outset of litigation
Time limitations imposed by client or the circumstances of the case
Amount in controversy and the results obtained
Experience, reputation and ability of the attorney
Undesirability of the case within the legal community
Nature and length of professional relationship between the attorney and client
Attorney’s fees awarded in similar cases

14. Ca – venue Infringement: Federal or Provincial Courts.
But majority of cases in Federal Court, where patentee can obtain nation wide relief (e.g., injunction and damages).
Impeachment or declaration of non-infringement: Federal Court only.
Adverse costs rules vary slightly between Federal and Provincial Courts, but main principles are consistent.

15. Ca – costs analysis Starting assumption: loser pays.
Assumption is rebuttable.
But not full reimbursement for successful party.
Assumption is Tariff based costs plus reasonable disbursements. Court may elect for lump sum instead.
For patent cases, typically mid-Col IV.
For each assessable service, multiply number of units by unit value (varies with consumer price index). Current unit value: $

16. Sample of tariff Item Assessable Service Number of Units Col I Col II
Col III
Col IV
Col V
A. Originating documents and Other Pleadings 1
Preparation and filing of originating documents, other than a notice of appeal to the Federal Court of Appeal, and application records.
1 - 3
2 - 5
4 - 7
5 - 9
7 - 13 2
Preparation and filing of all defences, replies, counterclaims or respondents’ records and materials. 3
Amendment of documents, where the amendment is necessitated by a new or amended originating document, pleading, notice or affidavit of another party.
1 - 2
1 - 4
2 - 6
3 - 7
4 - 8

17. Ca – costs analysis Widely understood that Tariff is outdated.
For example, see Dow Chemical v Nova, 2016 FC 91:
Highest Col V Tariff costs were $1.1M, representing 11% of successful parties’ actual legal fees.
Court parted from Tariff and awarded $2.9M in legal fees and $3.6M in disbursements.
Largest costs award in patent case in Canada by a wide margin.

18. Ca – rule 400 factors
result of the proceeding, including apportionment of liability, amounts claimed, and amounts recovered;
importance and complexity of the issues;
amount of work;
whether the public interest in having the proceeding litigated justifies a particular award of costs;
any conduct of a party that tended to shorten or unnecessarily lengthen the duration of the proceeding;
failure by a party to admit anything that should have been admitted or to serve a request to admit;
among many others.

19. Ca – costs process
Court awards costs, and typically requests submissions on costs.
Parties prepare submissions.
Court will provide directions as to costs (e.g., applicable Tariff column, number of counsel for Tariff calculations, etc.).
Parties try to settle costs.
If costs not settled, issue of costs goes to a reference on costs, where referee will make costs decision based on Court directions and parties’ submissions.

20. UK - Venues
Patents Court: Part of the Chancery Division of the High Court with specialist judges and rules. Proceedings normally take 9 – 15 months (but can be completed in less than 6 if urgent)
Intellectual Property Enterprise Court (“IPEC”): Specialist court for shorter cases (2 days max.) with a cap of £500,000 on damages. Very limited costs recovery. Proceedings take 12 – 15 months).
Court of Session: Deals with all Scottish patent cases.

21. UK – Costs Analysis
General rule in High Court proceedings is that the unsuccessful party will be ordered to pay the costs of the successful party. EU law provides for a similar rule.
However, where costs of a certain issue are “suitably circumscribable” the winning party may be required to pay the unsuccessful party's costs incurred in respect of that issue - see Hospira UK Limited -v- Cubist Pharmaceuticals LLC [2016] EWHC 2661.
The court will not allow costs which have been unreasonably incurred or are unreasonable in amount.

22. UK – Costs Analysis
Costs are ordinarily awarded on the ‘standard’ basis.
Costs must be proportionate to the matters in issue. On the standard basis, any doubt as to whether they were reasonably incurred or reasonable in amount are resolved in favour of paying party.
Costs are proportionate if they bear a reasonable relationship to the value of the claim and the complexity of the litigation (amongst other things).
Costs which are disproportionate in amount may be disallowed or reduced, even if reasonably incurred.

23. UK – Factors Conduct of the parties;
Efforts made by the parties to resolve the dispute;
‘Part 36’ offers.
Value and importance of the dispute to the parties;
Complexity of the matter;
Skill, effort, specialised knowledge involved;
Time spent on the case;
Where and how the work was done.
Costs Budgets.

24. UK – Costs budgeting
Relatively new process. Aimed at managing costs at an early stage. Costs are no longer just a ‘post trial’ matter.
For most cases valued at less than £10 million parties are required to file and exchange a costs budget before the case management conference.
The costs budget is an estimate of the costs a party expects to incur for each stage of proceedings.
Where a budget is deemed disproportionate, the court can reduce the amount.

25. UK – Costs budgeting
Parties are unable to recover more than the amounts in the approved costs budget. Failure to file a costs budget means attorney costs cannot be recovered (only the court fee).
A successful party will ordinarily be awarded the amounts set out in its approved costs budget. However, these amounts are still subject to detailed assessment and may be reduced if disproportionate or unreasonable.
Parties do not have to file costs budgets in IPEC or the Shorter Trial Scheme in the Patents Court.

26. UK - Sample budget

27. UK - Sample budget

28. UK - IPEC Costs
‘Loser Pays’ but not ‘compensatory’. The aim is to provide the parties with certainty.
Total recoverable costs are capped at £50, (Average recovery is in region of £30,000 to £38,000)
Costs caps also apply for each ‘phase’ of proceedings.
Generally accepted that caps are far below actual cost of proceedings. However, the Court is very busy – costs capping has been a success.

29. UK - IPEC Costs Caps Stage of a claim Cost Cap Particulars of claim
£7,000
Defence and counterclaim
Reply and defence to counterclaim
Reply to defence to counterclaim
£3,500
Attendance at a case management conference
£3,000
Making or responding to an application   
Providing or inspecting disclosure or product/process description  
£6,000
Performing or inspecting experiments   
Preparing witness statements   
Preparing experts' report   
£8,000
Preparing for and attending trial and judgment   
£16,000
Preparing for determination on the papers   
£5,500

30. UK - Costs Process
Parties prepare costs schedules and costs submissions.
The trial judge will decide the ‘winner’ and the percentage of its costs a successful party should recover.
On a ‘summary’ assessment (e.g. IPEC) the court will make a costs award based on the costs schedules and submissions.
Otherwise, the judge will order a ‘detailed’ assessment of costs. It may also make an interim costs award.

31. UK - Costs Process
A successful party should commence proceedings for a detailed assessment within 3 months of judgment and serve a detailed bill of costs.
The unsuccessful party is then required to serve points of dispute stating why the costs are disproportionate or unreasonable.
The costs the successful party is able to recover will then be determined at a detailed assessment hearing.
Because this process takes a long time and can be very expensive parties often agree on costs.

32. DE - Overview
General rule is that the losing party has to pay the costs of the winning party.
However, court fees and attorney costs are only recoverable according to the German statutory fee schedule and the value of the claim.
The trial judge will decide on the allocation of costs (i.e. who pays) and the value of the claim.
The court will then determine the precise amount of cost recovery in a separate procedure .

33. Michael Tomsa: MTomsa@mcandrews-ip.com
Michael Carter:
Will Boyer: