By Memorandum Opinion entered by The Honorable Richard G. Andrews in Pragmatus v. Newegg Inc., Civil Action No. 12-1533-RGA (D.Del., February 18, 2016), the Court denied Defendant Newegg’s Motion for Attorneys’ Fees but granted its Motion for Costs.  In doing so, the Court concluded that Newegg was the “prevailing party” but the case was not “exceptional.”

By way of background, Plaintiff Pragmatus sued Defendant Newegg alleging that Newegg’s use of live chat technology on its website infringed certain patents. Id. at 1.  Suppliers of the live chat technology used by Newegg on its website subsequently filed declaratory judgment actions against Pragmatus and reached settlements with Pragmatus.  Believing that, in light of the settlements with the suppliers, the activities that formed the basis of the infringement allegations against Newegg were now licensed, Pragmatus filed an unopposed motion to dismiss, pursuant to Federal Rule of Civil Procedure 41(a)(2), which was granted by the Court the same day. Id.

Newegg subsequently filed a motion seeking attorneys’ fees and costs. Id. After briefing and oral argument on the issues, the District Court issued a memorandum opinion denying Newegg’s motion on the ground that it was not a prevailing party under 35 U.S.C. § 285 and Federal Rule of Civil Procedure 54(d)(1). Id. at 1-2.  The United States Court of Appeals for the Federal Circuit subsequently reversed that decision and, in doing so, held “that ‘Newegg must be regarded as the prevailing party in the underlying litigation,’” and remanded the case for a determination of whether Newegg was entitled to attorney fees and costs.  Id. at 2.  Thus, on remand, the District Court had to decide whether the case was exceptional. Id.

After consideration of Newegg’s arguments, the District Court concluded the case was not exceptional under § 285 and denied the motion for attorneys’ fees. Id. at 10.  The Court noted that the Federal Circuit’s ruling dictated that Newegg be considered a prevailing party and that, pursuant to Federal Rule of Civil Procedure 54(d)(1) and Local Rule 54.1(a)(1), the prevailing party is entitled to costs. Id. Pragmatus asked the Court to exercise its discretion and deny Newegg costs for various reasons; however, the District Court declined to do so and referred the calculation of the costs to be awarded to the Clerk of Court. Id.

A copy of the Memorandum Opinion is attached.

The general takeaway from the case is as follows: just because one is a prevailing party, does not automatically mean that it will recover attorneys’ fees under 35 U.S.C. § 285.  The prevailing party must still show by a preponderance of the evidence that the case is “exceptional” for some reason.