Fees Under Alternative Arrangements Can Be Shifted, According to Special Master Recommendation, but Rigor Is Required

March 14, 2020

In early December 2019, District Judge William H. Alsup appointed a Special Master to resolve a dispute between plaintiff Straight Path IP Group, Inc. and defendants Apple and Cisco over the reasonableness of requested fees and costs. After granting each defendant summary judgment of noninfringement, Judge Alsup awarded fees in a late-November order that “finds that the shifting sands of the patent owner’s delineations of the claimed invention’s scope—instigated by its narrowing of scope to avoid invalidity before the Federal Circuit, followed by its broadening of scope to accuse others of infringement in the district court—render the above-captioned actions ‘exceptional’”. The appointed Special Master has returned his report and recommendation, indicating that Apple should be awarded $2.3M in fees; Cisco, a reduced $1.9M, the latter to compensate for work performed under an alternative fee arrangement with counsel: “This report concludes that such alternative fee arrangements, whether flat fee or otherwise, may be compensable under Section 285, but that prevailing parties must be required to satisfy appropriate reasonableness standards to ensure fairness and to protect against potential abuse”.

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