Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, et al., 2019-1134 (April 13, 2020), affirming the district court’s denial of Defendants’ attorney’s fees motion because they were not a “prevailing party” following Plaintiff’s dismissal without prejudice. Plaintiff Mossberg owned a patent covering a gun trigger. It sued Defendants for patent infringement. Rather than answer, Defendants attacked the validity of the patent in the USPTO. The district court stayed Plaintiff’s infringement lawsuit. After five years, Defendants ultimately prevailed in invalidating the patent at the USPTO. Plaintiff then filed a notice of voluntary dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A)(i) in the district court. The district court entered an order stating that the case was dismissed without prejudice.
Defendants subsequently filed a motion for attorney’s fees under 35 U.S.C. § 285, which in addition to requiring proof of an exceptional case, also requires that the moving party was “the prevailing party.” The district court hung its hat on the latter, holding that Defendants were “not a prevailing party to collect attorney’s fees . . . because a ‘Rule 41 dismissal without prejudice is not a decision on the merits and thus cannot be a judicial declaration altering the legal relationship between the parties.’” Defendants appealed.
The decision on appeal turned on whether there had been a “final decision.” A final decision for purposes of determining a “prevailing party” requires that the decision change the legal relationship between the parties. The Federal Circuit agreed no such decision had occurred – in the infringement lawsuit – before the dismissal. The final invalidity decision could not be used because it was obtained in a separate venue, the USPTO, not the district court. The Court agreed that neither the stay nor the dismissal order were final decisions either. The dismissal order was not a “final decision” because Mossberg’s notice of dismissal, which was earlier, was effective immediately upon filing. “Although the district court in this case entered a dismissal order after Timney filed its notice of voluntary dismissal, that dismissal order had no legal effect.” The only other court order in the case was the stay. “[T]he stay did not change the legal relationship between the parties; the Board’s invalidity decision and Mossberg’s voluntary Rule 41(a)(1)(A)(i) dismissal did.”