IP Law Daily, PATENT—Fed. Cir.: Though federal litigation was ‘exceptional’ case for which attorney fee award was proper, accused infringer was not entitled to fees for parallel IPR proceeding, (May 12, 2026)

By Robert Margolis, J.D.

Federal Circuit relies on recent precedent holding § 285 does not permit a party to collect attorney fees and costs from a “voluntarily undertaken parallel IPR proceeding.”

Though Extremity Medical, LLC (Extremity) sued Nextremity Solutions, Inc. (Nextremity) for patent infringement without conducting any prelitigation investigation after being put on notice of prior art, such that its failed federal lawsuit was an “exceptional” case warranting an award of attorney fees and costs to Nextremity under 35 U.S.C. § 285, Nextremity was not entitled to recover its attorney fees and costs for the parallel inter partes review (IPR) it instituted, in which the Board found the patent to be invalid, the United States Court of Appeals for the Federal Circuit in Washington, D.C. has held. The court affirmed a district court decision awarding attorney fees and costs to Nextremity for the district court litigation in the amount of $52,573 but denied attorney fees and costs to Nextremity in the amount of $343,660.86 for the IPR proceeding, citing precedent holding that § 285 does not permit fees and costs to be awarded for a “voluntarily undertaken parallel IPR proceeding” (Extremity Medical, LLC v. Nextremity Solutions, Inc., No. 25-1160 (Fed. Cir. May 11, 2026)).

Extremity sued Nextremity for infringing U.S. Patent No. 8,303,589 (the ’589 patent), which relates to orthopedic implant devices. The suit was filed after Extremity had sent cease and desist letters, to which Nextremity responded by denying infringement and providing a list of prior art it argued rendered the asserted claim of the ’589 patent invalid. After the suit was filed, Nextremity filed a petition for IPR at the Board, asserting the claim was unpatentable as anticipated by the prior art it had asserted in its correspondence with Extremity. After the Board granted institution of the IPR, the district court stayed the federal litigation upon stipulation of the parties. Before the Board, Extremity did not assert arguments in support of the claim’s patentability, instead seeking to amend its claim. The Board ultimately issued a final written decision finding Nextremity proved by a preponderance of the evidence that the claim of the ’589 patent was unpatentable as anticipated by the prior art, and the proposed amended claim similarly would be unpatentable as having been rendered obvious by the prior art. After the Board issued its decision, the district court lifted the stay and dismissed the case with prejudice.

Nextremity then moved for attorney fees and costs incurred in both the district court litigation and the IPR proceeding under § 285. The motion was granted with respect to the district court litigation but denied as to the IPR proceeding. Both parties appealed.

IPR proceeding. The appellate court affirmed the denial of attorney fees and costs for the IPR proceeding, relying on its recent decision in Dragon Intell. Prop. LLC v. DISH Network L.L.C., 101 F.4th 1366 (Fed. Cir. 2024). In Dragon, the federal circuit held § 285 does not permit a party to collect attorney fees and costs from a “voluntarily undertaken parallel IPR proceeding[].” 101 F.4th at 1372. It rejected the argument that the IPR proceeding was “part and parcel” of the district court litigation and that accordingly attorney fees and costs should be allowed for the IPR proceeding as well. In Dragon, the federal circuit highlighted the voluntary nature of the IPR proceeding and also pointed out that IPR proceedings are not “cases” under § 285. Further, unlike an IPR proceeding, the district court lives with the federal litigation and is therefore particularly well suited to determine if the case is exceptional. In contrast, a district court is not in position to evaluate the goings on in an IPR proceeding, to determine if it is “exceptional.”

In this case, the district court applied Dragon and the appellate court affirmed, finding Dragon applies and is dispositive. It noted in this case Nextremity voluntarily pursued parallel IPR proceedings rather than argue invalidity in the district court. The appellate court rejected Nextremity’s reliance on a Supreme Court case, Sullivan v. Hudson, 490 U.S. 877 (1989), in which a mandatory administrative proceeding on remand from a district court was deemed “part and parcel” of the federal litigation such that fees could be awarded for the time in the administrative proceeding. Here, as noted, the IPR proceeding was voluntary, not mandatory.

Exceptional case. The court also affirmed the district court’s determination that the federal case was exceptional, warranting fees. An “exceptional” case is “one that stands out from others with respect to the substantive strength of a party’s litigating position … or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). The district court found the case exceptional because Extremity (1) conducted no prelitigation investigation, despite being put on notice of prior art, (2) did not defend the claim’s patentability before the Board, and (3) did not put forth substantive arguments in favor of its litigation position in the district court. In making these findings and concluding they added up to an “exceptional case,” the district court did not abuse its discretion, the appellate court held. These factors, viewed together, reflect more than garden variety litigation weakness, and instead that the weakness of Extremity’s position stands out “from typical patent disputes in which parties advance and defend colorable validity theories,” the court held.

The Case is No. 25-1160.

Judge: Lourie, A.

Attorneys: Michael J. Zinna (Kelley Drye & Warren, LLP) for Extremity Medical, LLC. Nicholas Mesiti (Heslin, Rothenberg, Farley & Mesiti, P.C.) for Nextremity Solutions, Inc.

Companies: Extremity Medical, LLC; Nextremity Solutions, Inc.

Cases: Patent FedCirNews