Dragon Intell. Prop. LLC v. DISH Network L.L.C

Authored by: Jeremy J. Gustrowsky

A recent appellate decision clarifies the limits of attorney fee awards in patent disputes, especially when a defendant prevails by invalidating a patent through inter partes review (IPR). In this case, Dragon Intellectual Property LLC sued DISH Network L.L.C. and Sirius XM Radio Inc., alleging infringement of U.S. Patent No. 5,930,444. After the defendants successfully challenged the patent’s validity in an IPR proceeding, they sought to recover their attorney fees from both Dragon and its law firm, including fees incurred during the IPR process.

The court affirmed that the case was “exceptional” due to Dragon’s weak litigation position and its persistence despite clear evidence that the accused products did not infringe. As a result, the defendants were entitled to recover some of their attorney fees from Dragon for time spent litigating in district court. However, the court drew a clear line: fees incurred during the IPR process itself could not be recovered under the fee-shifting statute (35 U.S.C. § 285), since IPR is a separate, voluntary proceeding before the Patent Office, not the district court.

Additionally, the court rejected the idea that Dragon’s former attorneys could be held jointly responsible for paying the fee award. The statute allowing for fee-shifting in exceptional patent cases does not mention attorneys as liable parties. Instead, if a party believes opposing counsel acted improperly, other rules—like Rule 11 or specific statutes targeting attorney misconduct—must be used.

This decision provides important guidance for both patent owners and accused infringers. While prevailing parties in “exceptional” cases can recover some litigation costs, those costs are limited to district court proceedings and cannot be extended to IPR fees or opposing counsel unless other, more specific rules apply.