Future Link Sys., LLC v. Realtek Semiconductor Corp

Authored by: Jeremy J. Gustrowsky

In Future Link Systems, LLC v. Realtek Semiconductor Corp., the Federal Circuit clarified when a defendant can be considered a “prevailing party” entitled to attorney fees and costs in patent litigation. Future Link had sued Realtek for patent infringement in two separate cases involving U.S. Patent No. 7,917,680, U.S. Patent No. 8,099,614, and U.S. Patent No. 7,685,439. After Future Link entered a licensing agreement covering the accused Realtek products, it voluntarily dismissed both lawsuits. However, the district court converted these dismissals to “with prejudice” as a sanction, meaning Future Link could not refile the same claims against Realtek.

Realtek then sought attorney fees and costs, arguing that the dismissal with prejudice made it the prevailing party under 35 U.S.C. § 285 and Federal Rule of Civil Procedure 54(d)(1). The district court denied these requests, but the Federal Circuit disagreed. The appellate court held that a dismissal with prejudice is a significant legal change—it prevents the plaintiff from bringing the same claims again and thus qualifies the defendant as a prevailing party. The court vacated the lower court’s decision and sent the case back to determine if the case was “exceptional” enough to award fees and to address costs.

The Federal Circuit also reviewed Realtek’s requests for sanctions under Rule 11 and 28 U.S.C. § 1927, which target baseless or bad-faith litigation. Here, the court found that Future Link had conducted an adequate pre-filing investigation and that there was no clear evidence of bad faith or meritless litigation. As a result, the district court’s denial of sanctions was affirmed.

Finally, the court addressed a discovery dispute about access to confidential information. Realtek wanted to exempt some of its attorneys from a protective order’s appearance requirement, but the court upheld the district court’s decision, finding that the requirement was reasonable for accountability.

This case highlights the importance of how dismissals are entered and reinforces that a dismissal with prejudice can carry significant consequences for both parties in patent litigation.