Wrong Is Not Weak: The Federal Circuit Reins In Fee Shifting After IPR

Why It Matters

The ruling tightens the threshold for fee‑shifting and sanctions after an IPR loss, protecting patent owners from punitive awards unless their position is substantively weak, and it signals courts will not penalize mere procedural errors.

Key Takeaways

• IPR loss doesn't bar district‑court suits on surviving claims.
• “Exceptional” fee awards require substantive strength, not mere correctness.
• Federal Circuit rejected procedural setbacks as basis for §285 fees.
• Lack of diligence alone insufficient for §1927 sanctions.

Pulse Analysis

The Federal Circuit’s decision in mCom IP underscores how the Supreme Court’s Octane Fitness framework continues to shape fee‑shifting jurisprudence. While an inter‑partes review can invalidate most claims of a patent, the ruling makes clear that surviving claims may still be litigated in district court without automatically triggering the “exceptional case” bar for attorney‑fees awards. Courts must assess the substantive strength of the litigating position—considering both legal standards and factual context—rather than simply noting that the plaintiff’s view was ultimately wrong.

In its analysis, the appellate panel dissected the district court’s four rationales for the fee award. It rejected the notion that procedural setbacks, such as striking a complaint or dismissing an amendment, constitute exceptional weakness. Likewise, the court found no basis to treat a failure to investigate a potential license or an alleged nuisance‑settlement motive as evidence of bad faith. By distinguishing substantive patent strength from procedural diligence, the Federal Circuit reaffirmed that sanctions under § 1927 require egregious, reckless conduct, not merely a lack of thoroughness.

For patent owners and their counsel, the decision sends a cautionary signal. Post‑IPR litigation strategies must be grounded in a solid evidentiary foundation that can survive heightened district‑court scrutiny, especially on issues of obviousness and claim construction. At the same time, attorneys can avoid the specter of sanctions by documenting diligent investigative steps, even when a license is uncertain. The broader industry impact is a more predictable environment for enforcing remaining patent rights after an IPR, with reduced risk of costly fee awards that could otherwise deter enforcement efforts.