During the first appeal, this Court reversed the district court's finding of fraud on the PTO and vacated the district court's antitrust judgment. Dippin' Dots, Inc. v. Mosey, 476 F.3d 1337, 1348 (Fed. Cir. 2007) (hereinafter “Dippin' Dots II”). This Court also begrudgingly affirmed the district court's inequitable conduct judgment finding that DDI had the “minimum, threshold level of intent required for [finding] inequitable conduct.” Dippin' Dots II, 476 F.3d at 1346. This Court relied on the fact that “defendants submitted no evidence of their own – aside from the absence of the Festival Market sales from the prosecution record – which affirmatively shows DDI's fraudulent intent.” Id. at 1348. Moreover, the Court determined that DDI's submissions to the PTO were “not actually false.” Id. at 1347. Relying on these findings, this Court vacated the $3 million dollars in fees awarded to Defendants under the Clayton Act and remanded for determination of whether attorney fees were appropriate under Section 285. Id. at 1349.

On remand, the district court noted that “Defendants seek the same fees that were awarded under the Clayton Act, but they want them awarded under section 285 of the Patent Act.” (JA0163.) The district court, in direct contradiction with the holdings of this Court in the first appeal, found that this case was exceptional because it involved “inequitable, and in my view egregious, conduct before the PTO” and awarded Defendants over $4 million dollars in attorney fees and interest. (JA0161; JA0167; JA0169; see also JA0745; JA0747 (2005 Section 285 award to FBD).) Specifically, the district court found that DDI's “conduct before the PTO was inappropriate and, in my judgment, outrageous enough to warrant attorney fees.” (JA0166.)

The district court clearly erred by basing its exceptional case attorney fees award on a level of intent that this Court already found DDI did not possess. The law of the case is a judicially created doctrine that prevents district courts from disregarding the opinions of appellate courts. In short, a factual finding, such as the level of DDI's intent to deceive the PTO, relied on by this Court cannot, except in exceptional circumstances, be disturbed by the trial court on remand. By relying on a higher level of intent to defraud, without making any new factual findings or without being presented with any new evidence on remand, the district court clearly erred by finding this case exceptional.

Even if the district court did not clearly err in making its factual findings, the district court abused its discretion by:

• failing to require Appellees to present some affirmative evidence showing that DDI had a higher level of fraudulent intent than is required to support the finding of inequitable conduct;
• failing to consider DDI's success in the first appeal;
• failing to consider the closeness of this case;
• failing to make adequate factual findings concerning the fees to be awarded; and
• failing to require that Defendants submit adequate documentation of the hours their attorneys expended.

The award of prejudgment and postjudgment interest also should be reversed because the district court either clearly misapprehended the facts or abused its discretion by awarding attorney fees under Section 285 without requiring the introduction of additional evidence supporting a higher level of fraudulent intent.

Finally, the district court's denial of DDI's Rule 60(b) motion also must be reversed and accordingly the 2005 Section 285 award should be vacated. After appeal, it is clear that DDI did not commit fraud on the PTO. Dippin' Dots II, 476 F.3d at 1348 (reversing this finding). The district court's award of attorney fees to FBD in the 2005 Section 285 award was based on “[t]he jury's finding that Jones and his attorney committed fraud on the Patent Office” a decision that the district court found “compels a finding that this is an exceptional case which warrants an award of fees.” (JA0745.) However, inequitable conduct is not equivalent to fraud. This Court found that the evidence did not support anything more than the minimal intent required for inequitable conduct. Without evidence of more, an award of attorney fees under Section 285 cannot stand. Likewise, the district court abused its discretion by denying DDI's motion to stay this award pending appeal.

In its brief, because DDI cannot seriously dispute that the evidence from trial showed that this is exceptional under § 285, DDI instead takes direct aim at the district court judge, portraying him as a renegade bent on ignoring this Court's appellate authority. Indeed, DDI castigates the district court for allegedly trying to reinstate findings that were overturned by the Court in Dippin' Dots II. Yet, to make out such a dramatic story, DDI must premise its tale on gross misrepresentations of the district court and its October 2007 Order.

Tellingly, DDI does not – because it cannot – support its criticisms with direct quotations from the district court's remand decision. The reason for DDI's numerous citation omissions is clear: The record below speaks for itself and directly contradicts DDI's arguments. Indeed, a comparison of the findings in the October 2007 Order with the misrepresentations in DDI's brief makes clear that DDI is desperately attempting to fabricate error where, in fact, there is none. The district court carefully considered Dippin' Dots II and the evidence adduced at trial, engaged in the proper analysis for awarding fees under § 285, and fully supported its decision.

It is DDI that has behaved inequitably. As found by this Court in Dippin' Dots II, DDI engaged in inequitable conduct in the prosecution of the 156 Patent. Based on that conduct, the district court correctly found this case exceptional.

DDI failed to disclose pre-critical date sales (the Festival Market sales) during prosecution of the 156 Patent, despite this Court's repeated admonitions that patent applicants should be particularly forthcoming regarding their prior art sales. The Court found in Dippin' Dots II that such prior sales invalidated the 156 Patent and thus satisfied the highest level of materiality. The Court further ruled that DDI acted with sufficient deceptive intent in withholding this crippling prior art to constitute inequitable conduct. Based on the Court's inequitable conduct affirmance and the facts established at trial, the district court correctly found – and certainly did not clearly err in finding – that this case is exceptional.

Likewise, the district court correctly applied the proper legal test in deciding to award fees in this exceptional case. The district court found that equitable considerations favored awarding FBD fees, including DDI's misconduct during trial and FBD's sweeping victories on summary judgment regarding every claim for relief DDI raised in the case, as well as on patent validity and unenforceability at trial. The district court also considered equitable considerations such as DDI's conduct in procuring the 156 Patent.

The district court also used the correct analysis in determining a reasonable amount of fees to award. Using the universally accepted lodestar method, the
district court multiplied the reasonable hours worked by FBD's lawyers by the undisputedly reasonable hourly rates for those lawyers. With regard to FBD's calculation of the reasonable number of hours, DDI did not even meaningfully dispute those numbers in the district court, and the district court properly rejected the only criticisms that DDI did raise.

First, the district court did not abuse its discretion in determining that the reasonable number of hours included time spent working on the reversed Walker Process counterclaim because that counterclaim was fundamentally intertwined with FBD's successful patent defenses. Second, the district court did not abuse its discretion in determining that FBD's detailed fee records provided an adequate basis for determining the reasonable number of hours.

Similarly, DDI has never contested in any respect – not once – the hourly rates used by FBD in its fee request. The district court therefore did not abuse its discretion by accepting those uncontested rates. Likewise, the district court did not abuse its discretion in finding reasonable the total amount of fees awarded to FBD. DDI did not once claim in the district court (as it does now) that that fee award was unreasonable because it is larger than the vacated Clayton Act award. More importantly, there is no error from this increase because it stems only from the passage of time. DDI's suggestion that there is something unreasonable or deceitful about the § 285 fee award being greater than the vacated Clayton Act award is unsupported and simply absurd.

Finally, the district court correctly rejected DDI's Rule 60(b) motion. DDI improperly sought to substitute a Rule 60(b) motion for a timely appeal. Moreover, despite DDI's attempt to twist the reversal of the Walker Process verdict in its favor, the Rule 60(b) motion was groundless. Indeed, successfully making out a Walker Process claim has never been a prerequisite to a court awarding fees under § 285 and, therefore, an unsuccessful Walker Process claim certainly does not per se defeat an award of fees under § 285, as DDI suggests.

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