Attorney Fees Claim Permissible Even After Action Dismissed With Prejudice

A claim for attorney fees under 35 U.S.C. 285 is properly entertained by a district court even after an action's dismissal with prejudice by that court, a Federal Circuit panel determines in Highway Equipment Company, Inc. v. FECO, Ltd. and Stan Duncalf (Nos. 05-1547, 1578, November 21, 2006). The dismissal is deemed to have the necessary judicial imprimatur to constitute a judicially sanctioned change in the legal relationship of the parties.

On the day of a final scheduled pretrial conference in a suit in federal district court involving claims of both patent infringement and violations of state law, Highway Equipment filed a covenant not to assert any claim of patent infringement under its patent, thus withdrawing the patent infringement controversy. FECO subsequently filed its motion for attorney fees and, following dismissal of its motion, FECO appealed.

The district court dismissal of the attorney fees motion is affirmed. Effects of a dismissal with prejudice of attorney fees claims under the Patent Act must be determined by Federal Circuit law in order to promote national uniformity concerning the availability of attorney fees, the Federal Circuit panel concludes. Application of regional circuit law could cause a dismissal with prejudice on such claims to vary with the regional circuit in which the case originated. There is a noted lack of uniformity among the regional circuits regarding the effect of a dismissal on the availability for attorney fees, and applying the Federal Circuit's own law is considered to ensure uniformity when patent issues are litigated. Since the facts at issue in the claim arising under the applicable state statute are insufficiently related to those in the federal counts as to form a part of the same case or controversy, however, the district court's judgment on the alleged violation of state law is vacated, and the case is remanded with instructions to dismiss that claim.