NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
UCP INTERNATIONAL COMPANY LIMITED,
GLOBAL UNITED ENTERPRISES LIMITED,
Plaintiffs-Cross-Appellants
v.
BALSAM BRANDS INC., BALSAM
INTERNATIONAL UNLIMITED COMPANY,
Defendants-Appellants
______________________
2018-2231, 2018-2253
______________________
Appeals from the United States District Court for the
Northern District of California in No. 3:16-cv-07255-WHO,
Judge William H. Orrick, III.
______________________
Decided: September 19, 2019
______________________
PATRICIA LYNN PEDEN, Burke, Williams & Sorensen,
LLP, Oakland, CA, argued for plaintiffs-cross-appellants.
DEANNE MAYNARD, Morrison & Foerster LLP, Wash-
ington, DC, argued for defendants-appellants. Also repre-
sented by SETH W. LLOYD; ROSE S. LEE, Los Angeles, CA;
LENA HUGHES, New York, NY; MICHAEL ALLEN JACOBS,
2 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
San Francisco, CA; MARC N. BERNSTEIN, The Business Lit-
igation Group, P.C., San Francisco, CA.
______________________
Before WALLACH, CLEVENGER, and TARANTO, Circuit
Judges.
CLEVENGER, Circuit Judge.
The instant appeal is the companion to concurrently is-
suing Appeal No. 18-1256 (“the Merits Appeal”), where we
determined that the U.S. District Court for the Northern
District of California misconstrued the “pivot joint” claim
term of U.S. Patent Nos. 8,062,718 (“the ’718 patent) and
8,993,077 (“the ’077 patent”) (collectively, “the Patents-in-
Suit”). See UCP Int’l Co. v. Balsam Brands, Inc., No. 2018-
1256, slip op. at 27 (Fed. Cir. Sept. 19, 2019). We presume
familiarity with our opinion in the Merits Appeal which re-
cites the same technology and patents as the instant ap-
peal. We, therefore, only recite the facts necessary to
understand the issues on appeal here.
Cross-Appellants UCP International Company and
Global United Enterprises (collectively, “UCP”) sued Ap-
pellants Balsam Brands Inc. and Balsam International Un-
limited (together, “Balsam”) in the district court seeking a
declaratory judgment of non-infringement of all claims of
the Patents-in-Suit. The district court granted UCP’s mo-
tion for summary judgment of non-infringement and sub-
sequently awarded limited attorney fees under 35 U.S.C.
§ 285 to UCP.
Balsam appeals from the district court’s award of lim-
ited attorney fees, arguing that, if we reverse or vacate the
district court’s judgment in the Merits Appeal, then we also
must reverse the district court’s attorney fees award. UCP
cross-appeals on the ground that the district court abused
its discretion in not awarding all the fees UCP requested
in its motion. For the reasons that follow, we reverse the
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 3
district court’s attorney fees award and dismiss UCP’s
cross-appeal.
BACKGROUND
After the district court granted UCP’s motion for sum-
mary judgment of non-infringement, UCP moved for attor-
ney fees, expert fees, and the attorney fees it incurred in
pursuing merits fees (“fees-on-fees”). Specifically, UCP
sought an award of attorney fees from both the litigation
between Balsam and Frontgate, Balsam Brands Inc. v.
Cinmar, LLC, No. 3:15-cv-04829-WHO (N.D. Cal.) (“the
Frontgate Litigation”), and its declaratory judgment action
against Balsam, UCP Int’l Co. Ltd. v. Balsam Brands Inc.,
No. 16-CV-07255-WHO (N.D. Cal.) (“the Declaratory Judg-
ment Litigation”). UCP also sought an award of its expert
fees from the Frontgate Litigation, and an award of fees-
on-fees from the Declaratory Judgment Litigation. UCP
based its entitlement to an award of attorney fees from the
Frontgate Litigation on the fact that it was contractually
obligated to indemnify Frontgate in that action, and it
should, therefore, be able to recover its fees spent defend-
ing against Balsam’s purportedly meritless infringement
claims in that action.
The district court granted-in-part and denied-in-part
UCP’s motion for attorney fees. The district court denied
UCP’s request for attorney fees from the separate
Frontgate Litigation because it found that UCP was not a
“prevailing party” in that action, as is required to award
attorney fees under 35 U.S.C. § 285. The district court also
determined that Frontgate could not recover the expert
fees from the Frontgate Litigation under 28 U.S.C. § 1927
or the court’s inherent power. The district court then de-
termined that UCP was entitled to only limited attorney
fees under § 285 based on Balsam’s conduct in the Declar-
atory Judgment Litigation. The limited fees the district
court awarded were for Balsam’s decision to hire Judge Or-
rick’s former law firm partner “to prompt [his] recusal and
4 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
avoid [his] findings and conclusions that the Frontgate
claim construction order would apply in [the] declaratory
judgment case.” UCP Int’l Co. Ltd. v. Balsam Brands Inc.,
No. 16-CV-07255-WHO,
2018 WL 2938855, at *7 (N.D. Cal.
June 12, 2018).
In a separate order after receiving additional submis-
sions from the parties regarding fees spent litigating the
recusal issue and fees-on-fees, the district court awarded
UCP $43,475 in fees for litigating the recusal issue, and
$2,345 in fees-on-fees based on UCP limited success in its
motion for attorney fees.
Balsam appeals from the district court’s decision to
award limited attorney fees only on the ground that, if we
decided to reverse or vacate the district court’s judgment of
non-infringement in the Merits Appeal, then we also must
reverse the district court’s award of attorney fees under
§ 285 because UCP will no longer be a “prevailing party” as
the statute requires. UCP cross-appeals on the ground
that the district court abused its discretion in failing to
award UCP all of its attorney fees incurred in the Declara-
tory Judgment Litigation, and its attorney fees and expert
fees incurred in indemnifying its customer, Frontgate, in
the Frontgate Litigation. It claims entitlement to such fees
regardless of whether we reverse or vacate the district
court’s judgment in the Merits Appeal.
We have jurisdiction to consider Balsam’s appeal and
UCP’s cross-appeal under 28 U.S.C. § 1295(a)(1).
DISCUSSION
I
Pursuant to § 285 “[t]he court in exceptional cases may
award reasonable attorney fees to the prevailing party.”
35 U.S.C. § 285; see Lumen View Tech. LLC v.
Findthebest.com, Inc.,
811 F.3d 479, 482 (Fed. Cir. 2016).
We review all aspects of a district court’s § 285 determina-
tion for an abuse of discretion. Highmark Inc. v. Allcare
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 5
Health Mgmt. Sys., Inc.,
572 U.S. 559, 564 (2014). The stat-
ute imposes “one and only one constraint on district courts’
discretion to award attorney’s fees in patent litigation: The
power is reserved for ‘exceptional’ cases.” Octane Fitness,
LLC v. ICON Health & Fitness, Inc.,
572 U.S. 545, 552
(2014).
The district court determined that UCP was “entitled
to attorney fees incurred in filing and defending the motion
to disqualify” counsel and that the case was “exceptional”
under § 285 for “Balsam’s conduct resulting in [the district
court judge’s] temporary recusal.” Balsam,
2018 WL
2938855 at *7. Balsam asserts that the attorney fees
award must be reversed if the declaratory judgment in
UCP’s favor is reversed or vacated. UCP asserts in re-
sponse that, even if we were to reverse or vacate the district
court’s judgment in the Merits Appeal, we could still affirm
the district court’s award of attorney fees because the
award was not “tied to the non-infringement judgment.”
Cross-Appellants’ Br. at 50. UCP argues that the award of
fees was, instead, “a result of Balsam’s litigation miscon-
duct.”
Id. UCP also argues in the alternative that we could
affirm the district court’s award of attorney fees on other
grounds because “[c]ourt[s] have the inherent power to
sanction misconduct.”
Id. at 51.
“By its terms, [§ 285] requires that the recipient of at-
torney fees be a ‘prevailing party.’” RFR Indus., Inc. v. Cen-
trury Steps, Inc.,
477 F.3d 1348, 1353 (Fed. Cir. 2007). A
party “prevails” when it receives “relief on the merits” that
“materially alters the legal relationship between the par-
ties by modifying” the defendant’s behavior in a way that
“directly benefits” the plaintiff. SSL Servs., LLC v. Citrix
Sys., Inc.,
769 F.3d 1073, 1086 (Fed. Cir. 2014) (quoting
Farrar v. Hobby,
506 U.S. 103, 111–12, (1992)). In this
case, the district court awarded fees only after granting
UCP’s motion for summary judgment of non-infringement.
Where we vacate or reverse the judgment in the Merits Ap-
peal, we must also reverse the fee award. See Mankes v.
6 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
Vivid Seats Ltd.,
822 F.3d 1302, 1312 (Fed. Cir. 2016) (“Be-
cause we vacate and remand judgment on the pleadings
and no other relief runs in [the party’s favor, that party] is
no longer the ‘prevailing party’ under § 285 . . . . At this
point, § 285 does not authorize the district court to award
fees.”). As such, we must reverse the award of attorney
fees.
While UPC avers that the fee award can be affirmed on
alternative grounds, we disagree. Because UCP did not as-
sert a claim for attorney fees on any other basis, it cannot
raise it for the first time on appeal. Singleton v. Wuff,
428
U.S. 106, 120 (1976) (explaining that “[i]t is the general
rule . . . that a federal appellate court does not consider an
issue not passed upon below”). Therefore, we need not con-
sider an issue not raised below.
We also disagree with UCP’s argument that we can af-
firm the district court’s award of attorney fees here even if
UCP is not a prevailing party because the district court
awarded the fees based on Balsam’s litigation misconduct.
Regardless of why the district court awarded attorney fees
in this case, it did so solely under § 285. Prevailing party
status is a prerequisite to an award of attorney fees under
that statutory section. It is therefore immaterial that the
district court awarded attorney fees under § 285 based on
Balsam’s actions resulting in Judge Orrick’s recusal. Be-
cause we vacated the district court’s judgment in the Mer-
its Appeal, we must reverse its decision to award attorney
fees. See Waner v. Ford Motor Co.,
331 F.3d 851, 857 (Fed.
Cir. 2003) (vacating the district court’s award of fees to
Waner under § 285 for Ford’s litigation misconduct where
we determined that Warner lost on its unjust enrichment
and infringement claims against Ford, and thus was no
longer the prevailing party).
II
UCP argues in its cross-appeal that the district court
abused its discretion in not awarding UCP all of the
UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC. 7
attorney fees it incurred in Frontgate’s defense in the
Frontgate Litigation, all of the expert fees it incurred in the
Frontgate Litigation, all of the attorney fees it incurred in
the Declaratory Judgment Litigation, and all of its fees-on-
fees. Balsam contends in response that the district court
properly denied UCP additional attorney fees under 35
U.S.C. § 285, that it properly denied UCP’s claim for expert
fees under the court’s inherent power, and that it properly
limited UCP’s fees-on-fees award. We agree with Balsam.
First, UCP is not entitled to additional attorney fees
under § 285 for the same reason it is not entitled to the
limited attorney fees the court awarded—it is not a “pre-
vailing party” after our decision in the Merits Appeal.
Similarly, UCP is not entitled to additional fees in-
curred in litigating its motion for attorney fees because we
hold here that it is not even entitled to the fraction of its
fees-on-fees request that the district court awarded below.
UCP received a portion of its fees-on-fees request because
it succeeded, in part, in its motion for attorney fees. Be-
cause we reverse the district court’s decision regarding at-
torney fees, there is no longer a basis for awarding any fees-
on-fees. See Comm’r, I.N.S. v. Jean,
496 U.S. 154, 163 n.10
(1990) (“[F]ees for fee litigation should be excluded to the
extent that the applicant ultimately fails to prevail in such
litigation.”).
Last, UCP is not entitled to expert fees under the dis-
trict court’s inherent power because the district court did
not abuse its discretion in declining to award those fees. A
court’s decision of whether to award fees under its inherent
power is reviewed for abuse of discretion. Chambers v.
NASCO, Inc.,
501 U.S. 32, 55 (1991). In Chambers, the Su-
preme Court counseled that “a court’s inherent powers
“must be exercised with restraint.”
Id. at 44. The bar that
must be met to award expert fees under the court’s inher-
ent power is, therefore, high. See
id. at 45–46 (holding that
a court may assess fees under its inherent power when a
8 UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
party has acted “in bad faith, vexatiously, wantonly, or for
oppressive reasons” (quoting Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y,
421 U.S. 240, 259 (1975))); Amsted Indus.
Inc. v. Buckeye Steel Castings Co.,
23 F.3d 374, 378 (Fed.
Cir. 1994) (“Without a finding of fraud or bad faith whereby
the very temple of justice has been defiled, a court enjoys
no discretion to employ inherent powers to impose sanc-
tions.” (internal quotation marks omitted)); Fink v. Gomez,
239 F.3d 989, 994 (9th Cir. 2001) (holding that sanctions
are available under the court’s inherent authority “if the
court specifically finds bad faith or conduct tantamount to
bad faith”). After reviewing the record facts, we cannot dis-
cern any abuse of discretion in the district court’s determi-
nation that Balsam’s conduct did not meet that bar.
CONCLUSION
For the reasons stated above, we reverse the district
court’s decision to award attorney fees to UCP, and we dis-
miss UCP’s cross-appeal.
REVERSED AS TO APPEAL NO. 18-2231;
DISMISSED AS TO APPEAL NO. 18-2253.
COSTS
No costs.
