Federal Circuit Judge Kara Stoll.

The U.S. Court of Appeals for the Federal Circuit has asked Chief U.S. District Judge Leonard Stark of the District of Delaware to take a second look at a $444,000 "exceptional case" fee award against Intellectual Ventures.

Cybersecurity and defense company Trend Micro Inc. obtained the award in 2018 in the wake of a posttrial judgment that IV's asserted patent claims were ineligible for patent protection.

Stark awarded fees because an Intellectual Ventures expert witness had changed key testimony on the witness stand from his deposition. The expert admitted that he had changed it, but IV's attorneys subsequently tried to argue that the expert had not actually changed his opinion.

That clearly irked Stark. Ruling from the bench, he found the case exceptional "solely with respect to this collection of circumstances" regarding the expert. As to whether the case overall was exceptional, "I find it was not," Stark said. But that doesn't preclude "the finding of exceptionality with respect to the limited partial relief that is being requested."

On appeal, IV and its Susman Godfrey counsel argued that fees can only be awarded for exceptional cases, based on the totality of the circumstances, and not for just "a single discovery issue."

Paul Hastings Pal Alto, California, partner Yar Chaikovsky called that "a rigid interpretation of Section 285" that would restrict fee awards only to "instances where the entirety of the case, from beginning to end, comprise exceptional conduct." The Federal Circuit itself has at times reduced fee awards on the grounds that the trial judge should have focused on particular misconduct, he argued.

This round went to IV and Susman partner John Lahad in Houston, who argued the appeal.

"Under the statute, the district court in this case should have determined whether the circumstances surrounding the expert's changed opinion were such that, when considered as part of the totality of circumstances in the case, the case stands out as exceptional," Stoll wrote.

In sending the case back to Stark for reconsideration, Stoll also clarified that "a district court has discretion, in an appropriate case, to find a case exceptional based on a single, isolated act," and can award partial fees for a limited set of conduct or circumstances.

"But in all such cases we have required a finding of an exceptional case—not a finding of an exceptional portion of a case—to support an award of partial fees," she wrote.

Judges Timothy Dyk and Richard Taranto of the U.S. Court of Appeals for the Federal Circuit concurred.