The U.S. Court of Appeals for the Federal Circuit on Friday upheld a groundbreaking $4.4 million attorney fees award against the U.S. government for patent infringement.

It's believed to be the first fee award granted under a 1996 law that provides fee shifting for independent inventors, small businesses and nonprofits who bring patent claims against the government in the U.S. Court of Federal Claims.

The government had argued that its position in Hitkansut v. United States was "substantially justified," which would absolve it of fees under 28 U.S.C. §1498. But a Federal Circuit panel led by Chief Judge Sharon Prost held that, even under a narrow construction of the statute that excludes prelitigation conduct, the government's defense was not substantially justified.

The government's noninfringement positions were "factually inconsistent" with actions taken by the Department of Energy's Oak Ridge National Laboratory, which had incorporated inventor Donna Walker's patented method for strengthening manufactured materials into its thermomagnetic processing program. Oak Ridge provided interrogatory responses that "were contrary to both documentary evidence and the deposition testimony of its employees," and its enablement argument was contradicted by its own expert witness, Prost wrote.

"We agree with the Claims Court that, although 'the position of the United States' refers to litigation positions, those positions 'lack[] substantial justification' when they are 'unsupported by the facts,'" Prost wrote.

Judges Kimberly Moore and Raymond Clevenger concurred.

Walker had disclosed her patent application to Oak Ridge under a three-year nondisclosure agreement. Oak Ridge used the technology to help win some $45 million in research funding, obtain patents, author publications and receive awards, all without crediting Walker or providing additional compensation, the Court of Federal Claims found.

Walker assigned the patent to Hitkansut LLC and sued. After several years of litigation, the Court of Federal Claims found her patent valid and infringed. It awarded a $200,000 upfront licensing fee, but rejected Hitkansut's claim for about $5 million in royalties based on the research funding.

Hitkansut then moved for $4.5 million in attorneys fees and expenses.

In addition to arguing that its position was substantially justified, the government argued on appeal that the $200,000 in damages didn't justify the $4.4 million fee award.

Prost again disagreed. "Hitkansut brought exactly one claim—infringement of the '722 patent—and prevailed on it," she wrote. "The fact that it obtained less monetary relief than it may have hoped does not mean that it obtained 'limited success' as the term is used in Hensley [v. Eckerhart]."

Dickinson Wright represented Hitkansut at trial and on appeal. Partner John S. Artz had the winning argument.

Gary Hausken, the director of Department of Justice's commercial litigation branch, argued the appeal for the government.