Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-02040/USCOURTS-ca13-15-02040-0/pdf.json

Parties Involved:
Steve Dixon
Not party
Large Audience Display Systems, LLC
Appellant
Music Tour Management, Inc.
Not party
Britney Spears
Appellee
Spears King Pole Inc.
Appellee
Tennman Productions, LLC
Appellee
Justin Timberlake
Appellee

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

LARGE AUDIENCE DISPLAY SYSTEMS, LLC,

Plaintiff-Appellant

v.

TENNMAN PRODUCTIONS, LLC, 

JUSTIN TIMBERLAKE, BRITNEY SPEARS, 

SPEARS KING POLE INC.,

Defendants-Appellees

STEVE DIXON, 

MUSIC TOUR MANAGEMENT, INC.,

Defendants

______________________ 

2015-2040

______________________ 

Appeal from the United States District Court for the 

Central District of California in No. 2:11-cv-03398-R-RZ, 

Judge Manuel L. Real.

______________________ 

Decided: October 20, 2016

______________________ 

MICHAEL G. BURK, The Burk Law Firm, P.C., Austin, 

TX, for plaintiff-appellant. Also represented by ERIC B.

MEYERTONS, Meyertons, Hood, Kivlin, Kowert & Goetzel, 

P.C., Austin, TX.

Case: 15-2040 Document: 51-2 Page: 1 Filed: 10/20/2016
2 LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 

ANDREW SOL LANGSAM, Pryor Cashman LLP, New 

York, NY, for defendants-appellees. 

______________________ 

Before MOORE, LINN, and O’MALLEY, Circuit Judges.

PER CURIAM.

Large Audience Display Systems, LLC (“LADS”) appeals from the district court’s order granting a motion for 

attorney’s fees under 35 U.S.C. § 285 filed by Appellees 

Justin Timberlake, Tennman Productions, LLC, Britney 

Spears, and Spears King Pole, Inc.1 (collectively, “Appellees”). We find that certain of the factors relied upon by 

the district court to find this case to be exceptional were 

entitled to no weight under § 285. We therefore vacate

the district court’s award of attorney’s fees and costs, and 

remand for reconsideration of Appellees’ motion.

BACKGROUND

I. The ’346 Patent

The United States Patent and Trademark Office 

(“PTO”) issued Patent No. 6,669,346 (“the ’346 patent”), 

the patent at issue in this appeal, on December 30, 2003. 

The ’346 patent describes claims for a “panoramic imaging and display system for the imaging and displaying of 

visual-media content.” ’346 patent, at Abstract. The 

claims generally relate to large-audience, positionable 

imaging and display systems for the imaging and displaying of visual-media content. Id. at col. 1, ll. 12–14. Inven-

 

1 The complaint initially named Britney Touring, 

Inc. as a Defendant; Spears King Pole, Inc. was later 

substituted. The complaint also named Los Angeles 

Lakers, Inc. and Pussycat Dolls, LLC, both of whom were 

subsequently dismissed from the case. 

Case: 15-2040 Document: 51-2 Page: 2 Filed: 10/20/2016
LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 3

tor Darrell Metcalf (“Metcalf”) assigned the ’346 patent to 

LADS on October 21, 2009. 

II. Procedural History Prior

to District Court Stay

Although Metcalf is a resident of California, LADS 

was incorporated in Texas on November 9, 2011. LADS 

never engaged in any business in Texas or elsewhere, 

before or after its incorporation. In fact, Metcalf is the 

sole shareholder of LADS, and no one has ever picked up 

the keys for the Texas office listed on LADS’s Certificate 

of Incorporation. 

On November 11, 2009, LADS sued Appellees for infringement of the ’346 patent in the Eastern District of 

Texas. LADS alleged that Appellees Justin Timberlake 

and Tennman Productions, LLC infringed the ’346 patent 

through their use of a large-audience display screen 

during the “FutureSex/LoveShow Tour.” J.A. 85, 120. 

Similarly, LADS alleged that Appellees Spears King Pole, 

Inc. and Britney Spears’s use of a large-audience display 

screen during the “Circus Tour” infringed the ’346 patent. 

J.A. 86, 121. Specifically, Appellees used a large-scale 

display system in their concert tours that either drops 

down from or is fixed to the ceiling. The display system is 

shaped like a cylinder, so that the audience can see the 

screen from any direction. The screen is sufficiently large 

to display a larger image of a performer for an audience 

who may be seated far away from the actual performer. 

In March 2010, Appellees filed an opposed motion to 

transfer venue to the Central District of California, which 

the district court granted in March 2011 because it found 

that the “Central District of California ‘is clearly more 

convenient’ than the Eastern District of Texas.” Large 

Audience Display Sys., LLC v. Tennman Prods., LLC, No. 

2:09-CV-356-TJW-CE, 2011 WL 1235354, at *6 (E.D. Tex. 

Mar. 30, 2011).

Case: 15-2040 Document: 51-2 Page: 3 Filed: 10/20/2016
4 LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 

III. Reexamination History

Appellees filed an inter partes reexamination request 

for all asserted claims of the ’346 patent on November 11, 

2011. Subsequently, Appellees filed a motion to stay the 

district court case, pending the outcome of reexamination. 

After the PTO granted Appellees’ request for reexamination in January 2012 and issued an initial office action 

invalidating most of the asserted claims of the ’346 patent, the district court granted Appellees’ motion to stay. 

In the reexamination request, Appellees provided the 

PTO with a television broadcast of the 1996 Olympics 

opening ceremony, which showed the Temple of Zeus and 

disclosed a large audience display. In the January 18, 

2012 order granting reexamination, the examiner declined to consider this reference, explaining that the 

“determination of whether or not to grant inter partes 

reexamination is based upon prior art patents and/or 

printed publications,” but the submitted television broadcast “is merely a visual presentation.” J.A. 1232. The 

examiner also declined to consider a related poster printed in 1996, because the request did not provide any evidence of public dissemination. J.A. 1233. 

In April 2012, Appellees submitted supplemental prior art to the PTO, in the form of printed publications from 

the 1996 Olympics showing the Temple of Zeus and the 

large-audience display (the “Olympics Prior Art”). In 

response to this filing, the examiner issued a notice of 

defective paper for various reasons, including an issue 

with the submission of the Olympics Prior Art. Specifically, the examiner rejected the Olympics Prior Art submission under 37 C.F.R. § 1.948, stating that a third-party 

requester was only permitted to cite additional prior art 

to rebut a finding of fact by the examiner or a response of 

the patent owner, or when additional prior art had become known to the third-party requester only after the 

filing of the inter partes reexamination request. The 

Case: 15-2040 Document: 51-2 Page: 4 Filed: 10/20/2016
LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 5

examiner expunged Appellees’ filing, but permitted Appellees to resubmit a revised comment within fifteen days. 

On May 22, 2012, Appellees resubmitted their revised 

comment without an information disclosure statement 

(“IDS”).

On July 27, 2012, the PTO issued an action closing 

prosecution and rejecting all of the asserted claims, except 

for claim 24. LADS filed its response to the action closing 

prosecution on August 27, 2012, and submitted the Olympics Prior Art in its IDS without comment on September 

14, 2012. The PTO reopened prosecution of the ’346 

patent on November 26, 2012, in response to its receipt of 

LADS’s IDS. LADS filed its response on January 28, 2013, 

but it did not discuss the Olympics Prior Art in its IDS. 

Appellees then filed comments asking the examiner to 

raise new rejections based on the Olympics Prior Art, but 

the PTO struck these comments from the record on March 

15, 2013. In its reasoning, the PTO noted that the Olympics Prior Art was not considered in the reopening of the 

Non-Final Action of November 26, 2012, nor in the January 2013 response LADS filed. Hence, the PTO concluded 

that Appellees’ comments did not rebut any findings by 

the PTO or responses from LADS, and the inclusion of the 

Olympics Prior Art was therefore considered improper.

Despite rejecting the Olympics Prior Art for a third 

time, on November 3, 2014, the Patent Trial and Appeal 

Board (“PTAB”) issued a decision affirming the examiner’s rejection of original claims 1–6, 9, 10, 13–15, 17, 28

and 24 of the ’346 patent. The examiner cancelled claim 

24 in the Examiner’s Right of Appeal Notice, as obvious 

over prior art unrelated to the Olympics Prior Art. J.A. 

1494–96. The PTO issued an inter partes reexamination 

certificate on March 23, 2015, canceling these claims, but

added a number of new claims it deemed patentable. The 

PTO canceled all of the claims asserted in the district 

court litigation. 

Case: 15-2040 Document: 51-2 Page: 5 Filed: 10/20/2016
6 LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 

IV. Procedural History Following Reexamination 

On April 3, 2015, Appellees moved to dismiss the district court action with prejudice. LADS opposed the order 

and, instead, moved to lift the stay, asking for an opportunity to discover information about the infringing devices

so that it could assert the new claims against Appellees. 

On June 16, 2015, the district court lifted the stay sua 

sponte and dismissed the case with prejudice in light of 

the PTO’s final decision to cancel all claims asserted by 

LADS.

Appellees then filed a motion for recovery of attorney’s fees, costs, and expenses in the amount of 

$755,925.86, under 35 U.S.C. § 285.2 To counter Appellees’ contention that LADS had brought a wholly meritless lawsuit, LADS included in its opposition an email 

chain LADS’s counsel received from Appellees’ counsel on 

December 15, 2009, which included the following exchange between Appellees and their counsel:

At this point, without being able to talk to the inventor and blowing holes through the interpretation of the language of the Patent’s claims, the 

position of infringement is not frivolous.

Appellant Br. 40 (quoting J.A. 3749) (“the Langsam 

email”). LADS’s counsel did not notify Appellees’ counsel 

that it had received this message until it cited the Langsam email in its opposition to the attorney’s fees motion 

in 2015. Ten days later, in their reply brief to this motion, Appellees argued that this email was privileged and 

inadvertently sent to LADS’s counsel. Appellees furthermore argued that LADS’s use of “a privileged communication . . . limited only to the issue of infringement, not

 

2 Appellees asserted that they had paid $733,414.34 

in attorney’s fees and $22,511.52 in costs and expenses, 

based on LADS’s allegedly frivolous suit. 

Case: 15-2040 Document: 51-2 Page: 6 Filed: 10/20/2016
LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 7

invalidity nor ultimate liability, is in poor taste, unethical, 

and wrong” and “is clear evidence of egregiousness.” 

J.A. 3408 (emphasis in original). 

The district court granted Appellees’ motion, finding 

the case “sufficiently extraordinary to warrant an award 

of attorneys’ fees, costs, and expenses.” J.A. 3. In support 

of its determination that the case was exceptional under 

§ 285, the district court made the following factual findings: (i) LADS is “an apparent shell corporation,” which 

“seems to have been formed with the sole intent to create 

jurisdiction in [the Eastern District of Texas],” (ii) the 

constructions LADS proposed to the PTO during reexamination “seem disingenuous at the very least,” (iii) it 

“seems that [LADS] prolonged the reexamination process, 

and consequently this litigation, by refusing to present 

the [PTO] with additional prior art that, eventually, was 

dispositive of the claims at issue in this case,” (iv) after 

reexamination, LADS “sought to reopen [this] litigation to 

engage in discovery to attempt to assert additional claims, 

despite having had multiple previous opportunities to 

assert such claims,” (v) in opposing the fees motion, LADS 

“violated clear, important canons of professionalism in 

proffering clearly privileged information in support of its 

argument to mitigate or minimize its liability for attorneys’ fees,” (vi) “it is clear that [LADS] was the driving 

force behind keeping this litigation and reexamination 

process alive,” and (vii) this lawsuit “appears to have been 

a frivolous claim.” J.A. 3. 

The district court awarded Appellees all fees and costs 

requested, based on its “review of the submitted attorneys’ fees and costs and supporting evidence.” J.A. 3–4. 

In its ruling, the district court cited to the lodestar method for calculating attorney’s fees, which requires the court 

to determine the number of reasonable hours billed on the 

matter and multiply these hours by a reasonable hourly 

billing rate. J.A. 2–3. But the district court did not 

calculate fees using the lodestar method; it instead noted 

Case: 15-2040 Document: 51-2 Page: 7 Filed: 10/20/2016
8 LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 

that the requested fees “are in accord with the costs of 

defending a patent infringement suit as they are lower 

than the average cost to defend against patent infringement suits in which as little as less than $1 million is at 

stake, according to a 2013 Report of the Economic Survey.” J.A. 4. 

LADS timely appealed the district court’s award of 

fees under § 285. We have jurisdiction under 28 U.S.C. 

§ 1295(a)(1).

STANDARD OF REVIEW

A district court “in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. 

§ 285. An award of attorney’s fees under § 285 requires a 

two-step inquiry. First, a district court must determine 

whether a case is exceptional. There is no precise rule or 

formula for making exceptionality determinations, and 

district courts may determine exceptionality by considering the totality of circumstances, including frivolousness, 

motivation, objective unreasonableness, and concerns over 

compensation and deterrence. Octane Fitness, LLC v. 

ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). 

Second, if a district court finds a case exceptional, it must 

calculate the amount of the attorney’s fees award. “[A] 

district court usually applies the lodestar method, which 

provides a presumptively reasonable fee amount . . . by 

multiplying a reasonable hourly rate by the reasonable 

number of hours required to litigate a comparable case.” 

Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d 

479, 483 (Fed. Cir. 2016) (citing Perdue v. Kenny A. ex rel. 

Winn, 559 U.S. 542, 551–52, 554 (2010)). 

On appeal, all aspects of a district court’s § 285 determination are reviewed for an abuse of discretion. 

Highmark Inc. v. AllCare Health Mgmt. Sys., Inc., 134 S.

Ct. 1744, 1749 (2014). A district court abuses its discretion when “it base[s] its ruling on an erroneous view of the 

law or on a clearly erroneous assessment of the evidence.” 

Case: 15-2040 Document: 51-2 Page: 8 Filed: 10/20/2016
LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 9

Id. at 1748 n.2 (quoting Cooter & Gell v. Hartmarx Corp., 

496 U.S. 384, 405 (1990)). Here, we find that the district 

court based its ruling, to some extent, on both a misunderstanding of what factors are relevant to an exceptionality determination and a clearly erroneous view of the 

record evidence. Because those considerations were part 

of the totality of the circumstances deemed sufficient to 

justify a finding of exceptionality, we vacate and remand 

that finding for reconsideration.

DISCUSSION

I. Exceptional Case Determination

First, we agree with LADS that the district court’s

finding that “[LADS, the plaintiff], an apparent shell 

corporation, seems to have been formed with the sole 

intent to create jurisdiction in [the Eastern District of 

Texas]” was clearly erroneous. J.A. 3. Appellees’ argument that LADS was formed in the Eastern District of 

Texas to create jurisdiction is not convincing. Specific 

jurisdiction is based on the defendant’s contacts with a 

forum state, not the plaintiff’s contacts. J. McIntyre 

Mach., Ltd., v. Nicastro, 564 U.S. 873, 881 (2011). Therefore, where LADS was incorporated is irrelevant to where 

a court may exercise jurisdiction over an action brought 

by it. Thus, while the location of LADS might have been

relevant to a request for a change of venue under 28 

U.S.C § 1404, the formation of LADS in Texas would not 

affect whether the Eastern District of Texas could assert

jurisdiction over Appellees. 

Second, the district court’s finding that LADS’s claim 

“appears to have been . . . frivolous” is clearly erroneous. 

J.A. 3. The only evidence Appellees provide in support of 

this finding is that the PTO canceled the asserted claims 

in reexamination. The fact that the PTO canceled the 

asserted claims after LADS filed its complaint, without 

more, does not support a finding of frivolousness. Notably, 

in a reexamination proceeding, the PTAB gives claims 

Case: 15-2040 Document: 51-2 Page: 9 Filed: 10/20/2016
10 LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 

their broadest reasonable construction—making claims 

more susceptible to an obviousness rejection than they 

would be in district court. Next, in reexaminations, the 

PTAB only considers whether the claims are invalid 

under a preponderance of the evidence standard; unlike in 

the district court, no presumption of validity attaches to 

the claims and the question of validity is not measured by 

the clear and convincing evidence standard. While the 

reexamination rejection of asserted claims may be relevant to an assertion of frivolousness in some cases, there 

is nothing in this case to justify that conclusion.

Third, the record does not support the district court’s

finding that the Olympics Prior Art was dispositive in the 

reexamination. At the time LADS submitted the IDSs 

disclosing the Olympics Prior Art in September 2012, all 

of the asserted claims other than claim 24 stood rejected 

by the examiner. While the examiner may have later 

rejected claim 24 based on a reference disclosed in the 

September 2012 IDSs, the record does not indicate that 

the examiner or the PTAB relied on the Olympics Prior 

Art to reject any of the claims. J.A. 3180 (“While such 

documents were considered by Examiners, such documents were not applied by the Examiners in the NonFinal Action mailed November 26, 2012.”). Indeed, Appellees agree that the PTO rejected all of the reexamined 

claims without relying on the Olympics Prior Art. See 

Resp. Br. 32. 

“District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, 

considering the totality of the circumstances.” Octane 

Fitness, 134 S. Ct. at 1756. But, the circumstances upon 

which a district court relies must actually exist, and

findings that such circumstances do exist must be justified by the record. Here, many of the “circumstances” 

deemed dispositive by the district court, including but not 

limited to those noted, supra, either did not occur or were 

given undue weight. Thus, we must vacate the trial 

Case: 15-2040 Document: 51-2 Page: 10 Filed: 10/20/2016
LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 11

court’s finding of exceptionality and award of fees and 

costs under § 285. On remand, the district court shall

reconsider whether this case was exceptional. The district court may properly consider the totality of the circumstances in making its determination, including 

LADS’s use of the Langsam email to oppose Appellees’ 

motion for attorney’s fees, its opposition to the motion to 

transfer venue to the Central District of California, and 

the objective reasonableness of LADS’s claims given the 

standards and burdens that apply in district court, including the reasonableness of LADS’s proposed claim constructions.3 But the district court must assure both that 

the circumstances on which it relies are accurate and that 

the court affords only the appropriate measure of weight 

to each. 

II. Calculation of Attorney’s Fees

On remand, should the district court find this case to 

be exceptional, it will reach the issue of calculating reasonable attorney’s fees. In exceptional cases, a district 

court may award an amount of fees that “bear some 

relation to the extent of the misconduct.” Special Devices, 

Inc. v. OEA, Inc., 269 F.3d 1340, 1344 (Fed. Cir. 2001) 

(quoting Read Corp. v. Portec, Inc., 970 F.2d 816, 831 

(Fed. Cir. 1992)). 

The district court acknowledged that, typically, attorney’s fee awards are calculated using the lodestar method. 

J.A. 2–3. Under the lodestar method, the court calculates 

the attorney’s fees by “multiplying the number of hours 

reasonably expended on the litigation times a reasonable 

 

3 After careful consideration of the claim constructions LADS proposed to the PTAB, we take no issue with 

the district court’s conclusion that the objective weakness 

of those proposed constructions is a legitimate factor to 

consider in the court’s exceptionality analysis.

Case: 15-2040 Document: 51-2 Page: 11 Filed: 10/20/2016
12 LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 

hourly rate.” Blum v. Stenson, 465 U.S. 886, 888 (1984). 

A reasonable hourly rate should reflect the prevailing 

market rate. Id. at 895. In addition, the court must 

examine the attorneys’ comparable skill, experience, and 

reputation. Id. at 896. 

Here, the district court accepted the amount proposed 

by Appellees as reasonable and awarded the full amount, 

without performing a lodestar calculation. J.A. 3–4. The 

district court found this amount to be reasonable because 

the total amount sought by Appellees was “below average” 

for typical patent infringement suits in which less than $1 

million was at stake, according to a 2013 Report of the 

Economic Survey. J.A. 4. The average cost of typical 

patent infringement suits, however, was not the sole 

evidence upon which the district court should have relied

to determine attorney’s fees. In addition, the comparison 

was not appropriate because the survey provided only two 

benchmarks for average fees: (1) the end of discovery; and 

(2) through trial. In this case, little discovery had been

conducted by the parties, and the case was dismissed with 

prejudice before trial.

On remand, if the district court finds the case exceptional, it must use the lodestar method to calculate attorney’s fees determining the reasonable hours and rates for 

the lodestar calculation. Though Appellees were represented by attorneys from New York, the litigation occurred in the Central District of California. California fee 

rates should be used to calculate the lodestar figure

unless there is some special expertise Appellees’ counsel 

had that warrants a different rate, or a showing is made 

that there is a prevailing national rate applicable in 

patent cases. See Avera v. Sec’y of Health & Human 

Servs., 515 F.3d 1343, 1350 (Fed. Cir. 2008) (stating that 

the forum rate of attorney’s fees in Cheyenne, Wyoming, 

rather than the rate in the District of Columbia, applied 

to attorneys from the District of Columbia who litigated 

the case in Cheyenne). In addition, the district court 

Case: 15-2040 Document: 51-2 Page: 12 Filed: 10/20/2016
LARGE AUDIENCE DISPLAY SYS. v. TENNMAN PRODS. 13

should determine whether it was reasonable for seven 

partners to have billed 79 percent of the total hours on 

this case—almost quadruple the amount billed by associates—for tasks including electronic filing of documents 

and preparing pro hac vice applications. Appellees have 

not explained why partners worked so extensively on this 

case, even though twelve associates also billed to the case. 

It appears, moreover, that at least some of the billing 

entries were unreasonable, such as an entry for reviewing 

answers to interrogatories already served, and an entry 

for reviewing a court decision when the case was stayed 

for several years.

CONCLUSION

Because the district court abused its discretion in 

finding this case exceptional on the grounds articulated 

for the finding, and because the court’s fee calculations 

were not explained sufficiently, we vacate the district 

court’s award of fees under § 285 and remand for further 

proceedings consistent with this opinion. 

VACATED AND REMANDED

COSTS

No costs.

Case: 15-2040 Document: 51-2 Page: 13 Filed: 10/20/2016