Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01711/USCOURTS-ca13-14-01711-0/pdf.json

Parties Involved:
Buckhorn Inc.
Appellant
Does 1 - 6
Not party
Orbis Corporation
Appellee
Orbis Material Handling Inc.
Not party
Schoeller Arca Systems, Inc.
Not party

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

BUCKHORN INC.,

Plaintiff-Appellant

SCHOELLER ARCA SYSTEMS, INC.,

Plaintiff

v.

ORBIS CORPORATION,

Defendant-Appellee

ORBIS MATERIAL HANDLING INC., DOES 1 - 6,

Defendants

______________________ 

2014-1711

______________________ 

Appeal from the United States District Court for the 

Southern District of Ohio in No. 3:08-cv-00459-TSB-MJN, 

Judge Timothy S. Black.

______________________ 

Decided: July 2, 2015

______________________ 

 JUDY L. WOODS, Benesch, Friedlander, Coplan & 

Aronoff LLP, Indianapolis, IN, argued for plaintiffCase: 14-1711 Document: 50-2 Page: 1 Filed: 07/02/2015
2 BUCKHORN INC. v. ORBIS CORPORATION

appellant. Also represented by PRISCILA A. ROCHA, Cleveland, OH. 

 GASPARE JOSEPH BONO, McKenna Long & Aldridge, 

LLP, Washington, DC, argued for defendant-appellee. 

Also represented by JOHN WILLIAM LOMAS, JR., STEPHEN 

M. CHIPPENDALE. 

______________________ 

Before LOURIE, PLAGER, and DYK, Circuit Judges.

DYK, Circuit Judge. 

Orbis Corporation and Orbis Material Handling, Inc.

(collectively, “Orbis”), the defendant and prevailing party 

in a patent infringement suit, seeks attorney’s fees 

against Buckhorn, Inc. (“Buckhorn”), one of the plaintiffs

in the infringement action. Buckhorn’s co-plaintiff, 

Schoeller Arca Systems, Inc. (“SAS”), had previously been 

held liable to Orbis for fees pursuant to an agreement 

between it (SAS) and Orbis. Orbis argues that it is entitled to recover fees against Buckhorn under an indemnification provision in a patent licensing agreement (the 

“PLA”) between Buckhorn and SAS. Orbis also relies on 

the district court’s inherent power to award attorney’s 

fees.

The district court awarded fees to Orbis against 

Buckhorn under the PLA. But Orbis cannot recover 

under the PLA because Orbis is neither a party to the 

PLA nor a third-party beneficiary. Moreover, the district 

court neither invoked nor had inherent power to award 

fees in this case. We therefore reverse the district court’s 

award of fees to Orbis.

BACKGROUND

On December 12, 2008, Buckhorn filed suit against 

Orbis, alleging infringement of U.S. Patent No. 5,199,592 

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BUCKHORN INC. v. ORBIS CORPORATION 3

(“the ’592 patent”), relating to improved hinges on transportation containers. The ’592 patent was not owned by 

Buckhorn. Rather, SAS owned the patent, and Buckhorn

was the (purportedly) co-exclusive licensee of the patent

under the PLA. The license granted under the agreement 

was described as co-exclusive because SAS retained the 

right to practice the patent as well.1 The agreement

contained an indemnity clause, under which Buckhorn 

would be obligated to “pay all costs and expenses associated with” SAS’ cooperation if Buckhorn “require[d] [SAS’] 

cooperation in the maintenance of [an] infringement 

action.” J.A. 93 § 3.03. Orbis moved to dismiss the complaint brought by Buckhorn on standing grounds; in order 

to avoid dismissal, SAS joined the suit, and Buckhorn and 

SAS filed a joint amended complaint. 

SAS had previously granted Orbis a license to use the 

same patent. That license was granted pursuant to a 

Settlement and License Agreement entered into on September 15, 1992 (“the RX agreement”). Buckhorn was 

apparently unaware of this license when it commenced 

the infringement suit against Orbis.2 The RX agreement 

contained a fee provision clause:

1 The PLA was originally between SAS and the 

parent company of Buckhorn, Myers Industries, Inc. 

(“Myers”). Myers subsequently transferred the agreement 

to Buckhorn. It is undisputed that Buckhorn is now a 

party to the PLA. For simplicity, in this opinion we will

omit chain-of-title details with respect to the agreements 

in question, since they are irrelevant to the issues before 

us. We will thus refer to the parties to the various 

agreements as SAS, Orbis, and Buckhorn.

2 Indeed, SAS expressly warranted to Buckhorn in 

the PLA that it was the “owner of the entire right, title 

 

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In any litigation based on a controversy or dispute 

arising out of or in connection with this Agreement or its interpretation, the prevailing party 

shall be entitled to recover all fees, costs, reasonable attorneys fees, and other expenses attributable to the litigation.

J.A. 164. Buckhorn was not a party to the RX agreement.

On November 22, 2011, the district court granted 

summary judgment of non-infringement in favor of Orbis 

because Orbis was licensed under the RX agreement. 

Orbis subsequently requested fees against SAS and 

Buckhorn. It originally relied on the RX agreement’s fee 

provision and 35 U.S.C. § 285. The district court denied 

the fee request. With respect to § 285, the district court 

declined to award fees because the case was not “exceptional” and “both sides contributed to the dilatory tactics, 

discovery disputes, and frivolous motions for sanctions.” 

J.A. 211, 213. With respect to the RX agreement, the 

district court concluded that the fee provision did not 

apply because the litigation was not “based on a controversy or dispute arising out of or in connection with the 

License” and that it would be unconscionable, in light of 

the amount of time it took Orbis to produce the document, 

to award fees under it. J.A. 203.

Orbis appealed and challenged only the denial of fees 

under the RX agreement. Although Orbis listed both SAS 

and Buckhorn as appellees, Orbis expressly admitted in 

its briefing before this court: “Buckhorn filed the Initial 

Complaint, but [it] is not a party to the [RX agreement]. 

Orbis does not argue in this appeal that Buckhorn is 

liable under the Fee Provision [of the RX agreement].” 

and interest in and to the Licensed Patents.” J.A. 93 

§ 5.02.

 

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BUCKHORN INC. v. ORBIS CORPORATION 5

Brief for Appellant at 21, Buckhorn Inc. v. Orbis Corp., 

547 F. App’x 967 (Fed. Cir. 2013) (No. 2012-1643). We 

agreed that Buckhorn had no liability under the RX 

agreement. See Buckhorn, 547 F. App’x at 971 n.3. We 

determined that SAS was liable to pay Orbis’ fees under 

the RX agreement because the language was broad 

enough to cover infringement disputes arising out of the 

licensed patents and because an award of fees was not 

unconscionable. Id. at 971–73. We remanded for the 

district court to determine a reasonable fee award under 

that agreement. Id. at 974.

On remand, Buckhorn moved to be dismissed from the 

case, arguing that the remand proceedings only pertained 

to the amount of SAS’ liability under the RX agreement.

In opposition, Orbis for the first time argued that Buckhorn was liable under the PLA. Although the district 

court acknowledged that “[t]he only remaining issue being 

litigated is the request for attorney fees by Defendant 

Orbis pursuant to the [RX] [a]greement,” J.A. 258, the 

district court refused to dismiss Buckhorn. It reasoned 

that Buckhorn was liable to pay SAS’ costs under the 

PLA, and that “[t]his contractual obligation established 

Buckhorn’s ongoing significance to this lawsuit.” J.A. 

261. Additionally, the court reasoned that the “prosecution of this litigation has been controlled entirely by 

Buckhorn for its own benefit” and that “leav[ing] [SAS] to 

foot the bill” would be “not just.” Id. (citing DirectTV, Inc. 

v. Leto, 467 F.3d 842, 845 (3d Cir. 2006)). Subsequently, 

the district court awarded Orbis $2,788,594.50 in attorney’s fees. Buckhorn moved for clarification that it was 

not liable to Orbis under the RX agreement, which it 

argued was the only basis for Orbis’ fee award. In the 

district court’s clarification order, the district court 

acknowledged that “Buckhorn is not liable for attorneys’ 

fees under the terms of the [RX] [a]greement.” J.A. 43. 

However, the district court held Buckhorn liable to Orbis

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6 BUCKHORN INC. v. ORBIS CORPORATION

under the PLA, even though Orbis was not a party to the 

PLA, because, according to the district court, “the unambiguous language of the PLA requires Buckhorn to pay 

any fees that may be ultimately awarded to Orbis.” J.A. 

44 (citation and punctuation omitted).

Buckhorn appeals. We have jurisdiction pursuant to 

28 U.S.C. § 1295(a)(1). The RX agreement states that it is 

governed by and construed under California law, and the 

PLA states that it is governed by and construed under 

New York law. In such circumstances, California law 

governs the RX agreement, and New York law governs 

the PLA. See Power Lift, Inc. v. Weatherford Nipple-Up 

Sys., Inc., 871 F.2d 1082, 1085 (Fed. Cir. 1989); Tele-Save 

Merch. Co. v. Consumers Distrib. Co., 814 F.2d 1120, 

1122–24 (6th Cir. 1987). Questions concerning interpretation of settlement and licensing agreements generally 

do not raise issues unique to patent law. See Novamedix, 

Ltd. v. NDM Acquisition Corp., 166 F.3d 1177, 1180 (Fed. 

Cir. 1999) (citations omitted). Thus, we apply the law of 

the appropriate regional circuit—here, the Sixth Circuit—

to questions not governed by our law, California law, or 

New York law.3

3 Orbis argues that Buckhorn’s failure to appeal the 

district court’s order denying Buckhorn’s motion to dismiss precludes us from reviewing the district court’s 

decision to award fees under the PLA. This argument is 

frivolous. A denial of a motion to dismiss in a case such 

as this is not an interlocutory order appealable under 28 

U.S.C. § 1292. See Texas Health Choice, L.C. v. Office of 

Pers. Mgmt., 400 F.3d 895, 898 (Fed. Cir. 2005) (denial of 

motion to dismiss not an interlocutory appeal under 

§ 1292). Buckhorn appealed the award of fees, which the 

district court characterized as a “final enforceable judgment.” J.A. 41 n.1. It is beyond dispute that: 

 

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DISCUSSION

Orbis cannot recover fees from Buckhorn under the 

RX agreement. Orbis disclaimed this theory in its previous appeal: “Buckhorn filed the Initial Complaint, but is 

not a party to the Settlement License. Orbis does not 

argue in this appeal that Buckhorn is liable under the Fee 

Provision.” Brief for Appellant at 21, Buckhorn, 547 F. 

App’x 967 (No. 2012-1643). In our prior opinion, we 

described SAS as being “the only plaintiff with obligations 

under the fee provision” of the RX agreement. Buckhorn, 

547 F. App’x at 971 n.3. After remand, the district court 

noted that “[a]t no point has any party suggested that 

Buckhorn is a party to or successor-in-interest to the [RX] 

[a]greement” and concluded that “[n]o contract was ever 

made between Buckhorn and Orbis. Accordingly, Buckhorn is not liable for attorney’s fees under the terms of the 

[RX] [a]greement.” J.A. 42–43. In its brief on this appeal, 

Orbis admits: “Buckhorn’s joint-and-several liability does 

not rest on the [RX] [a]greement.” Appellee’s Br. 26.

Thus, the sole questions are whether the district court 

properly awarded fees against Buckhorn under the PLA

and whether it could have awarded fees based on its 

inherent authority. 

An appeal from the final judgment usually draws 

into question all prior nonfinal orders and all rulings which produced the judgment. Thus, a failure of the notice of appeal to specifically refer to a 

preliminary or interlocutory order does not prevent the review of that order on appeal. Having 

appealed from the judgment, the appellant is free 

to attack any nonfinal order or ruling leading up 

to it.

20 James Wm. Moore et al., Moore’s Federal Practice

§ 303.21[3][c][iii] (3d ed. 2012).

 

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To sue under a contract such as the PLA, a plaintiff 

must be a party to that contract or be an intended thirdparty beneficiary of the contract. See 13 Williston on 

Contracts § 37:9 (4th ed. 2013) (“[Unless they are intended beneficiaries,] third parties are neither bound by the 

contract nor otherwise subject to its terms . . . .”); 9 Corbin 

on Contracts §§ 44.1, 46.2 (rev. ed. 2007) (only contracting 

promisees or intended beneficiaries may sue to enforce a 

contract); German Alliance Ins. Co. v. Home Water Supply 

Co., 226 U.S. 220, 230 (1912) (“Before a stranger can avail 

himself of the exceptional privilege of suing for a breach of 

an agreement to which he is not a party, he must, at least, 

show that it was intended for his direct benefit.”). 

Our case law recognizes this fundamental requirement. In Alpine County, California v. United States, 417 

F.3d 1366 (Fed. Cir. 2005), we noted: “In order to sue for 

damages on a contract claim, a plaintiff must have either 

direct privity or third-party beneficiary status.” Id. at 

1368. Similarly, in Anderson v. United States, 344 F.3d 

1343 (Fed. Cir. 2003), we explained: “Without either 

direct privity or third-party beneficiary status,” the plaintiff lacks standing to sue. Id. at 1352. So too in Flexfab, 

L.L.C. v. United States, 424 F.3d 1254 (Fed. Cir. 2005), we 

noted: “Because Flexfab was not a direct party to the 

contract between Capital City and DSCC, it has standing 

to enforce the contract only if it was an intended thirdparty beneficiary.” Id. at 1259 (citing Castle v. United 

States, 301 F.3d 1328, 1339 (Fed. Cir. 2002)).

Most importantly, party or third-party beneficiary 

status is required under New York law, which governs the 

PLA. See Fourth Ocean Putnam Corp. v. Interstate 

Wrecking Co., 66 N.Y.2d 38, 41 (1985) (“[I]ncidental 

beneficiar[ies can]not maintain an action for breach of 

contract.”); Mendel v. Henry Phipps Plaza W., Inc., 6 

N.Y.3d 783, 786–87 (2006) (non-signatories who are not 

third-party beneficiaries lack standing to sue); Artwear, 

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BUCKHORN INC. v. ORBIS CORPORATION 9

Inc. v. Hughes, 615 N.Y.S. 2d 689, 692 (App. Div. 1994) 

(“Only an intended beneficiary of a contract may maintain 

an action as a third party; an incidental beneficiary may 

not.”).

Orbis is not a party to the PLA. As described above, 

the PLA is an agreement between SAS and Buckhorn and 

requires Buckhorn to indemnify SAS under certain circumstances. Nor is Orbis an intended third-party beneficiary. 

Parties asserting third-party beneficiary rights 

under a contract must establish “(1) the existence 

of a valid and binding contract between other parties, (2) that the contract was intended for [their] 

benefit and (3) that the benefit to [them] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of 

a duty to compensate [them] if the benefit is lost.” 

Mendel, 6 N.Y.3d at 786 (quoting Burns Jackson Miller 

Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 336 (1983)); 

see also Alpine, 417 F.3d at 1368 (“Third-party beneficiary 

status requires that the contracting parties had an express or implied intention to benefit directly the party 

claiming such status.”); 13 Williston on Contracts § 37:1 

(“[A] third party beneficiary contract arises when a promisor agrees with a promisee to render performance to a 

third party instead of to the promisee . . . .”); id. § 37:8

(citing cases showing that a party suing as a third-party 

beneficiary has the burden of showing that a contract 

provision was for his direct benefit). Orbis does not argue 

it was the intended beneficiary of the PLA. Nor could it 

have made such an argument. The PLA expressly stated:

Nothing expressed or implied in this Agreement is 

intended or shall be construed to confer upon or 

give to any party, other than the parties to this 

Agreement and their respective successors and 

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permitted assigns, any rights or remedies under 

or by reason of this Agreement.

J.A. 94 § 7.05. 

Alternatively, Orbis asserts that district courts have 

“broad discretion in fashioning joint-and-several liability,” 

and that we should affirm the district court’s award on 

that ground, see Appellee’s Br. 23, even though the district court did not rely on it. Significantly, the district 

court did not purport to award fees under its inherent 

powers. The district court previously stated that fees 

were not appropriate under 35 U.S.C. § 285 or as sanctions under Fed. R. Civ. P. 11 because the case was not 

“exceptional” and “both sides contributed to the dilatory 

tactics, discovery disputes, and frivolous motions for 

sanctions.” J.A. 211, 213. Focusing on the equities, the 

court additionally noted that an award of fees under the 

RX agreement would be “unconscionable.” J.A. 203. The 

district court’s award of fees was based on the PLA, not 

its “inherent power to impose sanctions for bad faith 

conduct.” See Chambers v. NASCO, Inc., 501 U.S. 32, 46

(1991). 

While it is true that federal courts may exercise “inherent power to sanction bad-faith misconduct,” id., 

“courts are not free to fashion drastic new rules with 

respect to the allowance of attorneys’ fees to the prevailing party in federal litigation.” Alyeska Pipeline Serv. Co. 

v. Wilderness Soc’y, 421 U.S. 240, 269 (1975). Rather, 

“the narrow exceptions to the American Rule effectively 

limit a court’s inherent power to impose attorney’s fees as 

a sanction to cases in which a litigant has engaged in badfaith conduct or willful disobedience of a court’s orders.” 

Chambers, 501 U.S. at 47. This situation does not exist 

here, nor does Orbis argue that it does.

At oral argument, Orbis suggested it is unfair to prevent it from collecting fees from Buckhorn because it has 

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BUCKHORN INC. v. ORBIS CORPORATION 11

had a problem collecting its fee award against SAS, and 

Buckhorn is (allegedly) liable to SAS under the PLA 

agreement for any fees that Orbis collects against SAS. 

That is not a basis for ignoring basic principles of contract 

law. We note, moreover, that Orbis has no basis for 

complaining about unfairness when it has not pursued 

alternative remedies. For example, federal law allows a 

judgment creditor to seize any asset of a judgment debtor 

allowably seized under applicable state law. See Fed. R. 

Civ. P. 64(a) (“At the commencement of and throughout 

an action, every remedy is available that, under the law of 

the state where the court is located, provides for seizing a 

person or property to secure satisfaction of the potential 

judgment.”).

Under Ohio state law, if SAS lacks sufficient tangible 

property to satisfy Orbis’ judgment against it for attorney’s fees, Orbis can potentially obtain an interest in SAS’ 

chose in action against Buckhorn under the PLA. Ohio 

Rev. Code § 2333.01 provides:

When a judgment debtor does not have sufficient 

personal or real property subject to levy on execution to satisfy the judgment, . . . a money contract, 

claim, or chose in action, due or to become due to 

him, . . . shall be subject to the payment of the 

judgment by action.

The Ohio Supreme Court defines a “chose in action” as 

“the right to bring an action to recover a debt, money, or 

thing.” Pilkington N. Am., Inc. v. Travelers Cas. & Sur. 

Co., 861 N.E.2d 121, 125 (Ohio 2006) (quoting Black’s 

Law Dictionary 258 (8th ed. 2004)). “It embraces demands arising out of a tort, as well as causes of action 

originating in breach of a contract.” Id. SAS has a potential indemnity claim against Buckhorn. Orbis has made 

no effort to acquire an interest in SAS’ chose in action

against Buckhorn.

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The difference between allowing Orbis to directly recover from Buckhorn as the district court did and requiring Orbis to obtain an interest in SAS’ claim against 

Buckhorn is significant in two respects. First, the PLA 

requires that the agreement “be governed by and construed in accordance with the laws of the state of New 

York” and that the parties bring suit in New York.4 J.A. 

95–96. Under the express terms of the agreement, an 

Ohio court cannot enforce the agreement. Second, Buckhorn has potential defenses to the indemnity provision. If 

the claim is pursued in New York court, Buckhorn will be 

able to raise those applicable defenses. See Hopple v. 

Cleveland Disc. Co., 157 N.E. 414, 416 (Ohio Ct. App. 

1927) (choses in action are “subject to defenses by the 

obligor to which the original owner [of the chose] was 

subject”); Fairbanks, Jr. v. Sargent, 9 N.E. 870, 875 (N.Y. 

1887) (the acquirer “of a chose in action takes the interest 

[acquired] subject to all defenses, legal and equitable, of 

the debtor” (quoting Bush v. Lathrop, 22 N.Y. 535, 538 

(1860))). We express no opinion on the relative merits of 

that hypothetical action.

We have considered Orbis’ other arguments and find 

them to be wholly without merit.

CONCLUSION

For the foregoing reasons, the district court’s award of 

fees against Buckhorn is reversed.

REVERSED

4 Buckhorn and SAS are currently litigating issues 

relating to the PLA in the Southern District of New York. 

See Myers Indus., Inc. v. Schoeller Arca Sys., Inc., Case 

No. 1:14-cv-07051-JFK (S.D.N.Y. filed Aug. 29, 2014). 

 

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COSTS

Costs to Buckhorn. 

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