Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-19-01884/USCOURTS-ca13-19-01884-0/pdf.json

Parties Involved:
Acceledyne Technologies, Ltd, LLC
Appellee
Hitkansut LLC
Appellee
United States
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________

HITKANSUT LLC, ACCELEDYNE 

TECHNOLOGIES, LTD, LLC,

Plaintiffs-Appellees

v.

UNITED STATES,

Defendant-Appellant

______________________

2019-1884

______________________

Appeal from the United States Court of Federal Claims 

in No. 1:12-cv-00303-CFL, Senior Judge Charles F. Lettow.

______________________

Decided: May 1, 2020

______________________

JOHN S. ARTZ, Dickinson Wright PLLC, Ann Arbor, MI, 

argued for plaintiffs-appellees. Also represented by 

ROBERT AVERS; FRANK MICHAEL SMITH, Troy, MI. 

 GARY LEE HAUSKEN, Commercial Litigation Branch, 

Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by JOSEPH H. HUNT. 

______________________

Before PROST, Chief Judge, CLEVENGER and MOORE,

Circuit Judges.

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2 HITKANSUT LLC v. UNITED STATES

PROST, Chief Judge.

The United States appeals from a decision of the 

United States Court of Federal Claims (“Claims Court”) 

awarding attorneys’ fees and costs to Hitkansut LLC and 

Acceledyne Technologies, Ltd., LLC (collectively, “Hitkansut”) under 28 U.S.C. § 1498(a). Section 1498(a) provides for the award of attorneys’ fees when certain 

conditions are met, unless “the court finds that the position 

of the United States was substantially justified.” We agree 

with the United States that “the position of the United 

States” as used in this statutory provision refers to positions taken by the United States during litigation and does 

not encompass pre-litigation conduct by government actors. The Claims Court erred to the extent it interpreted 

“the position of the United States” to include pre-litigation 

conduct. However, because the examples of conduct cited 

by the Claims Court demonstrate that the position of the 

United States was not substantially justified even under 

this narrower definition, we affirm the award of fees. 

I

Hitkansut owns United States Patent No. 7,175,722 

(“the ’722 patent”), entitled “Methods and Apparatus for 

Stress Relief Using Multiple Energy Sources.” While the 

application that later issued as the ’722 patent was pending, Hitkansut entered into a non-disclosure agreement 

with Oak Ridge National Laboratory (“ORNL”) and provided ORNL with a copy of the then-unpublished patent 

application. As the Claims Court found, ORNL staff “prepared various research reports, received funding, authored 

multiple publications, and received awards” for research 

“which was based upon unauthorized use of the ’722 patent.” Hitkansut LLC v. United States, 142 Fed. Cl. 341, 

346 (2019) (“Fees Decision”).

Following the issuance of the ’722 patent, Hitkansut 

brought suit alleging infringement by the United States 

(acting through ORNL) pursuant to 28 U.S.C. § 1498. Id. 

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The Claims Court determined that certain claims of the 

’722 patent were invalid but that claims 1, 6, and 11 of the 

’722 patent were valid and infringed. Hitkansut LLC v. 

United States, 130 Fed. Cl. 353, 367, 395 (2017) (“Merits 

Decision”). Although Hitkansut originally sought a royalty 

between $4.5 million and $5.6 million, based on a percentage of the relevant research funding obtained by ORNL, 

the Claims Court rejected this damages theory and instead 

awarded $200,000, plus interest, as the hypothetically negotiated cost of an up-front licensing fee for the ’722 patent. 

Id. at 392–94. Reserving the issue of attorneys’ fees, the 

Claims Court entered judgment on the merits pursuant to 

Court of Federal Claims Rule 54(b), which this court affirmed. Hitkansut LLC v. United States, 721 F. App’x 992 

(Fed. Cir. 2018).

Following our affirmance of the merits, Hitkansut 

moved for an award of attorneys’ fees and expenses pursuant to 28 U.S.C. § 1498(a), which the Claims Court grantedin-part in the amount of $4,387,889.54. Fees Decision

at 368. The United States timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

II

On appeal, the United States makes three challenges 

to the award of attorneys’ fees. First, it argues that the 

Claims Court erred in statutory interpretation by determining that “the position of the United States”—which

must be substantially justified under 28 U.S.C. § 1498(a)—

includes not only the government’s litigation positions but 

also its pre-litigation conduct. Second, it argues that, regardless of statutory interpretation, the position of the 

United States in this case was substantially justified. 

Third, it argues that because Hitkansut’s damages award 

was lower than the maximum damages figure it initially 

sought, the Claims Court erred by not proportionally reducing its attorneys’ fees award. We address each argument in turn. 

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4 HITKANSUT LLC v. UNITED STATES

We review the Claims Court’s statutory interpretation

de novo. Quaker State Oil Refining Corp. v. United States, 

994 F.2d 824, 827 (Fed. Cir. 1993). We review the Claims 

Court’s determination of whether the government’s position was substantially justified, as well as its determination of the proper amount of attorneys’ fees, for an abuse of 

discretion. See Pierce v. Underwood, 487 U.S. 552, 559 

(1988); Biery v. United States., 818 F.3d 704, 710 (Fed. Cir. 

2016).

A

Title 28, Section 1498 of the United States Code provides that when the United States uses a patented invention “without license . . . or lawful right,” the patent owner 

may bring suit to recover “his reasonable and entire compensation for such use.” 28 U.S.C. § 1498(a). The statute 

includes a fee-shifting provision, which states that when 

the patent owner is “an independent inventor, a nonprofit 

organization, or an entity that ha[s] no more than 500 employees,” reasonable and entire compensation shall include 

“reasonable fees for expert witnesses and attorneys.”1 Id.

This fee-shifting provision does not apply, however, “if the 

court finds that the position of the United States was substantially justified or that special circumstances make an 

award unjust.” Id.

The Claims Court, at Hitkansut’s urging, concluded 

that “the position of the United States” as used in § 1498(a) 

includes “both the position taken by the United States in 

the civil action and the action or failure to act by the agency 

upon which the civil action is based.” Fees Decision at 357 

(internal quotation marks omitted). We agree with the 

United States, however, that this is overbroad. As explained below, the “position of the United States” for the 

1 There is no dispute in this case that Hitkansut is 

an entity with fewer than 500 employees.

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purposes of § 1498(a) refers only to the positions taken by 

the United States in litigation and not to its prior actions 

or failures to act. 

1

Although we have never before interpreted this clause 

of § 1498(a), we have had prior occasion to interpret the 

phrase “the position of the United States.” The Equal Access to Justice Act (“EAJA”) similarly provides attorneys’ 

fees in certain circumstances “unless the court finds that 

the position of the United States was substantially justified.” 28 U.S.C. § 2412(d)(1)(A). Like § 1498(a) today, 

EAJA originally did not define “the position of the United 

States.” See Broad Ave. Laundry & Tailoring v. United 

States, 693 F.2d 1387, 1390 (Fed. Cir. 1982). 

Tasked with interpreting “the position of the United 

States” in EAJA, we concluded that “[a] fair and reasonable 

reading of those words is that the position referred to is 

that taken by the United States in the civil action in which 

the attorney’s fees were incurred.” Id. (internal quotation 

marks omitted). In other words, the position of the United 

States referred only to its litigation positions:

It would strain the normal meaning of language to 

construe the statutory words to cover the position 

the United States took in the administrative proceedings that led to the civil action in which the attorney’s fees were incurred. The petitioner here 

seeks attorney’s fees and expenses only for services 

rendered in the proceedings before the Court of 

Claims, and it would be inappropriate to look at the 

position the United States took in other forums to 

determine whether to award fees for those services.

Id. The Second, Fourth, and Tenth Circuits reached the 

same conclusion. See Boudin v. Thomas, 732 F.2d 1107, 

1115–16 (2d Cir. 1984) (“[W]e look only to the government’s position in the litigation . . . to determine whether 

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6 HITKANSUT LLC v. UNITED STATES

its actions were ‘substantially justified.’”); United States v. 

2,116 Boxes of Boned Beef, 726 F.2d 1481, 1487 (10th Cir. 

1984) (“[T]he position of the United States, for purposes of 

this Act, means the arguments relied upon by the government in litigation.”); Tyler Bus. Servs., Inc. v. NLRB, 695 

F.2d 73, 75–76 (4th Cir. 1982) (“We believe ‘position’ should 

be read to mean the government’s position as a party in 

prosecuting or defending the litigation.”). In 1985, however, Congress amended EAJA to include a broader express 

definition of the term: 

“position of the United States” means, in addition 

to the position taken by the United States in the 

civil action, the action or failure to act by the 

agency upon which the civil action is based.

28 U.S.C. § 2412(d)(2)(D); Pub. L. 99–80, 99 Stat. 183 

(1985).

Eleven years after amending EAJA, Congress amended 

§ 1498(a) to include the fee-shifting provision at issue here.

Pub. L. 104–308, 110 Stat. 3814 (1996). While Congress 

elected to use the same “position of the United States” language from EAJA, it did not incorporate the later-added 

express definition of the term. 

2

Statutory interpretation begins with the ordinary 

meaning of the language chosen by Congress. Microsoft 

Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 101 (2011). “[W]here 

Congress uses a common-law term in a statute, we assume 

the term comes with a common law meaning, absent anything pointing another way.” Id. (internal quotation marks 

omitted). In evaluating the language of § 1498(a) we conclude today, as we did in Broad Avenue Laundry, that the 

ordinary meaning of “the position of the United States” refers to the litigation positions taken by the United States 

in the civil action in which the attorneys’ fees were incurred 

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HITKANSUT LLC v. UNITED STATES 7

and not any underlying government action or inaction. See 

Broad Ave. Laundry, 693 F.2d at 1390.

Hitkansut argues, and the Claims Court concluded, 

that the existence of a broad express definition of the term 

in EAJA provides a reason to ignore the ordinary meaning 

of the language of § 1498(a). Fees Decision at 357–58; Appellees’ Br. 9–10. We do not agree. If anything, the opposite is true. “We normally assume that, when Congress 

enacts statutes, it is aware of relevant judicial precedent.” 

Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 648 (2010). We 

therefore assume that when Congress added the phrase 

“the position of the United States” to § 1498(a), it was 

aware that a majority of circuit courts to consider the issue 

had concluded that the ordinary meaning of that phrase

referred only to litigation positions. With that knowledge, 

Congress nonetheless crafted § 1498(a) to refer to the “positions of the United States” and elected not to provide an 

express definition of the term. That decision cannot reasonably be read as evidence of Congressional intent for 

§ 1498(a) to mirror EAJA.

Nor does anything in the legislative history indicate 

such an intent. It is true, as the Claims Court pointed out, 

that during the legislative process the Department of Justice expressed the view that § 1498(a) should match EAJA 

for the purposes of “recovery of costs and attorneys’ fees.” 

See H.R. Rep. No. 104-373, at 7, 1996 U.S.C.C.A.N. 4173, 

4179. But the Department’s views were not expressly related to the definition of “the position of the United States” 

and, notably, Congress declined to adopt many of the Department’s suggestions. For example, the Department also 

suggested that § 1498(a) include “limits on the net worth of 

individuals” who are eligible for attorneys’ fees. Id. While 

that limitation is present in EAJA, 28 U.S.C.

§ 2412(d)(2)(B), Congress declined to include it in 

§ 1498(a). This undermines any suggestion that Congress 

intended to fully adopt the Department’s recommendations. The decision not to include a definition of “the 

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8 HITKANSUT LLC v. UNITED STATES

position of the United States,” in spite of the Department’s 

recommendation, is further evidence that Congress intended the common-law definition of the term, not EAJA’s

express definition. 

Accordingly, we hold that “the position of the United 

States” as used in § 1498(a) refers to the litigation positions 

taken by the United States in the civil action in which the 

attorneys’ fees were incurred.

Hitkansut argues that this statutory interpretation 

cannot be correct because it would “preclude a trial court 

from considering whether the [g]overnment’s position during the litigation is supportable based on the unique facts 

and context underlying the litigation.” See Appellees’

Br. 21. That concern is misguided. We hold today that “the 

position of the United States” refers only to its litigation 

positions. But nothing in our holding prevents the Claims 

Court from looking to the facts of an individual case, including facts that occurred pre-litigation, when deciding 

whether those litigation positions were substantially justified.

As the Supreme Court has explained, the “substantially justified” test asks whether a position is “justified in 

substance or in the main—that is, justified to a degree that 

would satisfy a reasonable person.” Comm’r, I.N.S. v. Jean, 

496 U.S. 154, 158 n.6 (1990) (quoting Pierce v. Underwood, 

487 U.S. 552, 565–566 (1988)). That requires the position 

to have a “reasonable basis both in law and fact.” Id. (emphasis added). The Claims Court explained this point well:

As a practical matter, the court cannot determine 

whether the government’s position during litigation was justified without examining the underlying facts relating to the government’s conduct. A 

reasonable basis requires more than conceptual arguments germane to the subject matter; arguments 

must also hue to the facts. That a litigation position may be reasonable in the abstract, i.e., has a 

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HITKANSUT LLC v. UNITED STATES 9

reasonable basis in law, does not mean that the litigation position as applied to a specific case remains reasonable when contradicted or 

unsupported by the factual record.

Fees Decision at 357. 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.” Id. at 

359.

B

Applying our interpretation of § 1498(a), we determine 

that although the Claims Court relied on an overbroad definition of “the positions of the United States,” its analysis 

demonstrates that the position of the United States was 

not substantially justified even under a correct definition 

of that term. Therefore, we conclude that the Claims Court 

did not abuse its discretion in awarding attorneys’ fees. 

The “position of the United States” in this case includes 

its invalidity and non-infringement positions, as well as its 

discovery responses and other positions expressed during 

litigation. It does not include the act of infringement itself, 

the purported breach of contract, or any other underlying 

governmental actions. To the extent the Claims Court concluded that ORNL “breach[ing] the [non-disclosure] agreement and infring[ing] the invention” were positions of the 

United States that needed to be substantially justified, 

Fees Decision at 358, that was error, and we do not rely on 

these statements. 

Relying solely on the Claims Court’s statements regarding litigation positions, however, the record before us 

nonetheless reflects that the position of the United States 

was not substantially justified. As the Claims Court found, 

the United States maintained non-infringement positions 

that were factually inconsistent with the actions ORNL 

took after having learned of the ’722 patent. Id. at 359. For 

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10 HITKANSUT LLC v. UNITED STATES

example, ORNL provided interrogatory responses that 

were contrary to both documentary evidence and the deposition testimony of its employees. Id. at 359. Its obviousness arguments “failed to address an essential element of 

each of the three asserted claims or to demonstrate any motivation to combine the prior art.” Id. (internal quotation

marks omitted). And its enablement argument was contradicted by its own expert witness, who conceded that “a person of ordinary skill in the art could account for the errors 

in the patent without undue experimentation and perform 

all necessary calculations within approximately one hour.” 

Id. In light of these findings, each of which relates to the 

positions of the United States under a correct interpretation of that term, the Claims Court did not abuse its discretion in concluding that the government’s position was 

not substantially justified. 

C

Separately from its statutory interpretation argument, 

the United States argues that the Claims Court erred by 

failing to further reduce the attorneys’ fees awarded to Hitkansut. It contends that because Hitkansut originally 

sought $5.6 million in damages, but was awarded only 

$200,000, Hitkansut achieved only “limited success” in its 

lawsuit, and the Claims Court erred by declining to reduce 

its fee award accordingly. Appellant’s Br. 37–38. We disagree. The Claims Court has “broad discretion” to determine the amount of a fee award. See Biery, 818 F.3d at 714

(citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)). 

None of the cases cited by the government require the 

Claims Court to reduce a fee award where the plaintiff succeeded on its sole claim and recovered the maximum 

amount of damages allowable by law. 

The United States cites Hensley and Farrar v. Hobby, 

506 U.S. 103, 114 (1992), for the proposition that “the most 

critical factor in determining the reasonableness of a fee 

award is the degree of success obtained,” and therefore “fee 

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HITKANSUT LLC v. UNITED STATES 11

awards must be scaled to approximate the results obtained.” Appellant’s Br. 38 (citations omitted). Neither 

Hensley nor Farrar, however, mandates a reduction in fees 

in this case. 

Hensley concerns reduction of awards where “a plaintiff has achieved only partial or limited success” due to prevailing on less than all of its causes of action. 461 U.S. at 

436, 440. In such a case, “the hours spent on the unsuccessful claim should be excluded in considering the amount 

of a reasonable fee.” Id. at 440. In this case, however, Hitkansut brought exactly one claim—infringement of the ’722 

patent—and prevailed on it. 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. 

The United States’ reliance on Farrar is similarly 

founded on a quotation taken out of context. Farrar states 

that “where recovery of private damages is the purpose of 

. . . litigation, a district court, in fixing fees, is obligated to 

give primary consideration to the amount of damages 

awarded as compared to the amount sought.” 

506 U.S. at 114–15. That statement, however, referred to 

a plaintiff who obtained only nominal damages. As the Supreme Court explained, “[a] plaintiff who seeks compensatory damages but receives no more than nominal damages” 

often “should receive no attorney’s fees at all.” Id. at 115. 

This was true in Farrar because “[i]n a civil rights suit for 

damages . . . the awarding of nominal damages also highlights the plaintiff’s failure to prove actual, compensable injury.” Id. (emphasis added). Because damages awarded

under 42 U.S.C. § 1983, the statute at issue in Farrar, 

“must always be designed to compensate injuries,” the 

Court held that a plaintiff who has not proven compensable 

injuries may not be entitled to attorneys’ fees. Id.

Unlike the plaintiff in Farrar, Hitkansut did not “fail[] 

to prove actual, compensable injury.” At trial, it proved

compensable injury based on expert testimony from both 

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12 HITKANSUT LLC v. UNITED STATES

parties that the United States would have paid $200,000 

for a one-time license to the ’722 patent in a hypothetical

negotiation. Merits Decision at 391–92. This was not a 

“technical, insignificant victory.” Farrar, 506 U.S. at 113 

(internal quotation marks omitted). Therefore, the portion 

of Farrar relied upon by the United States, which is based 

on a plaintiff’s failure to prove actual injury, is inapplicable.

Accordingly, because Hitkansut succeeded on its sole 

claim, and proved a material amount of actual, compensable damages, the Claims Court did not abuse its discretion 

by declining to further reduce its award of attorneys’ fees. 

III

We have considered the parties’ remaining arguments 

and find them unpersuasive. For the foregoing reasons, we 

conclude that “the position of the United States” as used in 

§ 1498(a) refers to the litigation positions taken by the 

United States in the civil action in which the attorneys’ fees 

were incurred. We also conclude that the Claims Court did 

not abuse its discretion in finding that the position of the 

United States was not substantially justified in this case

and did not abuse its discretion by declining to further reduce its award of attorneys’ fees. Accordingly, the Claims 

Court’s award of attorneys’ fees is affirmed.

AFFIRMED

COSTS

The parties shall bear their own costs.

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