Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01777/USCOURTS-ca13-14-01777-0/pdf.json

Parties Involved:
Newegg Inc.
Appellant
Pragmatus Telecom LLC
Appellee

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

PRAGMATUS TELECOM LLC,

Plaintiff-Appellee

v.

NEWEGG INC.,

Defendant-Appellant

______________________ 

2014-1777

______________________ 

Appeal from the United States District Court for the 

District of Delaware in No. 1:12-cv-01533-RGA, Judge 

Richard G. Andrews.

______________________ 

Decided: July 31, 2015

______________________ 

MARC BELLOLI, Feinberg Day Alberti & Thompson 

LLP, Menlo Park, CA, argued for plaintiff-appellee. Also 

represented by ELIZABETH DAY, IAN NEVILLE FEINBERG,

CLAYTON W. THOMPSON, II; THOMAS RICHARD BURNS, JR.,

Adduci, Mastriani & Schaumberg, LLP, Washington, DC.

MARK A. LEMLEY, Durie Tangri LLP, San Francisco, 

CA, argued for defendant-appellant. Also represented by 

KENT E. BALDAUF, JR., DANIEL H. BREAN, CHRISTIAN D.

EHRET, The Webb Law Firm, Pittsburgh, PA; RICHARD 

GREGORY FRENKEL, Latham & Watkins LLP, Menlo Park, 

Case: 14-1777 Document: 52-2 Page: 1 Filed: 07/31/2015
2 PRAGMATUS TELECOM LLC v. NEWEGG INC. 

CA; EDWARD R. REINES, Weil, Gotshal & Manges LLP, 

Redwood Shores, CA.

______________________ 

Before PROST, Chief Judge, BRYSON, and DYK, Circuit 

Judges.

PER CURIAM.

I 

This appeal arises from a patent infringement action 

in the United States District Court for the District of 

Delaware, in which Pragmatus Telecom LLC accused 

Newegg Inc. of patent infringement. In its complaint, 

Pragmatus alleged that Newegg’s online retail website 

infringed two of Pragmatus’s patents by providing “live 

chat service over the Internet.” The accused features on 

Newegg’s website were implemented by software obtained 

from third-party software providers LivePerson, Moxie, 

and Oracle.

Each of the three software providers is now licensed 

to practice the patents-in-suit. Oracle took a license to

the patents prior to the commencement of the Newegg

suit. LivePerson and Moxie filed declaratory judgment 

actions after the commencement of the Newegg suit, and 

ultimately reached settlements in which they also took 

licenses to the patents-in-suit.

After the LivePerson and Moxie settlements, Pragmatus moved unilaterally to dismiss its action against 

Newegg since Newegg’s allegedly infringing activities 

(utilizing software provided by LivePerson, Moxie, and 

Oracle) were now authorized under the licenses to the 

three software providers. The district court granted 

Pragmatus’s motion.

In its order, the district court dismissed with prejudice “all claims brought by Pragmatus that relate to live 

chat products or services provided to Newegg by Moxie, 

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PRAGMATUS TELECOM LLC v. NEWEGG INC. 3

LivePerson and Oracle Corporation.” It also dismissed 

with prejudice “[a]ll of Pragmatus’ claims against Newegg 

that accrued before the date of its motion [to dismiss].” It

dismissed without prejudice “[a]ll other claims by Pragmatus.” Finally, the court dismissed without prejudice 

“[a]ll of Newegg’s counterclaims.”

Newegg then moved for attorney fees and costs. The 

district court denied the motions on the ground that 

Newegg was not a “prevailing party” under 35 U.S.C. 

§ 285 and Fed. R. Civ. P. 54(d)(1). Newegg appeals from 

the district court’s order denying its motions. 

II

The question in this case is whether Newegg is a 

“prevailing party” for purposes of awarding costs and 

attorney fees. We review the district court’s determination of prevailing party status de novo, applying Federal 

Circuit law. See Power Mosfet Techs., L.L.C. v. Siemens 

AG, 378 F.3d 1396, 1407 (Fed. Cir. 2004); Waner v. Ford 

Motor Co., 331 F.3d 851, 857 (Fed. Cir. 2003). 

“[T]o be a prevailing party, one must ‘receive at least 

some relief on the merits,’ which ‘alter[s] . . . the legal 

relationship of the parties.’” Former Emps. of Motorola 

Ceramic Prods. v. United States, 336 F.3d 1360, 1364 

(Fed. Cir. 2003), quoting Buckhannon Bd. & Care Home, 

Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 

598, 601, 605 (2001). Newegg argues that the district 

court’s order on Pragmatus’s voluntary motion to dismiss 

satisfies that test.

The district court concluded that Newegg was not a 

prevailing party, because it was merely the incidental 

beneficiary of the licensing agreements between Pragmatus and the software providers. The district court 

explained that it had “made no finding regarding any

substantive issue in the case” and stated that it “cannot 

be correct that a party can benefit from a bona fide license 

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4 PRAGMATUS TELECOM LLC v. NEWEGG INC. 

agreement, obtained after litigation began, and claim to 

be the prevailing party, without a single substantial court 

decision that favors that party.”

To the extent the district court interprets our precedents to require a prevailing party to have won a dispute 

or benefitted from a substantive court decision, the district court is incorrect. Such a requirement goes beyond 

the Supreme Court’s statements in Buckhannon, which 

require only that the party has obtained a “judgment on 

the merits,” 532 U.S. at 603, resulting in “a corresponding 

alteration in the legal relationship of the parties,” id. at 

605.

“The dismissal of a claim with prejudice . . . is a judgment on the merits under the law of the Federal Circuit.” 

Power Mosfet, 378 F.3d at 1416. At least where such a 

dismissal is paired with a covenant not to sue, this court 

has held that the dismissed party must be regarded as the 

prevailing party. See Highway Equip. Co. v. FECO, Ltd., 

469 F.3d 1027, 1035 (Fed. Cir. 2006) (“[A]s a matter of 

patent law, the dismissal with prejudice, based on the

covenant [not to sue] and granted pursuant to the district 

court’s discretion under Rule 41(a)(2), has the necessary 

judicial imprimatur to constitute a judicially sanctioned 

change in the legal relationship of the parties, such that 

the district court properly could entertain [a party’s] fee 

claim under 35 U.S.C. § 285.”). 

The parties disagree about whether the dismissal in 

this case contained a covenant not to sue. The dismissal 

order entered by the court dismisses with prejudice “all 

claims brought by Pragmatus that relate to live chat 

products or services provided to Newegg by Moxie, LivePerson and Oracle Corporation.” But Pragmatus claims 

that it did not accuse Newegg’s use of Oracle software 

because Oracle had already licensed the patents-in-suit. 

Pragmatus argues, therefore, that the district court’s 

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PRAGMATUS TELECOM LLC v. NEWEGG INC. 5

order applies only to the claims exhausted by the Moxie 

and LivePerson licenses. 

Pragmatus’s argument fails to account for why Oracle 

was mentioned at all in the dismissal order (which was 

drafted by Pragmatus). It is also at odds with the generic 

infringement language contained in Pragmatus’s complaint, which asserted that “Newegg has and continues to 

infringe directly one or more claims of the ’231 Patent, 

including at least by using the system of claim 1 of the 

’231 Patent to provide live chat service over the Internet.” 

And it is inconsistent with Pragmatus’s infringement 

contentions, which asserted “infringement of every claim 

identified with respect to the patents-in-suit in response 

to Patent Local Rule 3-1(a) above by at least the following 

products: any and all Live Chat products/services that 

have been offered by Newegg during the period from 6 

years prior to the filing of the complaint to the present.” 

The dismissal order (again following the language proposed by Pragmatus) further provides, in even broader 

terms, that the dismissal extends to “[a]ll of Pragmatus’ 

claims against Newegg that accrued before the date of the

motion” to dismiss. That language is therefore clearly not 

limited to claims covered by the Moxie and LivePerson 

licenses. 

Based on the documents before us, the broad language

of the proposed (and final) order appears to have been 

included to guarantee that there would be no current 

infringement claims against Newegg and therefore that 

Newegg’s counterclaims would also have to be dismissed. 

In its motion to dismiss, Pragmatus stated that “[b]ased 

on the representations made herein, and because there 

are no current infringement claims against Newegg, 

Newegg’s counterclaims currently have no independent 

basis for jurisdiction and should be dismissed.” Thus, it 

appears clear that Pragmatus intended for the dismissal 

order to cover any possible infringement claims and did 

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6 PRAGMATUS TELECOM LLC v. NEWEGG INC. 

not explicitly limit itself to the exhausted claims relating

to software provided by LivePerson and Moxie.

Given the comprehensive scope of the dismissal motion and order, we find the dismissal includes a covenant 

not to sue Newegg for any of its activities prior to the 

motion as to which Pragmatus might claim infringement, 

including any possible infringement resulting from 

Newegg’s provision of live chat services using Oracle 

software. Accordingly, we hold that the court’s analysis in

Highway Equipment controls this case, and that Newegg 

must be regarded as the prevailing party in the underlying litigation.

In so ruling, we do not, of course, make any determination as to whether Newegg is entitled to attorney fees 

and costs in connection with the district court litigation. 

We remand for the district court to determine whether 

Newegg is entitled to an award of fees or costs in connection with the proceedings before that court under governing standards. 

Costs on appeal to Newegg.

REVERSED AND REMANDED

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