United States Court of Appeals 

for the Federal Circuit 

__________________________ 

FRANK T. SHUM, 

Plaintiff-Appellant, 

v. 

INTEL CORPORATION, JEAN-MARC VERDIELL, 

AND LIGHTLOGIC, INC., 

Defendants-Appellees. 

__________________________ 

2010-1109 

__________________________ 

Appeal from the United States District Court for the 

Northern District of California in case no. 02-CV-3262, 

Senior Judge D. Lowell Jensen. 

__________________________ 

Decided: December 22, 2010 

__________________________ 

PAUL F. KIRSCH, of San Francisco California, argued 

for plaintiff-appellant. On the brief was GREGORY S.

CAVALLO, Shopoff & Cavallo LLP, of San Francisco, 

California. 

MARK C. FLEMING, Wilmer Cutler Pickering Hale and 

Dorr LLP, of Boston, Massachusetts, argued for defendants-appellees. With him on the brief were RICHARD W.
SHUM v. INTEL CORPORATION 2

O’NEILL, and WILLIAM F. LEE; and SETH P.WAXMAN, 

BRIAN M. BOYNTON, of Washington, DC. 

__________________________ 

Before NEWMAN, LOURIE, and PROST, Circuit Judges. 

Opinion for the court filed by Circuit Judge PROST. 

Dissenting opinion filed by Circuit Judge NEWMAN. 

PROST, Circuit Judge. 

This appeal reviews an award of costs in a case where 

no party prevailed on every claim. The underlying action 

was filed by an optical engineer named Frank Shum 

(“Shum”). Shum sought correction of inventorship for 

seven patents originally issued to his former business 

partner, Jean-Marc Verdiell (“Verdiell”), arguing that he, 

Shum, should be named as the sole inventor or coinventor. See 35 U.S.C. § 256. Shum also asserted numerous claims under California law, all of which allegedly 

stemmed from the sale of Verdiell’s company, LightLogic, 

Inc. (“Lightlogic”), to Intel Corporation (“Intel”). 

The district court correctly observed that both sides 

won on some claims and lost on others. Shum, for instance, succeeded on some of his inventorship claims, 

with the jury finding him to be the co-inventor of claims 

in five of the seven patents-in-suit. As for defendants 

Verdiell, Intel, and LightLogic, before trial, the district 

court granted their motion to dismiss some of Shum’s 

state law claims1 for failure to state a claim. See Fed. R. 

 1 These claims were for conversion, rescission, negligent misrepresentation, intentional interference with 

contractual relations, and successor liability. 
3 SHUM v. INTEL CORPORATION

Civ. P. 12(b)(6). The district court also granted summary 

judgment in favor of the defendants on Shum’s claims for 

breach of fiduciary duty and fraudulent concealment. 

Finally, after the jury was unable to reach a verdict on 

the remaining state law claims,2 the district court 

granted defendants’ post-verdict motion for judgment as a 

matter of law (“JMOL”). The final judgment in this action 

entitles Shum to be named as a co-inventor for claims in 

five of the seven patents-in-suit, but entitles him to none 

of the more than $409 million he sought in monetary 

damages. 

 

Based on this mixed result, the district court concluded that both parties “prevailed” within the meaning of 

Rule 54(d) of the Federal Rules of Civil Procedure, which 

governs the award of costs and fees accrued during trial. 

Acknowledging, however, that Rule 54 might only countenance a single “prevailing party,” the district court held in 

the alternative that the defendants were the “prevailing 

party.” The parties were then each awarded the costs 

associated with the claims they respectively won. After 

offsetting these amounts, the result was a net costs award 

of $134,368.28 to defendants, taxed against Shum. Shum 

timely appealed. 

On appeal, Shum argues that the award of costs must 

be vacated and recalculated on remand because there can 

only be one prevailing party. Moreover, according to 

Shum, he is that prevailing party. Though Shum lost on 

all of his California law claims and failed to recover any 

fraction of the more than $409 million in damages he 

sought, Shum nevertheless argues that his limited victory 

 2 These claims were for unjust enrichment, breach 

of contract, and intentional misrepresentation. 
SHUM v. INTEL CORPORATION 4

on the question of inventorship suffices to make him a 

prevailing party. Further, as a prevailing party, Shum 

contends that he is entitled to all of his costs, while defendants are entitled to none of theirs. 

We agree that there can be, by definition, only one 

prevailing party. We nevertheless affirm the award of 

costs because we agree with the district court’s alternative holding that defendants are the prevailing party. 

Though Shum’s victory on his co-inventorship claims 

changes the names appearing on those patents, it has not 

materially altered the legal relationship among the parties. Because Shum and Verdiell signed a Plan of Liquidation giving each equal rights to independently exploit 

the intellectual property arising from their ephemeral 

business partnership, this action has not materially 

altered the defendants’ behavior in a way that directly 

benefits Shum. On the other hand, defendants were not 

liable to Shum for $409 million. Accordingly, the district 

court did not abuse its discretion in awarding costs to 

each party with respect to the claims on which they each 

prevailed, then netting those sums to arrive at the final 

figure. 

BACKGROUND

This appeal is only about costs, not the merits. The 

merits were appealed separately and are the subject of a 

companion opinion, Shum v. Intel Corp., No. 2009-1385, -

1419. For the purposes of reviewing costs, the following 

facts matter. 

This appeal is the second to this court and but the latest episode in a protracted legal battle, all traceable to a 

brief and stormy business partnership. Shum and Verdiell are both engineers who work in the optoelectronics 
5 SHUM v. INTEL CORPORATION

field. In 1997, Verdiell and Shum became equal shareholders in a company called Radiance Design (“Radiance”). A brief nine months later, Radiance was formally 

dissolved pursuant to a plan of liquidation (“Liquidation 

Plan” or “POL”). 

The Liquidation Plan gave both parties equal rights to 

independently exploit the intellectual property developed 

by Radiance. After Radiance dissolved, Verdiell filed for, 

and was issued, the patents that are the subject of this 

suit. These patents were subsequently assigned to Verdiell’s company, LightLogic. In 2001, Intel purchased 

LightLogic, including all of its intellectual property rights, 

for $409 million. 

Upon learning of the sale, Shum filed this action. In 

his amended complaint, Shum asserted that he should be 

named as the co-, if not sole, inventor of claims in the 

seven patents-in-suit.3 In addition to these federal inventorship claims, Shum alleged numerous violations of 

California law: conversion, rescission, negligent misrepresentation, intentional interference with contractual 

relations, successor liability, breach of fiduciary duty, 

fraudulent concealment, unjust enrichment, breach of 

contract, and intentional misrepresentation. 

The first appeal to this court occurred after the district court dismissed Shum’s claim for unjust enrichment 

and granted defendants’ motion to bifurcate the inventorship and state law claims. Pursuant to the district court’s 

order, the inventorship claims were tried first in a bench 

trial, after which the state law claims were to be tried by 

 3 The patents are U.S. Patent Nos. 5,977,567 (“’567 

patent”), 6,376,268 (“’268 patent”), 6,207,950 (“’950 patent”), 6,227,724 (“’724 patent”), 6,586,726 (“’6726 patent”), 

6,585,427 (“’427 patent”), and 6,252,726 (“’2726 patent”). 
SHUM v. INTEL CORPORATION 6

jury. Shum v. Intel Corp., 499 F.3d 1272, 1275 (Fed. Cir. 

2007). 

Following the bench trial, the district court found that 

Shum had not shown by clear and convincing evidence 

that he was an inventor of any claims in the asserted 

patents. Defendants then renewed their motions for 

summary judgment on Shum’s state law claims. The 

district court granted the motions and entered judgment 

for the defendants. Shum appealed to this court (“first 

appeal”). We vacated the judgment, reversed the dismissal of Shum’s unjust enrichment claim, and remanded. 

Id. at 1276-77. In doing so, we agreed that under Beacon 

Theatres, Inc. v. Westover, 359 U.S. 500 (1959), the district court abused its discretion in holding a bench trial on 

Shum’s inventorship claim before trying his state law 

claims to a jury. Shum, 499 F.3d at 1276-79. Because 

Shum’s claims had common factual issues, we concluded 

that Shum was entitled to a jury trial on his state law 

claims prior to any court determination of his inventorship claim. Id. at 1279. We also reinstated Shum’s 

unjust enrichment claim, since it was neither “duplicative” nor “dependent” on Shum’s fraudulent concealment 

claims. Id. at 1279-80. 

The case returns to us after further proceedings below. Shum has had his jury trial on the inventorship and 

state law claims. Before trial, Shum withdrew his inventorship claims with respect to the ’2726 patent. For the 

remaining six patents,4 Shum limited his claims at trial 

to co-inventorship, thus abandoning his prior, alternative 

 4 The six patents disputed at trial were the ’567 

patent, ’268 patent, ’950 patent, ’6726 patent, ’724 patent, 

and ’427 patent. 
7 SHUM v. INTEL CORPORATION

claims for sole inventorship. The inventorship claims and 

state law claims for intentional misrepresentation, breach 

of contract, and unjust enrichment were submitted to the 

jury. 

The jury found that Shum was the co-inventor of some 

claims in five of six patents at issue during trial.5 The 

jury was unable to reach a verdict on Shum’s inventorship 

claims for the ’427 patent and for one additional claim in 

the ’724 patent.6 It also hung on all of Shum’s remaining 

state law claims. After declaring a mistrial, the district 

court entertained defendants’ motion for judgment as a 

matter of law. Consistent with the jury verdict, the court 

then entered judgment for Shum on his co-inventorship 

claims for the five patents on which the jury reached a 

verdict. It then entered judgment for defendants on the 

remaining claims, finding that Shum failed to introduce 

sufficient evidence to prove liability or damages for the 

state law claims, or to permit a reasonable jury to find 

Shum the co-inventor of the ’427 patent or the additional 

claim of the ’724 patent. 

Following entry of judgment, both parties submitted 

bills of costs pursuant to Federal Rule of Civil Procedure 

54. The Clerk of Court taxed costs of $507,644.82 in 

defendants’ favor and costs of $195,523.27 in Shum’s 

favor. Offset against each other, Shum thus owed 

$313,121.55 in costs to defendants. Before the district 

court, Shum moved to deny defendants costs on two 

 5 As stated previously, Shum withdrew his correction of inventorship claims for the ’2726 patent before 

trial. 

6 The jury unanimously found that Shum was the 

inventor of claims 1, 7, 14, and 16 of the ’724 patent. 
SHUM v. INTEL CORPORATION 8

grounds. First, Shum argued that defendants were not 

entitled to costs because they were not the “prevailing 

party” within the meaning of Rule 54. Second, Shum 

argued that certain items in defendants’ bill of costs 

should be disallowed. 

With modifications to certain cost items submitted by 

defendants, the district court upheld the award of costs. 

As to the threshold question of who was the prevailing 

party, the district court found that Shum and defendants 

were both prevailing parties, because both had prevailed 

with respect to some claims. Acknowledging that the law 

might require it to choose a single prevailing party, the 

district court held in the alternative that defendants were 

the prevailing party. In support of this determination, 

the district court noted that rather than being ordered to 

pay the over $400 million in damages sought by Shum, 

defendants owed nothing. Further, defendants retained 

their inventorship rights and ability to commercially 

exploit the covered technology. Though Shum gained 

legal title to five patents as a co-inventor, the district 

court found this limited victory did not materially alter 

the parties’ legal relationship because Shum already had 

the right to commercially exploit the covered technology 

under the Radiance POL. 

Shum timely appealed the district court’s award of 

costs. We have jurisdiction pursuant to 28 U.S.C. 

§ 1295(a)(1).7

 7 We reject Shum’s argument that the district court 

lacked subject matter jurisdiction based on Shum supposedly lacking a “concrete financial interest” in the patentsin-suit. At minimum, Shum’s state law claims necessarily 

depended on the resolution of a substantial question of 

federal patent law, inventorship. See Christianson v. Colt 

Indus. Operating Corp., 486 U.S. 800, 808-09 (1988); 
9 SHUM v. INTEL CORPORATION

ANALYSIS

Rule 54(d)(1) governs the award of costs. It provides 

that “[u]nless a federal statute, these rules, or a court 

order provides otherwise, costs—other than attorney’s 

fees—should be allowed to the prevailing party.” Fed. R. 

Civ. P. 54(d)(1). An award of costs thus involves two 

separate inquires. Power Mosfet Techs., L.L.C. v. Siemens 

AG, 378 F.3d 1396, 1407 (Fed. Cir. 2004). First, who is 

the “prevailing party” within the meaning of Rule 

54(d)(1). Second, how much (if any) costs should be 

awarded to the prevailing party. 

We address these questions below. 

I. Prevailing Party 

Federal Circuit law defines “prevailing party” for the 

purposes of patent litigation. Manildra Milling Corp. v. 

Ogilvie Mills, Inc., 76 F.3d 1178, 1182 (Fed. Cir. 1996). 

Determination of the prevailing party is a question of law 

 

Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 

1318, 1330 (Fed. Cir. 1998), overruled in part on other 

grounds, Midwest Indus., Inc. v. Karavan Trailers, Inc., 

175 F.3d 1356 (Fed. Cir. 1999). 

This court’s decision in Larson v. Correct Craft, Inc. is 

not to the contrary. 569 F.3d 1319 (Fed. Cir. 2009). 

Shum is not like the plaintiff in Larson, who had already 

transferred title to the patents for which he sought correction of inventorship, and thus had no ownership interest 

in the patents-in-suit. Id. at 1326-27. Our conclusion 

that the plaintiff in Larson suffered no injury-in-fact 

sufficient to confer constitutional standing was based on 

that transfer of ownership rights. No such transfer or 

assignment has occurred here. Accordingly, Shum had, 

and continues to have, standing to pursue his correction 

of inventorship claims under 35 U.S.C. § 256. 
SHUM v. INTEL CORPORATION 10

reviewed de novo. Inland Steel Co. v. LTV Steel Co., 364 

F.3d 1318, 1320 (Fed. Cir. 2004). 

On appeal, Shum argues that it was error for the district court to declare both him and the defendants “prevailing parties” within the meaning of Rule 54(d)(1). We 

agree. 

The district court is correct that both parties won or, 

said another way, “prevailed,” on certain claims and lost 

on others. But just because a party can be said to have 

“prevailed” on a claim does not necessarily make him a 

“prevailing party” as the term is used in Rule 54. 

The question then is whether Rule 54 limits how 

many “prevailing parties” there can be in a particular 

case. To answer that question, we begin with the text of 

the statute. Rule 54(d)(1) awards costs to “the prevailing 

party.” Fed. R. Civ. P. 54(d)(1) (emphasis added). In our 

view, the plain language of Rule 54 unambiguously limits 

the number of prevailing parties in a given case to one 

because the operative term, “prevailing party,” is singular. Had Congress intended for there to be multiple 

prevailing parties, it could easily have said so, substituting “parties” for “party.” 

Our conclusion that there can only be one prevailing 

party in a given case is reinforced by the use of the definite article “the” before “prevailing party.” Alternatives 

like “a,” “any,” or “some” lead to phrases like “a prevailing 

party” and “any prevailing party.” These hypothetical, 

unenacted versions of Rule 54 could be read to suggest 

that it is possible to have more than one prevailing party 

in an action. However, none of these theoretical alternatives is what Congress enacted. In our view, the word 

Congress did use, “the,” is evidence that what follows, 
11 SHUM v. INTEL CORPORATION

“prevailing party,” is specific and limited to a single party. 

See Rapanos v. United States, 547 U.S. 715, 732 (2006) 

(relying on use of “the” as evidence the statute narrowed 

the type of “waters” at issue); Rumsfeld v. Padilla, 542 

U.S. 426, 434-35 (2004) (relying on use of the definite 

article as evidence there was “generally only one proper 

respondent to a given prisoner’s habeas petition”); Freytag 

v. Comm’r, 501 U.S. 868, 902 (1991); see also Webster’s 

Third New International Dictionary 2368 (1981) (discussing the difference between the indefinite articles “a” and 

“an” and the definite article “the”). Rule 54(d) has no 

special rule or exception for mixed judgment cases, where 

both parties have some claims decided in their favor, as 

occurred here. Thus, even in mixed judgment cases, 

punting is not an option; Rule 54 does not allow every 

party that won on some claims to be deemed a “prevailing 

party.” For the purposes of costs and fees, there can be 

only one winner. A court must choose one, and only one, 

“prevailing party” to receive any costs award.8

The rub, of course, is choosing the “prevailing party” 

in a mixed judgment case like this one. To be a “prevailing party,” our precedent requires that the party have 

received at least some relief on the merits. That relief 

must materially alter the legal relationship between the 

parties by modifying one party’s behavior in a way that 

 8 That is not to say, of course, that the court must 

award a prevailing party costs. Depending on the extent 

and nature of the prevailing party’s victory, it may be 

proper for the trial court to award only low costs or no 

costs at all. See Farrar, 506 U.S. at 115; Manildra Milling, 76 F.3d at 1183. As we explained in Manildra Milling, even if a party satisfies our prevailing party test, the 

trial court “retains broad discretion as to how much to 

award, if anything.” 76 F.3d at 1183 (emphasis added). 
SHUM v. INTEL CORPORATION 12

“directly benefits” the opposing party. Farrar v. Hobby, 

506 U.S. 103, 111-13 (1992); Manildra Milling, 76 F.3d at 

1182; see also Inland Steel, 364 F.3d at 1320; Former 

Emps. of Motorola Ceramic Prods. v. United States, 336 

F.3d 1360, 1364 (Fed. Cir. 2003). A party is not required, 

however, to prevail on all claims in order to qualify as a 

prevailing party under Rule 54. See Kemin Foods, L.C. v. 

Pigmentos Vegetales Del Centro S.A. De C.V., 464 F.3d 

1339, 1347-48 (Fed. Cir. 2006). 

Here, our inquiry accordingly focuses on the relief 

Shum and defendants respectively received. Based on an 

examination of the parties’ respective successes, we hold 

that defendants are the “prevailing party” for the purposes of Rule 54. As set out in our companion opinion on 

the merits, Shum v. Intel Corporation, No. 2009-1385, -

1419, defendants won on all of Shum’s state law claims. 

Before trial even began, the district court dismissed 

Shum’s claims for conversion, rescission, negligent misrepresentation, intentional interference with contractual 

relations, and successor liability for failure to state a 

claim. See Fed. R. Civ. P. 12(b)(6). The district court also 

granted summary judgment in favor of defendants on 

Shum’s claims for breach of fiduciary duty and fraudulent 

concealment. After the jury hung on Shum’s claims for 

intentional misrepresentation, unjust enrichment, and 

breach of contract, the district court granted post-verdict 

JMOL in favor of the defendants on those claims. Defendants also won by post-verdict JMOL on Shum’s correction of inventorship claims for the ’427 patent and claim 5 

of the ’724 patent. As a result, defendants do not owe, 

and thus will not pay, any of the $409 million in damages 

and restitution sought by Shum. Further, defendants 

retain sole ownership and inventorship of the ’427 patent 

and claim 5 of the ’724 patent. We agree with the district 

court that the relief defendants obtained on these claims 
13 SHUM v. INTEL CORPORATION

alters the legal relationship of the parties: in addition to 

avoiding significant monetary liability, the judgment in 

defendants’ favor will have res judicata effect in any 

future action. See Inland Steel, 364 F.3d at 1320-21. 

In contrast, Shum’s victory was limited to his claims 

for correction of inventorship. For five of the seven patents originally at issue, Shum successfully established 

that he was the co-inventor of some claims. This determination gives Shum a property interest in the five 

patents. It also requires the U.S. Patent and Trademark 

Office to correct the inventorship and assignments of 

those patents to reflect Shum’s status as a co-inventor. 

Shum argues that he should be considered a “prevailing party” because he obtained some of the benefits he 

sought in bringing suit—namely, correction of inventorship. Shum is correct that his limited victory “alter[ed] 

the legal relationship between the parties.” Manildra 

Milling, 76 F.3d at 1182. As a result of the judgment, 

Shum is now the co-owner of five patents Intel bought 

from Verdiell. Shum will also henceforth be listed as the 

co-inventor, while Verdiell has lost his status as sole 

inventor. 

Not every alteration in the legal relationship between 

parties, however, satisfies our prevailing party test. 

Instead, the alteration must be (1) material and (2) “modify[] the defendant’s behavior in a way that directly 

benefits the plaintiff.” Manildra Milling, 76 F.3d at 1182 

(quoting Farrar, 506 U.S. at 111-13). Despite Shum’s 

protestations to the contrary, the question of inventorship 

was not the “central issue” in this case. As the district 

court found, this case was about the money. Indeed, 

Shum initially pled only state law claims, for which he 

requested over $409 million in damages and restitution; 
SHUM v. INTEL CORPORATION 14

the correction of inventorship claims were added later, in 

a subsequent amendment. 

We find it dispositive that Shum’s limited victory—a 

declaration of co-inventorship—has not met the second 

requirement under our prevailing test: the victory has 

not modified defendants’ behavior in a way that significantly benefits Shum. Id. As we explained in Singer v. 

Office of Senate Sergeant at Arms, 173 F.3d 837, 842 (Fed. 

Cir. 1999), it is not enough that the issue was contested, 

actually litigated, and ultimately decided in a party’s 

favor; the recognition of Shum’s co-inventorship status 

also had to confer some material benefit on Shum. We 

agree with the district court that Shum received no material benefit with respect to any of the defendants. 

For example, with respect to Verdiell, Shum’s coinventorship status has not given Shum a competitive 

advantage or required Verdiell to change his behavior. 

Under the POL which dissolved Radiance, Shum and 

Verdiell 

acknowledge[d] and agree[d] that, after the approval of this Plan [POL], each of them shall be 

entitled, without any liability or duty to account to 

the Corporation or to the other, to pursue any and 

all such other business activities as they shall desire, even if such activities are in competition with 

the business of the Corporation and even if they 

take, or attempt to take, a business opportunity 

that the Corporation could have itself pursued. 

(emphasis added.) The district court found that the 

declaration of co-inventorship did not give Shum any 

rights in the patented technology that he did not already 

have under the POL. We agree. Even before Shum was 
15 SHUM v. INTEL CORPORATION

declared a co-inventor, the POL gave him the right to 

exploit the covered technology without incurring any 

financial liability or legal obligations to Verdiell. Cf.

Singer, 173 F.3d at 842 (holding that official recognition 

of depression did not make petitioner a “prevailing party” 

because it entitled him to no benefits beyond those the 

agency was already giving him). 

Similarly, Shum’s co-inventorship status does not give 

Shum a competitive advantage with respect to Intel or 

LightLogic, nor does it require either company (Intel or 

LightLogic) to change its behavior. By purchasing LightLogic, including Verdiell’s share of the patents, Intel 

became a co-owner of the patents-in-suit. As a co-owner, 

Intel acquired and retains the right to make, use, license, 

offer to sell, or sell the inventions covered by the patents, 

with or without Shum’s consent. See 35 U.S.C. § 262. 

Shum’s victory is thus unlike the success obtained by 

the prevailing parties in cases like Farrar and Manildra 

Milling. In Farrar, plaintiffs obtained an award of nominal damages; in Manildra Milling, the plaintiff won a 

declaration that the competitor’s patent was invalid. 

Farrar, 506 U.S. at 111-12; Manildra Milling, 76 F.3d at 

1183; see also Ruiz v. A.B. Chance Co., 234 F.3d 654, 670 

(Fed. Cir. 2000); Gentry Gallery, Inc. v. Berkline Corp., 

134 F.3d 1473, 1480 (Fed. Cir. 1998) (noting that obtaining an injunction might also constitute a “benefit” qualifying a party for prevailing party status). Likewise, an 

injunction or judgment of infringement can both satisfy 

the prevailing party test because each constitutes “relief 

on the merits which alters . . . the legal relationship of the 

parties.” Inland Steel, 364 F.3d at 1320; Kemin Foods, 

464 F.3d at 1348. As this court stated in Manildra Milling, a party that obtains an injunction, declaration of 

patent invalidity, or judgment of infringement gains 
SHUM v. INTEL CORPORATION 16

“significant latitude” and frequently a “competitive edge” 

vis-à-vis the opposing party. 76 F.3d at 1183. Here, by 

contrast, Shum’s victory resulted in no equivalent gain 

because the POL already gave him those rights. 

Because we agree with the district court’s alternate 

holding that defendants are the “prevailing party” within 

the meaning of Rule 54, we turn to the reasonableness of 

the cost award. 

II. Cost Award 

Whether an award of costs is reasonable is determined under the law of the regional circuit. Manildra 

Milling, 76 F.3d at 1183. Accordingly, in this case we 

apply Ninth Circuit law. The Ninth Circuit reviews the 

reasonableness of a costs award for abuse of discretion 

and is “hesitant” to find an abuse of the trial court’s broad 

discretion over costs. K-S-H Plastics, Inc. v. Carolite, Inc., 

408 F.3d 54, 60 (1969). This deferential review is still 

guided, however, by Rule 54(d)(1), which the Ninth Circuit has construed as creating a presumption in favor of 

awarding costs to the prevailing party. Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1022 

(Fed. Cir. 2003); Dawson v. City of Seattle, 435 F.3d 1054, 

1070 (9th Cir. 2006); Save Our Valley v. Sound Transit, 

335 F.3d 932, 944 (9th Cir. 2003). To overcome this 

presumption, the losing party must establish a reason to 

deny costs and the district court must give specific reasons for refusing to award costs. Champion Produce, 342 

F.3d at 1022; Stanley v. Univ. of S. Cal., 178 F.3d 1069, 

1079 (9th Cir. 1999). 

In this case, Shum argues that the district court 

abused its discretion by awarding defendants part of their 

costs associated with the first bench trial, as well as 
17 SHUM v. INTEL CORPORATION

various costs associated with demonstrative exhibits, 

copying charges, and expert witness fees. 

Under the Ninth Circuit’s deferential standard of review, we cannot agree. It was not error for the district 

court to wait until the case was finally decided, after the 

second trial, to determine the prevailing party and award 

costs. When it finally did award costs, the district court 

carefully considered and meticulously explained its reasoning. It was not unreasonable for the district court to 

consider which claims the parties respectively won, or to 

reduce the prevailing party’s costs award to reflect the 

extent of its victory (i.e., the claims it lost). Here, the 

district court accounted for the claims defendants lost in 

precisely that fashion: it reduced defendants’ costs associated with the claims they won by the costs incurred by 

Shum on the claims he won. Further, given that defendants ultimately won on the all of the state law claims 

and that Shum’s limited victory on some inventorship 

claims did not modify defendants’ behavior in a way that 

materially benefited Shum, the district court did not 

abuse its discretion by awarding half of the costs associated with the first bench trial to defendants. As for 

Shum’s other quarrels with the costs award, Shum has 

given no reasons on appeal that were not already addressed and reasonably rejected by the district court. 

Shum has thus failed to overcome the Ninth Circuit’s 

strong presumption of awarding costs to the prevailing 

party. 

CONCLUSION

For the foregoing reasons, we hold that defendants 

were the prevailing party and the district court did not 

abuse its discretion in considering the parties’ relative 

success when awarding costs in this mixed judgment case. 
SHUM v. INTEL CORPORATION 18

The award of costs is affirmed. 

AFFIRMED
United States Court of Appeals 

for the Federal Circuit 

__________________________ 

FRANK T. SHUM, 

Plaintiff-Appellant, 

v. 

INTEL CORPORATION, JEAN-MARC VERDIELL, 

AND LIGHTLOGIC, INC., 

Defendants-Appellees. 

__________________________ 

2010-1109 

__________________________ 

Appeal from the United States District Court for the 

Northern District of California in Case No. 02-CV-3262, 

Senior Judge D. Lowell Jensen. 

__________________________ 

NEWMAN, Circuit Judge, dissenting. 

The award of “costs” is rarely of sufficient legal substance to warrant appellate attention, much less appellate 

dissent. But here the award is so flawed that it indeed 

was appealed, and its affirmation by my colleagues raises 

important concerns of justice and fairness, as well as 

conformity with rule and precedent. 

On his first appeal to the Federal Circuit, Mr. Shum 

obtained a reversal and remand of the major issue in 

dispute, that is, inventorship of five patents obtained by 

Verdiell and sold to Intel on the Radiance technology. 

Shum v. Intel Corp., 499 F.3d 1272 (Fed. Cir. 2007). 
SHUM v. INTEL CORPORATION 2

Despite Shum’s success on appeal, the district court 

awarded Intel $77,200 in costs for the first trial, which 

was half the amount submitted. Upon the second trial, 

Mr. Shum obtained unanimous jury verdicts that he is the 

joint inventor of five patents on the technology for which 

Intel paid $409 million. Thus Shum obtained the right to 

make, use, sell, license, and otherwise exploit the inventions that Verdiell had patented as his sole invention and 

that Intel had purchased for exclusive ownership. Nonetheless the district court, holding that neither side prevailed or alternatively that the defendants prevailed, 

awarded net costs in favor of defendants and against 

Shum, in the amount of $134,368.28. This award is 

contrary to precedent, and inappropriate. 

This is not the rare case in which a court might exercise its discretion, in the interest of justice, to mitigate the 

burdens of trial. I must protest this unusual ruling, 

whereby the losing side that presented a more expensive 

case1 is awarded the amount by which its costs exceeded 

those of the prevailing party. From my colleagues’ endorsement of this award of net costs to the losing party, I 

respectfully dissent. 

DISCUSSION

The Federal Rules provide that “costs” shall be taxed 

in favor of the prevailing party. By every measure Shum 

is the prevailing party, not the defendants. Shum obtained the judgment of joint inventorship that established 

his ownership in common of five of the six patents previously held exclusively by the defendants. When the 

district court refused to retry the deadlocked issues 

 1

 For example, Intel’s bill of costs includes over 

$200,000 for “demonstrative exhibits,” “graphics,” and 

“models,” for use at trial, on which Shum spent less than 

$60,000. 
3 SHUM v. INTEL CORPORATION

concerning monetary remedy and instead decided them 

“as a matter of law” in favor of the defendants, the defendants avoided damages, but they still lost exclusive 

ownership of the patented technology. This did not convert the defendants into “the prevailing party.” 

“Because a plaintiff prevails by achieving some of the 

benefit sought in bringing suit, it follows that a defendant 

is a prevailing party only if the plaintiff obtains no relief 

whatsoever from the litigation.” 10 James Wm. Moore, 

Moore’s Federal Practice §54.171[3][c], at 54-310 (3d ed. 

2010). Whatever the monetary value of Shum’s victory, it 

is apparent that Intel and Mr. Verdiell did not prevail, for 

they lost the exclusivity of five patents for which Shum 

was adjudged the joint inventor, and simply avoided 

monetary damages when the jury hung and the district 

court refused a retrial. 

The Court explained in Farrar v. Hobby, 506 U.S. 103 

(1992), that “a plaintiff ‘prevails’ when actual relief on the 

merits of his claim materially alters the legal relationship 

between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.” Id. at 

111-12. In Manildra Milling Corp. v. Ogilvie Mills, Inc., 

76 F.3d 1178 (Fed. Cir. 1996), the court applied this 

reasoning to taxation of costs in patent litigation in which 

the plaintiff did not obtain monetary damages, but the 

court held that the plaintiff was the prevailing party 

because a “judicial declaration that one is free from another's right to exclude alters the legal relationship between the parties.” Id. at 1183. The jury’s verdict 

granting Mr. Shum co-ownership of five of the six litigated patents was a victory that altered the legal relationship of the parties to Mr. Shum’s benefit. 

Although it is now final on this appeal that Mr. Shum 

will not receive a retrial on monetary damages, the Court 
SHUM v. INTEL CORPORATION 4

explained in Farrar that “the prevailing party inquiry 

does not turn on the magnitude of the relief obtained.” 

506 U.S. at 114. Mr. Shum now has the unchallengeable 

right to make, use, and sell for others to use, the five 

patented inventions “without the consent of and without 

accounting to the other owners.” 35 U.S.C. §262. In 

Manildra Milling this court explained that: “The freedom 

to practice an invention without fear of suit by the patentee is a valuable commercial benefit. By removing the 

potential threat of the patentee instituting an infringement action, the competitor necessarily alters the patentee's subsequent behavior to his benefit.” 76 F.3d at 

1183. The rights Mr. Shum has won here are greater 

than freedom from suit, for Shum became the co-owner of 

five patents that had previously been the exclusive property of Verdiell, LightLogic, and now Intel. 

My colleagues state that Shum was not the prevailing 

party because the judgment of joint inventorship and the 

ensuing co-ownership “did not give Shum any rights in 

the patented technology that he did not already have 

under the POL.” Maj. Op. at 14. This is plainly incorrect. 

The trial record is replete with Verdiell’s assertions of 

exclusivity, and that the patented subject matter was not 

included in the Radiance technology subject to the POL. 

Intel and Verdiell vigorously disputed Shum’s claims, 

stating that “the issue of inventorship is at the heart of 

the case” and a “necessary element” of all of the other 

claims. Defs.’ Opp’n to Pl.’s Mot. to Remand at 4-5, Shum 

v. Intel Corp., No. C 02-03262 (N.D. Cal. Nov. 1, 2002). 

Only now that Shum has prevailed do Intel and Verdiell 

proclaim that Shum already had what he won by jury 

verdict. However, at trial the defendants testified and 

argued that these patents and the technology they 

claimed were not part of the Radiance technology and 

that Shum had no rights in any of it. 
5 SHUM v. INTEL CORPORATION

Whatever the “prevailing” status of Shum, it is clear 

that Intel and Mr. Verdiell are not the prevailing party. 

Applying precedent, Mr. Shum won the judgment that he 

was a joint inventor of five of the six patents from which 

he had been excluded, and thus owner in common of these 

patents. See Manildra Milling, 76 F.3d at 1183 (the 

plaintiff was the prevailing party when the adverse 

patent was invalidated, although federal and state law 

claims were lost and no damages were awarded). Shum is 

now assured that he and his transferees cannot be sued 

on these patents, and that his right to practice and to 

grant licenses to the patented subject matter is not subject to challenge. The district court reasoned that Shum’s 

joint invention and co-ownership “did not give Shum a 

competitive edge over Verdiell in the marketplace.” Shum 

v. Intel Corp., 682 F. Supp. 2d 992, 997 (N.D. Cal. 2009). 

However, obtaining a competitive edge in the marketplace 

is not a requirement of being the prevailing party in 

litigation. 

Partial or apportioned costs have on occasion been 

awarded, when appropriate to the circumstances. See 10 

Wright & Miller, Federal Practice & Procedure §2667 (3d 

ed. 2010); Ortho-McNeil Pharm., Inc., v. Mylan Labs. Inc., 

569 F.3d 1353, 1358 (Fed. Cir. 2009); K-S-H Plastics, Inc. 

v. Carolite, Ind., 408 F.2d 54, 60 (9th Cir. 1969). This 

court has observed that costs should be apportioned only 

under “limited circumstances, such as when the costs 

incurred are greatly disproportionate to the relief obtained.” Kemin Foods, L.C. v. Pigmentos Vegetales Del 

Centro S.A. de C.V., 464 F.3d 1339, 1348 (Fed. Cir. 2006) 

(citing 10 Moore’s Federal Practice §54.101[1][b] (3d ed. 

2006)). Here the district court did not apportion “greatly 

disproportionate” costs; the court simply required Shum 

to pay Intel the amount by which Intel’s costs exceeded 
SHUM v. INTEL CORPORATION 6

Shum’s costs. This form of apportionment has no support 

in precedent or in logic, and in this case is unfair. 

When the plaintiff as well as the defendant have lost 

on significant issues, courts have generally awarded “no 

costs.” See Ruiz v. A.B. Chance Co., 234 F.3d 654, 670 

(Fed. Cir. 2000); Kropp v. Ziebarth, 601 F.2d 1348, 1358 

n.27 (8th Cir. 1979) (where neither party prevails, it is 

“quite appropriate to deny costs to both parties” (citing 

Srybnik v. Epstein, 230 F.2d 683, 686 (2d Cir. 1956))); 

Brunswick-Balke-Collender Co. v. Am. Bowling & Billiard 

Corp., 150 F.2d 69, 74 (2d Cir. 1945) (affirming denial of 

costs where both parties to a suit involving patent and 

trademark infringement prevailed in part); 10 Federal 

Practice & Procedure §2668 (3d ed. 2010) (the denial of 

costs to both sides “has been considered appropriate when 

neither side entirely prevailed, or when both sides prevailed”). 

In Ruiz, this court held that “neither party prevailed 

sufficiently to require an award of costs,” where the 

patent was declared invalid but no damages were 

awarded on the state law claims. 234 F.3d at 670. Thus 

even if Shum’s victory is viewed as no better than nominal, the proper result is “no costs,” not an award to the 

losing party. The Supreme Court in Farrar stated that 

when a victory is nominal “the only reasonable fee is 

usually no fee at all.” 506 U.S. at 115. 

As mentioned ante, the district court also taxed Mr. 

Shum for half of Intel’s costs associated with the first 

trial, which this court reversed and remanded in Mr. 

Shum’s favor. Shum v. Intel Corp., 499 F.3d 1272 (Fed. 

Cir. 2007). A determination of who is the prevailing party 

should be made when the controversy is finally decided. 

See 10 Federal Practice & Procedure §2667 (3d ed. 2010). 

Yet the district court charged Mr. Shum with $77,200, 
7 SHUM v. INTEL CORPORATION

which were half of Intel’s costs for the first trial, in which 

Shum succeeded on appeal. 

In accordance with precedent, Mr. Shum is the prevailing party. At worst, the award should be “no costs.” 

The district court exceeded its discretion in requiring 

Shum to pay Intel the difference between Shum’s lower 

costs and Intel’s higher costs, even on the district court’s 

theory that it was “close” as to which side “prevailed.” It 

is grievously unjust to tax Mr. Shum with the net costs of 

Intel’s unsuccessful but more expensive defense. This 

approach cannot be reconciled with any theory of taxable 

costs. From my colleagues’ endorsement of this ruling, I 

respectfully dissent.