# United States Court of Appeals **for the Federal Circuit**

______________________
IN RE: REMBRANDT TEC HNOLOGIES LP PATENT LITIGATION

--------------------------------------------------------------------------------- REMBRANDT TECHNOLOGI ES, LP, REMBRANDT TECHNOLOGIES, LLC, D BA REMSTREAM, Plaintiffs

- Appellants

v.

COMCAST OF FLORIDA/P ENNSYLVANIA, LP, ADELPHIA CONSOLIDATI ON LLC, MOTOROLA, INC., CISCO SYSTEMS, INC., COMCAST OF PENNSYLVANIA II, LP, CENTURY

- TCI CALIFORNIA COMMUNICATIONS, LP, CENTURY

TCI HOLDINGS, LLC, P ARNASSOS COMMUNICATIONS, LP, CSC HOLDINGS, INC.,

TIME WARNER CABLE LLC, TIME WARNER CABLE ENTERPRISES LL C, COXCOM, INC., SCIENTIFIC

- ATLANTA, INC., THOMSON, INC., NETGEAR, INC., CHART ER COMMUNICATIONS OPERATING LLC, CCO HOLDINGS LLC, ADELPHIA COMMUNICATI ONS CORPORATION, PARNASSOS HOLDINGS, LLC, COMCAST CABLE COMMUNICATIONS, LLC, COMCAST CORPORATION, CABLEVI SION SYSTEMS CORPORATIO N, AMBIT MICROSYSTEM S, INC., Defendants

- Appellees

CENTURY

- TCI DISTRIBUTION COM PANY, LLC, WESTERN NY CABLEVISION, LP, SHARP CORPORATION, SHARP E LECTRONICS CORP,

CBS CORPORATION, NBC UNIVERSAL INC,IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 2

CENTURY

- TCI CALIFORNIA, LP, PARNASSOS DISTRIBUTION COMPANY I, LLC, PARNASSOS DISTRIBUTION COMPANY II, LLC, PARNASSOS, LP, ABC, INC, COMCAS T CABLE COMMUNICATIONS HOLDI NGS, INC, COMCAST OF PLANO, LP, FOX BR OADCASTING COMPANY, FOX ENTERTAINMENT GROUP, INC. Defendants

______________________

2017

- 1784

______________________ Appeal from the United States District Court for the District of Delaware in No s . 1:06

- cv

- 00635

- GMS, 1:06

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00721

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00399

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- md

- 01848

- GMS, Judge Gregory M. Sleet.

______________________
Decided: July 27, 2018 S EALED O PINION I SSUED : July 27, 2018 P UBLIC O PINION I SSUED : August 15, 2018 *

______________________

T HOMAS G OLDSTEIN , Goldstein & Russell, P.C., B ethesda, MD, argued for plaintiffs

- appellants. Also repr esented by T EJINDER S INGH

.

* This opinion was originally filed under seal and has been unsealed in full.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 3

J OHN C. O’Q UINN , Kirkland & Ellis LLP, Washington, DC, argued for all defendants

- appellee s. Defendants

appellees Motorola, Inc., Cisco Systems, Inc., Scientific

Atlanta, Inc., Thomson, Inc., Ambit Microsystems, Inc., NETGEAR, Inc. also represented by A ARON N IELSON , J ASON M. W ILCOX ; S TEVEN C HERNY , New York, NY.

B RIAN L EE F ERRALL , Keker, Van Nest & Peters LLP, San Francisco, CA, for defendants

- appellees Comcast of Florida/Pennsylvania, LP, Comcast of Pennsylvania II, LP, Century

- TCI California Communications, LP, Cent ury

- TCI Holdings, LLC, Parnassos Communications, LP, Parnassos Holdings, LLC, Comcast Cable Communic ations, LLC, Comcast Corporation. Also represented by L EO L. L AM

.

B ENJAMIN H ERSHKOWITZ , Gibson, Dunn & Crutcher LLP, New York, NY, for defendants

- appellees CSC Hol dings, Inc., Cablevision Systems Corporation. Also repr esented by J OSH K REVITT , R OBERT S COTT R OE

.

T HOMAS L EE D USTON , Marshall, Gerstein & Borun LLP, Chicago, IL, for defendants

- appellees Time Warner Cable, LLC, Time Warner Cable Enterprises LLC, Cha rter Communications Operating LLC, CCO Holdings LLC. Also represented by J ULIANNE M. H ARTZELL , K EVIN D AVID H OGG

.

M ICHAEL C RAIG H ARWOOD , Kasowitz Benson Torres LLP, New York, NY, for defendants

- appellees Adelphia Communications Corporation, Adelphia Consolidation LLC.

M ITCHELL G. S TOCKWELL , Kilpatrick Townsend & Stockton LLP, Atlanta, GA, for defendant

- appellee Co xC om, Inc. Also represented by R ICHARD W. G OLDSTUCKER

.

______________________IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 4

Before O’M ALLEY , M AYER , and R EYNA , Circuit Judges.

O’M ALLEY , Circuit Judge.
This appeal derives from a multitude of patent i nfringement actions that plaintiffs

- appellants Rembrandt Technologies, LLC and Rembrandt Technologies, L.P. (collectively, “Rembrandt”) filed in the mid

- 2000s against dozens of cable companies, cable equipment manufactu rers, and broadcast networks. T he c ases were consolidated in the District of Delaware . A fter several years of litig ation, the district court entered final judgment against Rembrandt as to all claims

. M any of the defendants (collectively, “Appellees”) thereafter filed a motion requesting at torney fees under 35 U.S.C. § 285. Nearly four years after the litigation ended, the district court issued a brief order granting that motion and declaring the case exceptional

. In re Re mbrandt Techs., LP Patent Litig. , No. 1:07

- md -0 1848

- GMS (D. Del. Aug. 20, 2015) , ECF No. 951 (“ Exceptional Case Order ”)

. The court then granted the bulk of Appellees’ requests for fees, including nearly all of the attorney fees Appellees incurred in the litigation

. In re Rembrandt Techs., LP Patent Litig. , N o. 1: 07

- md -0 1848

- GMS (D. Del. Aug. 2 4, 2016 ) , ECF No. 1013 (“ First Fees Order ”). In total, t he court awarded Appellees more than $51 million in fees. In re Rembrandt Techs., LP Patent Litig. , No. 1:07

- md -0 1848

- GMS (D. Del. Mar. 2, 2017 ) , ECF No. 1044 (“ Second Fees Order ”).
Rembrandt appeals both the district court’s exce ptional

- case determination and its fee award. We conclude that the district court did not abuse its discretion in deeming th is case exceptional , but that the court erred by failing to an alyze fully the connection between the fees awarded and Rembrandt’s misconduct . We thus affirm the district court’s exceptional

- case determination, vacate the district court’s fee award , and remand for further proceedings

.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 5

I. B ACKGROUND
A. The Patents i n Suit
The underlying litigation involves nine patents b elonging to Rembrandt. Eight of them address cable modem technology

— U.S. Patent Nos. 4,937,819 (“the ’819 patent”), 5,008,903 (“the ’903 patent”), 5,71 0 ,761 (“the ’761 patent”), 5,719,858 (“the ’858 patent”), 5,778,234 (“the ’234 patent”), 5,852,631 (“the ’631 patent”), 6,131,159 (“the ’159 patent”), and 6,950,444 (“the ’444 patent”) . The ninth patent, U.S. Patent No . 5,243,627 (“the ’627 patent”), involves over

- the

- air signals. Al though the patente d technology is not directly relevant here, the history of the patents and the documents assoc iated with the techno logy bears heavily on the issues on appeal

. 1. Rembrandt and Paradyne

Before Rembrandt obtained the patents at issue, the y belonged to Paradyne Networks, Inc. (“Paradyne”), a former AT&T subsidiary that developed, manufactured, and distributed network access products. Three former Paradyne employees are relevant to this appeal : Gordon Bremer, the former director of Paradyne’s technology department who managed its patent portfolio; Scott Horstemeyer, Paradyne’s outside patent prosecution counsel; and Patrick Murphy, Para dyne’s Chief Financial Officer. In 2002, Paradyne decided that the expected value of the ’819 and ’858 patents did not j ustify paying the ir maintenance fees, and it therefore let the patents lapse

. Horstemeyer and Bremer later testified that Paradyne incorrectly believed it could thereafter make belated payments of the maintenance fees to revive the patents if it so desire d

. The ’819 and ’858 patents lapsed in June and February 2002, respectively.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 6

Following some third

- party interest in acquiring the Paradyne patents, Bremer, Horstemeyer, and Murphy decided to petition the United States Patent and Trad emark Office (“PTO”) t o revive the ’819 and ’858 patents

. In connection with that request, they represented th at “the delay in payment of the maintenance fee of this patent was unintentional.” J. A

. 141; see J.A. 150. Ho rstemeyer testified in these proceedings that he felt he could truthfully say that t he failure to pay fees had been unintentional because of Paradyne’s misunderstanding about the conditions for revival

. Horstemeyer explained

, however, that he did not offer this explanation to the PTO at the time because he did not want to deviate from the PTO form. The PTO granted the revival petitions.

I n September 2004, Paradyne contacted Rembrandt to
propos e a joint “patent assertion team” to “exploit[] the Paradyne patents”

— including the ones that Paradyne had revived. Appellees’ Br. 8

. In December 2004, Par adyne and Rembrandt executed a patent sale agreement that assigned six of the asserted patents (as well as several others not at issue here ) to Rembrandt. The agreement also gave Rembrandt the right to access and

co py relevant Paradyne documents. The companies amended their agreement in February 2005 , adding the ’819 patent to th e portfolio of patents assigned to Re mbrandt . Rembrandt’s in

- house counsel

, John Meli

, asked Paradyne in March 2005 to “save any material that relates to patents you sold to us or plan to sell to us, including product data that embodies the patented inve ntions.” J. A . 203.

2. Rembrandt and Zhone
Paradyne was acquired in September 2005 by Zhone Technologies (“Zhone”), an equipment manufactur er

. Thereafter , Zhone cut much of Parad yne’s workforce and footprint.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 7

Zhone also began to destroy Paradyne’s documents

, most of which were housed in a storage facility separate from Paradyne’s offices . Zhone’s general counsel, Paul Castor, testified that the purpose of the document d estruction was to cut storage costs, that boxes of doc uments were destroyed based on their dates (and not their contents), and that Zhone staff had no time to review their contents before destroying them. Zhone discarded

appr oximately 3

, 200 boxes of documents in total, 90% of them between September 2005 and April 2006. The destroyed documents related to conception and reduction to practice of the patents at issue; potentially invalidating sales and offers to sell ; public uses of prior art products; royalty agreements and licensing; standardization of the relevant techno logy; and patent prosecution.

There is no direct evidence that anyone at Rembrandt was aware of the document destruction, but Meli

— then Rembrandt’s in

- house counsel

— repeatedly visited Par adyne ’s offices to review and copy documents around the time of the sale to Zhone. Meli and other Rembrandt witnesses later testified that Rembrandt did not send Paradyne or Zhone a formal document retention notice until at least 2007. Several Zhone employees could recall no such requests from Rembrandt before 2008

. On February 14, 2006, Rembrandt signed a consulting agreement with Attic IP (“Attic”), a consulting firm that Bremer, Murphy, and Horst emeyer had formed. The consultants agreed to provide Rembrandt “[a]ssistance with patent portfolio analysis and ongoing patent asse rtion programs.” J.A. 240. In exchange, Rembrandt would pay Attic an annual flat fee , in addition to a small pe rcentage of licensing or litigation royalties if Rembrandt subsequently acquired any patents from Zhone. The agreement would not take effect until such an acquisition occurred.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 8

Weeks after Bremer signed this agreement

— but b efore Rembrandt had acquired any patents from Zhone, so that Bremer still had no stake in licensing or litigation royalties— Zhone’s general counsel, Castor, asked Bremer to review 30 boxes of documents

. Bremer wrote back to Castor that the documents “gener ally contain[ed] sales/marketing strategies, plans, reports, etc.,” not “‘legal’ documents.” J.A. 256. Bremer asked whether Castor wanted him to provide other details and whether the boxes should “remain in storage or be destroyed.” Id. Castor simply wrote back “destroy.” Id. Bremer did not object.
A few months later, on June 9, 2006, Rembrandt e ntered into a patent sale agreement with Zhone, acquiring more than 100 patents, including two of the patents in suit (the ’444 and ’903 patents). Like the s ale agreement with Paradyne, the agreement provided that Zhone would give Rembrandt access to documents relat ing to the assigned patents.
On June 12, 2006, Rembrandt learned that Zhone was planning to discard warehoused documents, including those relevant to the patents Rembrandt had purchased from Paradyne. Rembrandt urged Zhone not to destroy documents relevant to the patents it had purchased and began to work out an arrangement to preserve them. Castor told Rembrandt that it was “welcome to have” files relat ing to the purchased patents but that, if Rembrandt was not interested in them, Zhone would “likely destroy [them] in accordance with [its] records policy.” Appe llants ’ Br. 40 . Rembrandt told Zhone to send Rembrandt the relevant files. In August 20 06, Rembrandt arranged for the Attic consultants to take custody of the Zhone documents (termed the “Documents of Common Interest”), including patent disclosure and prosecution files, patent maint e-IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 9

nance files, inventor files, license agreement and acquis it ion files, technical file s, and patent marketing files.
B. The Present Litigation This brings us to the present litigation. In September 2005, Rembrandt sued Comcast in the Eastern District of Texas, asserting infringement of six patents it had a cquired from Paradyne. Rembrandt Techs., LP v. Comcast Corp. , No. 2:05

- CV

- 00 443- TJW (E.D. Tex.). Rembrandt then sued several other cable providers in the same district in June 2006. Rembrandt Techs., LP v. Time Warner Cable, Inc. , Nos. 2:06

- cv

- 224 (TJW -C E)

, 2:06

- cv

369 (TJW

- CE) (E.D. Tex.); Rembrandt Techs., LP v. Charter Commc’ns, Inc. , Nos. 2:06

- cv

- 223 (TJW

- CE)

, 2:06

-
cv

- 507 (TJW

- CE) (E.D. Tex.). After Rembrandt acquired more patents from Zhone, it filed a second wave of litigation in November 2006. Rem brandt added five patents, including two from Zhone, to its pending suits. At that time, the Attic consultants

— Bremer, Murphy, and Horstemeyer

— gained a stake in the outcome of Rembrandt’s litigation. Rembrandt add itionally asserted four of those patents against Adelphia Communications Corp. (“Adelphia”) in Adelphia’s ongoing bankruptcy proceedings before the Bankruptcy Court for the Southern District of New York. Rembrandt Techs., LP v. Adelphia Commc’ns Corp. , Bky. Adv. No. 1: 06

- 1739

- reg (Bankr. S.D.N.Y .). Rembrandt also sued several broadcast networks in the District of Delaware. E.g.

, Rembrandt Techs., LP v. CBS Corp. , No. 1: 06

- cv

- 00 727

- GMS (D. Del.).
The Judicial Panel on Multidistrict Litigation consol idated all of Rembrandt’s pending suits before Judge Sleet in the District of Delaware. In re Rembrandt Techs. , LP, Patent Litig. , 493 F. Supp. 2d 1367 (J.P.M.L. 2007) . Soon thereafter, several cable modem equipment manufactu rers

— most of which are among the Appellees here

— filed suit against Rembrandt in the District of Delaware see k-IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 10

ing a declaratory judgment that their products did not infringe any valid patents. Motorola, Inc. v. Rembrandt Techs., LP , No. 1: 07

- cv

- 00 752

- GMS (D. Del.). The decla ratory judgment action was consolidated into the multi

district litigation as well.
1. Litigation on the Merits

After a Markman hearing in August 2008, the district court issued claim construction orders on the nine p atents, all of which were adverse to Rembrandt. See In re Rembrandt Techs., LP Patent Litig. , No. 1:07

- md -0 1848

- GMS, 2008 WL 5773604 (D. Del. Nov. 19, 2008); In re Rembrandt Techs., LP Patent Litig. , No. 1:07

- md -0 1848

- GMS, 2008 WL 5773627 (D. Del. Nov. 7, 2008). On Jan uary 6, 2009, Rembrandt advised the parties that, in light of the claim construction order, it would not pursue its infringement claims on three of the patents in suit

— the ’631, ’819, and ’858 patents

— unless the district court’s claim construction was reversed on appeal. And, a fter further discovery, Rembrandt offered to drop the ’903 and ’234 patent s from the litigation in March and May 2009, respectively

. On July 31, 2009, after the parties executed a mutual covenant not to sue, Rembrandt moved to dismiss its claims on eight of the p atents , and the defendants moved to dismis s the ir associated invalidity counterclaims

. The district court granted the motion and dismissed the claims and counterclaims. On the remaining ’627 patent, Rembrandt stipulated to summary judgment of noni nfringement subject to its appeal of the district court’s claim construction decisions. The district court granted the motion on July 8, 2011. We affirmed the district court’s claim construction in 2012. In re Rembrandt Techs., LP , 496 F. App’x 36 (Fed. Cir. 20 1 2).

Until Rembrandt dismissed its claims, the parties e ngaged in considerable fact discovery. Appellees produced more than 15 million pages of documents, RembrandtIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 11

took 75 depositions, and Appellees took 35 depositions of their own. Rembrandt also provided eight reports from five experts, and Appellees responded with eleven reports from seven experts. Rembrandt incurred $20 million in fees from 2006 to 2008 alone. Appellees also subpoenaed documents from Paradyne and Zhone. Although Rembrandt’s a ttorneys responded to these subpoenas

, Re mbrandt never searched the war ehouse where it claimed Paradyne’s boxes were stored, nor acknowledge d any document destruction until after April 2008. Rembrandt instead claimed that it could not asce rtain information relevant to the on

- sale bar, and it den ied on several occasions that it had access to or control over Paradyne product documentation. Rembrandt also a sserted in interrogatory responses and in its opposition to summary judgment that there was no evidence of prior sales, without mentioning that relevant documents pote ntially reflecting such sales might have been destroyed.

2. Fee Motions Through discovery, Appellees ultimately learned about the abandonment and reviv al of the ’819 and ’858 patents, the three Attic consultants’ conting ent interest s in the litigation, and Zhone’s destruction of documents. On July 8, 2009

— after Rembrandt had dropped its i nfringement case as to five of the patents, but before the covenant not to sue had been finalized

— the district court granted Appellees permission t o file a motion for san ctions as a motion in limine. T wo weeks later, the parties entered into the covenant not to sue on all patents other than the ’627 patent

. On November 16, 2009, Appellees moved for a dete rmination that the case was exceptional under 35 U.S.C. § 285 and for an award of attorney fees. The parties adverse to Rembrandt

— which the parties defined as “ All Other Parties, ” or “AOPs”

— argued that the case was exceptional because Rembrandt (1) asserted two patentsIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 12

that Paradyne had revived improperly; (2) allowed Zhone to spoliate evidence; (3) improperly gave the Attic co nsultants an interest contingent on the litigation outcome; and (4) threatened AOPs with a baseless injunction demand. Adelphia additionally argued in a separate motion that R embrandt (1) had failed to comply with the marking requirement of 35 U.S.C. § 287, (2) possessed evidence that the on

- sale bar invalidated two of the asserted patents, and (3) engaged in bad

- faith conduct before the Bankruptcy Court for the South ern District of New York. 1 On July 13, 2011, the district court struck the fee m otions as premature in light of the still

- live dispute with regard to the ’627 patent. But, a fter we affirmed the district court’s ruling on the ’627 patent in 2012, the district court ordered that the fees motions would be deemed re

- filed as of September 7, 2011. More than a year later, the court returned the sealed record to the parties without ruling on the motion. Soon after the Supreme Court decided Octane Fitness, LLC v. ICON Health & Fitness, Inc. , 134 S. Ct. 1749 (2014), AOPs submitted a notice of supplemental author ity to the district court citing that case. Rembrandt r esponded by arguing that AOPs had abandoned their motion because the case had been closed for two

- and -aha lf years and because the pertinent briefs and suppor t1 Rembrandt now claims that Adelphia was not one of the AOPs. Appellant s’ Br. 15 n.6. But, as the district court later noted, the parties submitted a joint status report early in the litigation defining the term AOPs to inc lude “all parties adverse to Rembrandt, whether they are defendants or declaratory relief claimants

. ” In re Rembrandt Techs., LP Patent Litig. , No. 1:07

- md -0 1848, at 1 n.1 (D. Del. Dec. 6, 2012)

, ECF No. 937

. That defin ition encompasses Adelphia.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 13

ing documentation had been returned to AOP’s counsel, who had accepted them without objection. Rembrandt also contended that a ruling on the motions would cause great prejudice to Rem brandt because the briefings and supporting documents were stale. Rembrandt further argued that the case was not exceptional under the O ctane Fitness standard. On August 20, 2015

, t he district court issued a four

page order ruling on the motions, which by then had been pend ing for nearly four years

. Exceptional Case Order , at 1– 4. The district court attributed the delay in issuing the order to its “own administrative carelessness.” Id. at 2 n.3.

The court determined that th e case was “indeed e xceptional” for three reasons

. Id. at 3 n.4

. First, the court found that “the evidence shows that Rembrandt imprope rly compensated its fact witnesses, in violation of ethical rules of conduct.” Id. (citing Model Rules of Prof’l Co nduct R. 3.4(b) and c mt. 3 (Am. Bar Ass’n 2015) ). S econd,
t he court was “convinced that Rembrandt engaged in (or failed to prevent) widespread document spoliation over a number of years.” Id. The court acknowledged Re mbrandt’s argument that “it did not directly destroy any documents and that it lacked co ntrol over those who did actually commit the spoliation,” but the court nonetheless was “persuaded by a preponderance of the evidence that Rembrandt did have control and did anticipate forthco ming litigation such that it had a duty to preserve or i nstruct others to retain certain documents.” Id. The court concluded that “AOPs’ inability to conduct full discovery was prejudicial.” Id. Finally , the court found that “Re mbrandt should have known that the ‘revived patents’ were unenforceable.” Id.

Based on these findings, the court determined “that the evidence amply supports a finding that this case is exceptional.” Id. The court dismissed what it calledIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 14

Rembrandt’s “attempt[] to wipe its hands of all wrongd oing, pointing the finger at third parties,” because “Re mbrandt must take responsibility for its own massive litigation.” Id. The court concluded that, although things might have been different “[i]f it had only been a single issue, .

. . the ‘totality of the circumstances’

— the wrongful inducements , the spoliation, and the assertion of fraud ulently revived patents

— supports AOPs’ characterization of this case as ‘exceptional.’” Id. (quoting Octane Fitness

, 134 S. Ct. at 1756). The court thereafter denied Re mbrandt’s motion for reargument

. In re Rembrandt Techs., LP Patent Litig. , No. 1: 07

- md -0 1848 (D. Del. Aug. 2, 2016) , ECF No. 1011 (“ Reargument Order ”). In view of its exceptional case finding, t he court o rdered AOPs to submit documentation regarding their attorney fees, which they promptly did

. 3. Fee Awards On August 24, 2016, the district court granted AOPs’ requested fees in part. First Fees Order , at 1. The court found that AOPs had “provided extensive documentation to enable an evaluation of reasonableness” of their r equested fees and tha t the submitted hourly rates, based in part on the American Intellectual Property Law Associ ation’s economic survey, were reasonable because the case was “complex multi

- district litigation.” Id. at 1 n.2. The court also found that “[t]his was a challengi ng case calling for substantial time and expertise.” Id. Although the court did not analyze separately whether the hours e xpended were reasonable, it found that the lodestar amount was reasonable. Id. The court excluded, however, several categories of f

ees, including expert fees, fees related to Adelphia’s bankruptcy, fees for time spent on secretarial or clerical work, and prejudgment interest. Id. at 2. The court ordered AOPs “to calculate costs and fees and submit anIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 15

updated total of expenses incurred for approval within 14 days.” Id. at 3. On March 2, 2017, after considering AOPs’ revised proposed order regarding expenses and Rembrandt’s objections to that total, the district court issued an order awarding fees. Second Fees Order , at 1 . Although “Re mbrandt did not have leave to file” any objections, the court addressed and rejected each relevant objection “ out of an abundance of caution to Rembrandt’s substantive rights.” Id. at 1 n.1. As relevant here, the court permitted fees related to the ’6 27 patent, noting that AOPs’ opening brief “provided detailed calculations of attorneys’ fees and costs in connection with the ’627 patent.” Id. at 2 n.1. The
court also awarded “fees and costs related to the Adelphia Bankruptcy,” because the court’s denial of fees related to the bankruptcy did “not preclude an award of fees i ncurred defending the causes of action that Rembrandt brought in the bankruptcy court that were ultimately consolidated in [this] multi

- district litigation.” Id. The court there fore found “that it [was] reasonable to award Adelphia expenses relating to the Rembrandt litigation while it was pending in the Bankruptcy Court for the Southern District of New York.” Id.
The district court ultimately ordered Rembrandt to
pay more than $51 million in fees to all Appellees, inclu ding Adelphia. Id. at 2 –3 . Rembrandt appealed

. We have jurisdiction under 28 U.S.C. §§ 1295(a)(1) and 1338(a).

II. D ISCUSSION A. The Exceptional

- Case Determination

The district court determined that this was an exce ptional case . Specifically, the court found that Rembrandt : (1) wrongfully gave fact witnesses payments contingent on the outcome of the litigation; (2) e ngaged in, or failed to prevent, widespread document spoliation by Zhone; and (3) should have known that the revived patents wereIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 16

unenforceable. Rembrandt argues that all three of the district court’s misconduct findings were erroneous; that the district court did not follow the proper procedures in making these findings; and that the claimed misc onduct, taken together, does not render the entire multi

- district litigation exceptional. We review an exceptional case determination for abuse of discretion. Lumen View Tech. LLC v. Findthebest.com, Inc. , 811 F.3d 479, 482 (Fed. Cir. 2016) (citing Highma rk Inc. v. Allcare Health Mgmt. Sys., Inc.

, 134 S. Ct. 1744, 1749 (2014)). “To meet the abuse -ofdiscretion standard, the moving party must show that the district court has made ‘a clear error of judgment in weighing relevant factors or in basing its deci sion on an error of law or on clearly erroneous factual findings.’” Bayer CropScience AG v. Dow AgroSciences LLC , 851 F.3d 1302, 1306 (Fed. Cir. 2017) (quoting Mentor Graphics Corp. v. Quickturn Design Sys., Inc. , 150 F.3d 1374, 1377 (Fed. Cir. 1998)).

Re mbrandt raises strong arguments with respect to the district court’s factual findings. The district court’s remarkably terse orders shed little light on its justific ations for its decisions on these fact

- intensive issues

. B ut abuse of discretion is a def erential standard. On the record before us, we cannot say that any of the district court’s findings was based “on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Highmark , 134 S. Ct. at 1748 n.2 (quoting Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 405 (1990)). And , as explained below, the district court did not abuse its di scretion , procedurally or substantively, in determining that this pattern of misconduct rendered the case “exceptional” within the meaning of § 285.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 17

1 . The District Court’s Finding that the Witness Payments Were Improper Is Not Clearly Erroneous Rembrandt first disputes the district court’s decision that “the fee structure for Rembrandt’s fact witnesses was unreasonable and improperly linked to the outcome of the case, giving rise to a considerable risk of tainted testim ony.” Exceptional Case Order , at 3 n.4. Rembrandt co ntends that it never expected the Attic consultants to become fact witnesses, that the agreement did not prej udice Appellees, and that the agreements were permissible under our precedent. After filing suit based on the Paradyne patents, Re mbrandt hired three former Paradyne employees in Febr uary 2006 to provide “[a]ssistance with .

. . ongoing patent assertion programs.” J.A. 2 40 (emphasis added). Al though the agreement did not immediately give the co nsultants an interest in the outcome of the ongoing litigation, it clearly contemplated future “assertion pr ograms .” It expressly granted the consultants a stake in any litigation involving the Zhone patents , once acquired

. Rembrandt bought patents from Zhone in June 2006 and asserted them later that year. The district court reason ably could have found that, when Rembrandt signed the consulting agreement, it was likely that the c onsultants would play a role in litigation.
It also was foreseeable, at the ve ry least, that the co nsultants w ould become fact witnesses in that litigation

, given their roles within Paradyne . Meli

— Rembrandt’s former in

- house counsel

— acknowledged as much i n his deposition. Whether Rembrandt identified the consul tants as witnesses is beside the point. As Appellees co rrectly point out, all three witnesses did in fact testify about their knowledge of facts relevant to the merits of the lawsuit. Bremer testi fied about his involvement in patenting and licensing, the decision to abandon patents (which was related to Appellees’ inequitable conductIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 18

defense), the development process that led to the patented technology, and potentially invalidating sales of product s that may have practiced the asserted patents. And Ho rstemeyer testified that he prosecuted most of the asserted patents, that he participated in the patent review board at Paradyne that decided whether to proceed with patent applications, and that he he lped decide whether to aba ndon patents. Murphy was not involved as directly, but he was Paradyne’s CFO during the relevant period and also participat ed in the patent review board.
It is true, as Rembrandt notes, that the district court never found that an y witnesses gave false testimony. But the issue that the district court correctly identified was not that witnesses lied , but that the contingent fee a rrangement gave them incentives to lie. For exactly this reason, the Delaware State Bar Association has advised lawyers not to pay, offer to pay, or acquiesce in payments to witnesses contingent on the outcome of the case. Del. State Bar Ass’n Comm. on Prof’l Ethics, Opinion 1994

- 1 at 2– 3, available at http://media.dsba.org/ethics/pdfs/1994

- 1.pdf.

Rembrand t may be right that Bremer had simply fo rgotten key details about sales associated with a twenty

year- old project. But his contingent interest in the litig ation outcome gave him a strong incentive not to remember those sales, and it renders Appellees’ claim of tainted testimony at least plausible. And

, though Bremer had a similarly innocent explanation for his tacit approval of Castor’s decision to destroy s ales documents, Bremer’s potential stake in the case may well have led the district
court to see his acquiescence in a different light. It was reasonable for the district court to find “that the fee structure for Rembrandt’s fact witnesses was unreason abl e and improperly linked to the outcome of the case, giving rise to a considerable risk of tainted testimony.” Exceptional Case Order , at 3 n.4

.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 19

Rembrandt contends that the district court’s decision conflicts with our holding in Ethicon, Inc. v. U.S. Surgi cal Corp. , 135 F.3d 1456 (Fed. Cir. 1998) . In that case, the patent infringement defendant, U.S. Surgical Corp., obtained a retroactive license for the asserted patent from a third party , Young Jae Choi, who claimed to be an omitted co

- inventor. Id. at 1 459. The license agreement explicitly required Choi to testify in the lawsuit in e xchange for a fixed initial payment and an additional payment if U.S. Surgical prevailed in the suit

. Id. at 1459, 1465. We found that the district court did not abuse its discretion by admitting Choi’s testimony, “ subject to

cross

- examination that might expose Choi’s bias.” Id. at 1465. In several respects, the agreement in Ethicon raises more ethical concerns than the one here. The testimony that U.S. Surgical secured f rom Choi was known to be

case

- dispositive, but when Rembrandt hired the Attic consultants, all Rembrandt could have known is that their testimony would likely be relevant to certain defen ses. And the Ethicon agreement conditioned the bulk of the payment o n U.S. Surgical’s prevailing in the litig ation, which provided a much stronger incentive to the inventor than a percentage of any licensing or litigation proceeds. But, as Appellees note, the agreement in Ethicon i nvolved the assignment of patent rights. In allowing the assignor to testify, we noted that “[a] patent license agreement that binds the inventor to participate in su bsequent litigation is very common,” because it “simply assures the licensee that it will be able to defend the property in which it has purchased an interest.” Id. Rembrandt also cites several district court decisions permitting contingent payment arrang ements , but each of those opinions relies on the fact that the payments were “made in connection with an assignment or license of patent rights.” ESN, LLC v. Cisco Sys., Inc. , 685 F. Supp.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 20

2d 631, 646 (E.D. Tex. 2009) ; see Rembrandt Gaming Techs., LP v. Boyd Gaming Corp. , No. 2: 12

- cv

- 00775

- MMD

- GWF, slip op. at 3 (D. Nev. Mar. 31, 2017) (obser ving that “the Agreement involves assignment of the Patent, not an agreement to pay fact witnesses to testify, and the witnesses identified included the inventor”). R embrandt identifies no comparable agreements to the one here, however, where the contingent interest was given to likely witnesses only for their help with a licen sing or litigation campaign.
In short, Ethicon did not upend the longstanding eth ical rule in Delaware and other jurisdictions that fact witnesses to a lawsuit should not be paid contingent on the outcome of the suit . It is instead best read as an exception to that rule that applies only when the conti ngent payment accompanies the assignment or license of patent rights. As we said in Ethicon , it makes sense for a licensee or assignee to give the licensor or assignor an incentive “to defend the property in which [the former] has purchased an interest.” 135 F.3d at 1465. And these contingent inte rests make sense for seller s as well

— they ensure that, if the patented technology unexpectedly gains value, the licensor or assignor can reap some po rtion of the windfall. The agreement between Rembrandt and Attic, on the other hand, was fundamentally dif ferent from the sale of a right in a patent, and it does not impl icate these policy rationales. The district court’s decision does not call these “very common” agreements into que stion, id. , as Rem brandt suggests, and its finding that the witness payments were improper is not clearly erroneous

. 2 . The District Court ’s Document Spoliation Finding Is Not Clearly Erroneous
Rembrandt also disputes the district court’s concl usion “that Rembrandt engaged in (or failed to prevent) widespread document spoliation, over a number of years.” Exceptional Case Order , at 3 n.4. This c ourt reviews theIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 21

district court’ s spoliation decision under the law of the regional circuit

. Hynix Se miconductor Inc. v. Rambus Inc. , 645 F.3d 1336, 1345 (Fed. Cir. 2011) . In the Third Circuit, “[s] poliation occurs where : the evidence was in the party’ s control; the evidence is relevant to the claims or defenses in the case; there has been actual suppre ssion or withholding of evidence; and, the duty to preserve the evidence was reasonably foreseeable to the party. ” Bull v. United Parcel Serv., Inc. , 665 F.3d 68, 7 3 (3d Cir. 2012) (citing Brewer v. Quaker State Oil Ref

. Corp. , 72 F.3d 326, 334 (3d Cir. 1 995)).
Rembrandt does not dispute that Zhone destroyed thousands of boxes of documents starting in January 2006. Rembrandt also does not dispute that, by that time, litigation already had begun or was reasonably foresee able, meaning that Rembrandt had a d uty to preserve relevant evidence. Id. ; see Micron Tech., Inc. v. Rambus Inc. , 645 F.3d 1311, 1320 (Fed. Cir. 2011) (“The duty to preserve evidence begins when litigation is ‘pending or reasonably foreseeable.’” (quoting Silvestri v. Gen. Motors Corp. , 27 1 F.3d 583, 590 (4th Cir. 2001) ) ). And Re mbrandt does not meaningfully dispute that, even if most of these documents had no bearing on the case, at least some of the destroyed documents were relevant. Rembrandt argues only that it had no control over the documents destroyed and that the district court committed clear

error in finding that “spoliation occurred, und er facts that support bad faith ” on the part of Rembrandt. Reargument Order , at 2 n.1

. “[A] district court may award fees in the rare case in which a party ’ s unreasonable conduct

— while not nece ssarily independently sanctionable

— is nonetheless so ‘exceptional’ as to justify an award of fees.” Octane Fi tness , 134 S. Ct. at 1756

– 57. “Even if [Rem brandt’s] litigation conduct was not quite sanctionable,” therefore, the district court could “reasonably determine[] that the case was exceptional.” Lumen View , 811 F.3d at 483. ButIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 22

the district court specifically found

, as part of its exce ptional

- case determination, that Rembrandt spoliated evidence. The relevant question, therefore, can be framed as whether the district court based that conclusion on “clearly erroneous factual findings.” Bayer CropScience

, 851 F.3d at 1306 (quoting Mentor Graphics , 1 50 F.3d at 1377). The first aspect of th at inquiry is whether “the ev idence was in [Rembrandt’s] control

. ” Bull

, 665 F.3d at 73. Rembrandt points out that Paradyne and then Zhone always maintained physical possession of the documents while they were bein g destroyed. In signing the patent sale agreements, however, Paradyne and Zhone legally obligated themselves to give Rembrandt access to all documents related to the assigned patents. Rembrandt did not just obtain this right; it exercised the right by

as king Bremer to collect the Documents of Common Interest. 2 A s note d above , Rembrandt attorneys issued discovery responses and made all document productions on behalf of Paradyne and Zhone until September 2008. The district court reasonably could infer tha t Rembrandt, not Paradyne or Zhone, actually had control over the documents that Zhone destroyed. Next, under Third Circuit law, “a finding of bad faith is pivotal to a spoliation determination.” Bull , 665 F.3d at 79. Spoliation cannot occur, moreover, “where the d estruction was a matter of routine with no fraudulent intent.” Brewer , 72 F.3d at 334 (quoting 29 Am. Jur. 2d Evidence § 177). Rembrandt emphasizes that Zhone only destroyed the documents to clear warehouse space and

2 Appel lees’ assertion that these documents co mprised only those that were helpful to Rembrandt, Appe llees’ Br. 50

– 51, finds no support in the record. Bremer’s offer to collect these documents on Rembrandt’s behalf does help establish Rembrandt’s control, however.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 23

did not even look at their contents. Indeed, nothing in the record suggests that Zhone acted with fraudulent intent.

But the issue is not Zhone’s bad faith; it is Re mbrandt’s. Rembrandt instructed Paradyne in March 2005 to preserve material related to the patents sold and asked Zhone for access to or copies of all relevant materials in January 2006. Rembrandt also obtained boilerplate contractual assurances from Paradyne that Paradyne would provide “all material information within its posse ssion .

. . regarding the assigned pate nts.” J.A. 1 55, § 3.1.3 ; Appellants’ Br. 61

. And only in June 2006, after Zhone had destroyed the bulk of the Paradyne documents, did Bremer tell Rembrandt about the document destru ction. Two facts in the record suggest , however, that Re mbrandt knew that document destruction was a significant risk. First, Meli visited the former Paradyne facility in Florida shortly after the Zhone acquisition, and he repor ted that “every cubicle is gone, there’s nobody in it, [and] papers are strewn all over the place.” J.A. 2 419

– 20, 72:14

– 73:11 ; Appellees’ Br. 11 . He testified that he “really [did] believe it was shut down” and “being disma ntled.” J.A. 2 419, 72:22

– 25; J.A. 2 422, 75:11

– 22 ; Appellees’ Br. 1 0, 14, 50 . By that time

, litigation already was ong oing, and Me li should have known that some of the doc uments “strewn all over the place” might be relevant to that litigation. And s econd, Bremer

— who by then was on the Rembrandt payroll

— participated in the document destruction well before June 20 0 6. He reviewed doze ns of boxes for potential disposal in March 20 0 6, some of which were sales documents, and he allowed Zhone to order them to be destroyed. Bremer was not a lawyer, but he had run a patent program for 30 years and later admitted that he knew that sales documents could be relevant to the on

- sale bar. He testified that he did not preserve the documents simply because he had not been instructed toIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 24

do so. Bremer also admitted that he never asked for other warehoused documents to be preserved.

Even after it kne w about the risk of document d estruction, Rembrandt did not issue a formal document retention notice until May 2008. Rembrandt points to its January 2006 letter, in which it sought “access to, and copies of, all documents that may be related to the patent s in suit,” including but not limited to “any documents relat ing to the products that embody any invention claimed in the patents in suit (both technical and fina ncial documents).” J.A. 2 29

– 30. That request did imply that Zhone should hand over those documents instead of destroying them. But subsequent testimony from Re mbrandt’s own in

- house attorneys suggests that even they did not consider the 2006 letter a document -retention notice. G iven the significant risk of document de stru ction, Rembrandt could have at least issued a litigation hold

. 3

3 Appellees cite several out -of- circuit district court cases for the proposition that “[a] litiga tion hold is not, alone, sufficient; instead compliance must be monitored.” Bagley v. Yale Univ. , 318 F.R.D. 234, 239 (D. Conn. 2016) (quoting Mastr Adjustable Rate Mortgs. Tr. 2006

- OA2 v. UBS Real Estate Sec. Inc. , 295 F.R.D. 77, 85 (S.D.N.Y. 2013)) ; see Apple Inc. v. Samsung Elecs. Co. , 881 F. Supp. 2d 1132, 1147 (N.D. Cal. 2012) (finding that “Samsung had a duty to verify whether its employees were actually complying with the detailed instructions Samsung claims it communicated to them ”). Appellees do not elaborate on how well these cases represent Third Circuit law. The Apple decision, in fact, explicitly mentions that “bad faith is not the required mental state for the relief Apple seeks,” 881 F. Supp. 2d at 1147, indicating that the Ninth Circuit em ploys a lower standard for spoliation.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 25

Rembrandt relies heavily on St. Clair Intellectual Property Consultants, Inc. v. Toshiba Corp. , No. CV 09

- 354

- LPS, 2014 WL 4253259 (D. Del. Aug. 27, 2014), to support its assertion that it s conduct did not rise to the level of bad faith. In St. Clair , the district court found no bad faith where thousands of pounds of documents were destroyed by the former owners of patents that the plai ntiff was asserting. Id. at *4. With respect to some doc uments, the St. Clair court found that the defendant had “not shown any intent to suppress evidence; to the contr ary, the record suggests that a benign explanation is more plausible.” Id. And for others, the court was “not pe rsuaded that [the plainti ff’s and a former patent owner’s] destruction of the boxes of information was due to an ything worse than ‘inadvertence, negligence, inexplicable foolishness, or part of the normal activities of business or daily living.’” Id. at *5 (quoting Bozic v. City of Wash

. , 912 F. Supp. 2d 257, 270 (W.D. Pa. 2012)). The court observed that the plaintiff’s attorneys were “unaware of the destruction of evidence

, ” and that the plaintiff “b elieved all the contents of the boxes had been copied.” Id.

The facts here are different tha n those at issue in St. Clair

. T he plaintiff in St. Clair was unaware of the document destruction and believed all relevant info rmation had been copied. Here, as discussed above, Re mbrandt had reason to believe that document destruction

was possible, and it certainly knew that relevant info rmation remained in the possession of Zhone. The district court reasonably could have found Rembrandt’s claim of ignorance to be implausible.
Given all of the above, the district court reasonably could fin d “that Rembrandt did have control and did anticipate forthcoming litigation such that it had a duty to preserve or instruct others to retain certain doc uments.” Exceptional Case Order , at 3 n.4 . As the district court explained later, there was “sufficie nt evidence to support bad faith spoliation in the existing record.”IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 26

Reargument Order , at 2 n.1 . Although some of Appellees’

mor e conspiratorial allegations go too far , the district court had a reasonable basis to conclude that Rembrandt stood idly by while Zhone destroyed documents

. And, some of those documents were not just relevant , but directly helpful to Appellees’ invalidity defenses. The district court correctly noted, and Rembrandt does not dispute, that “AOPs’ in ability to conduct full discovery of relevant documents was prejudicial.” Exceptional Case Order , at 3 n.4. On balance, we conclude that t he district court’s finding of spoliation was not clearly erroneous

. 3 . The District Court’s I nequitable Conduct F inding Is Not Erroneous Rembrandt next challenges the district court’s finding that “Rembrandt should have known that the ‘revived patents’ were unenforceable.” Exceptional Case Order , at 3 n.4. Rembrandt argues that the district court erred both in find ing that the patents were unenforceable due to inequitable conduct and that the inequitable conduct was chargeable to Rembrandt. “Inequitable conduct is an equitable defense to patent infringement that, if proved, bars enforcement of a p atent. ” Therasense , Inc. v. Becton, Dickinson & Co. , 649 F.3d 1276, 1285 (Fed. Cir. 2011) (en banc). “To prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the spe cific inte nt to deceive the PTO.” Id. at 1287. “[P]revailing on a claim of inequ itable conduct often makes a case ‘exceptional’” under § 285. Id. at 1289 (citing Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp. , 267 F.3d 1370, 1380 (Fed. Cir. 2001)).

A threshold question here is the evidentiary standard that governs inequitable conduct determinations in the § 285 context. When a party raises inequitable conduct as a defense to patent infringement

, “ [t]he accused infringer must prove both elements

— intent and materiality

— byIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 27

clear and convincing evidence. ” Id. at 1287 (citing Star Sci.

, Inc. v. R.J. Reynolds Tobacco Co. , 537 F.3d 1357, 1365 (Fed. Cir. 2008)). But the Supreme Court held in Octane Fitness that patent litigants need only establish their entitlement to fees under § 285 by a preponderance of the evidence. 134 S. Ct. at 1758. Appellees therefore suggest that the clear and convincing standard should not apply here. Appellees ’ Br. 63

– 64.

The district court did not specify which evidentiary standard it applied. Other district courts that have considered the question have reached different concl usions

. See Evonik Degussa GmbH v. Materia, Inc.

, 305 F. Supp. 3d 563, 569

– 71 (D. Del. 2018) (collecting cases and noting disagreement before concluding that the clear and convincing evidence standard applied). We need not resolve that thorny issue, however, because the district court did not abuse its discretion under either evidentiary standard. The first question is wheth er Paradyne’s statement that the delay in payment was “unintentional” was mat erial to patentability. We have noted our reluctance to avoid impinging on the PTO’s discretion by opining “[o]n matters unrelated to the substantive criteria of patent ability.” Network Signatures, Inc. v. State Farm Mut. Auto. Ins. Co.

, 731 F.3d 1239, 1243 (Fed. Cir. 2013)

. But where the PTO’s procedural rules are unambiguous, deciding what it would have done in a particular circumstance does not require us to second

- guess the agency.

T he PTO has issued clear guidance on the precise i ssue we face here: whether a patent may be revived if the holder failed to pay maintenance fees in the belief that the invention had no commercial value. The governing regulation provides that “[t]he Director may accept the payment of any maintenance fee due on a patent after expiration of the patent if, upon petition, the delay in payment of the maintenance fee is shown to the satisfa c-IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 28

tion of the Director to have been unintentional.” 37 C.F.R. § 1.378(a) (2013) . In the Federal Register notice that the PTO published when it introduced this la nguage , the PTO explained what it meant by “unintentional”:
Where the applicant deliberately permits an appl ication to become abandoned (e.g., due to a concl usion that the claims are unpatentable, that a rejection in an Office action cannot be overcome,

or that the invention lacks sufficient commercial value to justify continued prosecution ), the aba ndonment of such application is considered to be a deliberately chosen course of action, and the r esulting delay cannot be considered as “uninte ntional” within the meaning of § 1.137(b). .

. . An intentional delay resulting from a deliberate course of action chosen by the applicant is not a ffected by: (1) The correctness of the applicant’s (or applicant’s representative’s) decision to abandon the application or not to seek or persist in seeking revival of the application; (2) the correctness or propriety of a rejection, or other objection, r equirement, or decision by the Office; or (3) the di scovery of new information or evidence, or other change in circumstance s subsequent to the aba ndonment or decision not to seek or persist in see king revival. Changes to Patent Practice and Procedure, 62 Fed. Reg. 53,132, 53,158

– 59 (Oct. 10, 1997) (to be codified at 37 C.F.R. pt. 1) (emphase s added); see Manual of Patent Exami ning Procedure § 711.03(c)(3)(II)(C) (9th ed. 2015) (noting that an applicant’s decision to abandon an appl ication for lack of “sufficient commercial value to justify continued prosecution” is “a deliberately chosen course of action, and the resulting dela y cannot be considered as ‘uninten tional’”). This definition of “unintentional” in relation to abandoned applications applies with equalIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 29

force to issued patent s

. See In re Patent No. 5,181,974

, 2007 WL 4974450, at *3

– 4 (Comm’r Pat. Aug. 17, 2007).

It is clear , therefore, that the PTO would not have r evived the patents if it had known that Paradyne co nsciously allowed them to expire. In other words, the statement was material to patentability

— or at least continued enforceability. 4 The district court’s fi nding to that effect is not clearly erroneous

. Paradyne’s alleged mistake of fact is no defense. It may be true that Paradyne’s employees genuinely b elieved that a patent could be revived for years even aft er the six

- month grace period for payment. But their dec ision not to make the payment still was intentional. The question of deceptive intent is more complex

. Rembrandt cites our holding in Therasense that a finding of deceptive intent is inappropriate “when there are multiple reasonable inferences th at may be drawn.” 649 F.3d at 1290

– 91. Network Signatures similarly explains that the patentee’s action cannot “constitute[] material misrepresentation with intent to deceive” unless “intent to deceive the PTO [is] the single most reasonable infe rence ab le to be drawn from the evidence.” 731 F.3d at

4 In setting forth its test for materiality, Therasense contemplated statements made to the PTO during initial prosecution of a patent. 649 F.3d at 1291

– 95. But stat ements critical to the “survival of the patent” —ev en though they do not, strictly speaking, bear on patentabi lity

— also can be material within the meaning of Th erasense

. See Ulead Sys., Inc. v. Lex Comput. & Mgmt. Corp. , 351 F.3d 1139, 1146 (Fed. Cir. 2003) (finding that a “false declaration of small enti ty status” in an effort to reduce the required maintenance fees satisfied the mat eriality prong of the inequitable conduct test).IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 30

1242 (quoting In re Rosuvastatin Calcium Patent Litig.

, 703 F.3d 511, 519 (Fed. Cir. 2012) ). 5 Rembrandt’s explanation for Paradyne’s conduct make s some sense. In a memo from Bremer to Ho rstemeyer on November 24, 2003, Bremer acknowledged that the PTO would not allow the revival of a patent unless the failure to pay maintenance fees was “unavoi dable” or “unintentional.” J.A. 1 38. Bremer told Ho rstemeyer that he felt that the abandonment was “unintentional” u nder the meaning of the PTO form because “we would NOT have abandoned [certain patents] if we understood that reviving was not possible.” Id. Bremer testified that it was Paradyne’s “understanding at the time of abandonment that a patent could be revived within 24 months of the USPTO official abandonment date.” J.A. 1 44. Horstemeyer also testified that he “thought [it] to be a true statement” that the delay in payment was unintentional. J.A. 1 162, 195:13

– 20. He claimed that the failure to pay maintena nce fees was due to “a misunderstanding about .

. . when the deadline actually was,” and that he was “instructed not to make that payment” because of the misunderstanding. J.A. 1 174, 207:3

– 13. As Appellees point out, however , that explanation is difficult to square with Bremer’s acknowledgment in another document that “[f]ailure to pay [maintenance] fees results in loss of patent rights.” J.A. 3 880. And Bremer testified that Horstemeyer was involved in the

5 We note that the high bar in these cases is rooted in the clear and convincing evidence standard. If Appe llees need only pr ove inequitable conduct in this context by the preponderance of the evidence

— which, again, we do not decide today

— the standard upon which the district court could have premised its findings of fact would be less exacting

.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 31

patent review board meetings where Paradyne deci ded which patents to abandon. Horstemeyer knew, in other words, exactly why Paradyne decided to abandon the ’819 and ’858 patents

— namely, because it believed that they were not worth the fee. Rembrandt’s explanation is also difficult to square with docum ents indicating that it was Bremer’s surprise that a third party might have interest in the abandoned patents that prompted their revival.

The district court could fairly conclude from this ev idence that the claim of mistake was a post hoc rational ization. The district court also could have decided the same about Paradyne’s explanation for why it told the PTO that the abandonment was “unintentional.” In making these factual findings, the district court also considered the misconduct discussed above, in which Bremer and Horstemeyer also were involved. See Exceptional Case Order , at 3 n.4 (“[T]he fact witnesses

— discussed above

— were the very same Paradyne emplo yees who engaged in the inequitable conduct.”); see also Reargument Order , at 2 n.1 (“T he court has been fu rnished with sufficient evidence to conclude that revival of the patents in this case fit into a pattern of misconduct, and therefore deception was the most reasonable infe rence.”). Although the other misconduct occurred much later, th e district court was entitled to weigh it when assessing the key players’ trustworthiness and the likel ihood that they had deceptive intent. For these reasons,
t he district court’s finding of inequitable conduct by Paradyne was not erroneous.
Our decision in Network Signatures is not to the co ntrary. In Network Signatures , the Navy allowed a patent to expire, in accordance with standard policy, because there was no commercial interest in the invention. 731 F.3d at 1240

– 41. Two weeks after the final paym ent date, someone contacted the Navy to inquire about licensing the patent. Id. at 1241. The Navy immediately filed a petition for delayed payment using the PTO’s standardIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 32

form, which contained a preprinted statement that the delay in payment of the main tenance fee was uninte ntional. Id. The PTO accepted the delayed payment and revived the patent. Id. In a subsequent lawsuit involving the patent, the defendant argued that this constituted inequitable conduct, and the district court granted su mmary jud gment of inequitable conduct, even as it found that none of the Navy’s statements in litigation were particularly egregious. Id. at 1241

– 42. We reversed the decision, holding that the Navy’s “c ompliance with the standard PTO procedure for delayed payment , using the PTO form for delayed payment, does not provide clear and convincing evidence of withholding of material info rmation with the intent to deceive the Director .” Id. at 1243.
Here, however, the district court found that the same people who deceive d the PTO were involved in a variety of other misconduct. In light of the latter findings, the district court reasonably could have decided that “intent to deceive the PTO [was] the single most reasonable inference able to be drawn from the evidence. ” Ne twork Signatures

, 731 F.3d at 1242 (quoting Rosuvastatin , 703 F.3d at 519 ). “[I]t is not the function of a court of appeals to override district court judgments on close issues, where credibility findings have been made.” Nilssen v. Osram Sylvania, Inc.

, 504 F.3d 1223, 1231

– 32 (Fed. Cir. 2007).
The only remaining question is whether the district court properly concluded that “Rembrandt had sufficient knowledge to learn of the fraud.” Exceptional Case Order

, at 3 n.4. That , too, is an issue of fact, for which the di strict court is owed deference . Although the district court did not elaborate on this finding, Appellees identify sufficient evidence to support it . Appellees cite, in parti cular, a spreadsheet that Bremer sent Meli in August 2006 about the p atents in which the third party had expressed interest . The row in that spreadsheet about the ’858 patent indicated that it had been abandoned. AlthoughIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 33

Rembrandt dismisses the likelihood that it could have gleaned information about the improper revival from this spreadsheet, the spreadsheet was not large

— it contained only 30 patents

— and among them were patents that Rembrandt already had asserted in this case and to which Rembrandt would have paid close attention. The district
court reasonably could have found that Rembrandt knew that the ’858 patent had been abandoned and chose not to investigate how it had been revived. Appellees also cite other documents that were avail able to Rembrandt in which Paradyne employees discussed their plan to revive the pat ents. Rembrandt had access to these documents under the patent sale agreement. Al though the ’819 patent was not listed in the spreadsheet, the fact that at least one patent had been revived in this way, in combination with the other documents accessible to Rembrandt, could give rise to the inference that Re mbrandt knew about, or could have learned about, the improper revival of both the ’819 and ’858 patents. Rembrandt argues that the district court’s implicit application of the “should have known” standa rd imposes too high a burden on Rembrandt and conflicts with our guidance in Therasense

. See 649 F.3d at 1290 (“A finding that the misrepresentation or omission amounts to gross negligence or negligence under a ‘should have known’ standard does not satisf y [the] intent requirement.”). But Appellees are right that Rembrandt conflates the inequ itable conduct and exceptional case inquiries. The first question— the one governed by Therasense

— is whether Paradyne committed inequitable conduct. The second quest ion— to which Therasense does not apply

— is whet her Paradyne’s conduct renders Rembrandt’s case exce ptional. Rembrandt’s reliance on Therasense in t he latter context is misplaced.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 34

4. The District Court Followed the Proper Procedures in Making Its Exceptional

- Case Determination
It is undisputed that Rembrandt did not request an evidentiary hearing at any point before the district court made its exceptional

- case determination. The district court sat on the motion for years, and it even returned the sealed exhibits to the parties, but it never resolved the motion. Five years after the motion was filed, and three years after the motion was re

- filed after judgment was entered on the ’627 patent, Appellees submitted suppl emental authority citing Octane Fitness , and Rembrandt responded. Although Rembrandt argued that Appellees had abandoned the motion and that ruling on the stale record would be prejudicial, Rembrandt did not request an evidentiary hearing. Rembrandt was never entitled to assume that th e motions would be denied or simply ignored

. Indeed, Rembrandt apparently did not make such an assumption; its filings show that it contemplated at least the possibility of a ruling on the motions. Re mbrandt waived its procedural objection to the lack of an evidentiary hearing. The district court also was not required to afford Rembrandt an evidentiary hearing in this case . Re mbrandt is right that “[t]he imposition of monetary san ctions by a court implicates fundamental notions of due process and thus requires ‘fair notice and an opportunity for a hearing on the record.’” Rogal v. Am. Broad. Cos. , 74 F.3d 40, 44 (3d Cir. 1996) (quoting Roadway Express, Inc. v. Piper , 447 U.S. 752, 767 (1980)). But, as the Third Circuit recognized in Rogal , the concept of an “opportun ity to be heard at a meaningful time and in a meaningful

manner

. . . is flexible, calling for procedural protection as dictated by the particular circumstance.” Id. (quoting Kahn v. United States , 753 F.2d 1208, 1218 (3d Cir. 1985)). The Rogal court explained that a district court, “in the sound exercise of its discretion,” must determine whether the resolution of a sanction charge “requiresIN RE REMBRANDT TECH S ., LP PATENT LITIG

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further proceedings, including the need for an evidentiary hearing.” Id. (quoting Jones v. Pitt sbur gh Nat’l Corp. , 899 F.2d 1350, 1359 (3d Cir. 1990) ). Although the Rogal court found the district court’s failure to hold an evidentiary hearing constituted an abuse of discretion in that case, it emphasized that its “holding [was] a narrow one and depend [e d] heavily on the specific nature” of the misconduct in question. Id. at 45. The Third Circuit remanded for the district court to hold the hearing, in particular, because the witness whose testimony the district court found sanctionable “did not have the same incentive at trial to try to clear up all of the apparent contradictions and inconsistencies in his testimony or to try to show his good faith as he would have had at an evidentiary hearing on the question of sanctions.” Id. That is not the case he re. As Appellees point out, the relevant witnesses had an opportunity to explain their actions at their depositions , and they had every incentive to do so; in fact, all of them were on Re mbrandt’s payroll by that time. The district court was not required to give them a second bite at the apple at an evidentiary hearing. The lack of an evidentiary hearing also does not alter the standard we use to review the district court’s factual findings. We give deference to those findings “in view of the district court’s superior understanding of the litig ation and the desirability of avoiding frequent appellate review of what essentially are factual matters .” Hensley v. Eckerhart , 461 U.S. 424, 437 (1983) . The district court here certainly understood the litigatio n better than we can on appeal. Although it remains incumbent on “the district court to provide a concise but clear explanation of its reasons for the fee award,” id. , our role is to compare that explanation against the record on appeal, not to conduct a de novo analysis of the record

.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 36

And, finally, the district court did not need to consider each MDL case separately in making an exceptional

- case determination, except to the extent it was required to establish a causal link for fees. “Cases consolidated f or MDL pretrial proceedings ordinarily retain their separate identities,” Gelboim v. Bank of Am. Corp. , 135 S. Ct. 897, 904 (2015), but MDL courts “have wide discretion” to manage their dockets to avoid “potential burdens on defendants and the court

, ” In r e Asbestos Prods. Liab

. Litig. (No. VI) , 718 F.3d 236, 246

– 47 (3d Cir. 2013) (quo ting Acuna v. Brown & Root Inc. , 200 F.3d 335, 340 (5th Cir. 2000)) . The district court exercised that discretion in considering all of the cases together in making its exce ptional

- case determinations, and the district court implici tly found that each case was exceptional. Section 285 does not compel a different process.

5 . The District Court Did Not Abuse Its Discretion in Determining that the Case Is Exceptional U nder § 28 5

Octane Fitness gives district courts broad discretion in the exceptional

- case determination. “ [A] n ‘exceptional’ case is simply one that stands out from others with r espect to the substantive strength of a party’s litigating position .

. . or the unreas onable manner in which the case was litigated.” Octane Fitness , 134 S. Ct. at 1756. “Di strict courts may determine whether a case is ‘exceptional’ in the case

- by

- case exercise of their discretion, considering the totality of the circumstances.” Id. Rel evant conside rations may include “frivolousness, motivation, objective unreasonableness (both in the factual and legal comp onents of the case) and the need in particular circumstan ces to advance considerations of compensation and deterrence.” Id. at 1756 n.6 (quoting Fogerty v. Fantasy, Inc. , 510 U.S. 517, 534 n.19 (1994)).

Under that generous standard, the district court’s d etermination was not an abuse of discretion. The district court found that Rembrandt’s conduct, and Paradyne’sIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 37

conduct that was attributable to Rembrandt, showed that Rembrandt litigated the case in an “unreasonable ma nner.” Exceptional Case Order , at 2 n.4 (quoting Octane Fitness , 134 S. Ct. at 1756)

. The court found, in partic ular, that “the ‘totality of the circumstances’

— the wrongful inducements, the spoliation, and the assertion of fraud ulently revived patents

— supports AOPs’ characterization of this case as ‘exceptional’

— it ‘stands out.’” Id. at 3 n.4 (quoting Octane Fitness , 134 S. Ct. at 1756). To overturn this finding, w e must find that the district court made “a clear error of judgment in weighing relevant factors or in basing its decision on an error of law or on clearly erron eous factual findings.” Bayer CropScience , 851 F.3d at 1306 (quoting Mentor Graphics , 150 F.3d at 1377). Because we find no clear error in the district court’s factual findings or any error in the legal standard it employed

, there is no basis for us to hold that the district court abused its discretion in determining that the case is exceptional.

B. The District Court’s Fee Award

Rembrandt also takes issue with the district court’s award of $51 million in attorney fees. Rembrandt raises no specific objections to Appellees’ tabulations of the hours they expended; nor does Rembrandt contend that Ap pellees should have calculated fees using a lower hourly rate. Rembrandt instead argues that the fee award is excessive and unreasonable because the district court failed to establish a causal connection between the claimed misconduct and the fees awarded . We agree. “The determination of reasonable attorney fees is also ‘a matter that is committed to the sound discretion’ of a district court judge.” Lumen View , 811 F.3d at 483 (quo ting Perdue v. Kenny A. ex rel. Winn , 559 U.S. 542, 558 (2010)). “We ther efore also review the calculation of an attorney fee award under § 285 for an abuse of discr etion.” Id.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 38

After determining that this case was exceptional, the district court asked Appellees to submit documentation detailing their fee requests and a proposed order awar ding those fees. Appellees did so, accompanied by briefing on why Rembrandt’s pervasive misconduct justified an award of all fees and costs incurred in the litigation. The proposed order also included, in footnotes, an award of the fees Appel lees incurred in defending against Rembrandt’s assertion of the ’627 patent.
The district court granted a lmost all of those fee r equests
, excluding only expert fees, fees relating to Adelp hia’s bankruptcy, fees for secretarial and clerical work, and prejud gment interest . But t he court did not explain why an award of almost all fees was warranted or whether it had accepted AOPs’ argument about pervasive misco nduct. First Fee s Order

, at 1

– 3. The district court’s order said nothing about the ’627 patent. It did, however, order AOPs to submit an updated fee request. Id. at 3. AOPs submitted that request and a new proposed order, e xplaining that the original proposed order “did not correc tly tabulate the fee amounts requested in the declarations submitted” because it “omitted” fees from Cablevision, Cox, and Adelphia. J.A. 3 268. Over Rembrandt’s objections, the district court gran ted Appellees’ request. Second Fee s Order , at 1

– 3. The distr ict court accepted AOPs’ explanation that the i ncreased amount was the result of a tabulation error. Id. at 2 n.1 . The district court found that AOPs had satisfied the procedural requirements for seeking fees related to the ’627 patent, and it awarded th ose fees without further explanation. Id. And the district court “conclude[d] that it is reasonable to award Adelphia expenses relating to the Rembrandt litigation while it was pending in the Bankruptcy Court for the Southern District of New York.” Id. It then ordered Rembrandt to pay the full amount of fees and costs Appellees requested. Id. at 2 –3.IN RE REMBRANDT TECH S ., LP PATENT LITIG

. 39

Appellees do not dispute that attorney fees under § 285 are compensatory, not punitive. Cent . Soya Co. v. Geo. A. Hormel & Co. , 723 F

. 2d 1573, 1578 (Fed. Cir. 1983)

. In such a “statutory sanction regime[],” a “fee award may go no further than to redress the wronged party ‘for losses sustained’; it may not impose an add itional amount as punishment for the sanctioned party’s misbehavior .” Goodyear Tire & Rubber Co. v. Haeger , 137 S. Ct. 1178, 1186 & n.5 (2017) (quoting Int’l Union, Uni ted Mine Workers of Am. v. Bagwell , 512 U.S. 821, 829 (1994)). D eterrence “is not an appropriate consideration in determining the amount of a reasonable attorney fee.” Lumen View , 811 F.3d at 484

– 85. It follows, as we have held, that “the amount of the award must bear some relation to the extent of the misconduct.” Rambus Inc. v. Infineon Tech s . AG , 318 F.3d 1081, 1106 (Fed. Cir. 2003). We have explained that “[a] finding of exceptionality based on litigation misconduct []

. . . usually does not support a full award of attorneys’ fees.” Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc. , 687 F.3d 1300, 1316 (Fed. Cir. 2012), vacated on other grounds , 134 S. Ct. 1744 (2014).
To be sure, a n award of fees under § 285 is not go verned by the same exacting standards as a sanction under the Federal Rules of Civil Procedure. Rule 37(b), for example, provides that a party failing to comply with a

c ourt order must “pay the reasonable expenses, including attorney ’s fees, caused by the failure.” Fed. R. Civ. P. 37(b)(2)(c). Section 285, on the other hand, says only that “[t]he court in exceptional cases may award reasonable attorney fees to the preva iling party.” 35 U.S.C. § 285. As the Supreme Court recognized in Goodyear

, an award of all of a party’s fees, “from either the start or some midpoint of a suit,” may be justified in some “exceptional

cas es.” 137 S. Ct. at 1187. But, critically, the amount of the award must bear some relation to the extent of the misconduc t. Rambus , 318 F.3d at 1106. The districtIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 40

court must explain that relationship, at least to the extent practicable. Appellees cite our decision in Monolithic Power Sy stems, Inc. v. O2 Micro International Ltd. , 726 F.3d 1359 (Fed. Cir. 2013), where we uph e ld a full award of attorney fees against a party whose “extensive misconduct was enough to comprise an abusive pattern or a vexatious strategy that was pervasive enough to infect the entire litigation.” Id. at 1369 (internal quotation marks omi tted). Under the circumstances there, we held “that [the party’s] rampant misconduct so severely affected every stage of the litigation that a full award of attorney fees was proper.” Id.

But the district court here never made such a finding. It said only that the inducements to witnesses “g[ave] rise to a considerable risk of tainted testimony, that the destruction of documents “was prejudicial” to AOPs because it prevented them from conducti ng “full discovery of relevant documents,” and that “Rembrandt should have known that the ‘revived patents’”

— two of the nine in the litigation

— “were unenforceable.” Exceptional Case Order

, at 3 n.4. 6 Although the district court also said that “Re mbrandt must take responsibility for its own massive litigation,” id. , none of the district court’s language i mplies that it thought the specific instances of misconduct above bore the kind of relation to the overall litigation contemplated by Goodyear or R ambus

.

6 Appellees claim that the distric t court found that “Rembrandt denied Appellees the opportunity ‘to conduct full discovery’ and ‘prejudic[ed]’ them at every turn.” Appellees’ Br. 66 (alteration in original) (quoting Exceptional Case Order

, at 3 n.4). Appellees read too much into the district court’s decision

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. 41

In fact, several of the district court’s findings suggest otherwise. The district court rejected Adelphia’s claim that Rembrandt had sued in bad faith and that its legal positions were unreasonable. Id. at 3 n.5 . And

, in one of its subsequent ord ers, the court found that expert fees were not warranted because they can be awarded only when a “party acted in bad faith, vexatiously, wantonly, [or] for oppressive reasons,” and that “such a finding is not warranted in this case.” First Fees Order

, at 2 n.3. The district court similarly found “that there has not been the kind of bad faith through litigation that warrants prejudgment interest on the amount of fees awarded.” Id. at 2 n.6. Appellees also imply that the fee award was appropr iate because t he destroyed documents and the induc ements to witnesses affected every issue in the suit. Appellees point to their own itemization of the documents destroyed and their relevance to the case. Rembrandt, on the other hand, submitted a declaration accompani ed by extensive documentation explaining all of the aspects of the case that the misconduct did not affect. Rembrandt notes, moreover, that the improperly revived patents were not asserted against Adelphia, that the on

- sale bar d efense was only relevant t o two patents, and that the ’627 patent was on a separate track and had no overlap with the issues involving the other patents

. The district court, by and large, did not even attempt to assess which issues the claimed misconduct affected

. It specifically addressed the fees Appellees incurred relating to the ’627 patent, which Appellees had listed separately in their proposed orders. Second Fees Order

, at 2 n.1

. But the district court did not establish a causal connection between the misconduct and those fees, and it did not offer any other reason for its fee award. Id. And , even though the district court explain ed why it awarded the attorney fees that Adelphia incurred defending against Rembrandt in bankruptcy court, it again failed to connectIN RE REMBRANDT TECH S ., LP PATENT LITIG

. 42

the misco nduct with Adelphia’s fees. Nowhere did the district court address the requisite “causal connection” it was required to find between the misconduct and the fees it awarded. Goodyear , 137 S. Ct. at 1187.

In the run -of- the

- mill patent infringement case i nvolv ing a few patents and a couple of defendants

, a fin ding of pervasive misbehavior or inequitable conduct that affects all of the patents in suit may justify an award of all of the fees incurred. But this massive case featured nine patents and dozens of defendants , and the claimed misconduct affected only some patents asserted against some defendants. Even if Rembrandt’s misconduct, taken as a whole, rendered the case exceptional, the district court was required to establish at least some “causal

connec tion” between the misconduct and the fee award

. Id. W hat the district court did here

— award all fees with no explanation whatsoever of such a causal connection

— was not enough

. The most appropriate course, therefore, is to remand for the district court to determine in the first instance how much of the claimed fees Rembrandt should pay. This does not require a tedious, line

- by

- line investigation of the hours Appellees expended. As the Supreme Court recently explained in Goodyear , “‘[t]he essential goal’ i n shifting fees’ is ‘to do rough justice, not to achieve audi ting perfection.’” Id. (quoting Fox v. Vice , 563 U.S. 826, 838 (2011) ). “The court may decide, for example, that all (or a set percentage) of a particular category of expenses

— say, for expert d iscovery

— were incurred solely because of a litigant’s bad

- faith conduct.” Id. “And such judgments, in light of the trial court’s ‘superior understanding of the litigation,’ are entitled to substantial deference on a ppeal.” Id. (quoting Hensley , 461 U.S. at 437 ).

We therefore vacate the district court’s fee award and remand for the district court to conduct the appropriate analysis in the first instance

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III. C ONCLUSION
We affirm the district court’s determination that this

case is exceptional under § 285. We vacate, however, its award of attorney fees and remand for further procee dings consistent with this opinion.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED

C OSTS

No costs.