United States Court of Appeals 

for the Federal Circuit ______________________ 

IN RE: REMBRANDT TECHNOLOGIES LP PATENT 

LITIGATION

---------------------------------------------------------------------------------

REMBRANDT TECHNOLOGIES, LP, REMBRANDT 

TECHNOLOGIES, LLC, DBA REMSTREAM, 

Plaintiffs-Appellants

v.

COMCAST OF FLORIDA/PENNSYLVANIA, LP, 

ADELPHIA CONSOLIDATION LLC, MOTOROLA,

INC., CISCO SYSTEMS, INC., COMCAST OF 

PENNSYLVANIA II, LP, CENTURY-TCI 

CALIFORNIA COMMUNICATIONS, LP, CENTURYTCI HOLDINGS, LLC, PARNASSOS 

COMMUNICATIONS, LP, CSC HOLDINGS, INC., 

TIME WARNER CABLE LLC, TIME WARNER 

CABLE ENTERPRISES LLC, COXCOM, INC., 

SCIENTIFIC-ATLANTA, INC., THOMSON, INC., 

NETGEAR, INC., CHARTER COMMUNICATIONS 

OPERATING LLC, CCO HOLDINGS LLC, 

ADELPHIA COMMUNICATIONS CORPORATION, 

PARNASSOS HOLDINGS, LLC, COMCAST CABLE 

COMMUNICATIONS, LLC, COMCAST 

CORPORATION, CABLEVISION SYSTEMS 

CORPORATION, AMBIT MICROSYSTEMS, INC.,

Defendants-Appellees

CENTURY-TCI DISTRIBUTION COMPANY, LLC, 

WESTERN NY CABLEVISION, LP, SHARP 

CORPORATION, SHARP ELECTRONICS CORP, 

CBS CORPORATION, NBC UNIVERSAL INC, 
2 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

CENTURY-TCI CALIFORNIA, LP, PARNASSOS 

DISTRIBUTION COMPANY I, LLC, PARNASSOS 

DISTRIBUTION COMPANY II, LLC, PARNASSOS, 

LP, ABC, INC, COMCAST CABLE 

COMMUNICATIONS HOLDINGS, INC, COMCAST 

OF PLANO, LP, FOX BROADCASTING COMPANY, 

FOX ENTERTAINMENT GROUP, INC.

Defendants

______________________ 

2017-1784

______________________ 

Appeal from the United States District Court for the 

District of Delaware in Nos. 1:06-cv-00635-GMS, 1:06-cv00721-GMS, 1:06-cv-00727-GMS, 1:06-cv-00729-GMS, 

1:06-cv-00730-GMS, 1:06-cv-00731-GMS, 1:07-cv-00396-

GMS, 1:07-cv-00397-GMS, 1:07-cv-00398-GMS, 1:07-cv00399-GMS, 1:07-cv-00400-GMS, 1:07-cv-00401-GMS, 

1:07-cv-00402-GMS, 1:07-cv-00403-GMS, 1:07-cv-00404-

GMS, 1:07-cv-00752-GMS, 1:07-md-01848-GMS, Judge 

Gregory M. Sleet.

______________________ 

Decided: July 27, 2018

SEALED OPINION ISSUED: July 27, 2018

PUBLIC OPINION ISSUED: August 15, 2018*

______________________ 

 THOMAS GOLDSTEIN, Goldstein & Russell, P.C., Bethesda, MD, argued for plaintiffs-appellants. Also represented by TEJINDER SINGH. 

* This opinion was originally filed under seal and 

has been unsealed in full.

 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 3

JOHN C. O’QUINN, Kirkland & Ellis LLP, Washington, 

DC, argued for all defendants-appellees. Defendantsappellees Motorola, Inc., Cisco Systems, Inc., ScientificAtlanta, Inc., Thomson, Inc., Ambit Microsystems, Inc., 

NETGEAR, Inc. also represented by AARON NIELSON,

JASON M. WILCOX; STEVEN CHERNY, New York, NY.

 BRIAN LEE FERRALL, 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, Century-TCI Holdings, LLC, Parnassos Communications, LP, 

Parnassos Holdings, LLC, Comcast Cable Communications, LLC, Comcast Corporation. Also represented by 

LEO L. LAM. 

 BENJAMIN HERSHKOWITZ, Gibson, Dunn & Crutcher 

LLP, New York, NY, for defendants-appellees CSC Holdings, Inc., Cablevision Systems Corporation. Also represented by JOSH KREVITT, ROBERT SCOTT ROE. 

 THOMAS LEE DUSTON, Marshall, Gerstein & Borun 

LLP, Chicago, IL, for defendants-appellees Time Warner 

Cable, LLC, Time Warner Cable Enterprises LLC, Charter Communications Operating LLC, CCO Holdings LLC. 

Also represented by JULIANNE M. HARTZELL, KEVIN DAVID 

HOGG. 

 MICHAEL CRAIG HARWOOD, Kasowitz Benson Torres 

LLP, New York, NY, for defendants-appellees Adelphia 

Communications Corporation, Adelphia Consolidation 

LLC.

 MITCHELL G. STOCKWELL, Kilpatrick Townsend &

Stockton LLP, Atlanta, GA, for defendant-appellee CoxCom, Inc. Also represented by RICHARD W. GOLDSTUCKER. 

______________________ 
4 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

Before O’MALLEY, MAYER, and REYNA, Circuit Judges.

O’MALLEY, Circuit Judge.

This appeal derives from a multitude of patent infringement 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 manufacturers, and broadcast networks. The cases were consolidated 

in the District of Delaware. After several years of litigation, the district court entered final judgment against 

Rembrandt as to all claims. 

Many of the defendants (collectively, “Appellees”) 

thereafter filed a motion requesting attorney 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 Rembrandt Techs., LP Patent Litig., No. 1:07-md-01848-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., No. 1:07-md-01848-GMS (D. Del. 

Aug. 24, 2016), ECF No. 1013 (“First Fees Order”). In 

total, the court awarded Appellees more than $51 million 

in fees. In re Rembrandt Techs., LP Patent Litig., No. 

1:07-md-01848-GMS (D. Del. Mar. 2, 2017), ECF No. 1044

(“Second Fees Order”).

Rembrandt appeals both the district court’s exceptional-case determination and its fee award. We conclude

that the district court did not abuse its discretion in 

deeming this case exceptional, but that the court erred by 

failing to analyze 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 TECHS., LP PATENT LITIG. 5

I. BACKGROUND

A. The Patents in Suit

The underlying litigation involves nine patents belonging 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”), 5,710,761 (“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. Although the patented technology is not directly relevant 

here, the history of the patents and the documents associated with the technology bears heavily on the issues on 

appeal. 

1. Rembrandt and Paradyne

Before Rembrandt obtained the patents at issue, they 

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, Paradyne’s Chief Financial 

Officer.

In 2002, Paradyne decided that the expected value of 

the ’819 and ’858 patents did not justify paying their

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 desired. The ’819 and ’858 patents lapsed in June 

and February 2002, respectively.
6 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

Following some third-party interest in acquiring the 

Paradyne patents, Bremer, Horstemeyer, and Murphy 

decided to petition the United States Patent and Trademark Office (“PTO”) to revive the ’819 and ’858 patents. 

In connection with that request, they represented that 

“the delay in payment of the maintenance fee of this 

patent was unintentional.” J.A. 141; see J.A. 150. Horstemeyer testified in these proceedings that he felt he

could truthfully say that the 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.

In September 2004, Paradyne contacted Rembrandt to 

propose a joint “patent assertion team” to “exploit[] the 

Paradyne patents”—including the ones that Paradyne 

had revived. Appellees’ Br. 8. In December 2004, Paradyne 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 

copy relevant Paradyne documents. The companies 

amended their agreement in February 2005, adding the 

’819 patent to the portfolio of patents assigned to Rembrandt. 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 inventions.” J.A. 203.

2. Rembrandt and Zhone

Paradyne was acquired in September 2005 by Zhone 

Technologies (“Zhone”), an equipment manufacturer. 

Thereafter, Zhone cut much of Paradyne’s workforce and 

footprint.
IN RE REMBRANDT TECHS., 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 destruction was to cut storage costs, that boxes of documents 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 

approximately 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 technology; 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 Paradyne’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 Horstemeyer had formed. The 

consultants agreed to provide Rembrandt “[a]ssistance 

with patent portfolio analysis and ongoing patent assertion programs.” J.A. 240. In exchange, Rembrandt would 

pay Attic an annual flat fee, in addition to a small percentage of licensing or litigation royalties if Rembrandt 

subsequently acquired any patents from Zhone. The 

agreement would not take effect until such an acquisition 

occurred.
8 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

Weeks after Bremer signed this agreement—but before 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 “generally 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 entered 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 sale agreement 

with Paradyne, the agreement provided that Zhone would 

give Rembrandt access to documents relating 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

relating to the purchased patents but that, if Rembrandt 

was not interested in them, Zhone would “likely destroy 

[them] in accordance with [its] records policy.” Appellants’ Br. 40. Rembrandt told Zhone to send Rembrandt 

the relevant files.

In August 2006, 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 mainte-
IN RE REMBRANDT TECHS., LP PATENT LITIG. 9

nance files, inventor files, license agreement and acquisition files, technical files, 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 acquired from Paradyne. Rembrandt Techs., LP v. Comcast 

Corp., No. 2:05-CV-00443-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-CE), 2:06-cv369 (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. 

Rembrandt 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 additionally 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-00727-

GMS (D. Del.).

The Judicial Panel on Multidistrict Litigation consolidated 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 manufacturers—most of which are among the Appellees here—filed 

suit against Rembrandt in the District of Delaware seek-
10 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

ing a declaratory judgment that their products did not 

infringe any valid patents. Motorola, Inc. v. Rembrandt 

Techs., LP, No. 1:07-cv-00752-GMS (D. Del.). The declaratory judgment action was consolidated into the multidistrict 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 patents, all of which were adverse to Rembrandt. See In re 

Rembrandt Techs., LP Patent Litig., No. 1:07-md-01848-

GMS, 2008 WL 5773604 (D. Del. Nov. 19, 2008); In re 

Rembrandt Techs., LP Patent Litig., No. 1:07-md-01848-

GMS, 2008 WL 5773627 (D. Del. Nov. 7, 2008). On January 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, after 

further discovery, Rembrandt offered to drop the ’903 and 

’234 patents 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 patents, and the defendants moved 

to dismiss their 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 noninfringement 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. 2012).

Until Rembrandt dismissed its claims, the parties engaged in considerable fact discovery. Appellees produced 

more than 15 million pages of documents, Rembrandt 
IN RE REMBRANDT TECHS., 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 attorneys responded 

to these subpoenas, Rembrandt never searched the warehouse where it claimed Paradyne’s boxes were stored, nor 

acknowledged any document destruction until after April 

2008. Rembrandt instead claimed that it could not ascertain information relevant to the on-sale bar, and it denied 

on several occasions that it had access to or control over 

Paradyne product documentation. Rembrandt also asserted in interrogatory responses and in its opposition to 

summary judgment that there was no evidence of prior 

sales, without mentioning that relevant documents potentially reflecting such sales might have been destroyed.

2. Fee Motions

Through discovery, Appellees ultimately learned 

about the abandonment and revival of the ’819 and ’858 

patents, the three Attic consultants’ contingent interests 

in the litigation, and Zhone’s destruction of documents. 

On July 8, 2009—after Rembrandt had dropped its infringement case as to five of the patents, but before the 

covenant not to sue had been finalized—the district court 

granted Appellees permission to file a motion for sanctions as a motion in limine. Two 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 determination 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 patents 
12 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

that Paradyne had revived improperly; (2) allowed Zhone 

to spoliate evidence; (3) improperly gave the Attic consultants an interest contingent on the litigation outcome; 

and (4) threatened AOPs with a baseless injunction 

demand. Adelphia additionally argued in a separate 

motion that Rembrandt (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 Southern District of 

New York.1

On July 13, 2011, the district court struck the fee motions as premature in light of the still-live dispute with 

regard to the ’627 patent. But, after 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 authority to the district court citing that case. Rembrandt responded by arguing that AOPs had abandoned their 

motion because the case had been closed for two-and-ahalf years and because the pertinent briefs and support1 Rembrandt now claims that Adelphia was not one 

of the AOPs. Appellants’ 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 

include “all parties adverse to Rembrandt, whether they 

are defendants or declaratory relief claimants.” In re 

Rembrandt Techs., LP Patent Litig., No. 1:07-md-01848, 

at 1 n.1 (D. Del. Dec. 6, 2012), ECF No. 937. That definition encompasses Adelphia.

 
IN RE REMBRANDT TECHS., 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 Rembrandt because the briefings and 

supporting documents were stale. Rembrandt further 

argued that the case was not exceptional under the Octane Fitness standard.

On August 20, 2015, the district court issued a fourpage order ruling on the motions, which by then had been 

pending 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 the case was “indeed exceptional” for three reasons. Id. at 3 n.4. First, the court 

found that “the evidence shows that Rembrandt improperly compensated its fact witnesses, in violation of ethical 

rules of conduct.” Id. (citing Model Rules of Prof’l Conduct R. 3.4(b) and cmt. 3 (Am. Bar Ass’n 2015)). Second, 

the court was “convinced that Rembrandt engaged in (or 

failed to prevent) widespread document spoliation over a 

number of years.” Id. The court acknowledged Rembrandt’s argument that “it did not directly destroy any 

documents and that it lacked control 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 forthcoming litigation such that it had a duty to preserve or instruct others to retain certain documents.” Id. The court 

concluded that “AOPs’ inability to conduct full discovery 

was prejudicial.” Id. Finally, the court found that “Rembrandt 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 called 
14 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

Rembrandt’s “attempt[] to wipe its hands of all wrongdoing, pointing the finger at third parties,” because “Rembrandt 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 fraudulently revived patents—supports AOPs’ characterization 

of this case as ‘exceptional.’” Id. (quoting Octane Fitness, 

134 S. Ct. at 1756). The court thereafter denied Rembrandt’s motion for reargument. In re Rembrandt Techs., 

LP Patent Litig., No. 1:07-md-01848 (D. Del. Aug. 2, 

2016), ECF No. 1011 (“Reargument Order”).

In view of its exceptional case finding, the court ordered 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 requested fees and that the submitted hourly rates, based in 

part on the American Intellectual Property Law Association’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 challenging case calling 

for substantial time and expertise.” Id. Although the 

court did not analyze separately whether the hours expended were reasonable, it found that the lodestar 

amount was reasonable. Id.

The court excluded, however, several categories of 

fees, 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 an 
IN RE REMBRANDT TECHS., 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 “Rembrandt 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 ’627 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 incurred defending the causes of action that Rembrandt 

brought in the bankruptcy court that were ultimately 

consolidated in [this] multi-district litigation.” Id. The 

court therefore 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, including Adelphia. Id. at 2–3. Rembrandt appealed. We have 

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

II. DISCUSSION

A. The Exceptional-Case Determination

The district court determined that this was an exceptional case. Specifically, the court found that Rembrandt: 

(1) wrongfully gave fact witnesses payments contingent 

on the outcome of the litigation; (2) engaged in, or failed 

to prevent, widespread document spoliation by Zhone; and 

(3) should have known that the revived patents were 
16 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

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 misconduct, 

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 Highmark 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 decision 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)).

Rembrandt raises strong arguments with respect to 

the district court’s factual findings. The district court’s 

remarkably terse orders shed little light on its justifications for its decisions on these fact-intensive issues. But 

abuse of discretion is a deferential 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 discretion, procedurally or substantively, in determining that 

this pattern of misconduct rendered the case “exceptional” 

within the meaning of § 285.
IN RE REMBRANDT TECHS., 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 testimony.” Exceptional Case Order, at 3 n.4. Rembrandt contends that it never expected the Attic consultants to 

become fact witnesses, that the agreement did not prejudice Appellees, and that the agreements were permissible 

under our precedent.

After filing suit based on the Paradyne patents, Rembrandt hired three former Paradyne employees in February 2006 to provide “[a]ssistance with . . . ongoing patent 

assertion programs.” J.A. 240 (emphasis added). Although the agreement did not immediately give the consultants an interest in the outcome of the ongoing 

litigation, it clearly contemplated future “assertion programs.” 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 reasonably could have found that, when Rembrandt signed the 

consulting agreement, it was likely that the consultants 

would play a role in litigation.

It also was foreseeable, at the very least, that the consultants would become fact witnesses in that litigation, 

given their roles within Paradyne. Meli—Rembrandt’s 

former in-house counsel—acknowledged as much in his 

deposition. Whether Rembrandt identified the consultants as witnesses is beside the point. As Appellees correctly point out, all three witnesses did in fact testify 

about their knowledge of facts relevant to the merits of 

the lawsuit. Bremer testified about his involvement in 

patenting and licensing, the decision to abandon patents 

(which was related to Appellees’ inequitable conduct 
18 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

defense), the development process that led to the patented 

technology, and potentially invalidating sales of products 

that may have practiced the asserted patents. And Horstemeyer 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 helped decide whether to abandon patents. Murphy was not involved as directly, but he 

was Paradyne’s CFO during the relevant period and also 

participated in the patent review board.

It is true, as Rembrandt notes, that the district court 

never found that any witnesses gave false testimony. But 

the issue that the district court correctly identified was 

not that witnesses lied, but that the contingent fee arrangement 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.

Rembrandt may be right that Bremer had simply forgotten key details about sales associated with a twentyyear-old project. But his contingent interest in the litigation 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 sales 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 unreasonable 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 TECHS., LP PATENT LITIG. 19

Rembrandt contends that the district court’s decision 

conflicts with our holding in Ethicon, Inc. v. U.S. Surgical 

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 1459. The license agreement 

explicitly required Choi to testify in the lawsuit in exchange 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 from 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 defenses. And the Ethicon agreement conditioned the bulk of 

the payment on U.S. Surgical’s prevailing in the litigation, 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 involved 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 subsequent 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 arrangements, 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. 
20 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

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) (observing that “the Agreement involves assignment of the 

Patent, not an agreement to pay fact witnesses to testify, 

and the witnesses identified included the inventor”). 

Rembrandt identifies no comparable agreements to the 

one here, however, where the contingent interest was 

given to likely witnesses only for their help with a licensing or litigation campaign.

In short, Ethicon did not upend the longstanding ethical 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 contingent 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 interests make sense for sellers as well—they 

ensure that, if the patented technology unexpectedly 

gains value, the licensor or assignor can reap some portion of the windfall. The agreement between Rembrandt 

and Attic, on the other hand, was fundamentally different 

from the sale of a right in a patent, and it does not implicate these policy rationales. The district court’s decision 

does not call these “very common” agreements into question, id., as Rembrandt 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 conclusion “that Rembrandt engaged in (or failed to prevent) 

widespread document spoliation, over a number of years.” 

Exceptional Case Order, at 3 n.4. This court reviews the 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 21

district court’s spoliation decision under the law of the 

regional circuit. Hynix Semiconductor 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 suppression 

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, 73 (3d Cir. 2012) 

(citing Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326, 

334 (3d Cir. 1995)).

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 foreseeable, meaning that Rembrandt had a duty 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., 271 F.3d 583, 590 (4th Cir. 2001))). And Rembrandt 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, under 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 necessarily independently sanctionable—is nonetheless so 

‘exceptional’ as to justify an award of fees.” Octane Fitness, 134 S. Ct. at 1756–57. “Even if [Rembrandt’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. But 
22 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

the district court specifically found, as part of its exceptional-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, 150 F.3d at 

1377).

The first aspect of that inquiry is whether “the evidence 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 being 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 

asking Bremer to collect the Documents of Common 

Interest.2 As noted 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 that 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 destruction 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 Appellees’ assertion that these documents comprised only those that were helpful to Rembrandt, Appellees’ 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 TECHS., 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 Rembrandt’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 possession . . . regarding the assigned patents.” J.A. 155, 

§ 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 destruction. 

Two facts in the record suggest, however, that Rembrandt knew that document destruction was a significant 

risk. First, Meli visited the former Paradyne facility in 

Florida shortly after the Zhone acquisition, and he reported that “every cubicle is gone, there’s nobody in it, [and] 

papers are strewn all over the place.” J.A. 2419–20, 

72:14–73:11; Appellees’ Br. 11. He testified that he 

“really [did] believe it was shut down” and “being dismantled.” J.A. 2419, 72:22–25; J.A. 2422, 75:11–22; Appellees’ 

Br. 10, 14, 50. By that time, litigation already was ongoing, and Meli should have known that some of the documents “strewn all over the place” might be relevant to 

that litigation. And second, Bremer—who by then was on 

the Rembrandt payroll—participated in the document 

destruction well before June 2006. He reviewed dozens of 

boxes for potential disposal in March 2006, 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 to 
24 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

do so. Bremer also admitted that he never asked for other 

warehoused documents to be preserved.

Even after it knew about the risk of document destruction, 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 patents 

in suit,” including but not limited to “any documents 

relating to the products that embody any invention 

claimed in the patents in suit (both technical and financial documents).” J.A. 229–30. That request did imply 

that Zhone should hand over those documents instead of 

destroying them. But subsequent testimony from Rembrandt’s own in-house attorneys suggests that even they 

did not consider the 2006 letter a document-retention 

notice. Given the significant risk of document destruction, 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] litigation 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 employs a lower standard for spoliation.

 
IN RE REMBRANDT TECHS., 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 its 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 plaintiff was asserting. Id. at *4. With respect to some documents, the St. Clair court found that the defendant had 

“not shown any intent to suppress evidence; to the contrary, the record suggests that a benign explanation is more 

plausible.” Id. And for others, the court was “not persuaded that [the plaintiff’s and a former patent owner’s] 

destruction of the boxes of information was due to anything 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 “believed all the contents of the boxes had been copied.” Id.

The facts here are different than those at issue in St. 

Clair. The plaintiff in St. Clair was unaware of the 

document destruction and believed all relevant information had been copied. Here, as discussed above, Rembrandt had reason to believe that document destruction 

was possible, and it certainly knew that relevant information 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 find “that Rembrandt did have control and did 

anticipate forthcoming litigation such that it had a duty 

to preserve or instruct others to retain certain documents.” Exceptional Case Order, at 3 n.4. As the district 

court explained later, there was “sufficient evidence to 

support bad faith spoliation in the existing record.” 
26 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

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

more 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’ inability to conduct full discovery of 

relevant documents was prejudicial.” Exceptional Case 

Order, at 3 n.4. On balance, we conclude that the district 

court’s finding of spoliation was not clearly erroneous. 

3. The District Court’s Inequitable Conduct 

Finding 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 finding 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 patent.” 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 specific intent to deceive 

the PTO.” Id. at 1287. “[P]revailing on a claim of inequitable 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—by 
IN RE REMBRANDT TECHS., 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 conclusions. 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 whether Paradyne’s statement 

that the delay in payment was “unintentional” was material 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 patentability.” 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.

The PTO has issued clear guidance on the precise issue 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 satisfac-
28 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

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 language, 

the PTO explained what it meant by “unintentional”:

Where the applicant deliberately permits an application to become abandoned (e.g., due to a conclusion 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 abandonment of such application is considered to be a 

deliberately chosen course of action, and the resulting delay cannot be considered as “unintentional” within the meaning of § 1.137(b). . . . An 

intentional delay resulting from a deliberate 

course of action chosen by the applicant is not affected 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, requirement, or decision by the Office; or (3) the discovery of new information or evidence, or other 

change in circumstances subsequent to the abandonment or decision not to seek or persist in seeking 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) (emphases added); see Manual of Patent 

Examining Procedure § 711.03(c)(3)(II)(C) (9th ed. 2015) 

(noting that an applicant’s decision to abandon an application for lack of “sufficient commercial value to justify 

continued prosecution” is “a deliberately chosen course of 

action, and the resulting delay cannot be considered as 

‘unintentional’”). This definition of “unintentional” in 

relation to abandoned applications applies with equal 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 29

force to issued patents. 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 revived the patents if it had known that Paradyne consciously allowed them to expire. In other words, the 

statement was material to patentability—or at least 

continued enforceability.4 The district court’s finding 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 believed that a patent could be revived for years even after 

the six-month grace period for payment. But their decision 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 that 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 inference able 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 statements critical to the “survival of the patent”—even 

though they do not, strictly speaking, bear on patentability—also can be material within the meaning of Therasense. See Ulead Sys., Inc. v. Lex Comput. & Mgmt. 

Corp., 351 F.3d 1139, 1146 (Fed. Cir. 2003) (finding that a 

“false declaration of small entity status” in an effort to 

reduce the required maintenance fees satisfied the materiality prong of the inequitable conduct test).

 
30 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

1242 (quoting In re Rosuvastatin Calcium Patent Litig., 

703 F.3d 511, 519 (Fed. Cir. 2012)).5

Rembrandt’s explanation for Paradyne’s conduct 

makes some sense. In a memo from Bremer to Horstemeyer 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 “unavoidable” or “unintentional.” J.A. 138. Bremer told Horstemeyer that he felt that the abandonment was 

“unintentional” under 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. 144. Horstemeyer also testified that he 

“thought [it] to be a true statement” that the delay in 

payment was unintentional. J.A. 1162, 195:13–20. He 

claimed that the failure to pay maintenance 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. 1174, 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. 3880. 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 Appellees need only prove 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 TECHS., LP PATENT LITIG. 31

patent review board meetings where Paradyne decided 

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 documents 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 evidence that the claim of mistake was a post hoc rationalization. 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 employees who engaged in the inequitable conduct.”); see also 

Reargument Order, at 2 n.1 (“The court has been furnished 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 inference.”). Although the other misconduct occurred much 

later, the district court was entitled to weigh it when 

assessing the key players’ trustworthiness and the likelihood that they had deceptive intent. For these reasons, 

the district court’s finding of inequitable conduct by 

Paradyne was not erroneous. 

Our decision in Network Signatures is not to the contrary. 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 payment 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 standard 
32 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

form, which contained a preprinted statement that the 

delay in payment of the maintenance fee was unintentional. 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 summary judgment 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 “compliance 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 information with the intent to deceive the Director.” Id. at 

1243.

Here, however, the district court found that the same 

people who deceived 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.” Network 

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 district court is owed deference. Although the district court 

did not elaborate on this finding, Appellees identify 

sufficient evidence to support it. Appellees cite, in particular, a spreadsheet that Bremer sent Meli in August 2006 

about the patents in which the third party had expressed 

interest. The row in that spreadsheet about the ’858 

patent indicated that it had been abandoned. Although 
IN RE REMBRANDT TECHS., 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 available to Rembrandt in which Paradyne employees discussed 

their plan to revive the patents. Rembrandt had access to 

these documents under the patent sale agreement. Although 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 Rembrandt 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” standard 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 satisfy [the] intent requirement.”). But 

Appellees are right that Rembrandt conflates the inequitable conduct and exceptional case inquiries. The first 

question—the one governed by Therasense—is whether 

Paradyne committed inequitable conduct. The second 

question—to which Therasense does not apply—is whether Paradyne’s conduct renders Rembrandt’s case exceptional. Rembrandt’s reliance on Therasense in the latter 

context is misplaced.
34 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

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 supplemental 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 the 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. Rembrandt 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. Rembrandt is right that “[t]he imposition of monetary sanctions 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 “opportunity 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 “requires 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 35

further proceedings, including the need for an evidentiary 

hearing.” Id. (quoting Jones v. Pittsburgh 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[ed] 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 here. 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 Rembrandt’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 litigation 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 litigation 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. 
36 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

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 for 

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 re Asbestos Prods. Liab. 

Litig. (No. VI), 718 F.3d 236, 246–47 (3d Cir. 2013) (quoting 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 exceptional-case determinations, and the district court implicitly 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 Under § 285 

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 respect to the substantive strength of a party’s litigating 

position . . . or the unreasonable manner in which the case 

was litigated.” Octane Fitness, 134 S. Ct. at 1756. “District courts may determine whether a case is ‘exceptional’ 

in the case-by-case exercise of their discretion, considering 

the totality of the circumstances.” Id. Relevant considerations may include “frivolousness, motivation, objective 

unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances 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 determination was not an abuse of discretion. The district 

court found that Rembrandt’s conduct, and Paradyne’s 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 37

conduct that was attributable to Rembrandt, showed that 

Rembrandt litigated the case in an “unreasonable manner.” Exceptional Case Order, at 2 n.4 (quoting Octane 

Fitness, 134 S. Ct. at 1756). The court found, in particular, that “the ‘totality of the circumstances’—the wrongful 

inducements, the spoliation, and the assertion of fraudulently 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, we 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 erroneous 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 

Appellees 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 (quoting Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 558 

(2010)). “We therefore also review the calculation of an 

attorney fee award under § 285 for an abuse of discretion.” Id.
38 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

After determining that this case was exceptional, the 

district court asked Appellees to submit documentation 

detailing their fee requests and a proposed order awarding 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 Appellees incurred in defending against Rembrandt’s

assertion of the ’627 patent.

The district court granted almost all of those fee requests, excluding only expert fees, fees relating to Adelphia’s bankruptcy, fees for secretarial and clerical work, and 

prejudgment interest. But the court did not explain why 

an award of almost all fees was warranted or whether it 

had accepted AOPs’ argument about pervasive misconduct. First Fees 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, explaining that the original proposed order “did not correctly tabulate the fee amounts requested in the declarations 

submitted” because it “omitted” fees from Cablevision, 

Cox, and Adelphia. J.A. 3268.

Over Rembrandt’s objections, the district court granted Appellees’ request. Second Fees Order, at 1–3. The 

district court accepted AOPs’ explanation that the increased 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 those 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 TECHS., 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 additional 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, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 829 

(1994)). Deterrence “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 Techs. 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, an award of fees under § 285 is not governed 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 

court 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 prevailing 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 

cases.” 137 S. Ct. at 1187. But, critically, the amount of 

the award must bear some relation to the extent of the 

misconduct. Rambus, 318 F.3d at 1106. The district 
40 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

court must explain that relationship, at least to the extent 

practicable.

Appellees cite our decision in Monolithic Power Systems, Inc. v. O2 Micro International Ltd., 726 F.3d 1359 

(Fed. Cir. 2013), where we upheld 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 omitted). 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 conducting “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 “Rembrandt must take responsibility for its own massive 

litigation,” id., none of the district court’s language implies that it thought the specific instances of misconduct 

above bore the kind of relation to the overall litigation 

contemplated by Goodyear or Rambus.

6 Appellees claim that the district 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. 

 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 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 orders, 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 appropriate because the destroyed documents and the inducements 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 accompanied 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 defense was only relevant to 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 explained why it awarded the 

attorney fees that Adelphia incurred defending against 

Rembrandt in bankruptcy court, it again failed to connect 
42 IN RE REMBRANDT TECHS., LP PATENT LITIG. 

the misconduct 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 involving a few patents and a couple of defendants, a finding 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 

connection” between the misconduct and the fee award. 

Id. What 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’ in 

shifting fees’ is ‘to do rough justice, not to achieve auditing 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 discovery—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 appeal.” 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. 
IN RE REMBRANDT TECHS., LP PATENT LITIG. 43

III. CONCLUSION

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 proceedings consistent with this opinion.

AFFIRMED IN PART, VACATED IN PART, 

AND REMANDED

COSTS

No costs.