Court Opinion

ID: 4303821
Source: CourtListenerOpinion
Date Created: 2018-08-15 15:00:33.179021+00
Date Added: 2024-06-11T07:49:00.988507
License: Public Domain

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, CENTURY-
         TCI 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,
2                 IN RE REMBRANDT TECHS., LP PATENT LITIG.

  CBS CORPORATION, NBC UNIVERSAL INC,
 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-cv-
00721-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-cv-
00399-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., Be-
thesda, MD, argued for plaintiffs-appellants. Also repre-
sented 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. Defendants-
appellees Motorola, Inc., Cisco Systems, Inc., Scientific-
Atlanta, 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, Centu-
ry-TCI Holdings, LLC, Parnassos Communications, LP,
Parnassos Holdings, LLC, Comcast Cable Communica-
tions, LLC, Comcast Corporation. Also represented by
LEO L. LAM.

    BENJAMIN HERSHKOWITZ, Gibson, Dunn & Crutcher
LLP, New York, NY, for defendants-appellees CSC Hold-
ings, Inc., Cablevision Systems Corporation. Also repre-
sented 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, Char-
ter 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 Cox-
Com, 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 in-
fringement 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 manufactur-
ers, and broadcast networks. The cases were consolidated
in the District of Delaware. After several years of litiga-
tion, 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 Rem-
brandt 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 excep-
tional-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 be-
longing 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. Alt-
hough the patented technology is not directly relevant
here, the history of the patents and the documents associ-
ated 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 Trade-
mark 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. Hor-
stemeyer 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, Para-
dyne 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 Rem-
brandt. 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 inven-
tions.” 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 de-
struction was to cut storage costs, that boxes of docu-
ments 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 Para-
dyne’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 asser-
tion programs.” J.A. 240. In exchange, Rembrandt would
pay Attic an annual flat fee, in addition to a small per-
centage 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 be-
fore 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 en-
tered 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.” Appel-
lants’ 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 acquisi-
tion 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 ac-
quired 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-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.
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 addi-
tionally 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 consoli-
dated 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 manufactur-
ers—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 declar-
atory 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 pa-
tents, 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 Janu-
ary 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 nonin-
fringement 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 en-
gaged 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 ware-
house where it claimed Paradyne’s boxes were stored, nor
acknowledged any document destruction until after April
2008. Rembrandt instead claimed that it could not ascer-
tain 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 as-
serted in interrogatory responses and in its opposition to
summary judgment that there was no evidence of prior
sales, without mentioning that relevant documents poten-
tially 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 in-
fringement 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 sanc-
tions 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 deter-
mination 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 con-
sultants 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. †
    On July 13, 2011, the district court struck the fee mo-
tions 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 authori-
ty to the district court citing that case. Rembrandt re-
sponded by arguing that AOPs had abandoned their
motion because the case had been closed for two-and-a-
half years and because the pertinent briefs and support-

     †  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 defini-
tion 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 Oc-
tane Fitness standard.
     On August 20, 2015, the district court issued a four-
page 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 ex-
ceptional” for three reasons. Id. at 3 n.4. First, the court
found that “the evidence shows that Rembrandt improper-
ly compensated its fact witnesses, in violation of ethical
rules of conduct.” Id. (citing Model Rules of Prof’l Con-
duct 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 Rem-
brandt’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 forthcom-
ing litigation such that it had a duty to preserve or in-
struct others to retain certain documents.” Id. The court
concluded that “AOPs’ inability to conduct full discovery
was prejudicial.” Id. Finally, the court found that “Rem-
brandt 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 wrongdo-
ing, pointing the finger at third parties,” because “Rem-
brandt 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 fraudu-
lently revived patents—supports AOPs’ characterization
of this case as ‘exceptional.’” Id. (quoting Octane Fitness,
134 S. Ct. at 1756). The court thereafter denied Rem-
brandt’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 or-
dered 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 re-
quested fees and that the submitted hourly rates, based in
part on the American Intellectual Property Law Associa-
tion’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 ex-
pended 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 “Rem-
brandt 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 in-
curred 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, includ-
ing 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 excep-
tional 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-of-
discretion 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 justifica-
tions 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 dis-
cretion, 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 testimo-
ny.” Exceptional Case Order, at 3 n.4. Rembrandt con-
tends that it never expected the Attic consultants to
become fact witnesses, that the agreement did not preju-
dice Appellees, and that the agreements were permissible
under our precedent.
     After filing suit based on the Paradyne patents, Rem-
brandt hired three former Paradyne employees in Febru-
ary 2006 to provide “[a]ssistance with . . . ongoing patent
assertion programs.” J.A. 240 (emphasis added). Alt-
hough the agreement did not immediately give the con-
sultants an interest in the outcome of the ongoing
litigation, it clearly contemplated future “assertion pro-
grams.” 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 reasona-
bly 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 con-
sultants 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 consult-
ants as witnesses is beside the point. As Appellees cor-
rectly 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 Hor-
stemeyer 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 aban-
don 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 ar-
rangement 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 for-
gotten key details about sales associated with a twenty-
year-old project. But his contingent interest in the litiga-
tion 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 unreasona-
ble 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 ex-
change 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 defens-
es. And the Ethicon agreement conditioned the bulk of
the payment on U.S. Surgical’s prevailing in the litiga-
tion, 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 in-
volved 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 sub-
sequent 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) (observ-
ing 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 licens-
ing or litigation campaign.
    In short, Ethicon did not upend the longstanding ethi-
cal 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 contin-
gent 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 por-
tion 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 impli-
cate these policy rationales. The district court’s decision
does not call these “very common” agreements into ques-
tion, 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 conclu-
sion “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 foreseea-
ble, 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 Rem-
brandt 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 neces-
sarily independently sanctionable—is nonetheless so
‘exceptional’ as to justify an award of fees.” Octane Fit-
ness, 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 excep-
tional-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 evi-
dence 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. ‡ 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 de-
struction 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

     ‡  Appellees’ assertion that these documents com-
prised only those that were helpful to Rembrandt, Appel-
lees’ 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 Rem-
brandt’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 posses-
sion . . . 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 destruc-
tion.
    Two facts in the record suggest, however, that Rem-
brandt knew that document destruction was a significant
risk. First, Meli visited the former Paradyne facility in
Florida shortly after the Zhone acquisition, and he report-
ed 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 disman-
tled.” J.A. 2419, 72:22–25; J.A. 2422, 75:11–22; Appellees’
Br. 10, 14, 50. By that time, litigation already was ongo-
ing, and Meli should have known that some of the docu-
ments “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 de-
struction, 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 finan-
cial documents).” J.A. 229–30. That request did imply
that Zhone should hand over those documents instead of
destroying them. But subsequent testimony from Rem-
brandt’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 destruc-
tion, Rembrandt could have at least issued a litigation
hold. §

     §  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 plain-
tiff was asserting. Id. at *4. With respect to some docu-
ments, the St. Clair court found that the defendant had
“not shown any intent to suppress evidence; to the contra-
ry, the record suggests that a benign explanation is more
plausible.” Id. And for others, the court was “not per-
suaded that [the plaintiff’s and a former patent owner’s]
destruction of the boxes of information was due to any-
thing 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 “be-
lieved 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 infor-
mation had been copied. Here, as discussed above, Rem-
brandt had reason to believe that document destruction
was possible, and it certainly knew that relevant infor-
mation 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 docu-
ments.” 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 pa-
tent.” 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 inequi-
table 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 conclu-
sions. 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 mate-
rial 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 patenta-
bility.” 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 is-
sue 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 appli-
     cation to become abandoned (e.g., due to a conclu-
     sion 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 aban-
     donment of such application is considered to be a
     deliberately chosen course of action, and the re-
     sulting delay cannot be considered as “uninten-
     tional” within the meaning of § 1.137(b). . . . An
     intentional delay resulting from a deliberate
     course of action chosen by the applicant is not af-
     fected 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, re-
     quirement, or decision by the Office; or (3) the dis-
     covery of new information or evidence, or other
     change in circumstances subsequent to the aban-
     donment or decision not to seek or persist in seek-
     ing 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 appli-
cation 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 re-
vived the patents if it had known that Paradyne con-
sciously allowed them to expire. In other words, the
statement was material to patentability—or at least
continued enforceability. ** 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 be-
lieved that a patent could be revived for years even after
the six-month grace period for payment. But their deci-
sion 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 infer-
ence able to be drawn from the evidence.” 731 F.3d at

    **   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 state-
ments critical to the “survival of the patent”—even
though they do not, strictly speaking, bear on patentabil-
ity—also can be material within the meaning of The-
rasense. 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 mate-
riality 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)). ††
    Rembrandt’s explanation for Paradyne’s conduct
makes some sense. In a memo from Bremer to Hor-
stemeyer 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 “unavoid-
able” or “unintentional.” J.A. 138. Bremer told Hor-
stemeyer 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

     †† We note that the high bar in these cases is rooted
in the clear and convincing evidence standard. If Appel-
lees 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 evi-
dence that the claim of mistake was a post hoc rationali-
zation. 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 Excep-
tional Case Order, at 3 n.4 (“[T]he fact witnesses—
discussed above—were the very same Paradyne employ-
ees who engaged in the inequitable conduct.”); see also
Reargument Order, at 2 n.1 (“The court has been fur-
nished 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 infer-
ence.”). Although the other misconduct occurred much
later, the district court was entitled to weigh it when
assessing the key players’ trustworthiness and the likeli-
hood 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 con-
trary. 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 uninten-
tional. 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 sum-
mary 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 infor-
mation 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 dis-
trict court is owed deference. Although the district court
did not elaborate on this finding, Appellees identify
sufficient evidence to support it. Appellees cite, in partic-
ular, 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 availa-
ble to Rembrandt in which Paradyne employees discussed
their plan to revive the patents. Rembrandt had access to
these documents under the patent sale agreement. Alt-
hough 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 Rem-
brandt 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 inequi-
table 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 wheth-
er Paradyne’s conduct renders Rembrandt’s case excep-
tional. Rembrandt’s reliance on Therasense in the latter
context is misplaced.
4. The District Court Followed the Proper Procedures in
     Making Its Exceptional-Case Determination
34                  IN RE REMBRANDT TECHS., LP PATENT LITIG.

    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 supple-
mental 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. Rem-
brandt 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. Rem-
brandt is right that “[t]he imposition of monetary sanc-
tions 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 “opportuni-
ty 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
further proceedings, including the need for an evidentiary
IN RE REMBRANDT TECHS., LP PATENT LITIG.                 35

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 Rem-
brandt’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 litiga-
tion 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.
   And, finally, the district court did not need to consider
each MDL case separately in making an exceptional-case
36                 IN RE REMBRANDT TECHS., LP PATENT LITIG.

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) (quot-
ing 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 excep-
tional-case determinations, and the district court implicit-
ly 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 re-
spect 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. “Dis-
trict 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 consider-
ations may include “frivolousness, motivation, objective
unreasonableness (both in the factual and legal compo-
nents of the case) and the need in particular circumstanc-
es 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 de-
termination was not an abuse of discretion. The district
court found that Rembrandt’s conduct, and Paradyne’s
conduct that was attributable to Rembrandt, showed that
Rembrandt litigated the case in an “unreasonable man-
IN RE REMBRANDT TECHS., LP PATENT LITIG.                 37

ner.” Exceptional Case Order, at 2 n.4 (quoting Octane
Fitness, 134 S. Ct. at 1756). The court found, in particu-
lar, that “the ‘totality of the circumstances’—the wrongful
inducements, the spoliation, and the assertion of fraudu-
lently 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 errone-
ous factual findings.” Bayer CropScience, 851 F.3d at
1306 (quoting Mentor Graphics, 150 F.3d at 1377). Be-
cause 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 (quot-
ing 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 discre-
tion.” Id.
    After determining that this case was exceptional, the
district court asked Appellees to submit documentation
38                 IN RE REMBRANDT TECHS., LP PATENT LITIG.

detailing their fee requests and a proposed order award-
ing 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 re-
quests, excluding only expert fees, fees relating to Adelph-
ia’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 miscon-
duct. 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, ex-
plaining that the original proposed order “did not correct-
ly 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 grant-
ed Appellees’ request. Second Fees Order, at 1–3. The
district court accepted AOPs’ explanation that the in-
creased 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.
    Appellees do not dispute that attorney fees under
§ 285 are compensatory, not punitive. Cent. Soya Co. v.
IN RE REMBRANDT TECHS., LP PATENT LITIG.                 39

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 addi-
tional 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, Unit-
ed 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 gov-
erned 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
court must explain that relationship, at least to the extent
practicable.
40                 IN RE REMBRANDT TECHS., LP PATENT LITIG.

     Appellees cite our decision in Monolithic Power Sys-
tems, 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 omit-
ted). 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. ‡‡ Although the district court also said that
“Rembrandt must take responsibility for its own massive
litigation,” id., none of the district court’s language im-
plies that it thought the specific instances of misconduct
above bore the kind of relation to the overall litigation
contemplated by Goodyear or Rambus.
    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

     ‡‡ 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 Excep-
tional Case Order, at 3 n.4). Appellees read too much into
the district court’s decision.
IN RE REMBRANDT TECHS., LP PATENT LITIG.                 41

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 appropri-
ate because the destroyed documents and the induce-
ments 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 de-
fense 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
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.
42                 IN RE REMBRANDT TECHS., LP PATENT LITIG.

    In the run-of-the-mill patent infringement case in-
volving a few patents and a couple of defendants, a find-
ing 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 audit-
ing 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 ap-
peal.” 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.
                     III. CONCLUSION
    We affirm the district court’s determination that this
case is exceptional under § 285. We vacate, however, its
IN RE REMBRANDT TECHS., LP PATENT LITIG.           43

award of attorney fees and remand for further proceed-
ings consistent with this opinion.
     AFFIRMED IN PART, VACATED IN PART,
              AND REMANDED
                          COSTS
   No costs.