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`
`
`
`
`NOTE: This disposition is nonprecedential.
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`UCP INTERNATIONAL COMPANY LIMITED,
`GLOBAL UNITED ENTERPRISES LIMITED,
`Plaintiffs-Cross-Appellants
`
`v.
`
`BALSAM BRANDS INC., BALSAM
`INTERNATIONAL UNLIMITED COMPANY,
`Defendants-Appellants
`______________________
`
`2018-2231, 2018-2253
`______________________
`
`Appeals from the United States District Court for the
`Northern District of California in No. 3:16-cv-07255-WHO,
`Judge William H. Orrick, III.
`______________________
`
`Decided: September 19, 2019
`______________________
`
`PATRICIA LYNN PEDEN, Burke, Williams & Sorensen,
`LLP, Oakland, CA, argued for plaintiffs-cross-appellants.
`
` DEANNE MAYNARD, Morrison & Foerster LLP, Wash-
`ington, DC, argued for defendants-appellants. Also repre-
`sented by SETH W. LLOYD; ROSE S. LEE, Los Angeles, CA;
`LENA HUGHES, New York, NY; MICHAEL ALLEN JACOBS,
`
`

`

`2
`
`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`San Francisco, CA; MARC N. BERNSTEIN, The Business Lit-
`igation Group, P.C., San Francisco, CA.
` ______________________
`
`Before WALLACH, CLEVENGER, and TARANTO, Circuit
`Judges.
`CLEVENGER, Circuit Judge.
`The instant appeal is the companion to concurrently is-
`suing Appeal No. 18-1256 (“the Merits Appeal”), where we
`determined that the U.S. District Court for the Northern
`District of California misconstrued the “pivot joint” claim
`term of U.S. Patent Nos. 8,062,718 (“the ’718 patent) and
`8,993,077 (“the ’077 patent”) (collectively, “the Patents-in-
`Suit”). See UCP Int’l Co. v. Balsam Brands, Inc., No. 2018-
`1256, slip op. at 27 (Fed. Cir. Sept. 19, 2019). We presume
`familiarity with our opinion in the Merits Appeal which re-
`cites the same technology and patents as the instant ap-
`peal. We, therefore, only recite the facts necessary to
`understand the issues on appeal here.
`Cross-Appellants UCP International Company and
`Global United Enterprises (collectively, “UCP”) sued Ap-
`pellants Balsam Brands Inc. and Balsam International Un-
`limited (together, “Balsam”) in the district court seeking a
`declaratory judgment of non-infringement of all claims of
`the Patents-in-Suit. The district court granted UCP’s mo-
`tion for summary judgment of non-infringement and sub-
`sequently awarded limited attorney fees under 35 U.S.C.
`§ 285 to UCP.
`Balsam appeals from the district court’s award of lim-
`ited attorney fees, arguing that, if we reverse or vacate the
`district court’s judgment in the Merits Appeal, then we also
`must reverse the district court’s attorney fees award. UCP
`cross-appeals on the ground that the district court abused
`its discretion in not awarding all the fees UCP requested
`in its motion. For the reasons that follow, we reverse the
`
`

`

`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`3
`
`district court’s attorney fees award and dismiss UCP’s
`cross-appeal.
`
`BACKGROUND
`After the district court granted UCP’s motion for sum-
`mary judgment of non-infringement, UCP moved for attor-
`ney fees, expert fees, and the attorney fees it incurred in
`pursuing merits fees (“fees-on-fees”). Specifically, UCP
`sought an award of attorney fees from both the litigation
`between Balsam and Frontgate, Balsam Brands Inc. v.
`Cinmar, LLC, No. 3:15-cv-04829-WHO (N.D. Cal.) (“the
`Frontgate Litigation”), and its declaratory judgment action
`against Balsam, UCP Int’l Co. Ltd. v. Balsam Brands Inc.,
`No. 16-CV-07255-WHO (N.D. Cal.) (“the Declaratory Judg-
`ment Litigation”). UCP also sought an award of its expert
`fees from the Frontgate Litigation, and an award of fees-
`on-fees from the Declaratory Judgment Litigation. UCP
`based its entitlement to an award of attorney fees from the
`Frontgate Litigation on the fact that it was contractually
`obligated to indemnify Frontgate in that action, and it
`should, therefore, be able to recover its fees spent defend-
`ing against Balsam’s purportedly meritless infringement
`claims in that action.
`The district court granted-in-part and denied-in-part
`UCP’s motion for attorney fees. The district court denied
`UCP’s request for attorney fees from the separate
`Frontgate Litigation because it found that UCP was not a
`“prevailing party” in that action, as is required to award
`attorney fees under 35 U.S.C. § 285. The district court also
`determined that Frontgate could not recover the expert
`fees from the Frontgate Litigation under 28 U.S.C. § 1927
`or the court’s inherent power. The district court then de-
`termined that UCP was entitled to only limited attorney
`fees under § 285 based on Balsam’s conduct in the Declar-
`atory Judgment Litigation. The limited fees the district
`court awarded were for Balsam’s decision to hire Judge Or-
`rick’s former law firm partner “to prompt [his] recusal and
`
`

`

`4
`
`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`avoid [his] findings and conclusions that the Frontgate
`claim construction order would apply in [the] declaratory
`judgment case.” UCP Int’l Co. Ltd. v. Balsam Brands Inc.,
`No. 16-CV-07255-WHO, 2018 WL 2938855, at *7 (N.D. Cal.
`June 12, 2018).
`In a separate order after receiving additional submis-
`sions from the parties regarding fees spent litigating the
`recusal issue and fees-on-fees, the district court awarded
`UCP $43,475 in fees for litigating the recusal issue, and
`$2,345 in fees-on-fees based on UCP limited success in its
`motion for attorney fees.
`Balsam appeals from the district court’s decision to
`award limited attorney fees only on the ground that, if we
`decided to reverse or vacate the district court’s judgment of
`non-infringement in the Merits Appeal, then we also must
`reverse the district court’s award of attorney fees under
`§ 285 because UCP will no longer be a “prevailing party” as
`the statute requires. UCP cross-appeals on the ground
`that the district court abused its discretion in failing to
`award UCP all of its attorney fees incurred in the Declara-
`tory Judgment Litigation, and its attorney fees and expert
`fees incurred in indemnifying its customer, Frontgate, in
`the Frontgate Litigation. It claims entitlement to such fees
`regardless of whether we reverse or vacate the district
`court’s judgment in the Merits Appeal.
`We have jurisdiction to consider Balsam’s appeal and
`UCP’s cross-appeal under 28 U.S.C. § 1295(a)(1).
`DISCUSSION
`I
`Pursuant to § 285 “[t]he court in exceptional cases may
`award reasonable attorney fees to the prevailing party.”
`35 U.S.C. § 285; see Lumen View Tech. LLC v.
`Findthebest.com, Inc., 811 F.3d 479, 482 (Fed. Cir. 2016).
`We review all aspects of a district court’s § 285 determina-
`tion for an abuse of discretion. Highmark Inc. v. Allcare
`
`

`

`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`5
`
`Health Mgmt. Sys., Inc., 572 U.S. 559, 564 (2014). The stat-
`ute imposes “one and only one constraint on district courts’
`discretion to award attorney’s fees in patent litigation: The
`power is reserved for ‘exceptional’ cases.” Octane Fitness,
`LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 552
`(2014).
`The district court determined that UCP was “entitled
`to attorney fees incurred in filing and defending the motion
`to disqualify” counsel and that the case was “exceptional”
`under § 285 for “Balsam’s conduct resulting in [the district
`court judge’s] temporary recusal.” Balsam, 2018 WL
`2938855 at *7. Balsam asserts that the attorney fees
`award must be reversed if the declaratory judgment in
`UCP’s favor is reversed or vacated. UCP asserts in re-
`sponse that, even if we were to reverse or vacate the district
`court’s judgment in the Merits Appeal, we could still affirm
`the district court’s award of attorney fees because the
`award was not “tied to the non-infringement judgment.”
`Cross-Appellants’ Br. at 50. UCP argues that the award of
`fees was, instead, “a result of Balsam’s litigation miscon-
`duct.” Id. UCP also argues in the alternative that we could
`affirm the district court’s award of attorney fees on other
`grounds because “[c]ourt[s] have the inherent power to
`sanction misconduct.” Id. at 51.
`“By its terms, [§ 285] requires that the recipient of at-
`torney fees be a ‘prevailing party.’” RFR Indus., Inc. v. Cen-
`trury Steps, Inc., 477 F.3d 1348, 1353 (Fed. Cir. 2007). A
`party “prevails” when it receives “relief on the merits” that
`“materially alters the legal relationship between the par-
`ties by modifying” the defendant’s behavior in a way that
`“directly benefits” the plaintiff. SSL Servs., LLC v. Citrix
`Sys., Inc., 769 F.3d 1073, 1086 (Fed. Cir. 2014) (quoting
`Farrar v. Hobby, 506 U.S. 103, 111–12, (1992)). In this
`case, the district court awarded fees only after granting
`UCP’s motion for summary judgment of non-infringement.
`Where we vacate or reverse the judgment in the Merits Ap-
`peal, we must also reverse the fee award. See Mankes v.
`
`

`

`6
`
`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`Vivid Seats Ltd., 822 F.3d 1302, 1312 (Fed. Cir. 2016) (“Be-
`cause we vacate and remand judgment on the pleadings
`and no other relief runs in [the party’s favor, that party] is
`no longer the ‘prevailing party’ under § 285 . . . . At this
`point, § 285 does not authorize the district court to award
`fees.”). As such, we must reverse the award of attorney
`fees.
`While UPC avers that the fee award can be affirmed on
`alternative grounds, we disagree. Because UCP did not as-
`sert a claim for attorney fees on any other basis, it cannot
`raise it for the first time on appeal. Singleton v. Wuff, 428
`U.S. 106, 120 (1976) (explaining that “[i]t is the general
`rule . . . that a federal appellate court does not consider an
`issue not passed upon below”). Therefore, we need not con-
`sider an issue not raised below.
`We also disagree with UCP’s argument that we can af-
`firm the district court’s award of attorney fees here even if
`UCP is not a prevailing party because the district court
`awarded the fees based on Balsam’s litigation misconduct.
`Regardless of why the district court awarded attorney fees
`in this case, it did so solely under § 285. Prevailing party
`status is a prerequisite to an award of attorney fees under
`that statutory section. It is therefore immaterial that the
`district court awarded attorney fees under § 285 based on
`Balsam’s actions resulting in Judge Orrick’s recusal. Be-
`cause we vacated the district court’s judgment in the Mer-
`its Appeal, we must reverse its decision to award attorney
`fees. See Waner v. Ford Motor Co., 331 F.3d 851, 857 (Fed.
`Cir. 2003) (vacating the district court’s award of fees to
`Waner under § 285 for Ford’s litigation misconduct where
`we determined that Warner lost on its unjust enrichment
`and infringement claims against Ford, and thus was no
`longer the prevailing party).
`II
`UCP argues in its cross-appeal that the district court
`abused its discretion in not awarding UCP all of the
`
`

`

`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`7
`
`attorney fees it incurred in Frontgate’s defense in the
`Frontgate Litigation, all of the expert fees it incurred in the
`Frontgate Litigation, all of the attorney fees it incurred in
`the Declaratory Judgment Litigation, and all of its fees-on-
`fees. Balsam contends in response that the district court
`properly denied UCP additional attorney fees under 35
`U.S.C. § 285, that it properly denied UCP’s claim for expert
`fees under the court’s inherent power, and that it properly
`limited UCP’s fees-on-fees award. We agree with Balsam.
`First, UCP is not entitled to additional attorney fees
`under § 285 for the same reason it is not entitled to the
`limited attorney fees the court awarded—it is not a “pre-
`vailing party” after our decision in the Merits Appeal.
`Similarly, UCP is not entitled to additional fees in-
`curred in litigating its motion for attorney fees because we
`hold here that it is not even entitled to the fraction of its
`fees-on-fees request that the district court awarded below.
`UCP received a portion of its fees-on-fees request because
`it succeeded, in part, in its motion for attorney fees. Be-
`cause we reverse the district court’s decision regarding at-
`torney fees, there is no longer a basis for awarding any fees-
`on-fees. See Comm’r, I.N.S. v. Jean, 496 U.S. 154, 163 n.10
`(1990) (“[F]ees for fee litigation should be excluded to the
`extent that the applicant ultimately fails to prevail in such
`litigation.”).
`Last, UCP is not entitled to expert fees under the dis-
`trict court’s inherent power because the district court did
`not abuse its discretion in declining to award those fees. A
`court’s decision of whether to award fees under its inherent
`power is reviewed for abuse of discretion. Chambers v.
`NASCO, Inc., 501 U.S. 32, 55 (1991). In Chambers, the Su-
`preme Court counseled that “a court’s inherent powers
`“must be exercised with restraint.” Id. at 44. The bar that
`must be met to award expert fees under the court’s inher-
`ent power is, therefore, high. See id. at 45–46 (holding that
`a court may assess fees under its inherent power when a
`
`

`

`8
`
`UCP INTERNATIONAL COMPANY LTD. v. BALSAM BRANDS INC.
`
`party has acted “in bad faith, vexatiously, wantonly, or for
`oppressive reasons” (quoting Alyeska Pipeline Serv. Co. v.
`Wilderness Soc’y, 421 U.S. 240, 259 (1975))); Amsted Indus.
`Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 378 (Fed.
`Cir. 1994) (“Without a finding of fraud or bad faith whereby
`the very temple of justice has been defiled, a court enjoys
`no discretion to employ inherent powers to impose sanc-
`tions.” (internal quotation marks omitted)); Fink v. Gomez,
`239 F.3d 989, 994 (9th Cir. 2001) (holding that sanctions
`are available under the court’s inherent authority “if the
`court specifically finds bad faith or conduct tantamount to
`bad faith”). After reviewing the record facts, we cannot dis-
`cern any abuse of discretion in the district court’s determi-
`nation that Balsam’s conduct did not meet that bar.
`CONCLUSION
`For the reasons stated above, we reverse the district
`court’s decision to award attorney fees to UCP, and we dis-
`miss UCP’s cross-appeal.
`REVERSED AS TO APPEAL NO. 18-2231;
`DISMISSED AS TO APPEAL NO. 18-2253.
`COSTS
`
`No costs.
`
`