Case: 20-1049 Document: 14 Page: 1 Filed: 01/15/2020
`
`20-1049, 20-1051
`__________________________
`
`UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
`__________________________
`
`UNILOC 2017 LLC,
`Plaintiff/Appellee
`
`v.
`MICROSOFT CORPORATION,
`Defendant/Appellant
`__________________________
`
`Appeal from the United States District Court for the Central District of California
`in case nos. 8:18-cv-02053-AG-JDE and 8:19-cv-00158-AG-JDE,
`Judge Andrew J. Guilford
`__________________________
`
`APPELLANT’S OPENING BRIEF
`__________________________
`
`Elizabeth M. Banzhoff
`PERKINS COIE LLP
`1900 Sixteenth Street, Suite 1400
`Denver, CO 80202
`Phone: (303) 291–2300
`E-mail:EBanzhoff@perkinscoie.com
`
`Dan L. Bagatell
`PERKINS COIE LLP
`3 Weatherby Road
`Hanover, New Hampshire 03755
`Phone: (602) 351–8250
`E-mail:DBagatell@perkinscoie.com
`
`Counsel for Appellant Microsoft Corporation
`
`January 15, 2020
`
`

`

`Case: 20-1049 Document: 14 Page: 2 Filed: 01/15/2020
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`CERTIFICATE OF INTEREST
`
`Counsel for appellant certifies the following:
`
`The full name of the party I represent is:
`Microsoft Corporation
`
`The names of all other real parties in interest represented by me are:
`none
`
`The names of all parent corporations and any publicly held companies that
`own 10% or more of the stock of the party I represent are:
`none
`
`The names of all law firms and lawyers that appeared for the parties now
`represented by me in the district court or that are expected to appear in this Court
`but have not yet appeared in this Court are:
`
`Juanita Rose Brooks
`Steven R. Katz
`Katherine H. Reardon
`
`FISH & RICHARDSON P.C.
`Roger A. Denning
`Aamir A. Kazi
`Benjamin K. Thompson
`
`James Huguenin-Love
`Indranil Mukerji
`
`WHITE & CASE LLP
`Shamita D. Etienne-Cummings James P. Gagen
`
`Allen W. Wang
`
`KELLER/ANDERLE LLP
`Chase Scolnick
`MICROSOFT CORPORATION
`David Killough
`
`– i –
`
`

`

`Case: 20-1049 Document: 14 Page: 3 Filed: 01/15/2020
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`The titles and numbers of any cases known to counsel to be pending in this
`or any other court or agency that will directly affect or be directly affected by this
`Court’s decision in the pending appeal are:
`none
`
`Dated: January 15, 2020
`
`/s/Elizabeth Banzhoff
` Elizabeth Banzhoff
`
`Counsel for Appellant
`
`– ii –
`
`

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`Case: 20-1049 Document: 14 Page: 4 Filed: 01/15/2020
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`TABLE OF CONTENTS
`
`Certificate of Interest ..................................................................................................i
`Table of Contents..................................................................................................... iii
`Table of Authorities...................................................................................................v
`Table of Abbreviations and Conventions ................................................................vii
`Statement of Related Cases.................................................................................... viii
`Introduction................................................................................................................1
`Jurisdiction.................................................................................................................3
`Issue Presented...........................................................................................................3
`Statement of the Case ................................................................................................3
`Summary of Argument ..............................................................................................5
`Standard of Review....................................................................................................7
`Argument ...................................................................................................................7
`I.
`Buckhannon sought to limit statutory fee awards to parties that
`prevailed in litigation rather than achieving extra-litigation results ..........8
`II. Microsoft prevailed in the litigation because Uniloc dismissed its
`claim with prejudice and can never assert that claim again.....................10
`A. A voluntary dismissal with prejudice is a judicially
`enforceable judgment and thus bears the hallmarks of
`“judicial imprimatur”........................................................................10
`B. Microsoft is the “prevailing party” because it achieved its
`desired result within the litigation ....................................................12
`C. This and other courts have recognized that voluntary
`dismissals may confer “prevailing party” status on the
`defendant...........................................................................................14
`
`– iii –
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`

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`Case: 20-1049 Document: 14 Page: 5 Filed: 01/15/2020
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`D. Sound public policy supports the conclusion that Microsoft
`was the prevailing party in this case.................................................16
`Conclusion ...............................................................................................................19
`Addendum: The District Court’s Order
`Certificate of Compliance
`Certificate of Authority
`
`– iv –
`
`

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`Case: 20-1049 Document: 14 Page: 6 Filed: 01/15/2020
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`TABLE OF AUTHORITIES
`
`Cases
`
`Pages
`
`Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res.,
`532 U.S. 598 (2001) ....................................................................................passim
`BWP Media USA, Inc. v. Gossip Cop. Media, LLC,
`No. 13 Civ. 7574(KPF), 2015 WL 321877 (S.D.N.Y. Jan. 26, 2015) ..............16
`Cadkin v. Loose,
`569 F.3d 1142 (9th Cir. 2009) ...........................................................................14
`Carter v. Inc. Vill. of Ocean Beach,
`759 F.3d 159 (2d Cir. 2018) ..............................................................................12
`Chapman Law Firm Co. v. Greenleaf Constr. Co.,
`490 F.3d 934 (Fed. Cir. 2007) ...........................................................................13
`Claiborne v. Wisdom,
`414 F.3d 715 (7th Cir. 2005) .............................................................................11
`CRST Van Expedited, Inc. v. E.E.O.C.,
`136 S. Ct. 1642 (2016) ...................................................................................6, 12
`Ellis v. Gelson’s Markets,
`1 F.3d 1246 (9th Cir. 1993) ...............................................................................11
`F4W, Inc. v. Tracstar Sys., Inc.,
`No. 6:12-CV-1539-ORL-KRS, 2015 WL 12838856 (M.D. Fla.
`Apr. 3, 2015), report and recommendation adopted, No. 6:12-CV-
`1539-ORL-KRS, 2015 WL 12840464 (M.D. Fla. June 18, 2015) ....................14
`Highway Equip. Co., Inc. v. FECO, Ltd.,
`469 F.3d 1027 (Fed. Cir. 2006) .......................................................6, 7, 8, 15, 18
`Hopkins Mfg. Corp. v. Cequent Performance Prods., Inc.,
`223 F. Supp. 3d 1194 (D. Kan. 2016) ...............................................................14
`Keith Mfg., Co. v. Butterfield,
`256 F. Supp. 3d 1123 (D. Or. 2017) ..................................................................14
`Kilopass Tech., Inc. v. Sidense Corp.,
`738 F.3d 1302 (Fed. Cir. 2013) .........................................................................16
`
`– v –
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`

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`Case: 20-1049 Document: 14 Page: 7 Filed: 01/15/2020
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`Khoury v. Allstate Ins. Co.,
`99 F. App’x 145 (9th Cir. 2004) ........................................................................11
`NEXUS Servs., Inc. v. Moran,
`No. 5:15-cv-00035, 2018 WL 1461750 (W.D. Va. Mar. 23, 2018) ..................16
`Nutrivita Labs., Inc. v. VBS Distrib. Inc.,
`160 F. Supp. 3d 1184 (C.D. Cal. 2016),
`aff’d, 697 F. App’x 559 (9th Cir. 2017) ................................................11, 14, 16
`Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
`572 U.S. 545 (2014) .............................................................................................7
`Power Mosfet Techs., L.L.C. v Siemens AG,
`378 F.3d 1396 (Fed. Cir. 2004) .........................................................................15
`Raniere v. Microsoft Corp.,
`887 F.3d 1298 (Fed. Cir. 2018) .....................................................................8, 12
`RFR Indus., Inc. v. Century Steps, Inc.,
`477 F.3d 1348 (Fed. Cir. 2007) ...................................................................13, 14
`Smith v. Lenches,
`263 F.3d 972 (9th Cir. 2001) .............................................................................18
`Xlear, Inc. v. Focus Nutrition, LLC,
`893 F.3d 1227 (10th Cir. 2018) .........................................................................14
`
`Statutes and Rules
`
`28 U.S.C. § 1295(a)(1) ..............................................................................................3
`28 U.S.C. § 1331 .......................................................................................................3
`28 U.S.C. § 1338(a) ..................................................................................................3
`35 U.S.C. § 285 ................................................................................................passim
`Fed. R. Civ. P. 41(a)(1)(A)(ii) .........................................................................passim
`Fed. R. Civ. P. 41(a)(2) .................................................................................2, 17, 18
`
`– vi –
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`

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`Case: 20-1049 Document: 14 Page: 8 Filed: 01/15/2020
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`TABLE OF ABBREVIATIONS AND CONVENTIONS
`
`Microsoft
`Uniloc
`
`’273 patent
`’485 patent
`
`defendant-appellant Microsoft Corporation
`plaintiff-appellee Uniloc 2017 LLC and its predecessors-
`in-interest
`U.S. Patent No. 8,881,273
`U.S. Patent No. 9,311,485
`
`– vii –
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`

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`Case: 20-1049 Document: 14 Page: 9 Filed: 01/15/2020
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`STATEMENT OF RELATED CASES
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`Microsoft Corporation and its counsel are unaware of any cases that would
`
`directly affect or be directly affected by this Court’s decision in this appeal.
`
`– viii –
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`

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`Case: 20-1049 Document: 14 Page: 10 Filed: 01/15/2020
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`INTRODUCTION
`
`This was a frivolous patent-infringement lawsuit. After Uniloc filed suit,
`
`Microsoft retained counsel, investigated the patent-in-suit, and concluded that the
`
`patent was plainly invalid for double-patenting over its nearly-identical parent
`
`patent. Microsoft promptly confronted Uniloc and explained why the case had no
`
`merit and should never have been filed. Uniloc relented and filed a stipulated
`
`dismissal of its infringement claim pursuant to Federal Rule of Civil Procedure
`
`41(a)(1)(A)(ii).
`
`The dismissal was expressly with prejudice. As a result, the parties’ posi-
`
`tions were materially and permanently altered in a judicially enforceable manner:
`
`Uniloc gave up its patent infringement claim and cannot assert that claim against
`
`Microsoft ever again. If Uniloc were to bring the same infringement claim again,
`
`the court presiding over that second action would have to dismiss it on grounds of
`
`res judicata (claim preclusion).
`
`After the dismissal here, Microsoft moved for an order declaring the case
`
`“exceptional” under 35 U.S.C. § 285, entitling Microsoft to reimbursement of
`
`reasonable attorneys’ fees. Microsoft argued that Uniloc had failed to conduct a
`
`reasonable pre-suit investigation and had asserted a patent that was plainly invalid
`
`for double-patenting. The district court, however, never addressed whether the
`
`case was exceptional and warranted a fee award. Instead, it denied the motion on
`
`– 1 –
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`

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`Case: 20-1049 Document: 14 Page: 11 Filed: 01/15/2020
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`grounds that the case was dismissed by stipulation under Rule 41(a)(1)(a)(ii) rather
`
`than by formal court order under Rule 41(a)(2). According to the court, the fact
`
`that the dismissal was stipulated meant that it lacked the “judicial imprimatur”
`
`necessary for Microsoft to qualify as a “prevailing party” under the Supreme
`
`Court’s decision in Buckhannon Board & Care Home, Inc. v. West Virginia
`
`Department of Health & Human Resources, 532 U.S. 598 (2001).
`
`This Court should now reverse, hold that Microsoft was the prevailing party
`
`as a matter of law, vacate the denial of Microsoft’s fees motion, and remand for the
`
`district court to determine whether the case was exceptional and warrants a fee
`
`award under 35 U.S.C. § 285. As a practical matter and a legal matter, Microsoft
`
`was the prevailing party in the litigation because Uniloc was forced to give up its
`
`infringement claim forever. The district court’s application of Buckhannon was
`
`mistaken for two reasons. First, the “judicial imprimatur” principle was designed
`
`to distinguish cases where a party prevails as a legal matter from cases that merely
`
`become moot due to a party’s voluntary change in conduct outside the litigation.
`
`This case was not moot, and Microsoft prevailed as a legal matter because Uniloc
`
`threw in the towel. Second, the dismissal has “judicial imprimatur” because
`
`Microsoft obtained a judicially enforceable judgment barring Uniloc from suing
`
`Microsoft on this infringement claim ever again.
`
`– 2 –
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`

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`Case: 20-1049 Document: 14 Page: 12 Filed: 01/15/2020
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`JURISDICTION
`
`This appeal arises from a final order of the District Court for the Central
`
`District of California. The district court had jurisdiction under 28 U.S.C. §§ 1331
`
`and 1338(a) because Uniloc asserted a claim of patent infringement. This appeal is
`
`from the district court’s September 9, 2019 order denying Microsoft’s motion for
`
`attorneys’ fees after Uniloc dismissed its claim. Microsoft timely filed notices of
`
`appeal on October 7, 2019, within 30 days of that final order. Appx322-323,
`
`Appx332-333 (notices of appeal).1 This Court therefore has jurisdiction under 28
`
`U.S.C. § 1295(a)(1).
`
`ISSUE PRESENTED
`
`Whether the district court erred in holding that Microsoft was not the
`
`“prevailing party” in this litigation and therefore not entitled to move for its
`
`attorneys’ fees under 35 U.S.C. § 285.
`
`STATEMENT OF THE CASE
`
`In 2018 and 2019, Uniloc filed a wave of infringement lawsuits against
`
`Microsoft. The complaint in this case asserted that Microsoft infringed U.S. Patent
`
`No. 9,311,485. Appx32-71. Microsoft investigated Uniloc’s allegations and both
`
`
`1 In an abundance of caution, Microsoft filed notices of appeal in both the
`consolidated case in which the district court’s order was entered and the individual
`case in which the patent at issue was asserted. This Court consolidated the two
`appeals.
`
`– 3 –
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`

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`Case: 20-1049 Document: 14 Page: 13 Filed: 01/15/2020
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`answered the complaint, Appx72-81, and sent a letter to Uniloc explaining why the
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`suit had no merit because the ’485 patent was invalid for double-patenting over its
`
`parent, U.S. Patent No. 8,881,273, see Appx201-202. The ’273 patent is identical
`
`to the ’485 patent except for a one-word difference: three dependent claims of the
`
`’273 patent refer to “unique digital fingerprints” of devices, whereas the ’485
`
`patent refers to “digital fingerprints.” Compare Appx307-321 with Appx57-71.
`
`That distinction was of no import, however, because the common specification
`
`describes “digital fingerprints” as “unique identifiers of individual devices,”
`
`Appx120 at 3:38, and during prosecution Uniloc distinguished prior art on the
`
`ground that the claimed “digital fingerprint” was unique, Appx148.
`
`In response to Microsoft’s letter, Uniloc agreed to dismiss this lawsuit.
`
`Appx204. More specifically, Uniloc proposed to stipulate to dismiss its claim of
`
`infringement of the ’485 patent with prejudice pursuant to Rule 41(a)(1)(A)(ii),
`
`which provides that “the plaintiff may dismiss an action without a court order by
`
`filing … a stipulation of dismissal signed by all parties who have appeared.”
`
`Appx204. Microsoft agreed to dismissal of the case with prejudice but made clear
`
`that it did “not agree to forego its right to seek costs and fees stemming from
`
`Uniloc’s assertion of admittedly invalid patent claims.” Appx206. The filed
`
`stipulation of dismissal accordingly did not include the usual language that each
`
`party will bear its own fees and costs. Appx84-86.
`
`– 4 –
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`

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`Case: 20-1049 Document: 14 Page: 14 Filed: 01/15/2020
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`Seeking to dissuade Uniloc from continuing to file frivolous lawsuits,
`
`Microsoft filed a motion seeking its attorneys’ fees under 35 U.S.C. § 285, which
`
`authorizes district courts to award reasonable attorneys’ fees to the “prevailing
`
`party” in “exceptional cases.” Appx87-226. The district court denied the motion.
`
`Appx1-7. The court did not address whether the case was exceptional because it
`
`concluded, as a threshold matter of law, that Microsoft was not a “prevailing
`
`party.” Appx7. The court acknowledged that the dismissal established the neces-
`
`sary change in the parties’ legal relationship because Uniloc is now barred from re-
`
`filing its claim against Microsoft. Appx3. Nevertheless, the court concluded that
`
`the dismissal lacked the “judicial imprimatur” necessary to make Microsoft the
`
`“prevailing party” under Buckhannon because the dismissal was stipulated rather
`
`than court-ordered. Appx3-7.
`
`Microsoft now appeals.
`
`SUMMARY OF ARGUMENT
`
`Microsoft was the prevailing party in this litigation because Uniloc is now
`
`legally barred from reasserting against Microsoft the claim Uniloc asserted in this
`
`case. This is not a case like Buckhannon where the plaintiff did not legally prevail
`
`because the defendant’s behavior outside the litigation had caused the litigation to
`
`become moot. Instead, it is a case where the plaintiff conceded defeat within the
`
`litigation and dismissed its claim with prejudice. If Uniloc were to try to assert the
`
`– 5 –
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`

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`Case: 20-1049 Document: 14 Page: 15 Filed: 01/15/2020
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`same claim again, any future court would be required to dismiss the claim under
`
`the doctrine of res judicata (claim preclusion).
`
`The dismissal with prejudice was thus a judicially sanctioned change in the
`
`legal relationship between the parties, and Microsoft was therefore the prevailing
`
`party even though the district court did not issue an order approving the stipulation.
`
`The only reason that the district court did not issue an order approving the stipula-
`
`tion was that such an order was unnecessary under Rule 41(a)(1)(A)(ii). As the
`
`Supreme Court held in CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642,
`
`1646 (2016), the district court did not need to adjudicate the merits of Uniloc’s
`
`claim to make Microsoft the prevailing party. And as this Court held in Highway
`
`Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1035 (Fed. Cir. 2006), it makes no
`
`difference that Uniloc dismissed its claim voluntarily rather than involuntarily.
`
`Policy reasons also support a holding that Microsoft was the prevailing party
`
`here. There is no practical difference between a case where the district court
`
`formally enters an order dismissing the case and the case here where, by rule, the
`
`dismissal was effective upon the filing of a stipulation. Uniloc should not be
`
`allowed to evade answering for its misconduct under 35 U.S.C. § 285 based on a
`
`procedural fortuity and formality. Moreover, insisting on such a distinction would
`
`force defendants to refuse to stipulate and instead oppose a motion to dismiss in
`
`order to seek their attorneys’ fees. Yet opposing a plaintiff’s motion to dismiss its
`
`– 6 –
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`

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`Case: 20-1049 Document: 14 Page: 16 Filed: 01/15/2020
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`own case with prejudice is almost always futile, and further litigation would result
`
`in needless expense of resources.
`
`The district court’s ruling that Microsoft was not the “prevailing party”
`
`should therefore be reversed, the denial of Microsoft’s motion for attorneys’ fees
`
`should be vacated, and the case should be remanded for the district court to deter-
`
`mine whether this was an exceptional case and, if so, the amount of attorneys’ fees
`
`that Microsoft is entitled to recoup.
`
`STANDARD OF REVIEW
`
`Although this Court reviews the exceptionality of a patent case and the
`
`amount of any attorneys’ fees awarded only for abuse of discretion, Octane
`
`Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 557 (2014), the district
`
`court did not reach those issues. Instead, it made a threshold legal determination
`
`that Microsoft did not qualify as a “prevailing party” because the case was dis-
`
`missed with prejudice by stipulation rather than by a court order. Appx1-7. This
`
`Court reviews that legal determination de novo. See Highway Equip., 469 F.3d at
`
`1032 (reviewing de novo “the effect of a dismissal with prejudice on the avail-
`
`ability [of] attorney fees”).
`
`ARGUMENT
`
`The district court erred as a matter of law in holding that Microsoft was not a
`
`“prevailing party” on grounds that the dismissal of Uniloc’s infringement claim
`
`– 7 –
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`

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`Case: 20-1049 Document: 14 Page: 17 Filed: 01/15/2020
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`with prejudice lacked sufficient “judicial imprimatur.” This Court should reverse
`
`that ruling, vacate the denial of Microsoft’s motion for attorneys’ fees, and remand
`
`for the district court to assess Microsoft’s fee motion on its merits.
`
`I. Buckhannonsought to limit statutory fee awards to parties that
`prevailed in litigation rather than achieving extra-litigation results
`
`Under the traditional “American Rule,” parties are ordinarily required to
`
`bear their own attorneys’ fees, regardless of which side prevailed. Buckhannon,
`
`532 U.S. at 602. But Congress may legislate exceptions to that rule, and it has
`
`done so in 35 U.S.C. § 285, which provides that in patent cases, “[t]he court in
`
`exceptional cases may award reasonable attorney fees to the prevailing party.”
`
`Other statutes and rules likewise authorize fee awards to the “prevailing party,”
`
`and the Supreme Court has construed the term to have a consistent meaning across
`
`attorneys’ fees statutes. Buckhannon, 532 U.S. at 603 n.4; see also Raniere v.
`
`Microsoft Corp., 887 F.3d 1298, 1306 (Fed. Cir. 2018) (agreeing that there is “no
`
`reason to make ... a distinction [between attorney fee statutes] in light of the Sup-
`
`reme Court’s clear command to construe the term ‘prevailing party’ consistently
`
`across fee-shifting regimes.”); Highway Equip., 469 F.3d at 1035 (“treat[ing] the
`
`prevailing party issue under Rule 54 and 35 U.S.C. § 285 similarly”).
`
`In Buckhannon, the Supreme Court addressed who qualified as a “prevailing
`
`party” under the Fair Housing Amendments Act (FHAA) and the Americans with
`
`Disabilities Act (ADA). In that case, the plaintiff, a residential care facility, sued
`
`– 8 –
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`the State of West Virginia and other defendants, contending that a “self-preserva-
`
`tion” requirement for residential care facilities violated the FHAA and ADA. 532
`
`U.S. at 601-02. During the case, the West Virginia legislature enacted legislation
`
`that removed the “self-preservation” requirement. Id. The defendants moved to
`
`dismiss the case as moot, and the district court granted the motion. Id. at 602. The
`
`plaintiff then moved for attorneys’ fees, arguing that it was the prevailing party
`
`under a “catalyst” theory, “which posits that a plaintiff is a ‘prevailing party’ if it
`
`achieves the desired result because the lawsuit brought about a voluntary change in
`
`the defendant's conduct.” Id. at 601.
`
`The Supreme Court rejected the “catalyst” theory, which several circuit
`
`courts had endorsed, on grounds that a “defendant’s voluntary change in conduct,
`
`although perhaps accomplishing what the plaintiff sought to achieve by the law-
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`suit, lack[ed] the necessary judicial imprimatur on the change.” Id. at 605. The
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`Court’s concern was that the catalyst theory would “authorize[ ] an award of
`
`attorney’s fees without a corresponding alteration in the legal relationship of the
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`parties.” Id. (emphasis in original). The Court thus held that a “judicially
`
`sanctioned” change in the legal relationship of the parties is required for a litigant
`
`to be deemed a “prevailing” party. Id. The Court further held that “enforceable
`
`judgments on the merits and court-ordered consent decrees create the ‘material
`
`– 9 –
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`Case: 20-1049 Document: 14 Page: 19 Filed: 01/15/2020
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`alteration of the legal relationship of the parties’ necessary to permit an award of
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`attorney’s fees.” Id. at 604.
`
`This case does not involve a plaintiff seeking its attorneys’ fees based on a
`
`“catalyst” theory. Nor does it involve a case that became moot due to extra-judi-
`
`cial events. It involves a defendant that convinced the plaintiff to dismiss with
`
`prejudice a meritless—but very much alive—case. As shown next, the parties’
`
`legal relationship permanently changed in Microsoft’s favor. Microsoft was
`
`therefore the prevailing party, legally as well as practically, and the district court
`
`should have proceeded to determine whether the case was “exceptional” and
`
`warrants a fee award.
`
`II. Microsoft prevailed in the litigation because Uniloc dismissed its
`claim with prejudice and can never assert that claim again
`
`A.
`
`A voluntary dismissal with prejudice is a judicially enforceable
`judgment and thus bears the hallmarks of “judicial imprimatur”
`
`As just discussed, Buckhannon held that “enforceable judgments on the
`
`merits” qualify as “judicially sanctioned” changes in the legal relationship between
`
`parties, permitting an award of attorneys’ fees. 532 U.S. at 604-05. Because
`
`Uniloc’s stipulated dismissal of its infringement claim was with prejudice and
`
`judicially enforceable, it was an “enforceable judgment on the merits” with suffi-
`
`cient “judicial imprimatur” to make Microsoft the “prevailing party.”
`
`– 10 –
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`Case: 20-1049 Document: 14 Page: 20 Filed: 01/15/2020
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`Under the doctrine of res judicata (claim preclusion), Uniloc’s dismissal of
`
`its infringement claim with prejudice means that Uniloc is now legally barred from
`
`asserting the claim in this case against Microsoft in any future case. See, e.g., Ellis
`
`v. Gelson’s Markets, 1 F.3d 1246 (9th Cir. 1993) (unpublished) (voluntary dismis-
`
`sal with prejudice has res judicata effect). If Uniloc tried to bring this infringe-
`
`ment claim again, the district court in the second case would be required to dismiss
`
`it. See Claiborne v. Wisdom, 414 F.3d 715, 719 (7th Cir. 2005) (interpreting
`
`Buckhannon). The dismissal has therefore materially and permanently altered the
`
`parties’ legal relationship in Microsoft’s favor. Id.
`
`As a practical and legal matter, the dismissal operates as a legally enforce-
`
`able judgment of this district court even though, under Rule 41(a)(1)(A)(ii), its
`
`stipulated nature meant that it took effect automatically and did not require formal
`
`approval and entry by the district judge himself. See Khoury v. Allstate Ins. Co.,
`
`99 F. App’x 145, 146 (9th Cir. 2004) (stipulated dismissal with prejudice pursuant
`
`to former Rule 41(a)(1)(ii) was a “final judgment on the merits”); Nutrivita Labs.,
`
`Inc. v. VBS Distrib. Inc., 160 F. Supp. 3d 1184, 1189 (C.D. Cal. 2016) (holding
`
`that defendant was the prevailing party when plaintiff stipulated to dismiss its case
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`with prejudice because the “mechanism of dismissal with prejudice does contem-
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`plate judicial enforcement”), aff’d, 697 F. App’x 559 (9th Cir. 2017).
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`– 11 –
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`

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`Case: 20-1049 Document: 14 Page: 21 Filed: 01/15/2020
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`To be sure, the district court did not adjudicate the merits of Uniloc’s
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`infringement claim in the sense of identifying substantive deficiencies requiring
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`dismissal. But that does not matter: since Buckhannon, the Supreme Court has
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`recognized that a defendant may be a “prevailing party” for purposes of attorneys’
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`fees even though it did not prevail based on a court’s ruling on the merits of the
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`plaintiff’s claim. CRST Van Expedited, 136 S. Ct. at 1646 (holding that a “favor-
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`able ruling on the merits is not a necessary predicate to find that a defendant has
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`prevailed”); see also Raniere, 887 F.3d at 1306-08 (holding that Microsoft was the
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`“prevailing party” even though the case was dismissed with prejudice on standing
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`grounds rather than on the patent-infringement merits).
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`Simply put, Microsoft was the “prevailing party” because it “gained through
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`the litigation a ‘material alteration of the legal relationship of the parties.’” Carter
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`v. Inc. Vill. of Ocean Beach, 759 F.3d 159, 165-66 (2d Cir. 2014) (quoting Buck-
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`hannon, 532 U.S. at 604).
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`B. Microsoft is the “prevailing party” because it
`achieved its desired result within the litigation
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`As discussed above, the Buckhannon Court’s concern was with basing
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`“prevailing party” status on events that occurred outside the lawsuit, rather than
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`within it. That concern is irrelevant here because Microsoft achieved its desired
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`result (dismissal with prejudice) within the litigation. No events outside the
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`lawsuit had rendered the case moot. Microsoft hired lawyers, filed an answer,
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`– 12 –
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`

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`Case: 20-1049 Document: 14 Page: 22 Filed: 01/15/2020
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`explained why it thought the lawsuit had no merit, and urged Uniloc to dismiss the
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`case with prejudice accordingly. The case remained a live case and controversy
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`until Uniloc relented and conceded defeat.
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`This case fundamentally differs from the cases cited by the district court in
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`which this Court has found insufficient judicial imprimatur. For example, in
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`Chapman Law Firm Co. v. Greenleaf Construction Co., 490 F.3d 934 (Fed. Cir.
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`2007), the Court of Federal Claims declined to dismiss a bid protest despite
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`proposed corrective action by the U.S. government and instead entered judgment
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`for the plaintiff so that the plaintiff could apply for attorneys’ fees. This Court
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`found no court-ordered alteration in the relationship of the parties had occurred
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`because, as in Buckhannon, the government had agreed to the corrective action.
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`Indeed, the Court held that the plaintiff was not entitled to judgment at all; the case
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`should have been dismissed with no judgment entered. Id. at 938-40. Here, by
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`contrast, the result was a final, valid, and enforceable judgment for Microsoft
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`against Uniloc.
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`In RFR Industries, Inc. v. Century Steps, Inc., 477 F.3d 1348 (Fed. Cir.
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`2007), the plaintiff voluntarily dismissed its case without prejudice before the
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`defendant filed its answer. Because the plaintiff was free to re-file suit, this Court
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`held that there had been no change in the parties’ legal relationship and the
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`defendant accordingly was not a “prevailing party” entitled to seek attorneys’ fees.
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`– 13 –
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`

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`Case: 20-1049 Document: 14 Page: 23 Filed: 01/15/2020
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`Id. at 1351-53; see also Cadkin v. Loose, 569 F.3d 1142, 1150 (9th Cir. 2009)
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`(similar). Here, by contrast, Uniloc dismissed its claim with prejudice and is not
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`free to refile. Microsoft won the case and was accordingly the “prevailing party.”2
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`C.
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`This and other courts have recognized that voluntary dismissals
`may confer “prevailing party” status on the defendant
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`The voluntary nature of Uniloc’s dismissal with prejudice makes no differ-
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`ence to Microsoft’s status as the prevailing party. Regardless of whether a plain-
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`tiff’s dismissal with prejudice is voluntary or involuntary, the defendant is the
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`2 The district court also relied on several trial-court decisions. Those
`decisions, however, latched onto Buckhannon’s reference to “judicial imprimatur”
`without recognizing the key distinction that the Supreme Court was making—
`between results achieved within the litigation and results achieved outside the
`litigation. See Keith Mfg., Co. v. Butterfield, 256 F. Supp. 3d 1123, 1135 (D. Or.
`2017); Hopkins Mfg. Corp. v. Cequent Performance Prods., Inc., 223 F. Supp. 3d
`1194, 1202 (D. Kan. 2016); F4W, Inc. v. Tracstar Sys., Inc., No. 6:12-cv-1539-Orl-
`28KRS, 2015 WL 12838856, at *4 (M.D. Fla. Apr. 3, 2015), report and recom-
`mendation adopted, No. 6:12-cv-1539-Orl-28KRS, 2015 WL 12840464 (M.D. Fla.
`June 18, 2015).
`Xlear, Inc. v. Focus Nutrition, LLC, 893 F.3d 1227, 1236-39 (10th Cir.
`2018) (not cited by the district court), is similarly flawed because it focused on
`whether the district court issued a formal order dismissing the case rather than on
`whether the defendant obtained a favorable result through the judicial process.
`Compare Nutrivita, 160 F. Supp. 3d at 1189-90 (correctly applying Buckhannon
`and concluding that the defendant was the prevailing party when the plai