Federal Circuit Affirms $3.2M Fee Award After Patentee Pursued Defeated Claim Construction

Maintaining a patent infringement theory that contradicts a court’s claim construction ruling can carry a heavy price tag, as demonstrated by a recent non-precedential Federal Circuit ruling affirming more than $3.2 million in attorney fees and expenses against a patentee and its exclusive licensee.

A McDermott Will & Emery article details Carnegie Institution of Washington v. Fenix Diamonds LLC, in which Carnegie and its licensee M7D Corporation sued Fenix over two patents covering chemical vapor deposition methods for lab-grown diamonds. Following the court’s construction of a key claim term requiring minimal non-diamond growth, Fenix produced discovery showing substantial polycrystalline material, rendering the plaintiffs’ infringement theory untenable.

Key legal and risk management takeaways from the decision include:

• Objectively baseless standard: The district court deemed the suit exceptional under 35 U.S.C. § 285 roughly a month after Fenix served its discovery proof, finding that plaintiffs impermissibly attempted to revive a rejected claim construction through expert testimony.
• Scope of fee-shifting: The Federal Circuit held that once a claim becomes objectively baseless, all subsequent reasonable attorney fees shift to the losing party without requiring a specific link between every individual fee item and particular litigation misconduct.
• Licensor exposure and joint liability: The appellate panel affirmed joint and several liability against Carnegie due to its deep ties with M7D—including shared legal counsel and consultation rights—proving that licensors face direct enterprise risk when intertwined with active licensee litigation.

For corporate counsel, the decision highlights the necessity of reassessing litigation positions immediately following claim construction and discovery disclosures, as continuing a defeated theory risks transforming outside counsel fees into an opponent’s monetary judgment.