Keith Mfg. Co. v. Butterfield

• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
• Citation: 955 F.3d 936
• Docket Number: 2019-1136
• Parties: KEITH MANUFACTURING CO., Plaintiff-Appellee v. Larry D. BUTTERFIELD, Defendant-Appellant
• Decision Date: 07 April 2020

955 F.3d 936

KEITH MANUFACTURING CO., Plaintiff-Appellee
v.
Larry D. BUTTERFIELD, Defendant-Appellant

2019-1136

United States Court of Appeals, Federal Circuit.

Decided: April 7, 2020

Bruce Kaser, Vantage Law PLLC, Seattle, WA, argued for plaintiff-appellee.

Shawn Kolitch, Kolitch Romano LLP, Portland, OR, argued for defendant-appellant.

Before Taranto, Clevenger, and Hughes, Circuit Judges.

Hughes, Circuit Judge.

955 F.3d 938

Keith Manufacturing Co. brought this lawsuit against Larry D. Butterfield in the United States District Court for the District of Oregon. Eighteen months after the litigation began, the parties filed a stipulation to dismiss all claims with prejudice under Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure. Shortly after, Mr. Butterfield filed a motion for attorney’s fees under Rule 54 of the Federal Rules of Civil Procedure. The district court denied the motion because there was no judgment sufficient for a Rule 54 motion. In particular, the district court reasoned that under the Supreme Court’s decision in Microsoft Corp. v. Baker , ––– U.S. ––––, 137 S. Ct. 1702, 198 L.Ed.2d 132 (2017), a voluntary dismissal with prejudice is not a "judgment" as required by Rule 54(d). But in our view, Microsoft is inapplicable because judgment in the context of Rule 54 does not raise the same concerns about finality and piecemeal litigation that animated the Supreme Court’s opinion in Microsoft . Therefore, we vacate the district court’s decision and remand for further proceedings.¹

I

In October 2015, Keith Manufacturing Co. filed this lawsuit against its former employee, Mr. Butterfield, after he filed a patent application for what eventually issued as U.S. Patent No. 9,126,520. Keith alleged that the ’520 patent was based on inventions made during Mr. Butterfield’s employment. Keith asserted five claims against Mr. Butterfield related to the ’520 patent : (1) declaratory judgment of noninfringement; (2) declaratory judgment of invalidity; (3) state-law breach of contract; (4) state-law misappropriation of trade secrets; and (5) correction of inventorship to add Keith employees as named inventors.

In May 2016, Mr. Butterfield sent Keith a covenant not to sue and then filed a motion to dismiss the first four claims. Mr. Butterfield argued that the covenant not to sue mooted the declaratory judgment claims. He also argued that both the applicable statutes of limitation and the doc-trine of laches barred the state-law claims. The district court granted the motion in part, dismissing the declaratory judgment claims but allowing the state-law claims to proceed.

In April 2017, the parties filed a stipulation of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii). Such a dismissal requires no court order. See Fed. R. Civ. P. 41(a)(1)(A)(ii). The stipulation was silent as to costs and attorney’s fees. Twelve days later, Mr. Butterfield moved for attorney’s fees under Fed. R. Civ. P. 54(d), Or. Rev. Stat. § 20.096, Or. Rev. Stat. § 646.467, and 35 U.S.C. § 285.

In its order denying attorney’s fees, the district court held that Rule 54 requires a judgment, which the Rule defines as "a decree and any order from which an appeal lies." Keith Mfg., Co. v. Butterfield , 256 F. Supp. 3d 1123, 1127 (D. Or. 2017) (quoting Fed. R. Civ. P. 54(a) ). The district court then held that the parties’ stipulation to dismiss with prejudice did not satisfy Rule 54 ’s judgment requirement because under Microsoft , a stipulation to dismiss

955 F.3d 939

with prejudice is not an appealable order. Id. at 1130.

Mr. Butterfield now appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

In cases involving questions of law not assigned to the Federal Circuit, we apply the law of the regional circuit. Panduit Corp. v. All States Plastic Mfg. Co. , 744 F.2d 1564, 1574–75 (Fed. Cir. 1984). Though the Ninth Circuit reviews a district court’s decision to deny a motion for attorney’s fees for abuse of discretion, it...