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Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in <a href="https://www.cafc.uscourts.gov/opinions-orders/23-1056.OPINION.9-9-2025_2570209.pdf"><em>Future Link Systems, LLC v. Realtek Semiconductor Corporation</em>, No. 23-1056 (Sept. 9, 2025)</a>, vacating a district court’s denial of fees and costs under 35 U.S.C. § 285 and Rule 54(d)(1) and affirming the district court’s denial of sanctions and fees under 28 U.S.C. § 1927 and Rule 11.

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Future Link filed two patent infringement suits against Realtek in the Western District of Texas, targeting Realtek’s integrated circuit products. After Realtek challenged the suits and Future Link voluntarily dismissed both cases, the district court converted the dismissals to dismissals “with prejudice” as a sanction. Realtek then sought attorney fees under 35 U.S.C. § 285, costs under Rule 54(d)(1), and additional sanctions, but the district court denied most of those requests, finding Realtek was not a prevailing party.

The Federal Circuit vacated the district court’s denial of fees and costs, holding that Realtek was indeed a prevailing party. The Court emphasized that a dismissal with prejudice constitutes a judicially sanctioned change in the parties’ legal relationship, effectively barring Future Link from asserting the same patents against Realtek’s products in the future. Citing Supreme Court and Federal Circuit precedent, the panel explained that a defendant “prevails” by successfully rebuffing a plaintiff’s claims, regardless of whether the case ends on the merits or through a dismissal with prejudice.

The Court remanded for the district court to determine whether the case is “exceptional” under § 285, whether fees are warranted, and to address Realtek’s request for costs under Rule 54(d)(1).

The Federal Circuit affirmed the district court’s denial of Rule 11 and 28 U.S.C. § 1927 sanctions, finding no abuse of discretion. The Court agreed that Future Link’s pre-suit investigation was adequate and that there was no clear evidence of bad faith or vexatious litigation. The Court also upheld the district court’s discovery rulings, including the refusal to modify a protective order restricting access to confidential materials.

Federal Circuit Clarifies “Prevailing Party” Status & Fee Awards in Patent Litigation

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