Federal Circuit Rules Section 285 Fee Awards Do Not Reach Parallel IPR Proceedings in Extremity Medical v. Nextremity

The U.S. Court of Appeals for the Federal Circuit (CAFC) ruled on May 12, 2026 in Extremity Medical, LLC v. Nextremity Solutions, Inc. that attorney fee awards under 35 U.S.C. § 285 do not extend to a parallel inter partes review (IPR) proceeding voluntarily pursued alongside district court litigation. The opinion, authored by Judge Lourie, reaffirms the rule established in Dragon Intellectual Property LLC v. DISH Network L.L.C.

The dispute began when Extremity Medical sued Nextremity in the District of Delaware over U.S. Patent No. 8,303,589, which covers orthopedic implant devices. Nextremity petitioned for an IPR, and the Patent Trial and Appeal Board (PTAB) ultimately invalidated the asserted claims. After the IPR effectively ended the district court action, Nextremity sought fee recovery under § 285. The district court awarded $52,573 for the district court litigation but denied the $343,660.86 sought for the IPR. Nextremity appealed the denial.

On appeal, Nextremity argued that the “rigid rule” of Dragon conflicts with the Supreme Court’s decision in Sullivan v. Hudson, 490 U.S. 877 (1989). In Sullivan, the Supreme Court stated that “where administrative proceedings are intimately tied to the resolution of the judicial action and necessary to the attainment of the results Congress sought to promote by providing for fees, they should be considered part and parcel of the action for which fees may be awarded.”

The CAFC rejected this reading. The court explained that Sullivan addressed a narrow class of administrative proceedings — specifically, mandatory administrative proceedings ordered on remand from a district court. “The fact that the IPR may have downstream effects on district court litigation does not convert it into a proceeding ‘intimately tied’ to the district court case under Sullivan,” the panel held. An IPR is initiated by an accused infringer’s voluntary choice, runs on its own statutory track, and is institutionally distinct from district court litigation.

Nextremity also argued that § 285 requires a “holistic, equitable approach” considering the “totality of circumstances” and that the district court’s denial conflicted with that mandate. The CAFC responded that the district court had in fact applied a holistic approach “in the case before it.” Extending § 285’s exceptional case framework to IPR proceedings, the court added, would require district courts to evaluate proceedings in which they had no involvement — a result inconsistent with how Congress structured the two systems.

Extremity’s cross-appeal challenging the district court fee award against it fared no better. The CAFC found ample support for the exceptional-case finding: Extremity had failed to conduct adequate pre-litigation investigation, declined to defend the asserted claim before the PTAB, and offered no substantive validity arguments during the district court litigation. “Viewed together, the record reflects more than ordinary litigation weakness; it supports the district court’s conclusion that Extremity’s litigating position ‘stands out’ from typical patent disputes in which parties advance and defend colorable validity theories,” the court wrote.

The practical stakes for accused infringers are considerable. Even where an IPR succeeds in invalidating the asserted claims and ends the underlying suit, the fees and costs invested in the IPR generally exceed those of the district court litigation. In Nextremity’s case, IPR costs were roughly 6.5 times the district court costs. Defendants who stay their district court action and shift resources to the PTAB now have settled assurance that any § 285 recovery will be capped at the district court side of the ledger.

For patent owners, the corollary is that § 285 provides only limited economic deterrence against weak infringement suits where the patent ultimately falls in IPR. The fee-shifting statute’s bite stops at the courthouse door, and Congress would have to amend the statute to extend it to PTAB proceedings. The current legislative agenda around IPR reform — focused largely on the historic decline in petitions and the rise of ex parte reexamination — does not include any visible proposal to revisit § 285’s reach.

The CAFC’s analysis tracks the line drawn in Dragon and reinforces that, under existing law, the IPR fee gap is a structural feature of the post-AIA system rather than an oversight a district court can correct through equitable discretion.