A court that refuses fees after an eligibility loss must explain why the suit was reasonable despite the warnings on the record

2026-09-30Fed. Cir.

Epic Tech, LLC v. Pen-Tech Associates, Inc., No. 2025-1624 (Fed. Cir. Sept. 30, 2026) (precedential), vacating and remanding Epic Tech, LLC v. Pen-Tech Associates, Inc., No. 1:20-cv-02428-VMC (N.D. Ga.)

Epic Tech, LLC owned United States Patent No. 8,545,317, which claims an electronic sweepstakes system connecting gaming terminals over a server network. Before it sued in 2020, the Supreme Court had decided Alice Corp. v. CLS Bank International, the United States Patent and Trademark Office had reopened prosecution of two related applications and rejected them under Section 101 of Title 35 of the United States Code, Epic Tech had abandoned three related applications, and a district court in litigation over related United States Patent No. 8,545,315 had held similar claims ineligible. The United States District Court for the Northern District of Georgia held the asserted claims ineligible on summary judgment and then denied the defendant's motions for sanctions under Rule 11 and for attorney fees under Section 285. The Federal Circuit, in an opinion by Chief Judge Moore joined by Judge Cunningham and District Judge Subramanian sitting by designation, vacated the denial, holding that those facts taken together created a compelling concern over the validity of the claims before the litigation was brought, and that the district court needed to address why the claim nevertheless had a reasonable chance of success. The panel added that facts showing a reasonable pre-suit infringement investigation do not address the distinct question of whether the patentee should have investigated validity.

What it changesAn eligibility rejection in a continuation or a sibling application now follows the issued parent into court, and so does any ruling on a related patent, so the prosecution history of the whole family is part of the fee exposure when a software or machine learning patent is asserted. Before suing on such a patent, the file should contain a pre-suit validity memorandum on eligibility, separate from the infringement analysis, that confronts every family-member rejection and every decision on related claims, and where that memorandum is weak the better course is to prosecute a continuation with claims that recite the technical mechanism and assert that instead. For a company on the receiving end of an assertion, this decision makes the fee motion after an eligibility win worth filing, and the first exhibit should be the examiner's rejections in the patentee's own related applications.

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