       NOTE: This disposition is nonprecedential.


  United States Court of Appeals
      for the Federal Circuit
                ______________________

   LARGE AUDIENCE DISPLAY SYSTEMS, LLC,
              Plaintiff-Appellant

                           v.

        TENNMAN PRODUCTIONS, LLC,
    JUSTIN TIMBERLAKE, BRITNEY SPEARS,
           SPEARS KING POLE INC.,
              Defendants-Appellees

                 STEVE DIXON,
        MUSIC TOUR MANAGEMENT, INC.,
                    Defendants
              ______________________

                      2015-2040
                ______________________

   Appeal from the United States District Court for the
Central District of California in No. 2:11-cv-03398-R-RZ,
Judge Manuel L. Real.
                 ______________________

               Decided: October 20, 2016
                ______________________

   MICHAEL G. BURK, The Burk Law Firm, P.C., Austin,
TX, for plaintiff-appellant. Also represented by ERIC B.
MEYERTONS, Meyertons, Hood, Kivlin, Kowert & Goetzel,
P.C., Austin, TX.
2           LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.




   ANDREW SOL LANGSAM, Pryor Cashman LLP, New
York, NY, for defendants-appellees.
                 ______________________

    Before MOORE, LINN, and O’MALLEY, Circuit Judges.
PER CURIAM.
    Large Audience Display Systems, LLC (“LADS”) ap-
peals from the district court’s order granting a motion for
attorney’s fees under 35 U.S.C. § 285 filed by Appellees
Justin Timberlake, Tennman Productions, LLC, Britney
Spears, and Spears King Pole, Inc. 1 (collectively, “Appel-
lees”). We find that certain of the factors relied upon by
the district court to find this case to be exceptional were
entitled to no weight under § 285. We therefore vacate
the district court’s award of attorney’s fees and costs, and
remand for reconsideration of Appellees’ motion.
                       BACKGROUND
                    I. The ’346 Patent
    The United States Patent and Trademark Office
(“PTO”) issued Patent No. 6,669,346 (“the ’346 patent”),
the patent at issue in this appeal, on December 30, 2003.
The ’346 patent describes claims for a “panoramic imag-
ing and display system for the imaging and displaying of
visual-media content.” ’346 patent, at Abstract. The
claims generally relate to large-audience, positionable
imaging and display systems for the imaging and display-
ing of visual-media content. Id. at col. 1, ll. 12–14. Inven-



    1   The complaint initially named Britney Touring,
Inc. as a Defendant; Spears King Pole, Inc. was later
substituted. The complaint also named Los Angeles
Lakers, Inc. and Pussycat Dolls, LLC, both of whom were
subsequently dismissed from the case.
LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.          3



tor Darrell Metcalf (“Metcalf”) assigned the ’346 patent to
LADS on October 21, 2009.
               II. Procedural History Prior
                   to District Court Stay
    Although Metcalf is a resident of California, LADS
was incorporated in Texas on November 9, 2011. LADS
never engaged in any business in Texas or elsewhere,
before or after its incorporation. In fact, Metcalf is the
sole shareholder of LADS, and no one has ever picked up
the keys for the Texas office listed on LADS’s Certificate
of Incorporation.
    On November 11, 2009, LADS sued Appellees for in-
fringement of the ’346 patent in the Eastern District of
Texas. LADS alleged that Appellees Justin Timberlake
and Tennman Productions, LLC infringed the ’346 patent
through their use of a large-audience display screen
during the “FutureSex/LoveShow Tour.” J.A. 85, 120.
Similarly, LADS alleged that Appellees Spears King Pole,
Inc. and Britney Spears’s use of a large-audience display
screen during the “Circus Tour” infringed the ’346 patent.
J.A. 86, 121. Specifically, Appellees used a large-scale
display system in their concert tours that either drops
down from or is fixed to the ceiling. The display system is
shaped like a cylinder, so that the audience can see the
screen from any direction. The screen is sufficiently large
to display a larger image of a performer for an audience
who may be seated far away from the actual performer.
    In March 2010, Appellees filed an opposed motion to
transfer venue to the Central District of California, which
the district court granted in March 2011 because it found
that the “Central District of California ‘is clearly more
convenient’ than the Eastern District of Texas.” Large
Audience Display Sys., LLC v. Tennman Prods., LLC, No.
2:09-CV-356-TJW-CE, 2011 WL 1235354, at *6 (E.D. Tex.
Mar. 30, 2011).
4           LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.



               III. Reexamination History
    Appellees filed an inter partes reexamination request
for all asserted claims of the ’346 patent on November 11,
2011. Subsequently, Appellees filed a motion to stay the
district court case, pending the outcome of reexamination.
After the PTO granted Appellees’ request for reexamina-
tion in January 2012 and issued an initial office action
invalidating most of the asserted claims of the ’346 pa-
tent, the district court granted Appellees’ motion to stay.
    In the reexamination request, Appellees provided the
PTO with a television broadcast of the 1996 Olympics
opening ceremony, which showed the Temple of Zeus and
disclosed a large audience display. In the January 18,
2012 order granting reexamination, the examiner de-
clined to consider this reference, explaining that the
“determination of whether or not to grant inter partes
reexamination is based upon prior art patents and/or
printed publications,” but the submitted television broad-
cast “is merely a visual presentation.” J.A. 1232. The
examiner also declined to consider a related poster print-
ed in 1996, because the request did not provide any evi-
dence of public dissemination. J.A. 1233.
     In April 2012, Appellees submitted supplemental pri-
or art to the PTO, in the form of printed publications from
the 1996 Olympics showing the Temple of Zeus and the
large-audience display (the “Olympics Prior Art”). In
response to this filing, the examiner issued a notice of
defective paper for various reasons, including an issue
with the submission of the Olympics Prior Art. Specifical-
ly, the examiner rejected the Olympics Prior Art submis-
sion under 37 C.F.R. § 1.948, stating that a third-party
requester was only permitted to cite additional prior art
to rebut a finding of fact by the examiner or a response of
the patent owner, or when additional prior art had be-
come known to the third-party requester only after the
filing of the inter partes reexamination request. The
LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.           5



examiner expunged Appellees’ filing, but permitted Appel-
lees to resubmit a revised comment within fifteen days.
On May 22, 2012, Appellees resubmitted their revised
comment without an information disclosure statement
(“IDS”).
     On July 27, 2012, the PTO issued an action closing
prosecution and rejecting all of the asserted claims, except
for claim 24. LADS filed its response to the action closing
prosecution on August 27, 2012, and submitted the Olym-
pics Prior Art in its IDS without comment on September
14, 2012. The PTO reopened prosecution of the ’346
patent on November 26, 2012, in response to its receipt of
LADS’s IDS. LADS filed its response on January 28, 2013,
but it did not discuss the Olympics Prior Art in its IDS.
Appellees then filed comments asking the examiner to
raise new rejections based on the Olympics Prior Art, but
the PTO struck these comments from the record on March
15, 2013. In its reasoning, the PTO noted that the Olym-
pics Prior Art was not considered in the reopening of the
Non-Final Action of November 26, 2012, nor in the Janu-
ary 2013 response LADS filed. Hence, the PTO concluded
that Appellees’ comments did not rebut any findings by
the PTO or responses from LADS, and the inclusion of the
Olympics Prior Art was therefore considered improper.
    Despite rejecting the Olympics Prior Art for a third
time, on November 3, 2014, the Patent Trial and Appeal
Board (“PTAB”) issued a decision affirming the examin-
er’s rejection of original claims 1–6, 9, 10, 13–15, 17, 28
and 24 of the ’346 patent. The examiner cancelled claim
24 in the Examiner’s Right of Appeal Notice, as obvious
over prior art unrelated to the Olympics Prior Art. J.A.
1494–96. The PTO issued an inter partes reexamination
certificate on March 23, 2015, canceling these claims, but
added a number of new claims it deemed patentable. The
PTO canceled all of the claims asserted in the district
court litigation.
6           LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.



    IV. Procedural History Following Reexamination
     On April 3, 2015, Appellees moved to dismiss the dis-
trict court action with prejudice. LADS opposed the order
and, instead, moved to lift the stay, asking for an oppor-
tunity to discover information about the infringing devices
so that it could assert the new claims against Appellees.
On June 16, 2015, the district court lifted the stay sua
sponte and dismissed the case with prejudice in light of
the PTO’s final decision to cancel all claims asserted by
LADS.
    Appellees then filed a motion for recovery of attor-
ney’s fees, costs, and expenses in the amount of
$755,925.86, under 35 U.S.C. § 285. 2 To counter Appel-
lees’ contention that LADS had brought a wholly merit-
less lawsuit, LADS included in its opposition an email
chain LADS’s counsel received from Appellees’ counsel on
December 15, 2009, which included the following ex-
change between Appellees and their counsel:
    At this point, without being able to talk to the in-
    ventor and blowing holes through the interpreta-
    tion of the language of the Patent’s claims, the
    position of infringement is not frivolous.
Appellant Br. 40 (quoting J.A. 3749) (“the Langsam
email”). LADS’s counsel did not notify Appellees’ counsel
that it had received this message until it cited the Lang-
sam email in its opposition to the attorney’s fees motion
in 2015. Ten days later, in their reply brief to this mo-
tion, Appellees argued that this email was privileged and
inadvertently sent to LADS’s counsel. Appellees further-
more argued that LADS’s use of “a privileged communica-
tion . . . limited only to the issue of infringement, not


    2   Appellees asserted that they had paid $733,414.34
in attorney’s fees and $22,511.52 in costs and expenses,
based on LADS’s allegedly frivolous suit.
LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.              7



invalidity nor ultimate liability, is in poor taste, unethical,
and wrong” and “is clear evidence of egregiousness.”
J.A. 3408 (emphasis in original).
     The district court granted Appellees’ motion, finding
the case “sufficiently extraordinary to warrant an award
of attorneys’ fees, costs, and expenses.” J.A. 3. In support
of its determination that the case was exceptional under
§ 285, the district court made the following factual find-
ings: (i) LADS is “an apparent shell corporation,” which
“seems to have been formed with the sole intent to create
jurisdiction in [the Eastern District of Texas],” (ii) the
constructions LADS proposed to the PTO during reexami-
nation “seem disingenuous at the very least,” (iii) it
“seems that [LADS] prolonged the reexamination process,
and consequently this litigation, by refusing to present
the [PTO] with additional prior art that, eventually, was
dispositive of the claims at issue in this case,” (iv) after
reexamination, LADS “sought to reopen [this] litigation to
engage in discovery to attempt to assert additional claims,
despite having had multiple previous opportunities to
assert such claims,” (v) in opposing the fees motion, LADS
“violated clear, important canons of professionalism in
proffering clearly privileged information in support of its
argument to mitigate or minimize its liability for attor-
neys’ fees,” (vi) “it is clear that [LADS] was the driving
force behind keeping this litigation and reexamination
process alive,” and (vii) this lawsuit “appears to have been
a frivolous claim.” J.A. 3.
     The district court awarded Appellees all fees and costs
requested, based on its “review of the submitted attor-
neys’ fees and costs and supporting evidence.” J.A. 3–4.
In its ruling, the district court cited to the lodestar meth-
od for calculating attorney’s fees, which requires the court
to determine the number of reasonable hours billed on the
matter and multiply these hours by a reasonable hourly
billing rate. J.A. 2–3. But the district court did not
calculate fees using the lodestar method; it instead noted
8           LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.



that the requested fees “are in accord with the costs of
defending a patent infringement suit as they are lower
than the average cost to defend against patent infringe-
ment suits in which as little as less than $1 million is at
stake, according to a 2013 Report of the Economic Sur-
vey.” J.A. 4.
    LADS timely appealed the district court’s award of
fees under § 285. We have jurisdiction under 28 U.S.C.
§ 1295(a)(1).
                   STANDARD OF REVIEW
    A district court “in exceptional cases may award rea-
sonable attorney fees to the prevailing party.” 35 U.S.C.
§ 285. An award of attorney’s fees under § 285 requires a
two-step inquiry. First, a district court must determine
whether a case is exceptional. There is no precise rule or
formula for making exceptionality determinations, and
district courts may determine exceptionality by consider-
ing the totality of circumstances, including frivolousness,
motivation, objective unreasonableness, and concerns over
compensation and deterrence. Octane Fitness, LLC v.
ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).
Second, if a district court finds a case exceptional, it must
calculate the amount of the attorney’s fees award. “[A]
district court usually applies the lodestar method, which
provides a presumptively reasonable fee amount . . . by
multiplying a reasonable hourly rate by the reasonable
number of hours required to litigate a comparable case.”
Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d
479, 483 (Fed. Cir. 2016) (citing Perdue v. Kenny A. ex rel.
Winn, 559 U.S. 542, 551–52, 554 (2010)).
    On appeal, all aspects of a district court’s § 285 de-
termination are reviewed for an abuse of discretion.
Highmark Inc. v. AllCare Health Mgmt. Sys., Inc., 134 S.
Ct. 1744, 1749 (2014). A district court abuses its discre-
tion when “it base[s] its ruling on an erroneous view of the
law or on a clearly erroneous assessment of the evidence.”
LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.           9



Id. at 1748 n.2 (quoting Cooter & Gell v. Hartmarx Corp.,
496 U.S. 384, 405 (1990)). Here, we find that the district
court based its ruling, to some extent, on both a misun-
derstanding of what factors are relevant to an exception-
ality determination and a clearly erroneous view of the
record evidence. Because those considerations were part
of the totality of the circumstances deemed sufficient to
justify a finding of exceptionality, we vacate and remand
that finding for reconsideration.
                       DISCUSSION
           I. Exceptional Case Determination
    First, we agree with LADS that the district court’s
finding that “[LADS, the plaintiff], an apparent shell
corporation, seems to have been formed with the sole
intent to create jurisdiction in [the Eastern District of
Texas]” was clearly erroneous. J.A. 3. Appellees’ argu-
ment that LADS was formed in the Eastern District of
Texas to create jurisdiction is not convincing. Specific
jurisdiction is based on the defendant’s contacts with a
forum state, not the plaintiff’s contacts. J. McIntyre
Mach., Ltd., v. Nicastro, 564 U.S. 873, 881 (2011). There-
fore, where LADS was incorporated is irrelevant to where
a court may exercise jurisdiction over an action brought
by it. Thus, while the location of LADS might have been
relevant to a request for a change of venue under 28
U.S.C § 1404, the formation of LADS in Texas would not
affect whether the Eastern District of Texas could assert
jurisdiction over Appellees.
    Second, the district court’s finding that LADS’s claim
“appears to have been . . . frivolous” is clearly erroneous.
J.A. 3. The only evidence Appellees provide in support of
this finding is that the PTO canceled the asserted claims
in reexamination. The fact that the PTO canceled the
asserted claims after LADS filed its complaint, without
more, does not support a finding of frivolousness. Notably,
in a reexamination proceeding, the PTAB gives claims
10          LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.



their broadest reasonable construction—making claims
more susceptible to an obviousness rejection than they
would be in district court. Next, in reexaminations, the
PTAB only considers whether the claims are invalid
under a preponderance of the evidence standard; unlike in
the district court, no presumption of validity attaches to
the claims and the question of validity is not measured by
the clear and convincing evidence standard. While the
reexamination rejection of asserted claims may be rele-
vant to an assertion of frivolousness in some cases, there
is nothing in this case to justify that conclusion.
    Third, the record does not support the district court’s
finding that the Olympics Prior Art was dispositive in the
reexamination. At the time LADS submitted the IDSs
disclosing the Olympics Prior Art in September 2012, all
of the asserted claims other than claim 24 stood rejected
by the examiner. While the examiner may have later
rejected claim 24 based on a reference disclosed in the
September 2012 IDSs, the record does not indicate that
the examiner or the PTAB relied on the Olympics Prior
Art to reject any of the claims. J.A. 3180 (“While such
documents were considered by Examiners, such docu-
ments were not applied by the Examiners in the Non-
Final Action mailed November 26, 2012.”). Indeed, Appel-
lees agree that the PTO rejected all of the reexamined
claims without relying on the Olympics Prior Art. See
Resp. Br. 32.
    “District courts may determine whether a case is ‘ex-
ceptional’ in the case-by-case exercise of their discretion,
considering the totality of the circumstances.” Octane
Fitness, 134 S. Ct. at 1756. But, the circumstances upon
which a district court relies must actually exist, and
findings that such circumstances do exist must be justi-
fied by the record. Here, many of the “circumstances”
deemed dispositive by the district court, including but not
limited to those noted, supra, either did not occur or were
given undue weight. Thus, we must vacate the trial
LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.         11



court’s finding of exceptionality and award of fees and
costs under § 285. On remand, the district court shall
reconsider whether this case was exceptional. The dis-
trict court may properly consider the totality of the cir-
cumstances in making its determination, including
LADS’s use of the Langsam email to oppose Appellees’
motion for attorney’s fees, its opposition to the motion to
transfer venue to the Central District of California, and
the objective reasonableness of LADS’s claims given the
standards and burdens that apply in district court, includ-
ing the reasonableness of LADS’s proposed claim con-
structions. 3 But the district court must assure both that
the circumstances on which it relies are accurate and that
the court affords only the appropriate measure of weight
to each.
            II. Calculation of Attorney’s Fees
    On remand, should the district court find this case to
be exceptional, it will reach the issue of calculating rea-
sonable attorney’s fees. In exceptional cases, a district
court may award an amount of fees that “bear some
relation to the extent of the misconduct.” Special Devices,
Inc. v. OEA, Inc., 269 F.3d 1340, 1344 (Fed. Cir. 2001)
(quoting Read Corp. v. Portec, Inc., 970 F.2d 816, 831
(Fed. Cir. 1992)).
    The district court acknowledged that, typically, attor-
ney’s fee awards are calculated using the lodestar method.
J.A. 2–3. Under the lodestar method, the court calculates
the attorney’s fees by “multiplying the number of hours
reasonably expended on the litigation times a reasonable



   3    After careful consideration of the claim construc-
tions LADS proposed to the PTAB, we take no issue with
the district court’s conclusion that the objective weakness
of those proposed constructions is a legitimate factor to
consider in the court’s exceptionality analysis.
12          LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.



hourly rate.” Blum v. Stenson, 465 U.S. 886, 888 (1984).
A reasonable hourly rate should reflect the prevailing
market rate. Id. at 895. In addition, the court must
examine the attorneys’ comparable skill, experience, and
reputation. Id. at 896.
     Here, the district court accepted the amount proposed
by Appellees as reasonable and awarded the full amount,
without performing a lodestar calculation. J.A. 3–4. The
district court found this amount to be reasonable because
the total amount sought by Appellees was “below average”
for typical patent infringement suits in which less than $1
million was at stake, according to a 2013 Report of the
Economic Survey. J.A. 4. The average cost of typical
patent infringement suits, however, was not the sole
evidence upon which the district court should have relied
to determine attorney’s fees. In addition, the comparison
was not appropriate because the survey provided only two
benchmarks for average fees: (1) the end of discovery; and
(2) through trial. In this case, little discovery had been
conducted by the parties, and the case was dismissed with
prejudice before trial.
    On remand, if the district court finds the case excep-
tional, it must use the lodestar method to calculate attor-
ney’s fees determining the reasonable hours and rates for
the lodestar calculation. Though Appellees were repre-
sented by attorneys from New York, the litigation oc-
curred in the Central District of California. California fee
rates should be used to calculate the lodestar figure
unless there is some special expertise Appellees’ counsel
had that warrants a different rate, or a showing is made
that there is a prevailing national rate applicable in
patent cases. See Avera v. Sec’y of Health & Human
Servs., 515 F.3d 1343, 1350 (Fed. Cir. 2008) (stating that
the forum rate of attorney’s fees in Cheyenne, Wyoming,
rather than the rate in the District of Columbia, applied
to attorneys from the District of Columbia who litigated
the case in Cheyenne). In addition, the district court
LARGE AUDIENCE DISPLAY SYS.   v. TENNMAN PRODS.          13



should determine whether it was reasonable for seven
partners to have billed 79 percent of the total hours on
this case—almost quadruple the amount billed by associ-
ates—for tasks including electronic filing of documents
and preparing pro hac vice applications. Appellees have
not explained why partners worked so extensively on this
case, even though twelve associates also billed to the case.
It appears, moreover, that at least some of the billing
entries were unreasonable, such as an entry for reviewing
answers to interrogatories already served, and an entry
for reviewing a court decision when the case was stayed
for several years.
                       CONCLUSION
    Because the district court abused its discretion in
finding this case exceptional on the grounds articulated
for the finding, and because the court’s fee calculations
were not explained sufficiently, we vacate the district
court’s award of fees under § 285 and remand for further
proceedings consistent with this opinion.
               VACATED AND REMANDED
                          COSTS
   No costs.
