Britney Spears and Justin Timberlake. Photo:

Justin Timberlake and Britney Spears could be on the verge of making new law on the reach of “exceptional case” attorney fee awards in patent cases.

The pop stars were before the U.S. Court of Appeals for the Federal Circuit for a second time May 4, seeking to preserve a $737,000 fee award in a patent dispute over panoramic video displays used in past concerts.

The Federal Circuit encouraged Pryor Cashman partner Andrew Langsam, who represents the pop stars, and Dwayne Goetzel, counsel for patentee Large Audience Display Systems, to try to work out on their own how much was spent before the Patent Trial and Appeal Board, and exclude it from the award. The court suggested the parties could then settle Large Audience Display Systems v. Tennman Productions themselves, rather than have it sent back to U.S. District Judge Manuel Real of the Central District of California for a third go-round.

But Langsam and Goetzel, of Meyertons, Hood, Kivlin, Kowert & Goetzel, notified the court last week that they were unable to reach an agreement. Langsam said only $196,854 was spent at the PTAB, while Goetzel put the figure at $428,000 or more.

The Federal Circuit has already sent the case back to Real once, suggesting that he reconsider the exceptionality finding and the amount of fees awarded. But Real stuck closely to his original reasoning and award, actually increasing the amount by $4,000.

That led to a raucous hearing this month at which the Federal Circuit judges expressed exasperation with both sides—and particularly Real’s inclusion of fees for a lengthy PTO re-examination hearing where the patent ultimately was invalidated.

“If you look at the re-exam, it’s got papers this high,” said Langsam, who represents the pop stars.

“But we can’t give you hours for re-exam,” Judge Kathleen O’Malley replied.

“That’s not part of the litigation,” Judge Richard Linn explained. “That’s a separate legal proceeding.”

Actually, the custom of awarding exceptional case fees for PTO proceedings appears to vary from district to district. U.S. District Judge William Walls of the District of New Jersey just imposed a $13 million fee award against a medical device company last month for work that included a re-examination proceeding, among other things. And the Federal Circuit has approved such a fee award, albeit 30 years ago. But U.S. District Judge Harry Leinenweber of the Northern District of Illinois rejected PTO fees in another case last week, saying “fees related to a separate legal proceeding cannot be recovered.”