P2I Ltd. v. Favored Tech USA Corp. — Court Awards $2.2 Million Attorney’s Fees for Bad Faith Nano-Coating Patent Litigation

Background

P2I Ltd. is a UK company that holds patents on nano-coating technology — thin, liquid-repellant coatings applied to consumer electronics to protect against moisture damage. P2I sued Favored Tech USA Corporation, a phone accessories company, for patent infringement. After litigation that the court later found was pursued in bad faith, P2I’s case was resolved unfavorably. On March 27, 2026, the court granted Favored Tech’s motion for attorney’s fees under 35 U.S.C. § 285 and the court’s inherent authority, finding the case exceptional due to P2I’s litigation misconduct. The June 12 order resolved the remaining question: how much Favored Tech was entitled to.

The Court’s Holding

Using the lodestar method, Judge Martínez-Olguín awarded Favored Tech $2,208,115.77 in attorney’s fees, working through fourteen categories of P2I’s objections.

The court sustained some objections: fees incurred on the ‘070 patent before February 14, 2025, were excluded, as were certain trade-secret-only activities that fell outside the scope of the fee award. Other categories of work were reduced proportionally — fees on issues common to both patents were reduced 50%, and fees related to a prior sanctions motion were reduced 75% — reflecting the partial overlap of the exceptional-case finding with the broader litigation. Most of Favored Tech’s billing, however, survived P2I’s objections. Notably, the court affirmed “fees-on-fees”: Favored Tech was entitled to compensation for the time it spent litigating both the Rule 11 sanctions motion and the § 285 fees motion itself, as these were directly caused by P2I’s bad faith conduct.

Key Takeaways

• Bad faith patent litigation has real financial consequences. A $2.2M fee award is a significant sanction that reflects the full cost of defending a case the court found was pursued in bad faith. This is not a deterrence in the abstract — it is a specific, quantified penalty.
• Fees-on-fees are available. When a party’s bad faith made the fees motion necessary, the prevailing defendant can recover the cost of litigating the fee application itself. This principle applies to both Rule 11 motions and § 285 motions.
• Category-by-category review matters. The court reduced fees in categories with patent-specific overlap (50%) and in areas where the sanctions theory only partially succeeded (75%). Defendants seeking fee awards should document work at a granular level to maximize recovery.

Why It Matters

Section 285 of the Patent Act allows district courts to award attorney’s fees to prevailing parties in “exceptional” patent cases. After the Supreme Court’s 2014 decision in Octane Fitness v. ICON Health & Fitness lowered the bar for what counts as exceptional, courts have been somewhat more willing to find bad faith in patent litigation and award fees. A $2.2M award to a consumer electronics accessories company defending against a UK nano-coating patent holder is a notable data point in the ongoing debate about patent licensing litigation tactics. The ruling also reinforces that foreign patent holders pursuing U.S. litigation face the same fee-shifting risk as domestic ones when their litigation conduct is deemed exceptional.