Checkpoint Systems, Inc. v, All-Tag Security S.A., [2016-1397] (June 5, 2017), the Federal Circuit reversed the award of attorneys fees.

Checkpoint sued under U.S. Patent No. 4,876,555 relates to improved anti-theft tags that are attached to merchandise.  After a jury trial, the patent was found not infringed, invalid, and unenforceable, and the court found the case to be “exceptional” because   Checkpoint’s expert witness based his infringement opinion on examination of imported tags that were manufactured by All–Tag in Switzerland, although the
accused tags were manufactured by All–Tag in Belgium.  The Federal Circuit reversed the attorney fee award because there was evidence that the Swiss products were made on the same machines and the Belgian products.  Certiorari was granted, and the case was remanded for further proceedings consistent with Octane Fitness and Highmark.  The district court agreed that Checkpoint’s claims were not frivolous, but nonetheless found the case to be exceptional, explaining: frivolousness is not required to find exceptionality under Section 285.  The district court’s determination was based upon three findings: (1) Checkpoint’s motivation in bringing the lawsuit, (2) inadequate pre-suit investigation, and (3) the failure of Checkpoint’s expert to inspect the correct accused product.

As the Checkpoints motivation, the Federal Circuit said that enforcement of the statutory right to exclude is not an “exceptional case” under §285.  While the Federal Circuit agreed that “motivation” to harass or burden an opponent may be relevant to an “exceptional
case” finding, “motivation to implement the statutory patent right by bringing suit based on a reasonable belief in infringement is not an
improper motive.”  The Federal Circuit found no evidence of harassment or abuse, and noted that Checkpoint’s claim survived summary judgment and a Daubert hearing.

The district court also found the expert’s failure to test an accused product supported the exceptional case finding and fee award.  The Federal Circuit noted that there no representation by All–Tag that the accused products were different from the tested products, and the district court did not so find.  Thus the failure to test the accused products did  not support an exceptional case ruling.

In Rothschild Connected Devices  Innovations, LLC v. Guardian Protection Services, Inc., [2016-2521] (June 5, 2017), the Federal Circuit reversed and remanded the determination that Appellee Rothschild Connected Devices Innovations, LLC had not engaged in conduct sufficient to make the litigation “exceptional.”

Rothschild’s sued ADS, alleging that ADS’s home security system infringes U.S. Patent No. 8,788,090.  ADS responded that the ’090 patent covers patent ineligible subject matter under 35 U.S.C. § 101, and that prior art anticipates claim 1 of the ’090 patent, an offered to settle if Rothschild paid ADS its attorneys fees and costs of $43,330.  When Rothschild rejected the offer, ADS next filed a motion for judgment on the pleadings, and sent Rothschild a “Safe Harbor Notice” pursuant to Federal Rule of Civil Procedure 11(c)(2).  In response, Rothschild voluntarily moved to dismiss its action, and ADS opposed the motion and filed a cross-motion for attorneys fees pursuant to § 285.

The District Court granted Rothschild’s Motion to Dismiss and denied ADS’s Cross-Motion for attorneys’ fees, finding that Rothschild did
not engage in conduct sufficient to make the action “exceptional”
under § 285, noting that Rothschild’s decision to voluntarily withdraw its
complaint within the safe harbor period is the type of reasonable conduct Rule 11 is designed to encourage.

The Federal Circuit found the denial of attorneys’ fees was an abuse of discretion.  The Federal Circuit found that the district court clearly erred by failing to consider Rothschild’s willful ignorance of the prior art.  The Federal Circuit further found that the district court misjudged Rothschild’s conduct in the other litigation is brought.  Finally the Federal Circuit found that the district court improperly conflated Rule 11 with 35 U.S.C. § 285.

The Federal Circuit remanded the case for further consideration of the attorneys’ fees reward by the district court.

In Nova Chemicals Corp. (Canada) v. Dow Chemical Co., [2016-1576] (May 11, 2017), the Federal Circuit affirmed the district court’s determination that the case was “exceptional” under 35 USC 285, and the award of $2.5 million in attorneys’ fees.

After a patent infringement trial which resulted in a $61 million award to Dow, in a proceeding for supplemental damages, the patent was found to be invalid for indefiniteness.  After uncovering what it claimed was evidence of fraud on the part of Dow and its counsel, Nova filed an action for relief from the initial judgment. The district court dismissed the action, and Dow sought sanctions and attorneys fees under 35 USC 285.  The district agreed with Dow finding NOVA’s claims for relief “just didn’t stand
up” and were “not even plausible.”

The Federal Circuit found nothing exceptional in the mere fact that NOVA filed a separate action because that was the only option available to challenge the earlier judgment.  However,  the Federal Circuit found that the substantive strength of a NOVA’s position could, and did, independently support an exceptional-case determination.

Nova also argued that it was error to compare the case to all patent cases, pointing out with this baseline an action to set aside a prior judgment would always be exceptional because, by necessity,it would
“stand out” from the traditional patent infringement case.  The Federal Circuit decline to hold that the district court erred in comparing this case to other patent cases more generally.  The Federal Circuit found that any concern regarding the district court’s comparison was tempered by the fact that it did not hold that this case stood out merely because NOVA requested that a prior judgment be set aside.

In University of Utah v. Max-Planck-Gesellschaft Zur Foerderung der Wissenschaften E.V., [2016-1336] (March 23, 2017), the Federal Circuit affirmed the district court’s finding that the case was not exceptional March 23, 2017, within the meaning of 35 U.S.C. § 285 and denying Max Planck’s motion for $8 million in attorney fees.

Dr. Thomas Tuschl and his colleagues published an article describing their various discoveries in the field of RNAi. Less than a month later,
Dr. Brenda Bass, of the University of Utah published a mini-review that summarized the state of RNAi research, focusing on Dr. Tuschl’s
article.  Dr. Tuschl read Dr. Bass’ minireview, recognized her hypothesis that 3’ overhangs may be relevant to RNAi, and tested that hypothesis, and made the claimed invention.

The University of Utah sued Max Plank claiming that its employee, Dr. Bass was a co-inventor.  The claim of joint inventorship turned on
alleged collaboration between Dr. Bass and the Tuschl that occurred over several conversations at various academic conferences.  The Federal Circuit listed a number of admissions during Dr. Bass’ deposition that directly contradicted the University of Utah’s allegations that Dr. Bass collaborated with the Tuschl II inventors. The Federal Circuit noted that the only supported allegation was that Dr. Bass and Dr. Tuschl met for dinner during a conference.

The district court reasoned that there was no evidence to support a finding of collaboration between Dr. Bass and Tuschl.  While Dr. Bass’ mini-review was integral to the Tuschl inventors’ research, the mini-review was in the public domain by the time Tuschl relied on it. The district court concluded that Tuschl’s reliance on the mini-review could not, on its own, support a finding of collaboration, and was not included to find that the discussions at an academic conference could constitute the collaboration needed to establish joint inventorship.

Max Planck sought eight million dollars in attorneys’ fees pursuant to 35 U.S.C. § 285, arguing that the case was “exceptional” because (1) in light of Dr. Bass’ deposition testimony, the University of Utah lacked any meaningful basis for filing its correction of inventorship suit; (2) the University of Utah’s delay in withdrawing its sole inventorship claim until the eve of summary judgment indicates that it knew its claim was meritless; and (3) the University of Utah’s claimed damages
were extortionately high.

The district court found that it was clear that Dr. Bass’ review played some role in the invention, rejecting the first grounds.  One the second point the district court actually credited the University for withdrawing its sole inventorship claim early.  On the last point the district court declined to find anything exceptional about the University of Utah’s position: “Although Utah may have been asking for pie in the sky, that does not differentiate this case from most patent cases.”

The Federal Circuit found that the district court provided a thorough explanation for why it did not find this case to be exceptional.  Noting that there is no precise Octane Fitness frame-work, the Federal Circuit said that the district court explained why the University of Utah’s position did not stand out from other patent cases, and Octane Fitness does not require anything more.  The Federal Circuit concluded:

The trial judge was in the best position to understand and weigh these issues. She had no obligation to write an opinion that reveals her assessment of every consideration. This court will not second guess her determination.

Although it played no role in the appeal, one has to wonder whether the $8 million in attorneys’ fees requested by Max Plank, which the district court called “jaw-dropping,” figured into the district court’s evaluation of the claim.  When the district court said that “it is not grossly unjust to require Max Planck to bear its own costs,”  was the court thinking that if it really took $8 million to defeat the University’s claims on Summary Judgment, were they really so exceptional?

In Bayer Cropscience AG v. Dow Agriscience LLC, [2015-1854] (March 17, 2017), the Federal Circuit affirmed affirmed the award of attorneys’ fees under 35 USC 285 to Dow, holding that the district court did not abuse its discretion in finding the case exceptional.

In its decision awarding attorney fees, the district judge found that Bayer’s arguments were “fallacious” because they were “implausible” and “made no business sense” in light of the facts surrounding the agreements and their negotiation.  The Federal Circuit noted the conflicting testimony of one of Bayer’s executives, and inconsistent emails to Bayer’s position that Dow was not licensed to commercially exploit Bayer’s genetically modified soybeans.

The Federal Circuit noted that abuse of discretion is a highly deferential standard.  It said that the district court applied the correct legal test under § 285, examining the totality of the circumstances to determine whether the case stood out from others. The Federal Circuit found that the district court’s opinion thoroughly demonstrated the totality-of-the circumstances approach, detailing the reasons why Bayer’s positions on the merits and litigation tactics coalesced in making this case, in its judgment, exceptional.

The Federal Circuit rejected the argument that Bayer had an objectively reasonable case on the merits, noting that Octane Fitness established that whether a party’s merits position was objectively reasonable is not dispositiveunder § 285. The Federal Circuit noted that the district court considered factors beyond the merits—including Bayer’s litigation conduct—and emphasized that Bayer’s conduct in litigating this case in the face of evidence that contradicted its contorted reading of the Agreement was objectively unreasonable.  In the words of the district court “Bayer marched onward with a view of its case that was not supported by its witnesses.”

The Federal Circuit  approved pre-suit diligence as a factor in the totality-of the-circumstance approach, and found that the district court did not abuse its discretion in concluding that Bayer failed to perform a diligent presuit investigation of its claims against Dow.  Rejecting Bayer’s other arguments, the Federal Circuit affirmed the district court.