In Blackbird Tech LLC v. Health in Motion LLC, [2018-2393] (December 16, 2019), the Federal Circuit affirmed the award of $363,243.80 attorney fees and expenses when Blackbird after nineteen months of litigation, voluntarily dismissed its suit with prejudice and executed a covenant not to sue.

An exceptional case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. There is no precise rule or formula for making these determinations; instead, district courts may determine whether a case is exceptional in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Considering the totality of the circumstances, the District Court found that Blackbird’s case against Appellees is exceptional within the meaning of §285 because it stands out from others with respect to both the substantive strength of Blackbird’s litigation position and the unreasonable manner in which the case was litigated by Blackbird.

The Federal Circuit noted that the District Court found that Blackbird’s litigation position was “meritless” and “frivolous, determining that when challenged on the merits, Blackbird raised flawed claim construction and infringement contentions, and ultimately did not prevail on the merits because Blackbird dismissed its claims with prejudice, and submitted a covenant not to sue on the eve of trial. The Federal Circuit noted that even accepting Blackbird’s proposed construction, the accused device does not include a housing that meets the requirements of independent claim 1.

The Federal Circuit rejected Blackbird’s argument that the district court merely found its position “flawed” and not objectively baseless. The Federal Circuit also rejected Blackbird’s argument that neither Health in Motion nor the district court gave adequate notice of the purported weakness of its position. The Federal Circuit said that the district court was not obliged to advise Blackbird of the weaknesses in its litigation position, and further that the exercise of even a modicum of due diligence by Blackbird, as part of a pre-suit investigation, would have revealed the weaknesses in its litigation position.

The Federal Circuit also agreed that the case stands out with respect to the manner in which Blackbird litigated. The district court found that the case was exceptional because Blackbird litigated in an unreasonable manner. including making nuisance value settlement offers, unreasonable delays in producing documents, and finally, filing a notice of dismissal, covenant not to sue, and motion to dismiss without first notifying Health in Motion’s counsel, on the same day pretrial submissions were due and shortly before its motion for summary judgment was to be decided. The Federal Circuit further found that the district court did not abuse its discretion by considering the need to deter future abusive litigation, noting that Blackbird has filed over one hundred patent infringement lawsuits, and none have been decided, on the merits, in favor of Blackbird.

Finally, the Federal Circuit rejected Blackbird’s complaint about the amount of the award. Specifically the Federal Circuit rejected the argument that defendants should not have spent so much on the defense of such a small claim. The Federal Circuit added that the record supports the conclusion that Blackbird’s misconduct so severely affected every stage of the litigation that a full award of attorney fees was proper.