Patent Infringement

October 29, 2014

Indiana Patent Litigation: Draper Sues Vutec for Patent Infringement

Indianapolis, Indiana – Patent attorneys for Draper, Inc. of Spiceland, Indiana sued in the Southern District of Indiana alleging that Vutec Corporation of Coral Springs, Florida infringed the patented “Roller Operated System with Mounting Assembly for Multi-Stage Installation,” Patent No. 6,532,109, and “Screen System,” Patent No. 6,816,308, which were issued by the U.S. Patent Office.

Draper provides consumers with products such as projection screens, window shades, projector lifts and mounts and other home theater accessories. Vutec designs and manufactures projection screens and audio-visual accessories.

In its complaint, filed by patent attorneys for Draper, the following claims are asserted:

• Count I: Vutec Motorized Projection Screen Model – LECTRIC I-C – Patent Infringement of United States Patent No. 6,532,109

• Count II: Vutec Motorized Projection Screen Model – LECTRIC III-C – Patent Infringement of United States Patent No. 6,532,109

• Count III: Vutec Motorized Projection Screen Model – LECTRIC II-e Patent Infringement of United States Patent No. 6,532,109

• Count IV: Vutec Motorized Projection Screen Model – LECTRIC IV-e – Patent Infringement of United States Patent No. 6,532,109

• Count V: Vutec Motorized Projection Screen Model – LECTRIC I-C – Patent Infringement of United States Patent No. 6,816,308

• Count VI: Vutec Motorized Projection Screen Model – LECTRIC III-C – Patent Infringement of United States Patent No. 6,816,308

• Count VII: Vutec Motorized Projection Screen Model – LECTRIC II-e Patent Infringement of United States Patent No. 6,816,308

• Count VIII: Vutec Motorized Projection Screen Model – LECTRIC IV-e – Patent Infringement of United States Patent No. 6,816,308

Draper asserts that Vutec’s infringement has been willful, deliberate, and with knowledge of Draper’s intellectual property rights and asks that the court:

A. adjudge and decree that U.S. Patent Nos. 6,532,109 and 6,816,308 are valid and enforceable against Vutec and that Vutec has infringed and continues to infringe the patents;

B. grant injunctions enjoining acts of infringement by Vutec, its agents, and those acting in concert with it;

C. enter an award to Draper of such damages as it shall prove at trial against Vutec that are adequate to compensate Draper for said infringement as permitted under the Patent Act;

D. order an award to Draper of up to three times the amount of compensatory damages because of Vutec’s willful infringement and any enhanced damages as provided by 35 U.S.C. § 284;

E. render a finding that this case is “exceptional” and award Draper its costs and reasonable attorneys’ fees, as provided by 35 U.S.C. § 285;

F. award Draper any profits that Draper lost due to Vutec’s infringement of U.S. Patent Nos. 6,532,109 and 6,816,308; and

G. award Draper pre-judgment and post-judgment interests on damages.

Practice Tip: Deciding simply to ignore a complaint can be a costly error. Failing to present the defendant’s account of the facts and arguments about the proper application of the law can result in the trial court considering only the plaintiff’s side of the story. In other words, if the defendants choose to leave a complaint unanswered, the court may deem the well-pled allegations of the plaintiff to have been admitted by the defendants due to their failure to deny them.

October 23, 2014

Indiana Patent Litigation: Lilly Sues Alleging Infringement of ALIMTA

By Overhauser Law Offices, LLC

Indianapolis, Indiana – An Indiana patent attorney for Eli Lilly and Company of Indianapolis, Indiana (“Lilly”) and The Trustees of Princeton University of Princeton, New Jersey (“Princeton”) filed a patent infringement complaint in the Southern District of Indiana alleging that Nang Kuang Pharmaceutical Co., Ltd. of Tainan City, Taiwan and CANDA NK-2, LLC of Waco, Texas infringed and/or will infringe ALIMTA®, U.S. Patent Nos. 5,344,932 (“the ‘932 patent”) and 7,772,209 (“the ‘209 patent”; collectively, “the patents-in-suit”), which have been issued by the U.S. Patent Office.

ALIMTA, which is licensed to Lilly, is a chemotherapy agent used for the treatment of various types of cancer. ALIMTA is composed of the pharmaceutical chemical pemetrexed disodium. It is indicated, in combination with cisplatin, (a) for the treatment of patients with malignant pleural mesothelioma, or (b) for the initial treatment of locally advanced or metastatic nonsquamous non-small cell lung cancer. ALIMTA also is indicated as a single agent for the treatment of patients with locally advanced or metastatic nonsquamous non-small cell lung cancer after prior chemotherapy. Additionally, ALIMTA is indicated for maintenance treatment of patients with locally advanced or metastatic nonsquamous non-small cell lung cancer whose disease has not progressed after four cycles of platinum-based first-line chemotherapy. One or more claims of the ‘209 patent cover a method of administering pemetrexed disodium to a patient in need thereof that also involves administration of folic acid and vitamin B12. The ‘932 patent, titled “N-(pyrrolo(2,3-d)pyrimidin-3-ylacyl)-Glutamic Acid Derivatives,” along with the ‘209 patent, have been listed in connection with ALIMTA in the FDA’s publication Approved Drug Products with Therapeutic Equivalence Evaluations.

This Indiana patent infringement lawsuit arises out of the filing by Defendant Nang Kuang of an Abbreviated New Drug Application (“ANDA”) with the U.S. Food and Drug Administration (“FDA”) seeking approval to manufacture and sell generic versions of ALIMTA prior to the expiration of the ‘932 and ‘209 patents. Nang Kuang filed as a part of that ANDA a certification of the type described in Section 505(j)(2)(A)(vii)(IV) of the Food, Drug and Cosmetic Act, 21 U.S.C. § 55(j)(2)(A)(vii)(IV), with respect to the patents-in-suit, asserting that the claims of the patents-in-suit are invalid, unenforceable, and/or not infringed by the manufacture, use, offer for sale, or sale of Defendants’ ANDA products.

In their complaint, filed by an Indiana patent lawyer, Lilly and Princeton state that Defendants intend to engage in the manufacture, use, offer for sale, sale, marketing, distribution, and/or importation of Defendants’ ANDA products and the proposed labeling therefor immediately and imminently upon approval of the ANDA i.e., prior to the expiration of the patents-in-suit. Plaintiffs asserts that Defendants’ actions constitute and/or will constitute infringement of the patents-in-suit, active inducement of infringement of the patents-in-suit, and contribution to the infringement by others of the patents-in-suit.

The complaint, filed by an Indiana patent lawyer, lists the following claims:

Count I: Infringement of U.S. Patent No. 5,344,932
Count II: Infringement of U.S. Patent No. 7,772,209

Lilly and Princeton ask the court for:

(a) A judgment that Defendants have infringed the ‘932 patent and/or will infringe and/or actively induce infringement of the ‘932 patent;

(b) A judgment ordering that the effective date of any FDA approval for Defendants to make, use, offer for sale, sell, market, distribute, or import Defendants’ ANDA Products, or any product the use of which infringes the ‘932 patent, be not earlier than the expiration date of the ‘932 patent, inclusive of any extension(s) and additional period(s) of exclusivity;

(c) A preliminary and permanent injunction enjoining Defendants, and all persons acting in concert with Defendants, from making, using, selling, offering for sale, marketing, distributing, or importing Defendants’ ANDA Products, or any product the use of which infringes the ‘932 patent, or the inducement of any of the foregoing, prior to the expiration date of the ‘932 patent, inclusive of any extension(s) and additional period(s) of exclusivity;

(d) A judgment declaring that making, using, selling, offering for sale, marketing, distributing, or importing of Defendants’ ANDA Products, or any product the use of which infringes the ‘932 patent, prior to the expiration date of the ‘932 patent, infringes, will infringe and/or will actively induce infringement of the ‘932 patent;

(e) A judgment that Defendants have infringed the ‘209 patent and/or will infringe, actively induce infringement of, and/or contribute to infringement by others of the ‘209 patent;

(f) A judgment ordering that the effective date of any FDA approval for Defendants to make, use, offer for sale, sell, market, distribute, or import Defendants’ ANDA Products, or any product the use of which infringes the ‘209 patent, be not earlier than the expiration date of the ‘209 patent, inclusive of any extension(s) and additional period(s) of exclusivity;

(g) A preliminary and permanent injunction enjoining Defendants, and all persons acting in concert with Defendants, from making, using, selling, offering for sale, marketing, distributing, or importing Defendants’ ANDA Products, or any product the use of which infringes the ‘209 patent, or the inducement of or contribution to any of the foregoing, prior to the expiration date of the ‘209 patent, inclusive of any extension(s) and additional period(s) of exclusivity;

(h) A judgment declaring that making, using, selling, offering for sale, marketing, distributing, or importing of Defendants’ ANDA Products, or any product the use of which infringes the ‘209 patent, prior to the expiration date of the ‘209 patent, infringes, will infringe, will actively induce infringement of, and/or will contribute to the infringement by others of the ‘209 patent;

(i) A declaration that this is an exceptional case and an award of attorneys’ fees pursuant to 35 U.S.C. § 285; and

(j) An award of Plaintiffs’ costs and expenses in the action.

Practice Tip #1: This summer, Lilly succeeded in defending the ‘209 method-of-use patent in before District Judge Tanya Walton Pratt in the Southern District of Indiana. The court found, inter alia, that the patent did not fail for “obviousness.”

Practice Tip #2: Obviousness is a legal conclusion based on underlying factual findings. Such findings include: 1) the scope and content of the prior art; 2) the differences between the claims and the prior art; 3) the level of ordinary skill in the art; and 4) objective considerations of non-obviousness such as commercial success and satisfaction of a long-felt need. Moreover, it is insufficient that prior art merely includes separate references to the subject matter of a subsequent patent claim. Instead, obviousness requires the additional showing that a person of ordinary skill in the art of the subject matter would have combined those elements of the prior art.

October 22, 2014

Indiana Patent Litigation: PHD Sues DE-STA-CO for Patent Infringement

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – Indiana patent attorneys for PHD, Inc. of Fort Wayne, Indiana filed an intellectual property complaint in the Northern District of Indiana alleging that DE-STA-CO of Auburn Hills, Michigan infringed its patent on the “Long Travel Gripper,” Patent No. 7,490,881, which has been registered by the U.S. Patent Office.

Plaintiff asserts rights acquired via assignment to a patented product called “Long Travel Gripper,” U.S. Patent No. 7,490,881 (the “‘881 Patent”). On April 29, 2014, Defendant was notified that its product “RPR Gladiator Series Gripper” appeared to infringe the ‘881 Patent.

In this Indiana patent litigation, Defendant is accused of infringing the ‘881 Patent as well as inducing infringement by others. Plaintiff contends that the infringing activities have been willful and that this case is exceptional, entitling it to an award of attorneys’ fees.

Plaintiff asks the court for a judgment of infringement; damages, including treble damages; a declaration that the case is exceptional and an award of attorneys’ fees pursuant to such a finding; and injunctive relief.

Practice Tip: The U.S. Supreme Court expanded upon existing jurisprudence regarding “exceptional” patent lawsuits this year. In two related cases, it held that a trial court may as a matter of its discretion award attorneys’ fees in cases of patent infringement litigation that it deems “exceptional.” These Supreme Court rulings revisiting how “exceptional” is defined may benefit any company that is the target of a questionable patent infringement lawsuit, as trial judges will now have greater latitude to award attorneys’ fees – including awarding attorneys’ fees to prevailing defendants – in those cases in which they determine that the conduct of the losing party “stands out from others.”

October 3, 2014

If You Have Been Sued for Patent Infringement

By Overhauser Law Offices, LLC

How does a patent infringement lawsuit begin?

A patent lawsuit begins with the filing of a complaint alleging patent infringement by the patent

holder. If a lawsuit is filed against you, the patent owner must serve two documents on you: (1) a document called a “complaint,” which explains the accusations made against you; and (2) a document called a “summons.” The patent owner may first send a “demand” letter that states that you are potentially infringing the claims of a patent and requests that you pay for a license to use the patented invention, or it may go straight to court.

September 29, 2014

What To Do If You Get a Demand Letter

By Overhauser Law Offices, LLC

What is a demand letter? Am I legally

obligated to respond?

A demand letter is correspondence that states that you are potentially infringing the claims of a patent and requesting that you pay for a license to use the patented invention. You are not legally required to respond to a demand letter, but in some situations that may be the right course of action. Before deciding, consider your options, described below.

September 18, 2014

Indiana Utility Patent Litigation: Functional Devices Sues for Declaratory Judgment of Utility Patent Non-infringement and Invalidity

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana patent attorneys for Functional Devices, Incorporated of

Russiaville, Indiana filed a declaratory judgment action asserting patent invalidity and non-infringement in the Southern District of Indiana. This intellectual property complaint alleges that Low Voltage Systems, Inc. d/b/a LVS, Inc. of San Leandro, California and Albert L. Hermans of Oakland, California wrongfully accused Functional Devices of infringing Utility Patent No. 7,045,964, “Emergency Lighting System with Automatic Diagnostic Test” (“the ‘964 Patent”), which was issued by the U.S. Patent Office.

Declaratory judgment Plaintiff Functional Devices been designing, manufacturing, and selling electronic devices in the United States since 1969. It sells relays, current sensors, power control, enclosures, power supplies, transformers, and accessories.

Declaratory judgment Defendant Low Voltage offers a line of electrical, low voltage, fire alarm, access control, security, video, and voice and data fiber optics products. It specializes in emergency lighting products, central-lighting inverters and power-control relays. Declaratory judgment Defendant Hermans is the owner of the ‘964 Patent. He is believed to have assigned or exclusively licensed the ‘964 Patent to Low Voltage.

Functional Devices asserts that it has been wrongly accused by LVS of infringing the ‘964 Patent. It indicates that, on August 28, 2014, patent counsel for LVS sent Functional Devices a demand letter contending that the manufacture, use, sale, and offer for sale of certain products infringes the ‘964 Patent. This letter, it claims, creates an actual, substantial, and continuing justiciable controversy between Functional Devices and LVS.

In its complaint, filed by Indiana patent lawyers, Functional Devices lists the following claims:

• Count I: Declaratory Judgment – Non-infringement of the ‘964 Patent
• Count II: Declaratory Judgment – Invalidity and Unenforceability of the ‘964 Patent

Functional Devices seeks a declaration from the court that 1) the ‘964 Patent is invalid and unenforceable and 2) no Functional Devices product infringes the ‘964 Patent. It also asks the court to order Low Voltage and Hermans to pay all costs and attorneys’ fees associated with the litigation.

Practice Tip #1: When the declaratory judgment plaintiff files in its home jurisdiction, establishing personal jurisdiction over declaratory judgment defendants is sometimes tricky and can lead to competing lawsuits in different jurisdictions. The first-to-file rule is a doctrine of federal comity that generally favors pursuing only the first-filed action when multiple lawsuits involving the same claims are filed in different jurisdictions. It was designed to avoid conflicting decisions and promote judicial efficiency. Finding an exception to the first-to-file rule requires a sound reason that would make it unjust or inefficient to continue the first-filed action.

Practice Tip #2: A court may also consider the extent to which a declaratory judgment action is anticipatory and motivated by forum shopping. However, the Federal Circuit has repeatedly held that a finding that a filing was anticipatory does not in itself constitute sufficient legal reason to transfer or dismiss the first-filed case.

September 10, 2014

Indiana Patent Law: Strong Showing Required to Plead and Prove Inequitable Conduct

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – Judge Theresa L. Springmann of the Northern District of Indiana held

that a patent infringement defendant’s claim of inequitable conduct by the patentee had been insufficiently pled. The defendant’s counterclaim was dismissed and its affirmative defense struck.

In 2013, an Indiana patent attorney for Unverferth Manufacturing Co., Inc. of Kalida, Ohio sued Par-Kan Company of Silver Lake, Indiana alleging infringement of Patent No. 8,221,047, Seed Carrier With Pivoting Conveyor, which had been registered with the United States Patent and Trademark Office (“USPTO”).

Unverferth alleged that Par-Kan had engaged in both the “unauthorized, infringing manufacture, use, importation, sale and/or offer for sale” of the product and inducing others to infringe patented seed tender products, including its “Seed Weigh” product. Unverferth further alleged that the infringing behavior continued after Par-Kan was notified of the infringement and, as such, some or all of the infringement was willful.

In its complaint, filed by an Indiana patent lawyer, Unverferth asked for preliminary and permanent injunctions, for lost profits in an amount no less than a reasonable royalty, and that such damages be trebled. It also asked the court for a judgment that the case was “exceptional,” and that, consequently, it was entitled to all costs and expenses of the action, including reasonable attorneys’ fees.

Par-Kan interposed a claim of inequitable conduct against Unverferth, stating that two declarations of Unverferth’s Vice President of Sales and Marketing, which had been submitted to the USPTO, failed to mention all relevant facts. Par-Kan also asserted that certain statements in the declarations, such as “I am unaware of any other factors contributing to the success of the product,” were false.

Unverferth asked the court to dismiss Par-Kan’s counterclaim of inequitable conduct for failure to state a claim. Additionally, Unverferth asked the court to strike Par-Kan’s amended affirmative defense of inequitable conduct.

The court agreed that Par-Kan’s claim of inequitable conduct was not properly before the court. Inequitable conduct “renders an entire patent (or even a patent family) unenforceable,” stated the court. Thus, as a general rule, the application of a defense or counterclaim of inequitable conduct will be limited to instances where the patentee’s misconduct resulted in the unfair benefit of receiving an unwarranted claim.

Consequently, the accused infringer must meet the heavy burden of proving, by clear and convincing evidence, that the patent applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the USPTO.

The “materiality” element of the test requires a showing of “but-for” materiality – would the USPTO have allowed the claim if it had been aware of the undisclosed information? To allow the court to evaluate materiality, the alleged infringer’s pleading must include the “who, what, when, where, why and how” of the material misrepresentation or omission that it claims was made to the USPTO.

More specifically, the pleadings must identify the “who” – the specific individual associated with the filing or prosecution of the patent, who both knew of the material information and deliberately withheld or misrepresented it. They must also identify the “what” – which claims, and which limitations in those claims, the withheld references are relevant to – and the “where” – where in those references the material information is found. These assertions allow the alleged infringer to explain, and the court to infer, both “why” the withheld information is material and “how” an examiner would have used this information in assessing the patentability of the claims.

The court held that Par-Kan’s pleadings properly included the “who” and “when” components, but that they failed to meet requirements regarding the “what, where, how, and why” regarding the materiality of the alleged omissions and misstatements. Instead, the court noted that the USPTO had explicitly stated that the declarations in question were insufficient to overcome the rejections. Thus, the court held, but-for materiality had not been sufficiently pled.

The court then turned to the requirement that specific intent to deceive be shown. Deceptive intent may not be assumed from the materiality of a deception and a mere allegation of an omission is insufficient. Instead, to satisfy the inequitable conduct standard, “deceptive intent must be the most reasonable inference drawn from the evidence.” The court held that Par-Kan had failed to show that Unverferth had demonstrated deceptive intent, as other interpretations of the declarant’s intent were reasonable, including that the declarant had believed his sworn statements to be true.

The court dismissed Par-Kan’s counterclaim asserting, and struck its affirmative defense of, inequitable conduct. It stated, however, that were Par-Kan to file a motion to amend its pleadings, the court would consider whether such an amendment would be permitted.

Practice Tip: An exception to the requirement for “but-for” materiality exists where there is egregious affirmative misconduct. However, this exception contemplates extraordinary circumstances like “deliberately planned and executed schemes.” Alleged misconduct such as the failure to mention prior art references in an affidavit is insufficient to constitute such “egregious affirmative misconduct.”

September 8, 2014

Apple Entitled to $400M in Samsung Profits, Indiana University Maurer School of Law Professors Say in Amicus Brief

By Overhauser Law Offices, LLC

Bloomington, Indiana – In a highly publicized intellectual property case involving the design features of smartphones and tablets, the Federal Circuit will decide whether to force Samsung to pay Apple nearly $400 million – Samsung’s total profits on products that infringed Apple’s design patents. Though several high-profile academics have lined up in support of Samsung, Apple’s position on the total profits rule should prevail, according to Indiana University Maurer School of Law experts who have filed an amicus curiae brief in the case.

Apple and Samsung have been battling in dozens of complex intellectual property infringement cases in several countries. At trial in one of the U.S. cases, a jury found that several Samsung devices infringed Apple’s design patents, and awarded Apple all of Samsung’s profits on those devices. On appeal, Samsung is arguing that it should only be required to give up the portion of its profits that can be linked directly to the infringing design features of the products, a theory called “apportionment.”

“Congress debated this same question over a century ago and rejected apportionment,” said Mark D. Janis, the Robert A. Lucas Chair of Law and director of the Center for Intellectual Property Research at the IU Maurer School of Law. He explained that in the mid-1880s, the Supreme Court decided two cases involving carpet designs in which the infringers made thousands of dollars in profits, but the design patent holder was awarded only 6 cents because it failed to prove how much of the profit was attributable to the carpets’ appearance.

August 22, 2014

Indiana Patent Litigation: Kimball International Sues Westin-Nielsen for Infringement of Two Design Patents

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana patent attorneys for Kimball International, Inc. of Jasper, Indiana commenced intellectual property litigation in the Southern District of Indiana alleging that NWN, Inc., d/b/a Westin-Nielsen, infringed Design Patent Nos. D654,718 for a “Side Chair” and D665,188, also for a “Side Chair.” These design patents have been issued by the U.S. Patent Office.

Kimball, a furniture design and manufacturing company that has operated for over four decades, asserts that Westin-Nielsen’s “Cascade” line of chairs infringes Kimball’s intellectual property rights in two design patents. The Cascade line of chairs, named after the Cascade River in northern Minnesota, is designed for plus-sized seating.

At issue in this design patent litigation are United States Design Patent Nos. D654,718 (the “‘718 Patent”) and D665,188 (the “‘188 Patent”). Westin-Nielsen is accused of infringing these patented designs, either directly or contributorily, by making, using, selling, offering for sale, or supplying products such as Westin-Nielsen’s Cascade line of chairs. Kimball asserts that Westin-Nielsen will continue to do so unless enjoined.

The complaint, filed by Indiana patent lawyers for Kimball, lists the following counts:

• Infringement of United States Design Patent No. D654,718

• Infringement of United States Design Patent No. D665,188

Kimball asks that the court:

• Adjudge that NWN has infringed the ‘718 and ‘188 Patents in violation of 35 U.S.C. § 271;

• Issue preliminary and permanent injunctive relief prohibiting NWN and its agents from infringing the ‘718 and ‘188 Patents pursuant to 35 U.S.C. § 283;

• Award Kimball damages for patent infringement, and prejudgment interest and costs against NWN pursuant to 35 U.S.C. § 284;

• Adjudge that NWN’s infringement of the ‘718 and ‘188 Patents has been deliberate, willful, and wanton;

• Adjudge that NWN’s infringement of the ‘718 and ‘188 Patents has been exceptional under 35 U.S.C. § 285;

• Treble the damage award under 35 U.S.C. § 284;

• Award Kimball its reasonable attorneys’ fees under 35 U.S.C. § 285; and

• Award Kimball the total profits received or derived by NWN from the manufacture, marketing, sale, offering for sale, and/or distribution of products bearing or using any copy or colorable imitation of the ‘718 and ‘188 Patents pursuant to 35 U.S.C. § 289.

Practice Tip: The U.S. Supreme Court ruled this year that a trial court may award attorneys’ fees in case of patent infringement litigation that it deems “exceptional.” These Supreme Court rulings revisiting how “exceptional” is defined may benefit any company which is the target of a questionable patent infringement lawsuit, as trial judges will now have greater latitude to award attorneys’ fees in those cases in which they determine that the conduct of the losing party “stands out from others.”

August 20, 2014

United States Patent Law: Supreme Court Holds Prevailing Defendants in “Unreasonable” Patent Lawsuit Can Be Awarded Legal Fees; Federal Circuit Review Curtailed

By Overhauser Law Offices, LLC

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Washington, D.C. – In two related rulings, the United States Supreme Court addressed the standards for granting and reviewing awards of legal fees in patent infringement lawsuits.

In the first matter, Octane Fitness, LLC was sued by Icon Health & Fitness, Inc. At issue was Icon’s contention that the use of a particular component in elliptical fitness machines constituted patent infringement. After Octane prevailed, it sought $1.8 million in attorneys’ fees. The district court denied these fees and an appeal was taken on the issue.

In its review, the Federal Circuit applied the rule from Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc. In Brooks Furniture, the Federal Circuit had defined an “exceptional case,” which would warrant an award of legal fees, as one that either involves “material inappropriate conduct” or is both “objectively baseless” and “brought in subjective bad faith.” It then rejected Octane’s assertion – that attorneys’ fees were appropriate because Icon had asserted an unreasonable claim construction – as not falling within the Brooks Furniture definition and declined to overrule the district court’s denial of attorney’s fees.

In Octane Fitness v. Icon Health & Fitness, Case No. 12-1184, the Supreme Court reversed and remanded. Justice Sotomayor, writing for a unanimous court, said that the Federal Circuit’s interpretation of 35 U.S.C. §285 was overly rigid and “superimposes an inflexible framework onto statutory text that is inherently flexible.” Instead, the Court held that “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.

The Court also revised the standard of proof that had been required by the Federal Circuit. In Brooks Furniture, the Federal Circuit had held that §285 requires that parties establish the “exceptional” nature of a case by “clear and convincing evidence.” The Supreme Court opined that such a high standard was not supported by the statute. Instead, as patent infringement litigation is generally governed by a preponderance-of-the-evidence standard, that standard was also appropriate for the award of attorneys’ fees.

The second patent infringement litigation decided by the Supreme Court pertained to a patent infringement lawsuit filed by Allcare Health management Systems. After Allcare lost in the district court, the district judge awarded $5 million in attorneys’ fees to Highmark. The Federal Circuit reviewed the district court’s judgment de novo and reversed the award.

In Highmark v. Allcare Health Management Systems, Case No. 12-1163, the Supreme Court reversed the Federal Circuit’s reversal, holding that, in light of the traditional framework of review, the Federal Circuit should be more deferential to the trial court on the issue of the award of fees. The Supreme Court stated, “Traditionally, decisions on ‘questions of law’ are ‘reviewable de novo,’ decisions on ‘questions of fact’ are ‘reviewable for clear error,’ and decisions on ‘matters of discretion’ are ‘reviewable for abuse of discretion.'” The determination of whether a case should be considered to be “exceptional” for the purposes of awarding attorneys’ fees is a matter of discretion. As such, it is properly reviewed not de novo but instead for abuse of discretion.

Practice Tip: Under U.S. patent law, a trial court may award attorneys’ fees in case of patent infringement litigation that it deems “exceptional.” These Supreme Court rulings revisiting how “exceptional” is defined may benefit Google, Apple and other large technology companies, which are often targets of questionable patent infringement lawsuits, as trial judges will now have greater latitude to award attorneys’ fees in those cases in which they determine that the conduct of the losing party “stands out from others.”