Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. In an important opinion regarding the proper standard for whether a patent case is “exceptional” such that attorneys’ fees may be awarded to the prevailing party, the Court of Appeals for the Federal Circuit vacated a fee award by Judge Stark in Delaware because he determined that a portion or aspect of the case was exceptional, but not necessarily the entirety of the case. The Federal Circuit clarified that the entire case must be exceptional, and that exceptionality of the entire case may be based on limited or isolated circumstances. The Federal Circuit counseled, however, that “the district court in this case should have determined whether the circumstances surrounding the expert’s changed opinion were such that, when considered as part of the totality of circumstances in the case, the case stands out as exceptional.” Slip. Op. at 6. The Federal Circuit also distinguished other cases that awarded partial fees because those cases were determined to be exceptional “cases,” but the fees were intended to be related “to the extent of the misconduct.” Slip. Op. at 7. This is an important case that clarifies the exceptional case standard in patent cases, and which will likely be applied in trademark cases under the Lanham Act, which also requires a case to be “exceptional” before attorneys’ fees can be awarded.
2. In another fee opinion in a patent case, The Federal Circuit affirmed an exceptional case finding and an award of attorneys’ fees against Plaintiff Blackbird Tech LLC. In the case, Blackbird was informed by the defendant that its infringement case was non-existent and that a fee award would be sought. A series of settlement negotiations took place, without a settlement being reached. Then, after the defendant’s motion for summary judgment was fully briefed, but before it was decided, Blackbird unilaterally and without notice filed a Notice of Voluntary Dismissal with Prejudice, executed a covenant not to sue, and filed a motion to dismiss for lack of subject matter jurisdiction based on the covenant not to sue. The district court eventually dismissed the case and upon a motion by the defendant, awarded attorneys’ fees to defendant. The Federal Circuit affirmed the fee award finding that the case was exceptional both as to substantive weakness and litigation misconduct (including delays in document production and the last minute, unannounced dismissal). Of note, however the Federal Circuit also affirmed a deterrence function of the fee award to deter Blackbird and similar high-volume patent case filers from filing cases to attempt to extract nuisance value settlements where the cases are of questionable merit. This case is one to cite if a defendant is up against a high volume non-practicing entity with a weak case.
3. A recent bill entitled the Inventor Rights Act was introduced by Rep. Davis (D-IL) and Rep. Gosar (R-AZ). The bill is interesting in that it attempts to bolster the rights of inventors that themselves attempt to enforce their patents (as opposed to non-practicing entities that purchase patents from others). The bill has some interesting features such as expanded venue choices, injunctive relief being more readily available (in theory), and immunity from post-grant proceedings in the Patent Trial and Appeal Board. The interesting aspect of the bill is that by distinguishing inventor-enforced patents from non-practicing entity enforced patents, the proponents at least give a nod to the stern, big tech, anti-troll lobby that exists. The bill may be DOA, but it is at least a nice effort and has some good discussion points. Stick tap (I am a hockey fan) to Patently-O for having a copy of the bill available, and for generally being an outstanding, thoughtful blog for current events is patent law.
Lastly, Merry Christmas and Happy Holidays to all. In light of the holiday season, I.P. Takeaways will be taking a few weeks off.