{"id":84265,"date":"2017-06-09T05:15:59","date_gmt":"2017-06-09T09:15:59","guid":{"rendered":"https:\/\/ipwatchdog.com\/?p=84265"},"modified":"2017-08-01T19:00:40","modified_gmt":"2017-08-01T23:00:40","slug":"federal-circuit-reverses-grant-attorney-fees-case-not-exceptional","status":"publish","type":"post","link":"https:\/\/ipwatchdog.com\/2017\/06\/09\/federal-circuit-reverses-grant-attorney-fees-case-not-exceptional\/id=84265\/","title":{"rendered":"Federal Circuit Reverses Grant of Attorney Fees; Case Not Exceptional Under 35 U.S.C. \u00a7 285"},"content":{"rendered":"

\"FederalCheckpoint Sys. v. All-Tag Sec. S.A<\/a>,<\/u>\u00a0(Fed. Cir. June 5, 2017) (Before Newman, Lourie, and Moore, J.) (Opinion for the court, Newman, J.)<\/p>\n

The Federal Circuit held that the district court erred in finding this case exceptional under 35 U.S.C. \u00a7 285, and it reversed its award of attorney fees to the defendants. The record showed that the plaintiff\u2019s charge of infringement was reasonable and the litigation was not abusive or brought in bad faith.<\/p>\n

Checkpoint Systems owns the \u2019555 patent, which relates to improved anti-theft tags that are attached to merchandise and deactivated when the goods are purchased. Checkpoint sued the All-Tag defendants for infringing the \u2019555 patent. The jury found the \u2019555 patent not infringed, invalid, and unenforceable. The district court subsequently found the case to be \u201cexceptional\u201d under 35 U.S.C. \u00a7 285 and awarded All-Tag approximately $6.6 million in attorney fees, costs, and interest. The district court considered the case to be exceptional because Checkpoint\u2019s expert 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.<\/p>\n

Checkpoint appealed to the Federal Circuit, pointing to evidence in the record explaining that the tags from Belgium were manufactured on the same machines that All-Tag transferred from Switzerland to Belgium. The Federal Circuit affirmed the judgment entered on the jury verdict but reversed the attorney fee award because the infringement charge was not shown to have been made in bad faith or objectively baseless. All-Tag sought certiorari, which was granted, with the opinion vacated, and remanded to the Federal Circuit in conjunction with the Supreme Court\u2019s decisions on fee-shifting in Octane Fitness, LLC v. ICON Health & Fitness, Inc<\/a>.<\/em> (U.S. 2014) and Highmark, Inc. v. Allcare Health Management System, Inc.<\/em><\/a> (U.S. 2014). On remand from the Supreme Court, the Federal Circuit remanded to the district court for further consideration of the attorney fee award in light of the Supreme Court\u2019s decisions. The district court again held the case to be exceptional, for the same reasons. Additionally, the district court found Checkpoint\u2019s pre-suit investigation, based on a European infringement verdict against All-Tag on a counterpart of the \u2019555 patent and two infringement opinions from counsel, to be inadequate because the infringement opinions \u201cwere given years before filing.\u201d The district court also cited Checkpoint\u2019s \u201cimproper motivation\u201d behind the lawsuit, stating that Checkpoint brought suit \u201cto interfere improperly with Defendants\u2019 business and to protect its own competitive advantage.\u201d<\/p>\n

In Octane Fitness<\/em>, the Supreme Court explained that an \u201cexceptional case\u201d is one that \u201cstands out from others with respect to the substantive strength of a party\u2019s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.\u201d Here, Checkpoint argued that its litigating position was objectively reasonable, despite the error in providing the wrong sample tag to its expert for analysis. The Federal Circuit noted that the manufacture of that tag in Switzerland rather than in Belgium was made known by All-Tag before trial. It also noted that All-Tag attempted to exclude Checkpoint\u2019s expert testimony pre-trial and moved for judgment as a matter of law post-trial. The district court denied both motions, but still found the case to be exceptional, in part due to Checkpoint\u2019s \u201cimproper motivation.\u201d The Federal Circuit rejected this reasoning, stating that \u201cthe patent law provides the statutory right to exclude those that infringe a patented invention. Enforcement of this right is not an \u2018exceptional case\u2019 under the patent law.\u201d While motivation to harass or burden an opponent may be relevant to an \u201cexceptional case\u201d finding, motivation to implement a statutory patent right by bringing suit based on a reasonable belief in infringement is not an improper motive. The Federal Circuit found no harassment or abuse.<\/p>\n

Additionally, the Federal Circuit pointed to the district court\u2019s finding that Checkpoint had sufficient evidence of infringement to survive summary judgment motions and a Daubert <\/em>challenge, and to proceed to a jury trial. It noted that \u201c[a]bsent misrepresentation to the court, a party is entitled to rely on a court\u2019s denial of summary judgment and JMOL . . . as an indication that the party\u2019s claims were objectively reasonable and suitable for resolution at trial.\u201d<\/p>\n

Finally, the Federal Circuit addressed the district court\u2019s argument that Checkpoint\u2019s expert\u2019s reliance on two of All-Tag\u2019s manufacturing process patents, the \u2019466 and \u2019343 patents, was insufficient. The district court stated that there was evidence that All-Tag\u2019s manufacturing processes were not the same as those disclosed in the \u2019466 and \u2019343 patents, which made comparisons of the patents, instead of the actual products, insufficient. The Federal Circuit rejected the district court\u2019s reasoning. It explained that there was no representation by All-Tag that the accused products were different from the tested products, and that the district court did not find them to be different. There was no allegation of falsity, fraud or bad faith. Additionally, All-Tag\u2019s witness testified that the All-Tag patents explained how All-Tag manufactured its tags and that it was \u201cenough just to read the patent.\u201d As a result, the Federal Circuit found that the district court erred in its award of attorney fees and reversed its decision.<\/p>\n

Reliance on a mistaken sample for infringement testing was not abusive or in bad faith, particularly when there was evidence the sample could still be considered representative. Although \u201cimproper motivation\u201d for bringing suit may factor into whether a case is \u201cexceptional\u201d under \u00a7 285, it is not improper to assert patents to thwart competition, rather it is a statutory right to do so. Thus, a fee award should not be used as a penalty for failure to win a patent infringement suit. Instead, \u00a7 285 should be implemented only to prevent a \u201cgross injustice.\u201d<\/em> The case must stand out from others with respect to the substantive strength of a party\u2019s litigating position or the unreasonable manner in which the case was litigated.<\/em><\/p>\n

[Troutman-Ad]<\/p>\n

[Troutman-About]<\/p>\n","protected":false},"excerpt":{"rendered":"

In the Federal Circuit case of Checkpoint Systems v. All-Tag Sec, The Federal Circuit held that the district court erred in finding this case exceptional under 35 U.S.C. \u00a7 285, and it reversed its award of attorney fees to the defendants. The record showed that the plaintiff\u2019s charge of infringement was reasonable and the litigation was not abusive or brought in bad faith.<\/p>\n","protected":false},"author":109093,"featured_media":77031,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[7202,7203,82,228,3],"tags":[1593,1592,553,13004,8730,8317,6640,1098,9862,463,6639,33,8742,34,248],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/posts\/84265"}],"collection":[{"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/users\/109093"}],"replies":[{"embeddable":true,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/comments?post=84265"}],"version-history":[{"count":0,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/posts\/84265\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/media\/77031"}],"wp:attachment":[{"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/media?parent=84265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/categories?post=84265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/tags?post=84265"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/ipwatchdog.com\/wp-json\/wp\/v2\/yst_prominent_words?post=84265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}