United States District Court, W.D. Wisconsin
OPINION & ORDER
D. PETERSON, DISTRICT JUDGE.
a patent infringement case involving a captioned telephone
service for the deaf and hearing-impaired. Plaintiffs
Ultratec, Inc., and CapTel, Inc., asserted U.S. Patent No. 7,
660, 398 (the '398 patent) against defendants Sorenson
Communications, Inc., and CaptionCall, LLC. Defendants
stipulated to infringement, and the case went to trial on
validity and damages. The jury found that the asserted claims
were not obvious and awarded damages to plaintiffs for
infringement. After trial, the court granted defendants'
motion for judgment as a matter of law that the '398
patent is invalid as obvious. Dkt. 706.
now move for attorney fees under 35 U.S.C. § 285. They
contend that plaintiffs knew that their claims were invalid
as obvious over plaintiffs' own prior art, but initiated
this infringement case nonetheless. The court is not
convinced that the case is “exceptional” or that
fee shifting is warranted, so it will deny defendants'
§ 285 of the Patent Act, “[t]he court in
exceptional cases may award reasonable attorney fees to the
prevailing party.” 35 U.S.C. § 285. For nearly a
decade, under Brooks Furniture Manufacturing,
Inc. v. Dutailier International, Inc., 393 F.3d 1378
(Fed. Cir. 2005), an “exceptional” case was one
that involved some actionable misconduct. But now, under
Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 134 S.Ct. 1749 (2014), 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.”
Id. at 1756; see also Highmark Inc. v. Allcare
Health Mgmt. Sys., Inc., 134 S.Ct. 1744, 1748 (2014).
District courts determine whether a case is exceptional on a
case-by-case basis, considering the totality of the
circumstances. Octane, 134 S.Ct. at 1756. The moving
party must demonstrate that the case is exceptional by a
preponderance of the evidence. Id. at 1758. The
determination is a discretionary one for the court.
question is not governed by clear-cut rules, but the
court's discretion is guided by the purpose of
fee-shifting under § 285, which is to dissuade
unreasonable lawsuits and litigation tactics by compensating
the prevailing party for enduring them. See, e.g.,
Commil USA, LLC v. Cisco Sys., Inc., 135 S.Ct. 1920,
1930-31 (2015). The court should not award fees to punish a
patent holder simply for failing to prove infringement.
Gaymar Indus., Inc. v. Cincinnati Sub-Zero Prods.,
Inc., 790 F.3d 1369, 1373 (Fed. Cir. 2015) (citing
Octane, 134 S.Ct. at 1753). A litigation position
that seems obviously wrong after a decision on the merits
might have seemed reasonable when judged without the benefit
of hindsight. And fee-shifting in routine cases would deter
legitimate efforts to enforce patent rights. So the court
will award fees only if there has been some conduct that
warrants imposing on the losing party the additional burden
of paying the other side's attorney fees. The court need
not find that the losing case was frivolous, or that it was
brought in bad faith for an illegitimate purpose (although
that would clearly warrant fee-shifting). See Lumen View
Tech., LLC v. Findthebest.com, Inc., 24 F.Supp.3d 329,
335 (S.D.N.Y. 2014), aff'd, 811 F.3d 479 (Fed.
Cir. 2016). Such clearly inappropriate cases and tactics
would be sanctionable pursuant to Rule 11 or the court's
inherent powers even without § 285.
the purpose of § 285 is to compensate parties forced to
defend against unreasonable litigation and to deter improper
conduct, a good way to think of the question is this: was the
losing party's case so unusually weak on the merits that
it suggests an improper purpose or demonstrates irresponsible
conduct that should be deterred? Or, is there other evidence,
besides substantive weakness on the merits, that suggests an
improper purpose? With these questions in mind, the court
turns to the parties' arguments.
argue that plaintiffs knew their patent was invalid as
obvious over their own prior art, the CapTel trials combined
with U.S. Patent Publication No. 2002/0085685 (the '685
publication), yet argued during litigation that the CapTel
trials weren't prior art, but rather were an experimental
use. They complain that plaintiffs mischaracterized the
evidence concerning the trials and made “objectively
baseless arguments that contradicted well-settled legal
principles” concerning the experimental-use exception.
Dkt. 735, at 13.
true that plaintiffs argued that the trials were
experimental, and the court ultimately determined that they
weren't, but that doesn't mean plaintiffs'
litigation position was unreasonable or improper. The court
denied defendants summary judgment that the patent was
invalid over the trials because plaintiffs adduced evidence
that the primary purpose of the trials was experimental, not
commercial. See Dkt. 478, at 28-30. Whether the
trials were experimental was genuinely disputed; a reasonable
juror at that point could have found that they were. At
trial, the evidence showed that the trials, although in some
sense experimental, went “beyond the scope of the
experimental-use exception” and ventured into
refinement at some point prior to the critical date. Dkt.
585, Tr. 5a, at 29:7-8. Ultimately, the court determined that
the experimental-use exception did not apply to the trials
and granted defendants' motion for judgment as a matter
of law that claims 11, 12, and 13 of the '398 patent were
invalid as obvious over the trials combined with the '685
publication. Dkt. 706. So although plaintiffs' position
concerning the CapTel trials was not ultimately successful,
it was far from unreasonable. Whether the trials were an
experimental use was a close call, especially in the
uncharted territory of applying the experimental use
exception within the context of prior art. See,
e.g., Dkt. 585, Tr. 5a, at 35:16-37:11, 44:2-20.
also complain of several litigation tactics that, they argue,
render this case exceptional. The court is not persuaded.
Plaintiffs have filed other infringement actions against
defendants, which have been very burdensome to the parties
and the court. But those other cases do not make
this case exceptional under § 285, and the
burdensome nature of this litigation is not exclusively
plaintiffs' fault. As explained above, plaintiffs'
position that the '398 patent was not invalid was not
unreasonable, so their assertion of that patent was not
unfair, vexatious, or a misuse of judicial resources. As for
defendants' expert witness's lack of access to a
certain type of phone used in the CapTel trials, defendants
point to no authority stating that such a discovery dispute
renders a case exceptional under § 285, nor do they show
that plaintiffs acted improperly or unreasonably.
case was not so far outside the norms of patent litigation
that it demonstrated irresponsible litigation or suggested
that plaintiffs maintained the suit for some improper
purpose. Fee-shifting under the circumstances of this case
would discourage aggressive but good-faith patent
ORDERED that defendants Sorenson Communications, Inc., and
CaptionCall, LLC's motion an order that this case is