Articles Posted in US Court of Appeals for the Federal Circuit

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ThermoLife, the exclusive licensee of four Stanford University patents, claiming methods and compositions involving the amino acids arginine and lysine, to be ingested to enhance vascular function and physical performance, filed an infringement suit against several defendants. Stanford was a co-plaintiff. A bench trial was held and the district court found all asserted claims invalid and later granted defendants’ motions for attorney’s fees under 35 U.S.C. 285, which authorizes an award to a prevailing party in “exceptional” cases. The court found the cases exceptional, not based on an assessment of the validity position taken by plaintiffs or how they litigated but on its conclusion that plaintiffs were unjustified in alleging infringement in the first place, having failed to do an adequate pre-filing investigation. The Federal Circuit affirmed. These are unusual cases in that the basis for the fee award had nothing to do with the only issues litigated to reach the merits judgment: Infringement had not been adjudicated and even discovery on infringement had been postponed so that validity could be litigated first. Nevertheless, there was no abuse of discretion in the district court’s determination of exceptionality based on plaintiffs’ inadequate pre-suit investigation of infringement. View "ThermoLife International, LLC v. GNC Corp." on Justia Law

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Hamilton had been employed by the EEOC for 20 years, with no disciplinary problems, until one day in 2016, when, while engaged in mediation, he suddenly began using racial epithets, engaging in physical violence, and refusing to follow orders. The EEOC removed him from federal service. The union filed a grievance, which led to arbitration. During a hearing, the EEOC called 11 witnesses; the union called Hamilton. Although the arbitrator found that certain aspects of the EEOC’s case had not been proved, he credited the testimony of EEOC witnesses to conclude that Hamilton “had a major physical and/or mental breakdown.” Because Hamilton denied taking any of the actions he was charged with, the arbitrator concluded that Hamilton “did not remember.” The arbitrator found that the EEOC had not shown that Hamilton’s behavior had any negative effect on its reputation and had failed to consider that Hamilton’s behavior “was caused by his obvious medical condition,” and set aside Hamilton’s removal, awarding back pay. The arbitrator denied the union’s request for arbitration costs and attorney fees. The Federal Circuit vacated the denial of attorneys’ fees; 5 U.S.C. 7701(g) provides that an adjudicator may require an agency to pay the employee’s reasonable attorney fees if the employee is the prevailing party and the adjudicator determines that payment by the agency “is warranted in the interest of justice.” On remand, the arbitrator must reconsider the issue and include a statement of reasons. View "AFGE Local 3599 v. Equal Employment Opportunity Commission" on Justia Law

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The Katten law firm signed an engagement letter with Bausch & Lomb, a corporate affiliate of Valeant, that broadly defined Katten’s client as any Valeant entity. Attorneys Mukerjee and Soderstrom represented Mylan during various stages of proceedings in which Valeant was adverse, first, as Alston & Bird attorneys, but later, as Katten attorneys. Valeant and others moved to disqualify Katten as counsel for Mylan in three pending appeals concerning patents and trademarks. The Federal Circuit granted those motions. Katten has an ongoing attorney-client relationship with Valeant and its subsidiaries, so Katten’s representation of Mylan in these appeals presents concurrent conflicts of interest in violation of Rule 1.7(a) of the Model Rules of Professional Conduct. View "Dr. Falk Pharma GMBH v. Generico, LLC" on Justia Law

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PDIC’s patent allegedly covers encoding digital images in the JPEG format. PDIC licensed the patent to Adobe, promising not to sue Adobe or Adobe’s customers for claims arising “in whole or part owing to an Adobe Licensed Product.” PDIC sued Adobe customers, alleging that encoding JPEG images on the customers’ websites infringed its patent. Adobe was allowed to intervene to defend nine customers, asserting that PDIC breached its license agreement. PDIC dismissed the actions in which Adobe had intervened. Adobe unsuccessfully sought "exceptional case" attorneys’ fees, 35 U.S.C. 285, and FRCP 11 sanctions. The court concluded that it could not determine the prevailing party nor "say that PDIC’s pre-suit investigation was inadequate or that any filing was made for any improper purpose.” The court denied in part PDIC’s motion for summary judgment, finding that a reasonable juror could find "that PDIC’s infringement allegations . . . cover the use of Adobe products,” and violated the agreement; it held that Adobe could only collect fees incurred in defending its customers in suits that violated the agreement but could not recover fees incurred in the affirmative breach-of-contract suit. After failed attempts to identify "purely defense fees,” Adobe requested judgment in favor of PDIC. The court reiterated “that there are purely defensive damages that can be proven,” but entered the judgment. The Federal Circuit dismissed an appeal for lack of jurisdiction. There was no final ruling barring recovery on Adobe’s breach claim. Under New Jersey law, actual damages are not a required element of a breach of contract claim. View "Princeton Digital Image Corp. v. Office Depot Inc." on Justia Law

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Spineology’s patent describes an “expandable reamer” for use in orthopedic surgery. Wright manufactures a reamer known as the X-REAM®. In 2015, Spineology sued Wright, alleging the X-REAM® infringes its patent. The district court refused to adopt either party’s construction of the term “body” but construed “body” consistent with Wright’s noninfringement position and granted Wright summary judgment. Wright then sought attorney fees, 35 U.S.C. 285, arguing Spineology’s proposed construction of “body,” its damages theories, and its litigation conduct rendered the case “exceptional.” The Federal Circuit affirmed the denial of the motion. While ultimately the court rejected Spineology’s proposed construction, the attempt was not so meritless as to render the case exceptional. The court determined “the arguments made by Spineology to support its damages theory . . . are not so meritless as to render the case exceptional” and “[n]othing about this case stands out from others with respect to the substantive strength of Spineology’s litigating position or the manner in which the case was litigated.” View "Spineology, Inc. v. Wright Medical Technology Inc." on Justia Law

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AlphaCap, a non-capitalized non-practicing entity, hired Gutride on a contingency basis and sued 10 internet crowdfunding companies for patent infringement. Nine defendants settled for less than $50,000 each, leaving only Gust. After the litigation ended, the district court awarded Gust $492,420 in fees and $15,923 in costs under 28 U.S.C. 1927, concluding that the case was “exceptional” because AlphaCap had “clear notice" that its patents could not survive scrutiny under 35 U.S.C. 101. The court found the claims were directed to crowdfunding, a fundamental economic concept and an abstract idea, and did not include an inventive concept sufficient to render the abstract ideas patent eligible under “Alice.” The court reasoned that AlphaCap brought the case “to extract a nuisance settlement,” as confirmed by the nine other “paltry settlements” and AlphaCap’s decision to file in a distant venue. Gutride’s contested its joint and several liability for the fees. The Federal Circuit reversed, noting the “unbroken band of cases” excluding baseless filing of a complaint from supporting a section 1927 award. In addition, AlphaCap’s position on patent eligibility was colorable, given the relative paucity of section 101 cases. The district court had no basis to find that Gutride knew that the patents were invalid. While acknowledging concerns about AlphaCap’s “business model,” the court held that the fact that 10 suits were filed and the opposition to a transfer of venue did not establish bad faith. View "Gust, Inc. v. AlphaCap Ventures LLC" on Justia Law

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Eight of Rembrandt’s at-issue patents address cable modem technology; the ninth involves over-the-air signals. Rembrandt filed multiple infringement suits against dozens of cable companies, cable equipment manufacturers, and broadcast networks. The cases were consolidated. After several years of litigation, the court entered final judgment against Rembrandt on all claims. Many of the defendants sought attorney fees under 35 U.S.C. 285. Nearly four years after the litigation ended, the court issued a brief order granting that motion, declaring the case exceptional, and granting the bulk of the requests for fees, including nearly all of the attorney fees incurred in the litigation: more than $51 million. The Federal Circuit affirmed the exceptional case designation but remanded, finding that the court erred by failing to analyze fully the connection between the fees awarded and Rembrandt’s misconduct. While the court’s findings that that Rembrandt: wrongfully gave fact witnesses payments contingent on the outcome of the litigation; engaged in, or failed to prevent, widespread document spoliation; and should have known that the revived patents were unenforceable, were “remarkably terse” and “shed little light on its justifications” none of those findings was based “on an erroneous view of the law or on a clearly erroneous assessment of the evidence. View "In re Rembrandt Technologies, LP Patent Litigation" on Justia Law

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The 2001 patent application, directed to a method of treating cancer by administering natural killer cells, was rejected on obviousness grounds, after years of examination. The Patent and Trial Appeal Board affirmed. The assignee of the application appealed to the district court under 35 U.S.C. 145, in lieu of an immediate appeal to the Federal Circuit. The statute provides that the applicant must pay “[a]ll of the expenses of the proceeding,” “regardless of the outcome.” After prevailing in the district court, the Patent and Trademark Office (USPTO) sought to recover $111,696.39 in fees under section 145. Although the district court granted the USPTO’s expert fees, it denied attorneys’ fees. Initially, the Federal Circuit reversed. On reconsideration, the court affirmed. The American Rule prohibits courts from shifting attorneys’ fees from one party to another absent a “specific and explicit” directive from Congress. The phrase “[a]ll the expenses of the proceedings” falls short of that stringent standard. View "Nantkwest, Inc. v. Iancu" on Justia Law

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The Claims Court entered judgment in favor of Starry on its bid protest claim, concluding that the Department of Health and Human Services acted arbitrarily and capriciously in canceling its solicitation seeking to procure certain business operations services. The Claims Court thereafter awarded Starry attorney fees at the rates actually billed to Starry by its counsel, finding that the “extreme measures that [Starry] was forced to pursue to vindicate its right to a rational and lawful federal procurement process, combined with the shocking disregard of the truth by” HHS, constituted a “special factor” justifying an award of fees above the EAJA’s “default rate” of $125 per hour. EAJA, the Equal Access to Justice Act, 28 U.S.C. 2412(d)(2)(A), provides that when a trial court finds that a “special factor” exists, it is authorized to increase the statutory attorney fee rate in certain cases brought by or against the government. The Federal Circuit vacated the award, holding that the Claims Court erred as a matter of law in holding that an agency’s improper or dilatory conduct during the administrative process that gave rise to the litigation between the parties can constitute a “special factor.” EAJA does not contain any reference to prelitigation activities. View "Starry Associates, Inc. v. United States" on Justia Law

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Stone sued Cook in the Eastern District of Texas, alleging infringement of the 327 patent, which relates to a basket-type medical device used to remove stones from biological systems. Venue was transferred to the Southern District of Indiana. Cook deposed the patent’s inventor, who stated, regarding the addition of the “sheath movement element” in claim 1 to overcome an examiner’s rejection, “I realize there is nothing novel about it.” Cook then petitioned the Patent and Trademark Office for inter partes review of all claims. Following the institution of IPR, one of Stone’s managing members offered to license the 327 patent to Cook for $150,000.00 but negotiations broke down. The Patent Board canceled all of the patent’s claims. Following a dismissal with prejudice, the court denied Cook’s motion for attorney fees, 35 U.S.C. 285. The Federal Circuit affirmed, agreeing the case was not “exceptional” and that Stone lacked any type of “clear notice” of the 327 patent’s invalidity by service of Cook’s invalidity contentions. While one might view Stone’s litigating position as weak given the inventor’s deposition testimony regarding the novelty and origin of claim 1’s sheath handle element, exceptionality is not assessed by a strong or even correct litigating position. View "Stone Basket Innovations, LLC v. Cook Medical LLC" on Justia Law