Originally published by Michael C. Smith.
Readers familiar with Texas courts will recognize Judge Gregg Costa as the former district judge in the Galveston division of the Southern District of Texas, who was subsequently appointed to the Fifth Circuit Court of Appeals. However, Judge Costa kept part of his old docket pending his replacement's confirmation. One of those cases, was a patent infringement case,RLIS v. Cerner Corp., 3:12cv209.
At trial in sunny Galveston, the jury returned a verdict of no infringement, and invalidated the asserted claims. Defendant Cerner then moved for attorneys fees under section 285, contending that the case met the standard for exceptionality required by the statute to award attorneys fees. Specifically, it contended that the plaintiff's positions were substantively meritless, and it litigated the case in an unreasonable manner. In an order handed down last week, Judge Costa rejected that claim.
Substantively Meritless
With respect to the arguments that the plaintiff's positions were substantively meritless, Judge Costa noted that the cases following Octane have recognized the difference between a reasonable position and a meritless one. "Since Octane," he observed, "district courts tend to award fees based on substantive weakness when a party fails to adduce any evidence to support its position, or the party advances a position conclusively contradicted by the evidence." Specifically, the Court rejected the claim that the granting of judgment as a matter of law during trial on the plaintiff's indirect claims was unreasonable, and found "[e]ven more unexceptional" the fact that the factfinder sided with one side after hearing "hotly contested expert and lay testimony from both sides." The Court noted that the claims at issue survived a "barrage" of summary judgment motions, and were supported by expert testimony.
Manner in Which Case Litigated
Moving on to Cerner's argument that the way in which the plaintiff litigated the case was unreasonable, Judge Costa identified three principal decisions by the plaintiff, all of which were made after the jury was impaneled. First, after jury selection but before opening statements, the plaintiff dropped one patent, and several claims from a second patent. Second, after the court relied on the plaintiffs willfulness allegations to admit a key piece of evidence that painted the defendant in a bad light, the plaintiff dropped its willfulness allegations. Third and finally, the plaintiff sought to change its infringement theory prior to and during trial.
Again, Judge Costa parsed the post – Octane decisions to evaluate whether this conduct was exceptional, and concluded that "[s]ince Octane, district courts have awarded fees when the plaintiff had a history of bringing nuisance value cases, was motivated by a bad faith desire to bankrupt the alleged infringer with litigation costs, resisted discovery requests, made no reasonable effort to verify that the defendant's products infringed, engaged in inequitable conduct at the PTO, or made misrepresentations during the litigation." While he observed that he had repeatedly voiced his displeasure with some of the plaintiff's trial tactics, the court concluded that they did not rise to the level of exceptional conduct for which an award of fees is warranted. Significant to the court's analysis was his observation that the defendant made no allegations of unprofessional conduct from the plaintiff's counsel in the more than two years that the case was litigated prior to trial. Nor did the Court detect any, despite numerous motions and hearings in what it characterized as a vigorously contested case.
In conclusion, the court observed that the concerns raised by the defendant "involved decisions made during the heat of trial. This is thus not a case in which RLIS brought the suit in bad faith were conducted discovery in a vexatious manner." The best cases for Cerner therefore, Judge Costa wrote, were those in which the patentee dropped the suit prior to trial. "But district courts that found exceptionality in those cases tended to base their decision on repeated instances of the plaintiff waiting until the last possible moment to drop the entire lawsuit," he noted, "often after realizing that a nuisance settlement was not forthcoming." In contrast here, however, though the plaintiff significantly reduced the number of claims during trial, it "kept the heart of the case alive until the jury returned a verdict." There were no allegations of bad faith when the plaintiff announced it was dropping the claims, and the Court noted that the Federal Circuit had previously found that a late stipulation did not meet the exceptionality requirement because "reduction of the issues… was a praiseworthy step, beneficial to the courts and the parties". In fact, it quoted the defendant's counsel stating at the time that "[a]nything they can do to make this case a little more digestible I think is good" and "we're not going to make a big stink out of it".
In conclusion, Judge Costa concluded that the defendant had failed to meet its burden of showing that the plaintiffs overall conduct in the case was vexatious, unreasonable, and bad faith, or otherwise exceptional, and accordingly denied the motion for attorneys fees.
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.
from Texas Bar Today http://ift.tt/1hUzYLG
via Abogado Aly Website
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