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The technology company iLOR struck out three times in its 2007 patent infringement suit against Google, which can only be described as a resounding defeat for iLOR and its lawyers at Frost Brown Todd. But on Tuesday, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit concluded that iLOR’s case, however unsuccessful, wasn’t objectively baseless. In a precedential 15-page opinion that sets a new standard for finding a patent case exceptional in the context of awarding attorney fees, the appellate panel reversed a federal district court ruling that called for iLOR to pay Google $660,000 in attorneys fees and costs. Lexington, Ky., federal district court judge Joseph Hood found iLOR’s suit objectively baseless in 2009, following his denial of the company’s motion for a preliminary injunction, the dismissal of iLOR’s suit; and the Federal Circuit’s affirmance of Hood’s finding that Google didn’t infringe iLOR’s patent, which involves technology for using a mouse cursor to open a toolbar over a hyperlink. “iLOR was aware or should have been aware of the fatal flaws in its theory of the case,” Judge Hood wrote in an October 2009 opinion that found the case exceptional and awarded fees to Google’s counsel from Fish & Richardson and Middleton Reutlinger. The Federal Circuit panel–Judges Timothy Dyk and Richard Linn and Chief Judge Randall Rader–disagreed. “Though iLOR was ultimately unsuccessful in its patent infringement suit, Google has not met its high burden to show by clear and convincing evidence that this suit was brought frivolously or that iLOR’s position on claim construction was objectively baseless,” the panel concluded, in an opinion written by Judge Dyk. The opinion establishes that the standard for objective baselessness parallels the standard for objective recklessness in willful infringement actions, which holds that the plaintiff’s state of mind is irrelevant. Under that standard, the Federal Circuit found, a blog post by iLOR’s CEO that Judge Hood cited in ruling the case exceptional was not material to the question of objective baselessness. (In the blog post, which preceded iLOR’s suit, the CEO asserted that the automatic toolbar feature of iLOR’s technology differentiated it from Google’s application.) “A finding of objective baselessness is to be determined by the record made in the infringement proceedings,” the panel wrote. “Simply being wrong about claim construction should not subject a party to sanctions where the construction is not objectively baseless….In light of the claim terms, specification, and prosecution history, we believe that iLOR could reasonably argue for the claim construction that it proposed.” In order to find a case is exceptional for the purposes of awarding attorneys’ fees, the Federal Circuit ruled, a court must find both that the case is objectively baseless and that the plaintiff brought the litigation in bad faith. In the iLOR case, the panel noted, it didn’t have to consider the question of subjective bad faith because Google couldn’t show objective baselessness. We phoned Fish & Richardson’s Frank Scherkenbach, who argued Google’s casebefore the Federal Circuit, but we didn’t hear back. Lead counsel for iLOR, David Schmit of Frost Brown Todd, declined to comment on the Federal Circuit’s ruling.

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