U.S. District Judge Jon Tigar, Northern District of California (S. Todd Rogers / The Recorder)
SAN FRANCISCO — If a patent holder doesn’t get a favorable claim construction order and presses ahead with litigation anyway, is it now at risk of a big attorney fee award under new U.S. Supreme Court case law?
U.S. District Judge Jon Tigar wrestled with that question Thursday as he became the latest federal judge tasked with applying the high court’s new, flexible, and somewhat vague, Octane Fitness standard for fee shifting in patent cases.
“There’s not so much guidance on this issue because the landscape has changed so much recently,” Tigar said at the outset of the hearing in Eon v. Sensus USA. “We’re all wrestling with this, and trying to figure out where the bar is.”
Though he didn’t tip his hand completely, Tigar sounded open to awarding fees against Tyler, Texas-based Eon Corp., a nonpracticing entity that has accused mobile phone companies of infringing its patent for switching between cellular and Wi-Fi signals.
Six phone companies say Eon dragged out the litigation for nearly a year, despite a claim construction order making clear that Eon could not prove infringement. The only reason was to avoid a final ruling that would bind Eon in other cases its bringing around the country, they contend. That makes the case “exceptional” and worthy of fee shifting under the court’s new standard in Octane Fitness v. ICON Health & Fitness, Sidley Austin partner Bryan Anderson argued for U.S. Cellular.
Such a ruling would put litigants in an untenable position, attorney John Hendricks argued on Eon’s behalf. A claim construction order cannot by itself end litigation, and the U.S. Court of Appeals for the Federal Circuit discourages litigants from taking direct appeals from them. So a patentee would have to choose between walking away from a potentially meritorious case or facing a crippling fee award, he said.
Besides, if the phone companies were so sure the case was unwinnable, they could have brought their summary judgment motion a year ago, Hendricks said, instead of waiting until after discovery.
“They brought a motion,” Tigar said. “And then it was granted.”
“They waited,” Hendricks replied. “And now they’re complaining about all the money they spent.”
“You’re criticizing them for spending money to respond to your discovery?” Tigar asked.
Octane Fitness overruled the Federal Circuit’s rigid requirement that a case be “objectively baseless” and brought in bad faith. Instead, the high court ruled, an exceptional case is “simply one that stands out from others” with respect to its substantive strength “or the unreasonable manner in which the case was litigated.”
Because the case law applying Octane Fitness is wide open, Tigar skipped his usual practice of issuing a tentative ruling. But, he noted Thursday, Judge Mariana Pfaelzer of the Central District of California denied fees in May in a similar case, saying a claim construction order cannot legally determine validity or infringement.
“Tell me why this case comes out differently,” he asked Anderson.
The facts of every case are different, Anderson said, and in this one it was “unequivocally clear” that Eon could not prevail.
“How much money do you want?” Tigar asked later in the argument.
Anderson was reluctant to answer, saying the numbers were in his filings.
“I want to hear you say it,” Tigar pressed. “Not to be too theatrical about it,” the judge added, but an attorney who comes into his court asking for fees should be prepared to say how much.
Anderson said U.S. Cellular is seeking about $650,000 for work done since the claim construction order last July. Frederick Whitmer, a Kilpatrick Townsend & Stockton partner, said Motorola Mobility is asking for $460,000, while Motorola Solutions wants $179,000. Cisco, backed by Duane Morris, is seeking $764,000, according to filings, while HTC and Akin Gump Strauss Hauer & Feld are asking for $754,000. Sprint filed its request under seal and its counsel at K&L Gates did not speak up Thursday.
Tigar’s questions for Eon were more probing. Twice he asked Hendricks why he shouldn’t find that Eon’s conduct was aimed at tactical objectives in other litigation.
“I’m not asking whether you agree with that characterization, because I’m sure you don’t,” Tigar said. But “would a finding to that effect be without any basis in the record?”
There’s no basis, Hendricks argued. In fact, he pointed out, Eon persuaded Tigar to reconsider parts of his claim construction ruling.
That’s true, Tigar said, but it “didn’t turn out to be helpful in the end.”
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