The Software IP Report

Attorneys’ Fees Awarded in Light of Octane Fitness

A plaintiff had licensed a patent to defendants, including a right to sub-license, but excluded certain uses of the claimed method.  The plaintiff then sued the defendants based on those excluded uses.  The defendants were awarded attorneys’ fees under 35 U.S.C. § 285 where, among other things, the plaintiff had attempted to enforce the patent beyond what the plaintiff knew was the patent’s proper scope.  Home Gambling Network, Inc. v. Piche, No. 2:05-CV-610-DAE (D. Nev. May 21, 2014).  In awarding fees, the court took note that, after Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184, 134 S. Ct. 1749, 188 L. Ed. 2d 816 (Apr. 29, 2014), the standard for making a fee award was relaxed, no longer requiring a proof by clear and convincing evidence, or of subjective baselessness or objective bad faith.  Instead, the court used its discretion in awarding fees.

The court succinctly set forth the relevant facts:

On September 30, 2013, this Court granted Defendants’ Motion for Summary Judgment in its entirety, dismissing all of Plaintiffs’ claims. (Dkt. # 333.) In relevant part, the Court concluded that (1) there was no liability under 35 U.S.C. § 271(a) because at least one of the method steps was performed outside the United States (id. at 16); (2) there was no inducement to infringe the patent because there was no direct infringement of a patent (id.); (3) Defendants did not infringe the Method Patent by operating a website and licensing software that permitted sports betting, lottery, keno, and bingo games because these activities are excluded from the Method Patent pursuant to the prosecution history disclaimer (id. at 23); and (4) there was no contractual liability of Defendants because the HGN Contract did not prevent CWC from licensing the CWC Software to third parties for bingo, keno, lottery or sporting events (id. at 25). Importantly, the Court found that Plaintiffs purposefully attempted to exclude subject matter that was beyond the scope of the Method Patent from the license granted to CWC, so that they could license that subject matter to others for money. (Id. at 26.)

The court concluded that:

the totality of the circumstances warrants a finding of “exceptionality” in this case because: (1) Plaintiffs alleged in their amended complaint that live casinos were located outside the United States in Costa Rica despite controlling Federal Circuit law holding that an infringement of a method patent could not lie unless all steps were performed in the United States; (2) Plaintiffs attempted to sue for infringement of a patent that they did not own and in fact voluntarily relinquished years earlier; and (3) Plaintiffs engaged in patent misuse by purposefully attempting to limit Defendants’ usage of subject matter that was beyond the scope of the Method Patent from the license granted to CWC, so that they could license that subject matter to others for money. Given these facts, the Court concludes Defendants have demonstrated, by a preponderance of the evidence, that this is an exceptional case in which they are entitled to attorney fees.

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