The Software IP Report

Attorneys’ Fees Awarded in Patent Case Under Octane Fitness Standard

Discovery abuse and a reversal in an inventor’s trial testimony made for an exceptional case under 35 U.S.C. § 285, and therefore warranted an award of attorneys’ fees against a losing plaintiff in Digital Reg of Texas, LLC v. Adobe Systems Inc., Case No. 4:12-cv-01971-CW (N.D. Cal. Mar. 9, 2015). This case provides an example of a district court’s application of Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014) in determining what makes for an exceptional case justifying the award of attorneys fees.

The plaintiff alleged that the defendant infringed claims of U.S. Patent Nos. 6,389,541, 6,751,670 and 7,421,741. The court issued a claim construction order on the ‘741 patent and entered summary judgment in favor of the defendant. The defendant subsequently prevailed in a trial on the ‘541 and ‘670 patents, in which disputed patent claims were found to be invalid for obviousness.

Following trial, the defendant successfully moved for attorneys’ fees under 35 U.S.C. § 285, which provides that “the court ‘in exceptional cases may award reasonable attorney fees to the prevailing party.’”  The U.S. Supreme Court, in Octane Fitness, explained that “exceptional” is determined “case-by-case” considering the “totality of the circumstances” found by the district court.

The defendant alleged four bases for a finding that this case was exceptional, two of which were accepted by the court. First, the named inventor on the patents-in-suit changed his testimony at trial, after testifying in his deposition that he would not do so. Specifically, after testifying at deposition that there was no document relating to his conception of the claimed invention(s), at trial over a year later the inventor identified such a document. The plaintiff did not alert the defendant as to this change, despite having more than enough time to rectify the situation.

Second, the plaintiff produced incorrect key material evidence in discovery. The plaintiff “was on notice” that the correct document had not been produced and that it “was not proffering the final draft.” The difference in drafts could have been material. It did not matter whether the plaintiff’s failure to investigate its production was careless or intentional; as a result of its misconduct the defendant should be reimbursed “for the considerable costs it expended due to” the plaintiff’s misbehavior.

However, the plaintiff’s claim construction arguments were not frivolous, and did not support a finding of an exceptional case. Further, simply because the plaintiff’s damages expert proffered flawed testimony that was not excluded did not mean that his testimony was “exceptional.”

While the defendant’s motion for attorneys’ fees was granted, its itemization of fees was insufficient. The court ordered the defendant to file a supplemental declaration consistent with the fees incurred in relation to the discovery abuse and change in inventor testimony that warranted the fee award.