In an exemplary ruling, the United States District Court for the Southern District of New York has ordered the so-called patent troll, Lumen View Technology, LLC (“Lumen”), to pay opposing party FindTheBest.com’s legal fees and other expenses under the fee-shifting provision of 35 U.S.C. § 285. See Lumen View Technology, LLC v. FindTheBest.com, Inc., 1:13-cv-3599 (DLC) (SDNY 2014).
Lumen filed suit against FindTheBest in May 2013 alleging FindTheBest infringed on a computer-implemented method patent that facilitated bilateral and multilateral decision-making. Lumen also filed more than twenty other similar patent infringement claims against various other technology companies during 2012 and 2013. FindTheBest quickly noticed the Lumen claim was a sham due to the fact that FindTheBest technology did not use a bilateral or multilateral decision-making process. The Southern District found Lumen’s suit to be without merit and dismissed the case in November 2013.
After the dismissal, FindTheBest petitioned the court to find Lumen’s suit one of an “exceptional case” under Section 285 and the recent Supreme Court ruling in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014).
In the April 2014 unanimous decision penned by Justice Sotomayor, the Supreme Court ruled that an “exceptional case” under § 285 is one that stands out from others with respect to a party’s litigating position, considering the law and the facts of the case, or the unreasonable manner in which the case was litigated. See Octane Fitness, LLC, 134 S. Ct. at 1756.
The Court found the previous standard in Brooks Furniture Manufactuirng, Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (2005), to be overly restrictive and one that hampered the statutory grant of discretion given to the courts under Section 285. Section 285 imposes only one constraint on a district court’s discretion to award fees, one of “exceptional” cases. In Brooks, a case could only be deemed exceptional when there was material inappropriate conduct, or when parties brought cases in subjective bad faith and were objectively baseless. The Court found this framework to be inconsistent with the text of Section 285.
In step with the Supreme Court’s Octane decision, the Southern District found Lumen’s patent infringement suit to fall under the “exceptional case” standard. As such, the Southern District of New York granted FindTheBest’s motion and found the suit to be a “prototypical exceptional case” shifting payment of FindTheBest’s case fees to Lumen.
sewellnylaw
Great update! Unchecked, patent trolls can have negative effects on innovation and R&D.
sewellnylaw
I do not disagree with the necessary redefinition of the reading of Section 285 or the even more essential retribution against patent trolls. However, there does seem to be a potential issue with how a decision is made in terms of whether or not to shift fee payments to the opposing side.
The term “exceptional cases” seems like it would be problematic as more and more patent troll cases arise. How long will the current cases that are deemed “exceptional” remain so when considered under the conventional definition of the word “exceptional?” Section 285 states that reasonable fees may be awarded in exceptional cases, but the Patent Act does not define “exceptional” and hence, the term is construed “in accordance with [its] ordinary meaning.” Today, the word “exceptional” is defined as unusual, rare, or even incomparable. With more and more frequent cases of patent trolling, it is difficult to imagine how a case such as this one can be considered rare or incomparable in the very near future.
Patent trolling is on the rise and has been for a while now. In 2013, there were 3,134 reported patent troll suits, more than half of all patent suits, and in 2012, there were 2,921 suits initiated by patent trolls, which was already a significant increase from 2011. Currently, patent trolls initiate more than 50% of all patent suits.
With such drastic numbers, a case in which a patent troll takes advantage of the patent litigation process is no longer unusual or rare; these are no longer “exceptional” cases.
Perhaps this is simply a trivial matter, focusing too deeply on the definition of a word. However, that can hardly be the case as this Lumen case is an excellent example of the significance a single word can have on the outcome of litigation processes. The Southern District redefined the meaning of “exceptional” to fall in line with the Supreme Court’s ruling but it would appear that the Supreme Court’s definition of “exceptional” will not stand for much longer. Even under Sotomayor’s reasoning, patent troll cases can no longer be considered one that stands out from others. Instead, patent troll cases can arguably be considered the norm of patent cases. With over 50% of all patent suits being patent troll cases, an exceptional case would actually be a case in which there are legitimate patent contentions amongst parties with actual merit to their arguments. Soon the language of Section 285 will have to be reworded to allow courts to award fees in “ordinary” cases.
I am very curious as to whether or not this will become a problem for patent litigation in the future. It may be a non-issue and something that the courts quickly dismiss but I believe that it is a legitimate source of potential problems and difficulties for patent litigation.