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Octane Fitness v. Icon Health

The Patent Act’s fee-shifting provision authorizes district courts toaward attorney’s fees to prevailing parties in “exceptional cases.” 35 U. S. C. §285. In Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378, 1381, the Federal Circuit defined an “exceptionalcase” as one which either involves “material inappropriate conduct” or is both “objectively baseless” and “brought in subjective bad faith.” Brooks Furniture also requires that parties establish the “exceptional” nature of a case by “clear and convincing evidence.” Id., at 1382. Respondent ICON Health & Fitness, Inc., sued petitioner Octane Fitness, LLC, for patent infringement. The District Court granted summary judgment to Octane. Octane then moved for attorney’s fees under §285. The District Court denied the motion under the Brooks Furniture framework, finding ICON’s claim to be neither objectivelybaseless nor brought in subjective bad faith. The Federal Circuit affirmed.

Held: The Brooks Furniture framework is unduly rigid and impermissibly encumbers the statutory grant of discretion to district courts.Pp. 7–12. (a) Section 285 imposes one and only one constraint on district courts’ discretion to award attorney’s fees: The power is reserved for“exceptional” cases. Because the Patent Act does not define “exceptional,” the term is construed “in accordance with [its] ordinary meaning.” Sebelius v. Cloer, 569 U. S. ___, ___. In 1952, when Congress used the word in §285 (and today, for that matter),“[e]xceptional” meant “uncommon,” “rare,” or “not ordinary.” Webster’s New International Dictionary 889 (2d ed. 1934). An “exceptional” case, then, is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-caseexercise of their discretion, considering the totality of the circumstances. Cf. Fogerty v. Fantasy, Inc., 510 U. S. 517. Pp. 7–8.

(b) The Brooks Furniture framework superimposes an inflexible framework onto statutory text that is inherently flexible. Pp. 8–11.

(1) Brooks Furniture is too restrictive in defining the two categories of cases in which fee awards are allowed. The first category—cases involving litigation or certain other misconduct—appears to extend largely to independently sanctionable conduct. But that is not the appropriate benchmark. A district court may award fees in the rare case in which a party’s unreasonable, though not independentlysanctionable, conduct is so “exceptional” as to justify an award. For litigation to fall within the second category, a district court must determine that the litigation is both objectively baseless and brought insubjective bad faith. But a case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itselfapart from mine-run cases to be “exceptional.” The Federal Circuit imported this second category from Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U. S. 49, but that case’s standard finds no roots in §285’s text and makes little sense in the context of the exceptional-case determination. Pp. 8–10.

(2) Brooks Furniture is so demanding that it would appear torender §285 largely superfluous. Because courts already possess theinherent power to award fees in cases involving misconduct or badfaith, see Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 258–259, this Court has declined to construe fee-shifting provisions narrowly so as to avoid rendering them superfluous. See, e.g., Christiansburg Garment Co. v. EEOC, 434 U. S. 412, 419. Pp. 10–11.

(3) Brooks Furniture’s requirement that proof of entitlement tofees be made by clear and convincing evidence is not justified by§285, which imposes no specific evidentiary burden. Nor has this Court interpreted comparable fee-shifting statutes to require such a burden of proof. See, e.g., Fogerty, 510 U. S, at 519. P. 11.

496 Fed. Appx. 57, reversed and remanded.

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In re: Dominion Dealer Solutions, LLC

Dominion Dealer Solutions, LLC, petitioned the Director of the United States Patent & Trademark Office to institute inter partes reviews of five patents owned by AutoAlert, Inc. The Director, through her delegee, denied the petitions. Dominion now petitions this court to issue a writ of mandamus that would vacate the non-institution decisions and order the Director to institute an inter partes review for each of the five AutoAlert patents. As we decide today in St. Jude Medical, Cardiology Div., Inc. v. Volcano Corp., No. 2014-1183, however, the relevant statutory provisions make clear that we may not hear an appeal from the Director’s decision not to institute an inter partes review. Based on that decision, we deny Dominion’s petition for mandamus relief.

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St. Jude Medical, Cardiology Div., Inc. v. Volcano Corp.

St. Jude Medical, Cardiology Division, Inc., petitioned the Director of the United States Patent & Trademark Office to institute an inter partes review of a patent owned by Volcano Corporation. The Director, through her delegee, denied the petition. St. Jude appealed the noninstitution decision to this court. Volcano and the Director now move to dismiss. We grant the motion.

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In re: Procter & Gamble Co.

Clio USA, Inc., petitioned the Director of the United States Patent & Trademark Office to institute inter partes reviews of three patents owned by The Proctor & Gamble Company (P&G). The Director, through her delegee, granted the petitions. P&G now petitions this court to issue a writ of mandamus that would direct the PTO to withdraw the orders instituting inter partes reviews of the three P&G patents.

In today’s decision in St. Jude Medical, Cardiology Div., Inc. v. Volcano Corp., No. 2014-1183, we describe the statutory scheme governing inter partes reviews, 35 U.S.C. §§ 311-319, and conclude that a decision by the Director not to institute an inter partes review may not be appealed to this court. In In re Dominion Dealer Solutions, LLC, No. 2014-109, also issued today, we conclude that a non-institution decision may not be directly reviewed by this court through the extraordinary means of mandamus. The present case involves a decision by the Director to institute an inter partes review. We conclude that immediate review of such a decision is not available in this court. We therefore deny P&G’s petition for mandamus relief.

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Vaillancourt v. Becton Dickinson & Co.

The Patent Trial and Appeal Board affirmed the rejection of all thirty-seven claims of U.S. Patent No. 6,699,221 on appeal from an inter partes reexamination. Appellant Michael J. Vaillancourt previously owned the ’221 patent, but while the reexamination proceedings were still pending, he assigned all right, title, and interest in the patent to VLV Associates, Inc. Vaillancourt, and not VLV, now appeals the Board decision to this court. The only cause of action (right to sue) in this court that Vaillancourt invokes is 35 U.S.C. § 141, but the unambiguous language of that provision limits it to the patent owner. Though the parties in this case have argued about “standing,” the Supreme Court recently clarified that some issues often discussed in “standing” terms are better viewed as interpretations of a statutory cause of action. See Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1386-88 (2014). Because the issue here focuses on § 141, this opinion directly addresses the scope of that cause of action. As Vaillancourt is not the owner of the ’221 patent, he cannot bring this appeal before the court, for lack of a cause of action. Accordingly, this court dismisses the appeal.

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Braintree Labs, Inc. v. Novel Labs, Inc.

This is a patent infringement case under the Hatch- Waxman Act. See 35 U.S.C. § 271(e)(2)(A). Defendant- Appellant Novel Laboratories, Inc. (“Novel”) appeals the grant of summary judgment by the United States District Court for the District of New Jersey that U.S. Patent No. 6,946,149 (“’149 patent”) held by Braintree Laboratories, Inc. (“Braintree”) is infringed by the composition covered by Novel’s abbreviated new drug application (“ANDA”). See Braintree Labs., Inc. v. Novel Labs., Inc., No. 11-CV- 1341, 2013 WL 211252 (D.N.J. Jan. 18, 2013) (“Infringement Opinion”). The district court entered summary judgment of infringement based on its construction of four disputed claim terms. See Braintree Labs., Inc. v. Novel Labs., Inc., No. 11-CV-1341, 2012 WL 4120907 (D.N.J. Sept. 19, 2012) (“Claim Construction Order”). Novel challenges the district court’s claim construction for two of those terms. Following a six-day bench trial on Novel’s invalidity defenses, the district found that Novel failed to prove that the asserted claims were invalid. See Braintree Labs., Inc. v. Novel Labs., No. 11-CV-1341, 2013 WL 2970739 (D.N.J. June 4, 2013) (“Validity Opinion”). Novel also appeals those findings.

Because we agree with Novel that the district court erred in its construction of the claim term “clinically significant electrolyte shifts,” we reverse the district court’s claim construction of that term, vacate the district court’s grant of summary judgment of infringement, and remand for further factual findings to determine whether the composition covered by Novel’s ANDA product infringes under the new claim construction articulated herein. Further, we affirm the district court’s findings that the asserted claims of the ’149 patent are not invalid.

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DSM Desotech Inc. v. 3D Sys. Corp.

This is an antitrust case. DSM Desotech Inc. (“Desotech”) is the plaintiff-appellant. Desotech makes, among other things, resins for use in stereolithography (“SL”) machines. 3D Systems Corp. and 3D Systems, Inc. (collectively “3DS”), the defendants-appellees, make and sell SL machines, as well as resins for use in those machines. Desotech brought suit in the United States District Court for the Northern District of Illinois, accusing 3DS of violating the federal and state antitrust laws and various other state laws by, inter alia, installing a technological lock on its machines that prevents customers from using Desotech resins that have not been approved by 3DS. Desotech also accused 3DS of patent infringement.

After the close of fact and expert discovery, 3DS moved for summary judgment on all counts of Desotech’s complaint. The district court granted 3DS’s motion as to the antitrust claims and certain state-law claims. After the parties stipulated to dismissal of the remaining claims, the court entered judgment in favor of 3DS. DSM Desotech, Inc. v. 3D Sys. Corp., No. 08-cv-1531 (N.D. Ill. Mar. 4, 2013). Desotech appeals that judgment. For the reasons set forth below, we affirm.

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Sanofi-Aventis Deutschland GMBH v. Glenmark Pharm., Inc.

This patent infringement suit concerns the antihypertension drug having the brand name Tarka®. Tarka® is a combination of two active ingredients into a single dosage product: the angiotensin converting enzyme (ACE) inhibitor trandolapril, and the calcium channel blocker (also called “calcium antagonist”) verapamil hydrochloride. The combination drug is covered by United States Patent No. 5,721,244 (the ’244 patent) and is owned by or exclusively licensed to Sanofi-Aventis Deutschland GmbH (a company of Germany), Aventis Pharma S.A. (a company of France); Abbott GmbH (a company of Germany), and Abbott Laboratories and Abbott Laboratories Inc. (United States companies) (collectively “Plaintiffs”).

The New Drug Application (NDA) for the Tarka® product was approved by the Food and Drug Administration in 1996 and acquired by Abbott Laboratories in 2001. In 2007 the defendants Glenmark Pharmaceuticals Inc. and Glenmark Pharmaceuticals Ltd. (collectively “Glenmark”) filed an abbreviated new drug application (ANDA) for the generic counterpart of this product. Since the ’244 patent had not expired, Glenmark filed a Hatch-Waxman “Paragraph IV Certification,” leading to the filing by Plaintiffs of this infringement suit.

Launch of Glenmark’s generic product was stayed for 30 months, as the statute provides. 21 U.S.C. §355(j)(5(B)(iii). After the stay expired in 2010, Plaintiffs moved for a preliminary injunction, which the district court denied. In June 2010 Glenmark launched its generic product “at-risk,” while this litigation proceeded in the district court.

Trial was to a jury. Glenmark admitted infringement, and the jury held that the ’244 patent had not been proved invalid. The jury awarded $15,200,000 in lost profits and $803,514 in price erosion damages. Post-trial motions were denied, and judgment was entered on the verdict. The district court retained authority to assess post-verdict damages if this court sustained the judgment on appeal.

Glenmark does not appeal the quantum of damages, but argues (1) that the ’244 patent is invalid, (2) that Glenmark is entitled to a new trial based on a prejudicial jury instruction on evidence spoliation, and (3) that no damages should be awarded due to lack of standing of the Abbott United States companies. Plaintiffs defend the judgment, and also state that this court lacks jurisdiction to entertain this appeal because the district court’s judgment was not final.

We conclude that jurisdiction is proper, and affirm the district court’s judgment and related rulings.

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Gilead Sciences, Inc. v. Natco Pharma. Ltd.

Gilead Sciences, Inc. (“Gilead”) owns United States Patent Nos. 5,763,483 and 5,952,375, which are directed to antiviral compounds and methods for their use. While the patents list the same inventors and the written descriptions disclose similar content, they do not claim priority to a common patent application and have different expiration dates. Gilead sued Natco Pharma Limited (“Natco”) for infringement of the ’483 patent after Natco filed a request with the Food and Drug Administration seeking approval to market a generic version of one of Gilead’s drugs that is allegedly covered by the ’483 patent. In response, Natco asserted that the ’483 patent was invalid for obviousness-type double patenting over Gilead’s ’375 patent. In Gilead’s view, the ’375 patent cannot serve as a double patenting reference against the ’483 patent because, even though the ’483 patent’s expiration date is twenty-two months after the ’375 patent’s expiration date, the ’375 patent issued after the ’483 patent.

The United States District Court for the District of New Jersey agreed with Gilead and, pursuant to a stipulation, granted it final judgment on infringement. Natco appeals that judgment and argues that the ’375 patent should qualify as an obviousness-type double patenting reference for the ’483 patent because it expires before the ’483 patent. Because the obviousness-type double patenting doctrine prohibits an inventor from extending his right to exclude through claims in a later-expiring patent that are not patentably distinct from the claims of the inventor’s earlier-expiring patent, we agree with Natco that the ’375 patent qualifies as an obviousness-type double patenting reference for the ’483 patent. We therefore vacate the district court’s decision and remand.

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Chicago Bd. Options Exch., Inc. v. Int'l Secs., LLC

This patent case, involving systems for trading financial instruments, is before us on appeal for the second time. Defendant-Appellant International Securities Exchange, LLC (“ISE”) argues that the district court erred in making certain pretrial rulings that led ISE to stipulate to non-infringement and in finding claim 2 indefinite. We affirm the lower court’s judgment of noninfringement because none of its pretrial rulings were in error. Because the specification discloses an algorithm for “matching” on a “pro rata” basis, we reverse the finding that claim 2 is indefinite.

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