Munchkin, Inc. filed a lawsuit in the United States District Court for the Central District of California against Luv n’ Care, Ltd. and Admar International, Inc. (collectively, LNC) for trademark infringement and unfair competition claims based on LNC’s spillproof drinking containers. A year later, the district court granted Munchkin leave to amend the complaint to include new trademark infringement claims, trade dress infringement claims, and patent infringement claims based on U.S. Patent No. 8,739,993 (the ’993 patent) which is directed to a spillproof drinking container. While the litigation was ongoing, Munchkin voluntarily dismissed all of its non-patent claims with prejudice and then its ’993 patent was held unpatentable through an inter partes review (IPR) initiated by LNC at the Patent Trial and Appeal Board (the Patent Board). After we summarily affirmed the Patent Board’s decision, Munchkin, Inc. v. Luv n’ Care, Ltd., 702 F. App’x 982 (Fed. Cir. 2017), Munchkin also dismissed its patent infringement claims.O
The district court subsequently granted LNC’s motion for attorney’s fees under 35 U.S.C. § 285 and 15 U.S.C. § 1117(a), finding the case to be “exceptional” based on LNC’s arguments in its fee motion that the trademark and trade dress infringement claims were substantively weak, and that Munchkin should have been aware of the substantive weakness of its patent’s validity.
Munchkin appeals, contending that the district court’s determination that this was an “exceptional” case lacks a proper foundation because LNC’s fee motion insufficiently presented the required facts and analysis needed to establish that Munchkin’s patent, trademark, and trade dress infringement claims were so substantively meritless to render the case exceptional. We agree with Munchkin. None of these issues was fully adjudicated before the court on the merits, and given the limited arguments LNC made in support of its fee motion, we hold that the district court abused its discretion in granting the motion and we reverse the exceptional-case determination.
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