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Award of Patent Case Attorneys' Fees Upheld As Court Affirms Frivolous Infringement Claim

Wednesday, April 16, 2014

By Tony Dutra  

April 14 --As the Supreme Court deliberates whether the U.S. Court of Appeals for the Federal Circuit has set too high a standard for awarding attorneys' fees to patent infringement case defendants, the appeals court affirmed a $360,000 award on April 11 in a nonprecedential opinion.

The high court heard oral argument on Feb. 26 on both its standard for finding an “exceptional” patent case, under 35 U.S.C. §285--particularly the requirement to prove the objective unreasonableness of a purported “frivolous” argument--as well as the court's lack of deference to district court findings (39 PTD, 2/27/14).

District Court Awards Attorneys' Fees

Jack O. Cartner, president of Motrim Inc., is the listed inventor on a patent (U.S. Patent No. 5,197,284) on a hydraulic motor deceleration system used in large scale mowing machines. To overcome an examiner's initial rejection based on a patent (No. 4,732,076) granted to Roland Ewald, Cartner added a limitation requiring deceleration “without a loss of fluid.”

Alamo Group Inc. markets the Tiger and Alamo mowers. Cartner sued Alamo for patent infringement in May 2007 in the U.S. District Court for the Northern District of Ohio. During discovery, Alamo submitted a copy of the Tiger mower schematics which, Cartner agreed, depicted a system similar to Ewald with respect to the loss of fluid.

The court construed that and other key terms, after which Cartner stipulated to patent invalidity for lack of written description. In June 2009, the Federal Circuit modified the construction of “control orifice” on appeal and remanded the invalidity judgment. 333 Fed. App'x 565, 2009 BL 129713 (Fed. Cir. 2009).

On remand, the parties resumed discovery with respect to infringement, but in January 2010, Cartner initiated a consent judgment of noninfringement, which the court entered two months later.

Judge Lesley Brooks Wells then granted Alamo's motion to declare this an exceptional case, but rejected the call to award fees going back to the date when it supplied the schematics to Cartner. Both parties appealed.

Arguments Frivolous, in Bad Faith

The Federal Circuit agreed with the decision to declare this an exceptional case and with the date of accrual.

The court held that Cartner's arguments were frivolous to the extent that he continued the claim of infringement after decisions on three claim terms, not including “control orifice.” In particular, the court rejected Cartner's contention that there were certain brief moments when the Alamo devices would not lose fluid when, by the same argument, the Ewald patented device would perform the same way.

Cartner also argued that he maintained a claim that the mowers infringed under the doctrine of equivalents, but he never put forth a related theory at any time, including when Alamo asked in an interrogatory for a description of “how the asserted patent claims apply or correspond to each Accused Product.”

The court said, “This language is best interpreted to require disclosure of all theories of infringement, including whether infringement is under the doctrine of equivalents.” Cartner's “bad faith conduct” as to this argument, added to frivolous arguments on literal infringement, led the court to affirm the exceptional case judgment.

Award for 'Extra Legal Effort' Required

As to award accrual timing, the district court determined that the day of the remand of the first appeal was “the earliest date upon which issues of claim construction had been resolved.” The appeals court agreed.

For one, the “without a loss of fluid” limitation was the only one addressed by the earlier supplied schematics, and that applied to the Tiger mowers only.

Also, the court said, Cartner's first appeal was successful as to his case for patent validity. For that part of the case, the court said, “It would be error to require Cartner to pay Alamo's attorney fees and costs for litigating an appeal in which Cartner prevailed.”

“The district court's award of $358,516.44 properly reflects the 'extra legal effort' Alamo had to expend to 'counterract [Cartner's] misconduct,” the court said in conclusion.

Judge Evan J. Wallach wrote the court's opinion, joined by Judges Timothy B. Dyk and Kimberly A. Moore.

Philip J. Moy Jr. of Fay Sharpe LLP, Cleveland, represented Cartner. Bryan A. Schwartz of Benesch, Friedlander, Coplan & Aronoff LLP, Cleveland, represented Alamo.

 


Text is available at http://pub.bna.com/ptcj/13129314Apr11.PDF.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

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