Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-02669/USCOURTS-caed-2_02-cv-02669-22/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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28 1 Said amount excludes fees for time spent on litigating

the instant motion; while Bridge requested fees for this work, it

did not provide the court with an amount requested.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

McKESSON INFORMATION 

SOLUTIONS INC.,

NO. CIV. S-02-2669 FCD KJM

Plaintiff,

v. MEMORANDUM AND ORDER

BRIDGE MEDICAL, INC.,

Defendant.

----oo0oo----

This matter is before the court on defendant Bridge Medical,

Inc.’s (“Bridge”) motion for attorney fees, pursuant to 35 U.S.C.

§ 285, in the amount of $4,044,581.13, plus post-judgment

interest.1 Bridge moves for said fees on the grounds that (1) it

is the prevailing party based on the court’s June 13, 2006 order,

finding plaintiff McKesson Information Solutions Inc.’s

(“McKesson”) ‘716 patent unenforceable for inequitable conduct,

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and (2) the court’s finding of inequitable conduct renders this

case “exceptional” within the meaning of § 285. Consideration of

the type of inequitable conduct in this case in conjunction with

McKesson’s bad faith pursuit of baseless claims and vexatious

litigation tactics, Bridge argues, warrants the court exercise

its discretion and award fees. McKesson opposes the motion,

arguing that this case is not “exceptional” within the meaning of

§ 285, and even if it were, an award of fees is not appropriate

in this case where neither McKesson nor its predecessor-ininterest were involved in the inequitable conduct, and McKesson

did not pursue baseless claims or engage in vexatious litigation

tactics. 

The court heard oral argument on the motion on August 18,

2006. By this order, it now renders its decision on the motion. 

While the court’s order finding the ‘716 patent unenforceable for

inequitable conduct amply supports a finding of an “exceptional”

case, numerous factors, described below, militate against an

award of fees in this case. Thus, despite the court’s finding

that this case is “exceptional” within the meaning of § 285, the

court declines to award fees to Bridge.

McKesson has been seriously punished in this case–-its

patent rights have been deemed unenforceable and its infringement

claims against Bridge rendered moot thereby. Under the factual

circumstances of this case, the court cannot, in its discretion,

further punish McKesson by an award of fees to Bridge. Such an

award would not serve the interests of justice, as in this case,

the court finds that requiring each side to bear its own fees is

a “fair allocation of the burdens of litigation as between

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2 Because the court declines to award fees, it does not

consider whether the amount of fees claimed by Bridge is

reasonable. The court notes, however, that McKesson did not

challenge the number of hours claimed by Bridge or 

Bridge’s requested rates, but rather argued that Bridge was

entitled only to those fees, if at all, relating to the work on

the inequitable conduct issue. In that regard, McKesson argued

that Bridge should be entitled to no more than $669,057.25 in

fees. Bridge responded that McKesson miscalculated the amount of

fees attributable to the inequitable conduct issue, claiming said

amount to be $995,984.71. 

3 Some of these facts were not introduced at trial;

however, Bridge has not opposed the facts on the motion.

3

[Bridge the] winner and [McKesson the] loser.”2 S.C. Johnson &

Son, Inc. v. Carter-Wallace, Inc., 781 F.2d 198, 201 (Fed. Cir. 

1986).

BACKGROUND 

On December 13, 2002, McKesson sued Bridge, alleging

infringement of U.S. Patent No. 4,857,716 (“the ‘716 patent”). 

McKesson acquired the ‘716 patent as part of its acquisition of

HBOC of Atlanta in approximately 1988. (Opp’n, filed Aug. 4,

2006, at 1.) HBOC of Atlanta had acquired the patent during its

acquisition of CliniCom, Inc. (“CliniCom”)–-the original assignee

of the ‘716 patent. (Id.) During the mid-1980's, CliniCom hired

the law firm of Merchant & Gould P.C. (“M&G”) to act as its

patent counsel for the prosecution of several patent applications

related to medication administration technology. (Id. at 1-2.) 

Then M&G attorney Michael Schumann (“Schumann”) was the principal

attorney in charge of the CliniCom applications, including the

application that issued as the ‘716 patent.3 (Id. at 2.)

By way of affirmative defense to McKesson’s complaint and

via its own counter-complaint for declaratory judgment, Bridge

asserted that the ‘716 patent is unenforceable due to inequitable

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conduct by Schumann during the prosecution of the patent before

the United States Patent and Trademark Office (“PTO”). 

Ultimately, the lawsuit engendered more than three years of

hard fought litigation, which included: (1) McKesson’s motion to

strike certain affirmative defenses and counterclaims of Bridge,

which the court granted in part (Docket # 37); (2) Bridge’s

motion for summary judgment, brought prior to any discovery or

even Bridge’s answer to the complaint, which the court denied

(Docket # 36); (3) Bridge’s discovery motion to limit certain

discovery but in essence seeking a partial claim construction,

which while provided by the magistrate judge, was vacated

subsequently by this court (Docket # 128); (4) McKesson’s motion

for a preliminary injunction, which the court denied (Docket 

# 185); (5) multiple rounds of claim construction briefing and

hearing; (6) two years of fact discovery including third-party

discovery and twenty-seven depositions; (7) the exchange of

expert reports and seven expert depositions; (8) six summary

judgment motions--four filed by McKesson and two by Bridge, all

of which the court denied (Docket #s 532, 533, 535, 547); 

(9) McKesson’s motions to reopen discovery and add Cerner

Corporation as a party, which the court denied; (10) preparation

and a 4-day trial of the inequitable conduct issue; and 

(11) preparation for a four to five week jury trial on

infringement and validity.

In May 2006, the court presided over the inequitable conduct

bench trial. On June 13, 2006, the court issued Findings of Fact

and Conclusions of Law (“FF&CL”) holding that inequitable conduct

occurred in the prosecution of the ‘716 patent, thereby finding

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the patent unenforceable. (FF&CL, filed June 13, 2006.) The

court found that Schumann intentionally withheld three pieces of

highly material information from the PTO: (1) the prior art Baker

patent (id. at 20-34); (2) two rejections of substantially

similar claims in the co-pending ‘009 prosecution (id. at 34-45);

and (3) the allowance of substantially similar claims in the

co-pending ‘372 prosecution (id. at 45-48). The court further

found that during his testimony, “Mr. Schumann offered nothing

other than bare denials of intent, combined with numerous excuses

that this court finds implausible and not credible.” (Id. at

50:7-10; see also Id. at 31:16-32:11 [Schumann’s excuse regarding

the nondisclosure of Baker “strains credulity” and “is simply not

credible”]; Id. at 41:12-15 [explanation for nondisclosure of the

‘009 rejections “is not accurate”]; Id. at 49:18-20 [Schumann

“failed to provide a credible explanation for his

nondisclosures.”].) In conducting the equitable weighing of

materiality and intent, the court recognized that “[a] pattern of

material nondisclosures, such as present here, weighs firmly in

favor of unenforceability.” (Id. at 48:27-28.) The court

accordingly ruled that the inequitable conduct rendered the ‘716

patent unenforceable. (Id. at 50:13-15.)

STANDARD

Under the “American Rule,” prevailing parties are not

normally entitled to attorney fees in federal court. See

Machinery Corp. of America v. Gullfiber, 774 F.2d 467, 471 (Fed.

Cir. 1985). One reason for having each party bear its own fees

is so that litigants are not “penalized for merely defending or

prosecuting a lawsuit.” Id. The Patent Act provides a limited

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exception to the “American Rule,” allowing prevailing parties to

recover reasonable attorney fees in “exceptional” cases. 

35 U.S.C. § 285 (“The court in exceptional cases may award

reasonable attorney fees to the prevailing party.”) The statute

does not define an “exceptional cas[e].”

Courts have determined that whether to award attorney fees

under § 285 is a two-step process. First, the court must

determine whether a case is exceptional. Phonometrics, Inc. v.

Westin Hotel Co., 350 F.3d 1242, 1245 (Fed. Cir. 2003). It is

the prevailing party’s burden to demonstrate the exceptional

nature of the case by clear and convincing evidence. Cambridge

Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048, 1050 (Fed.

Cir. 1992). Second, if the court finds the case exceptional, it

must decide, in its discretion, whether an award of fees is

appropriate. Phonometrics, 350 F.3d at 1245. 

“The prevailing party may prove the existence of an

exceptional case by showing: inequitable conduct before the PTO;

litigation misconduct; vexatious, unjustified, and otherwise bad

faith litigation; a frivolous suit or willful infringement.” 

Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022,

1034 (Fed. Cir. 2002) (internal citations omitted). However, a

finding of inequitable conduct does not require a finding that

the case is exceptional. Gardco Mfg., Inc. v. Herst Lighting

Co., 820 F.2d 1209, 1215 (Fed. Cir. 1987) (“it has not been held

that every case of proven inequitable conduct must result in an

automatic attorney fee award, or that every instance of

inequitable conduct mandates an evaluation of the case as

‘exceptional.’”) Indeed, courts have recognized that “[t]o prove

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a case exceptional imposes more stringent requirements than proof

of inequitable conduct.” National Diamond Syndicate Inc. v.

Flanders Diamond USA Inc., 67 U.S.P.Q.2d (BNA) 1671, 1676 (N.D.

Ill. 2003). In holding that inequitable conduct rises to the

level of exceptional circumstances warranting attorney fees,

courts have been influenced by, inter alia, the following

factors: “(1) multiple material references were withheld from the

PTO; (2) misleading statements and misrepresentations were made

to the PTO as a result of the non-disclosure; (3) inequitable

conduct formed the basis for the issuance of the patent; and 

(4) the applicants engaged in a ‘program’ of withholding their

knowledge of material information from the PTO.” Evident Corp.

v. Church & Dwight Co., Inc., 2003 U.S. Dist. LEXIS 26296, *7-8

(D. N.J. June 30, 2003), aff’d, 399 F.3d 1310 (Fed. Cir. 2005).

Nevertheless, even an exceptional case does not require in

all circumstances the award of attorney fees. Consolidated

Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804, 815 (Fed. Cir.

1990). “In the context of fee awards to prevailing accused

infringers, we have observed that § 285 is limited to

circumstances in which it is necessary to prevent ‘a gross

injustice’ to the accused infringer[.]” Forest Labs., Inc. v.

Abbott Labs., 339 F.3d 1324, 1329 (Fed. Cir. 2003) (internal

citations omitted). To determine whether attorney fees are

warranted, a court should “weigh considerations such as the

closeness of the case, the tactics of counsel, the conduct of the

parties, and any other factors that may contribute to a fair

allocation of the burdens of litigation as between winner and

loser.” S.C. Johnson, 781 F.3d at 201.

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The decision to award attorney fees, vel non, is

discretionary and permits the judge to weigh

intangible as well as tangible factors: the degree

of culpability of the infringer, the closeness of the

question, litigation behavior, and any other factors

whereby fee shifting may serve as an instrument of

justice.

Superior Fireplace Co. v. Majestic Prods. Co., 270 F.3d 1358,

1378 (Fed. Cir. 2001) (internal quotations and citation omitted).

In the end, the court must decide, in its discretion, whether “it

would be ‘grossly unjust’ for the winner to bear the burden of

[its own] counsel fees [which] prevailing litigants normally

bear.” Pollenex Corp. v. Sunbeam-Home Comfort, 835 F. Supp. 403,

404 (N.D. Ill. 1993); Rohm & Hass Co. v. Crystal Chem. Co., 763

F.2d 688, 691 (Fed. Cir. 1984).

ANALYSIS

1. Is This An Exceptional Case?

McKesson does not dispute that Bridge is the prevailing

party in this litigation based on the court’s judgment finding

the ‘716 patent unenforceable for inequitable conduct. The

parties do, however, vigorously dispute whether the court’s

finding of inequitable conduct provides grounds for an

exceptional case determination. On one hand, Bridge emphasizes

that the Federal Circuit has “repeatedly identified as

‘exceptional’ those cases involving inequitable conduct before

the Patent Office.” Forest Labs., 339 F.3d at 1329. To Bridge,

the court’s inequitable conduct ruling alone provides

“compelling” grounds to deem this case exceptional under § 285. 

McKesson, on the other hand, stresses that a finding of

inequitable conduct does not require a finding of an exceptional

case, see Gardco, 820 F.2d at 1215, and here, McKesson argues,

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4 See FF&CL at 29:11-30:10 (describing Schumann’s

multiple opportunities, after Examiner Lev brought the Baker

patent to his attention, to disclose the patent in the ‘716

prosecution).

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the facts supporting the court’s finding are not “so egregious”

as to warrant the conclusion of exceptional circumstances.

The court agrees with Bridge. First, an exceptional case

finding is warranted here given the court’s previous finding of a

pattern of highly material nondisclosures. (FF&CL at 48:27-28.) 

“The number of material references intentionally withheld from

the PTO is relevant to finding a case exceptional . . . .” 

Evident Corp., 2003 U.S. Dist. LEXIS 26296 at *10, *14 (premising

exceptional case finding in part on applicants’ “engage[ment] in

a program to withhold material art from the PTO”). In this case,

the inequitable conduct “extended well beyond any mere isolated

lapse in disclosing a potential prior art reference.” Tarkett,

Inc. v. Congoleum Corp., 156 F.R.D. 608, 614 (E.D. Pa. 1994). 

The court found that Schumann failed to disclose multiple

material references–the Baker patent, the ‘009 rejections and the

‘372 notice of allowance. Like in Tarkett, this conduct

“represented a general breakdown in the candor and good faith

with which [the patent prosecutor] was expected to deal with the

patent office.” Id.; see also Evident Corp., 2003 U.S. Dist.

LEXIS 26296 at *14 (Schumann, like the inventors and their

counsel in Evident Corp., “failed to disclose material prior art

to the PTO despite multiple opportunities,” to do so).4

Moreover, with respect to each non-disclosure, the court

found the showings of materiality and intent to deceive “high.” 

(FF&CL at 50:5-6.) Indeed, based on that conclusion, the court

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expressly noted that any one of the subject non-disclosures would

support judgment of unenforceability. (FF&CL at 50:2-5.) 

Significantly, Schumann’s non-disclosures allowed him to make

arguments to the PTO that he otherwise would have been unable to

make had he disclosed the references. (FF&CL at 28:16-30:10 [re:

the Baker patent], 38:4-39:6 [re: the ‘009 rejctions].) As to

‘372 allowance, the court found that disclosure may well have

resulted in the rejection of the ‘716 application for double

patenting. (FF&CL at 45:13-46:11.) As recognized by other

courts, such facts strongly support a finding that the case is

exceptional. See e.g.; Agfa Corp. v. Creo Prods., Inc., 451 F.3d

1366, 1378 (Fed. Cir. 2006) (basing exceptional case finding, in

part, on fact that undisclosed prior art was “inconsistent with

Agfa’s misleading statements to the examiner during

prosecution”); Evident Corp., 2003 U.S. Dist. LEXIS 26296 at *13

(exceptional case finding warranted where non-disclosed prior art

enabled applicants to make multiple subsequent misrepresentations

regarding the prior art and non-disclosures directly led to the

issuance of the patent); Tarkett, 156 F.R.D. at 614 (exceptional

case finding based on facts that non-disclosed prior art

anticipated at least some claims of the subject patent and

misleading statements were made to the PTO about the nondisclosed prior art); Pollenex, 835 F. Supp. at 405 (finding

important to the exceptional case determination that the failure

to disclose two prior art references misled the PTO into

believing that three or more references had to be combined to

achieve the element combination in the claim).

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Finally, the court found that Schumann failed to proffer a

credible explanation for his conduct. “[S]chumann offered

nothing other than bare denials of intent, combined with numerous

excuses that this court finds implausible and not credible.” 

(FF&CL at 50:5-10.) The court concluded that this was “not a

case of mistake or negligence” and that Schumann had acted in a

“wayward position contrary to law.” (FF&CL at 49:20-21, 49:26.)

McKesson argues that its defenses raised at trial preclude

an exceptional case finding. These failed defenses, which the

court rejected and found lacked credibility, do not affect the

analysis. Similar arguments were made in virtually every case

deemed exceptional. See e.g. Bruno v. Living Aids, Inc. v. Acorn

Mobility Servs., Ltd., 394 F.3d 1348, 1352 (Fed. Cir. 2005) (case

exceptional despite patentee’s argument that it was not aware of

the prior art’s materiality, and looking back in hindsight, it

believed the withheld prior art was immaterial and cumulative of

other disclosed art).

Furthermore, while the court acknowledges that McKesson

proffered some evidence of Schumann’s good faith and candor

before the PTO, in that he disclosed numerous examples of prior

art and the co-pendency of the various CliniCom applications to

the ‘716 examiner, said evidence does not persuade the court that

this case is not exceptional. The cases relied on by McKesson

are distinguishable. In Elk Corp. of Dallas v. GAF Bldg.

Materials, 2000 U.S. Dist. LEXIS 2658, *6 (N.D. Tex. Mar. 7,

2000), the district court denied an award of fees, finding the

case not exceptional, in part, because the plaintiff patentee

disclosed other material prior art during the prosecution of the

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patent-in-suit. However, in its findings of fact and conclusions

of law, the Elk Corp. court expressly found the inequitable

conduct issue to be a “close question.” Id. Ultimately, the

court found that the plaintiff did not “disclose the most

material prior art [and thus was found to have committed

inequitable conduct],” but noted that the plaintiff was

“reasonably entitled to rely on the arguments it advanced at

trial.” Id. at *6-7. Similarly, in Torin Corp. v. Philips

Industries, Inc., 625 F. Supp. 1077, 1096-97 (S.D. Ohio 1985),

the district court found the case, involving the non-disclsoure

of only piece of prior art, not exceptional because the

“questions of fact were close” and the inequitable conduct was

proved “circumstantially from events occurring nearly twenty

years before the suit was initiated.” 

Here, the pattern of deceit and the array of excuses offered

by McKesson which this court found wholly lacking in credibility

distinguish this case from Elk Corp. and Torin. Nowhere in the

court’s FF&CL did it describe this case as a “close question,”

nor could the court’s analysis of the facts here reasonably be

given this interpretation.

Accordingly, based on the above, the court finds this case

exceptional. 

2. Is An Award of Attorney Fees Appropriate?

While the court has concluded that Bridge succeeded in

presenting evidence sufficient to meet its burden to prove

inequitable conduct and the exceptional nature of this case,

“that does not mean the case [is] ‘open and shut’” regarding the

award of fees. Espeed, Inc. v. Brokertec USA, L.L.C., 417 F.

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5 Concurrently with the jury trial, the parties in Espeed

tried the issues of inequitable conduct and laches to the court. 

By the instant opinion, the district court issued its post-trial

findings of fact and conclusions of law pursuant to Fed. R. Civ.

P. 52(a) and rendered its decision on an award of fees pursuant

to § 285. Id. at 584.

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Supp. 2d 580, 600 (D. Del. 2006) (finding case exceptional but

declining to award attorney fees where case was “hard fought”5

with a split jury verdict finding infringement but deeming patent

invalid and the plaintiff’s counsel was professional in the

conduct of the litigation); accord Modine Mfg. Co v. The Allen

Group, Inc., 14 U.S.P.Q.2d 1210 (N.D. Cal. 1989) (finding case

exceptional because of willful infringement but declining to

award attorney fees). Clearly, an exceptional case does not

require, in all circumstances, the award of attorney fees. 

Consolidated Aluminum Corp., 910 F.2d at 815 (affirming district

court’s decision to deny attorney fees’ request despite finding

of inequitable conduct, stating that this ruling was in accord

with the court’s “repeated statement that not every case deemed

‘exceptional’ must result in a fee award”).

Here, a variety of factors militate against an award of fees

to Bridge: 

a. McKesson’s & CliniCom’s Lack of Involvement in the

Inequitable Conduct

First, the subject conduct occurred over 20 years ago and

neither McKesson nor CliniCom were involved in the inequitable

conduct. Indeed, McKesson did not acquire any rights in the ‘716

patent until more than a decade after the inequitable conduct

occurred. In this case, unlike all the cases cited by both

parties, there was simply no evidence that the plaintiff,

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McKesson, or its predecessor, CliniCom, had any role in the

inequitable conduct. In that regard, McKesson correctly argues

that the cases relied on by Bridge to support an award of fees

are distinguishable because in each of the cases a close nexus

existed between the plaintiff(s) in the patent action and the

party responsible for the inequitable conduct. See e.g.

Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370,

1375, 1385 (Fed. Cir. 2001) (awarding attorney fees for

inequitable conduct committed directly by the plaintiff in

failing to disclose on-sale bar activities and suing on a

knowingly invalid patent); Vardon Golf Co. v. Karsten Mfg. Corp.,

2003 U.S. Dist. LEXIS 5072, *3-4 (N.D. Ill. Mar. 31, 2003)

(awarding fees for inequitable conduct based on the plaintiff’s

failure to disclose known, material prior art); Ulead Sys., Inc.

v. Lex Computer & Mgmt. Corp., 151 F. Supp. 2d 1192, 1204 (C.D.

Cal. 2001) (awarding attorney fees for inequitable conduct

committed by CEO and sole shareholder of the plaintiff); Tarkett,

156 F.R.D. at 614 (awarding attorney fees for inequitable conduct

based on fraudulent acts of the plaintiff “carried out at the

highest and most responsible levels of the company”); Pollenex,

835 F. Supp. at 404-06 (awarding attorney fees for inequitable

conduct based on the plaintiff’s intentional copying of prior art

devices and failure to disclose those prior art devices to the

PTO).

Even Evident Corp. and Peabody Myers Corp. v. Vac-Con Inc.,

17 U.S.P.Q.2d 1817 (M.D. Fla. 1990), the two cases cited by

Bridge which did not involve inequitable conduct by the

plaintiffs themselves, are distinguishable because in both of

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6 See Stark v. Advanced Magnetics, Inc., 119 F.3d 1551,

1556 (Fed. Cir. 1997) (“One bad apple spoils the entire barrel. 

Misdeeds of co-inventors, or even a patent attorney can affect

the property rights of an otherwise innocent individual.”);

Peabody, 17 U.S.P.Q.2d at 1817 (corporation that acquired

interest in patent through merger found liable for inequitable

conduct committed long before it acquired its interest in the

patent and ordered to pay attorney fees).

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these cases, the plaintiffs’ predecessors were involved in the

conduct. In Evident Corp., the inventors and their counsel

committed the inequitable conduct; the patent was later licensed

to plaintiff Evident Corporation. 2003 U.S. Dist. LEXIS 26296 at

*2. In Peabody, while plaintiff Peabody was not involved in the

subject conduct, its predecessor-in-interest was actively

involved in the wrongdoing. 17 U.S.P.Q.2d at 1827-28. Here,

there was no evidence whatsoever that CliniCom played any role in

the wrongdoing.

While McKesson’s authorities, denying awards of fees, could

also be distinguished on this basis (see e.g. Elk Corp., Torin,

Gardco, Consolidated Aluminum, and Nat’l Diamond Syndicate), the

court finds that McKesson’s and CliniCom’s lack of involvement in

the inequitable conduct weighs heavily against an award of fees

in this case. Said fact, contrary to Bridge’s argument, is

properly considered by the court. While Bridge is correct that a

patent holder may be charged with the consequences of inequitable

conduct that occurred in the prosecution of a patent without

regard to its own guilt or innocence,6 the court may nonetheless

consider McKesson’s and CliniCom’s lack of involvement in

deciding whether to award fees. The two issues are separate

inquiries: By law, McKesson may be held accountable for

inequitable conduct and its patent deemed unenforceable, even

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though it was not a direct participant in the wrongdoing. 

However, that finding does not prevent the court from considering

the level of culpability in deciding whether justice would be

served by an award of fees. See e.g. Bayer AG v. Housey Pharma.,

Inc., 2004 U.S. Dist. LEXIS 9633, *7 (D. Del. Jan. 29, 2004)

(reducing amount of attorney fees in inequitable conduct case and

noting that “the court has already granted substantial relief to

Bayer in the form of a declaration of unenforceability”), vacated

by 140 Fed. Appx. 948 (vacating award of fees because of remand

of inequitable conduct determination for further findings).

The court’s decision, here, is ultimately an equitable one

and where there is no evidence that McKesson or its predecessor,

CliniCom, were involved in the conduct, the court should be

hesitant to award fees so as not to chill the pursuit of valid

patent infringement claims. See Revlon, Inc. v. Carson Prods.

Co., 803 F.2d 676, 679 (Fed. Cir. 1986) (affirming denial of

attorney fees and holding that “[a]ttorney fees are not to be

routinely assessed against a losing party in litigation in order

to avoid penalizing a party ‘for merely defending or prosecuting

a lawsuit’”). Indeed, there is no evidence here that McKesson

had any actual and/or constructive knowledge, prior to this

lawsuit, that the ‘716 patent was procured through inequitable

conduct. By law, McKesson’s ‘716 patent was presumptively valid

(35 U.S.C. § 282); McKesson apparently learned of the inequitable

conduct charges through this lawsuit; once revealed by Bridge’s

answer and counter-complaint, McKesson gleaned the relevant facts

from the prosecution history as Schumann had no present

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7 Bridge makes much of the fact that McKesson and

Schumann were represented by the same counsel in this action;

Bridge argues that by the joint representation, McKesson should

be charged with knowledge of the fact of Schumann’s inequitable

conduct. However, Schumann had no recollection of the events at

issue, and thus, McKesson cannot be charged with any knowledge

supplied by Schumann. Schumann conceded at deposition and trial

that he had no present recollection of the ‘716 patent

prosecution, and his testimony was based therefore on his custom

and practice and that of his firm at the time, as well as his

beliefs, now, looking back at the file history. Ultimately, this

proved significant to the court’s decision as Schumann was unable

to provide the court with a good faith, contemporaneous

explanation for what occurred. This, however, is not a basis for

an award of fees to Bridge.

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recollection of the events in question.7 (FF&CL at 30:11-31:4.) 

That McKesson may have become aware of facts that the court later

determined constituted inequitable conduct does not equate with

pursuit of inequitable conduct itself. Forest Labs., 339 F.3d at

1329-30 (reversing award of attorney fees and holding that

knowledge of the events that led to a finding of equitable

estoppel could not be equated with bad faith knowledge that the

plaintiff would be equitably estopped from pursuing its claims). 

Under these circumstances, the court agrees with McKesson that:

An award of fees against McKesson would send a signal 

to patent assignees that even though they own a

presumptively valid patent and have no knowledge of

potential inequitable conduct when bringing suit, they 

run a risk that upon a good faith assertion of that 

patent against an infringer, they will be held liable 

for substantial attorney fees relating to inequitable

conduct in which they played no role but vigorously

contested at trial. 

(Opp’n, filed Aug. 4, 2006, at 8:20-25.) Such a rule of decision

is contrary to the federal policy behind the Patent Act. Revlon,

803 F.2d at 679; Fleischmann Distilling Corp. v. Maier Brewing

Co., 386 U.S. 714, 718 (1967).

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b. McKesson’s Claims and Defenses were not Frivolous

During this litigation, McKesson vigorously opposed the

charge of inequitable conduct. It successfully opposed, based

largely on its experts’ opinions, Bridge’s motion for summary

judgment on the issue. This success is strong evidence that

McKesson’s positions on inequitable conduct were not frivolous. 

Sulzer Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1370 (Fed.

Cir. 2004) (affirming district court’s denial of attorney fees to

the prevailing defendant because “it is difficult to conceive of

a ‘baseless’ claim that survived summary judgment). In fact,

after the court’s denial of Bridge’s motion for summary judgment,

Bridge dropped allegations it previously advanced regarding the

subject inequitable conduct (e.g., Bridge did not pursue at trial

allegations concerning six prior art references disclosed in the

‘441 patent application). (Mem. & Order, filed Aug. 11, 2005, at

4:9-13.) This is further evidence that McKesson’s positions were

not frivolous or taken in bad faith. While, in the end, the

court did not agree with McKesson’s experts’ opinions and with

McKesson’s arguments concerning the inferences to be drawn from

the evidence presented at trial, this disagreement is not a

sufficient basis to find that McKesson engaged in the “bad faith”

pursuit of baseless claims, as asserted by Bridge.

c. McKesson did not Engage in Vexatious Litigation

Tactics

Bridge not only argues the baselessness of McKesson’s claims

but argues more generally that McKesson engaged in various “bad

faith” and “vexatious” litigation tactics which warrant a grant

of attorney fees to Bridge. Whether the parties engaged in bad

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faith or vexatious litigation tactics is often a consideration

used by courts to determine the propriety of an award of fees. 

See e.g. Elk Corp., 2000 U.S. Dist. LEXIS 2658, *10 (holding that

even had the court found the case exceptional, it would have

denied fees due to both parties’ bad faith litigation tactics);

Torin, 625 F. Supp. at 1097 (denying fees, in part, because the

plaintiff conducted litigation fairly and expeditiously by

dismissing claims with no merit); Consolidated Aluminum, 910 F.2d

at 814 (affirming denial of fees and noting that the defendant

had been adjudicated a willful infringer, had engaged in delay

tactics, had lost some of its claims, and the plaintiff prevailed

on many of its infringement claims); Peabody, 17 U.S.P.Q. 2d at

1828 (awarding fees, in part, because plaintiff persisted in

litigating the case despite the obvious invalidity of the

patent); Vardon, 2003 U.S. Dist. LEXIS 5072, *4 (awarding fees,

in part, because plaintiff had engaged in vexatious litigation

tactics).

Here, Bridge argues that McKesson unnecessarily complicated

this litigation by advancing arguments that directly contradicted

(1) the facts as it knew or should have known them to be, (2) the

law, (3) the court’s rulings, and/or (4) its own witnesses’

testimony. Bridge gives several purported examples relating to

each of the subject non-disclosures by Schumann. 

First, regarding the Baker patent, Bridge argues that at

summary judgment, McKesson refused to admit Baker disclosed a

three-node wireless communication system employing a radio

transmission link between a portable handheld unit and a fixed

base station unit, yet, at trial, McKesson’s expert Bims conceded

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this fact. Bridge also argues that Bims conceded, contrary to

McKesson’s position on the motion for summary judgment, that the

Baker patent was material from a scientific standpoint.

Bridge’s examples do not demonstrate bad faith litigation

tactics by McKesson. McKesson provided reasoned and supported

responses to Bridge’s arguments at summary judgment. Indeed, the

court denied both parties’ cross-motions for summary judgment on

inequitable conduct finding that based on the proffered,

competing expert testimony, triable issues of fact remained. 

Specifically as to the Baker patent, McKesson disputed Bridge’s

reading of the Baker patent’s claim terms; as such, McKesson

argued Bridge’s statement of “undisputed fact” regarding the

three-node system was overbroad in light of the actual wording of

the Baker patent itself, which McKesson quoted from in its

response to Bridge’s “undisputed fact.” Moreover, at summary

judgment, McKesson disputed, through its expert, that the Baker

patent was material, at all, to the ‘716 prosecution; in

McKesson’s view, Baker was cumulative of other art disclosed by

Schumann involving telecommunications. This position was

supported by evidence and not wholly without merit. Finally,

while Bims did concede at trial that the Baker patent was

material from a “scientific standpoint,” his ultimate opinion was

that the patent was cumulative of other art disclosed, and thus

not material. 

Next, Bridge argues regarding the ‘009 rejections, that at

summary judgment, McKesson improperly argued that there was no

evidence Schumann knew he was under a duty to disclose a

rejection from a co-pending case. At his deposition taken prior

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8 In its memorandum and order of August 11, 2005, denying

the parties’ cross-motions for summary judgment on inequitable

conduct, the court found that Dayco did not create new law. 

(Mem. & Order at 10 n.8.) 

9 Schumann testified: “if it was deemed relevant and in

your duty to disclose, you would do that [disclose a material

rejection in a co-pending case]. I’m just saying that the

typical normal course is that it’s rare that you would bring an

office action to the attention of the examiner in a co-pending

case.” (Schumann Dep., 127:24-128:4.)

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to the motions, Schumann testified he would disclose rejections

in co-pending cases if they were material. Also, Bridge points

out that McKesson continued to argue at trial, despite the

court’s ruling on the motions for summary judgment,8 that Dayco

Products, Inc. v. Total Containment, Inc., 329 F.3d 1358, 1368

(Fed. Cir. 2003), created new law. Finally, Bridge argues

McKesson maintained at summary judgment that the ‘009 rejections

were immaterial because they related to a “handheld” instead of a

“system,” but at trial, Schumann testified otherwise and the

court ultimately found the argument “not credible.”

Again, Bridge’s examples are not persuasive. Schumann’s

testimony regarding the obligation to disclose rejections in copending cases must be read in full context.9 His response was

given after heavy “cross-examination” during that portion of the

deposition, and his answer could fairly be read as only an

admission that he understood if a rejection was material, he

would be obligated to disclose it. He later testified that he

could not recall a single instance in which he had determined

that a rejection was material and should be disclosed. That

testimony was consistent with his repeated statements that it was

his custom and practice and that of his firm at the time, to

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never disclose office actions in co-pending cases because they

believed they were under no duty to do so. Moreover, McKesson,

as an advocate for its position, understandably did not raise

this testimony of Schumann; however, significantly, nor did

Bridge raise the testimony in support of its motion (and

presumably Bridge should have, if in its view, such testimony was

persuasive). Furthermore, there is nothing vexatious about

McKesson’s continued assertion of its position on Dayco (that

Dayco created new disclosure obligations that did not apply to

Schumann at the time of the ‘716 prosecution). Bridge never

objected during trial to McKesson’s argument, and the court did

raise the issue either. In rendering its decision, the court

found some of McKesson’s arguments unpersuasive and some of its

witnesses’ testimony not credible. However, such findings do not

render McKesson’s positions vexatious. Nothing about McKesson’s

conduct in this case has exceeded the “normal bounds of

aggressive advocacy.” Cf. Elk Corp., 2000 U.S. Dist. LEXIS 2658

at *10. This litigation was, as noted at the outset, hard fought

by very capable, specialized and admirably professional counsel

on both sides.

Finally, Bridge contends with respect to the ‘372 notice of

allowance, that at summary judgment, McKesson took the position

that Schumann had no duty to disclose a notice of allowance in a

co-pending case, yet at trial, McKesson’s expert Smegal testified

that such a duty existed for a substantially similar claim in a

co-pending application.

However, Smegal testified that Dayco created this duty, not

that Schumann was under such a duty at the time of the ‘716

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prosecution. Moreover, Bridge’s argument is unavailing as it

ignores McKesson’s defense that the notice of allowance in any

event, did not need to be disclosed because it was for an

invention that was patentably distinct from the ‘716 invention. 

While the court did not agree with McKesson’s position regarding

the patentably distinct nature of the inventions, its position

was reasoned and supported by evidence, including expert

testimony, and thus cannot be said to have been taken in bad

faith.

In sum, the court finds that Bridge has overstated its case

for “bad faith litigation tactics” on the part of McKesson. This

case was an aggressively litigated case between two sophisticated

parties represented by well-qualified counsel, specialized in

patent law. While McKesson may have, at times, “pushed the

envelope” in terms of its arguments or interpretations of the

evidence submitted, so too did Bridge. McKesson vigorously

pressed its infringement claims in this action; claims which

survived Bridge’s motion for summary judgment of non-infringement

and which were set to be tried before a jury. That trial date,

of course, was vacated upon the court’s decision finding the

patent unenforceable for inequitable conduct. That finding,

however, is no reflection on the merits of McKesson’s

infringement claims; indeed, those claims may well have succeeded

had McKesson held an enforceable patent. As set forth above,

significantly, that patent was deemed not enforceable through no

conduct of McKesson’s. While the court ultimately did not agree

with McKesson’s experts nor its interpretations of the evidence,

the court cannot find that McKesson’s positions were frivolous or

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10 In the same vein, it was Bridge that brought a summary

judgment motion before any discovery had begun, which the court

summarily denied, and it was Bridge that surreptitiously sought

and received a claim construction ruling via a discovery motion,

which ruling the court subsequently vacated.

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taken in bad faith nor its litigation tactics vexatious.

d. Other Considerations

In addition to the above, two other factors are noteworthy,

both of which further support the denial of an award of fees to

Bridge. First, no order of this court has found that McKesson

engaged in improper conduct in any facet of this litigation. 

Bridge raises, in passing, in its motion for fees, allegations of

discovery misconduct by McKesson. However, while the parties had

numerous contentious discovery battles, McKesson was never once

found to have improperly withheld discovery, and in fact, several

times, Bridge was compelled by the court to provide discovery

responses and documents previously withheld.10 (See e.g. Docket 

#s 215 [compelling Bridge to provide complete responses to

interrogatories], 236 [requiring Bridge to provide financial

information 45 days prior to disclosure of expert witnesses], 431

[compelling Bridge to provide supplemental response to

interrogatory].) Second, this case was not a “David versus

Goliath” contest as insinuated by Bridge. Bridge is not a small

competitor of McKesson; during the majority of this action,

Bridge was a wholly owned subsidiary of AmerisourceBergen

Corporation (“ABC”), one of the largest pharmaceutical services

companies in the United States. (Chou Decl. [Docket #559], 

¶ 5.) Also, during the pendency of this action, ABC sold

substantially all of Bridge’s assets to another major competitor

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of McKesson, Cerner Corporation. (Id. at ¶ 2.)

Overall, upon consideration of the combination of above

factors, the court cannot find that it would be “grossly unjust”

for Bridge to bear its own counsel fees as prevailing litigants

normally do. Pollenex, 835 F. Supp. at 404; Rohm & Hass, 763

F.2d at 691.

CONCLUSION

For the foregoing reasons, the court DENIES Bridge’s motion

for attorney fees pursuant to § 285. Despite the court’s

conclusion that Schumann committed inequitable conduct in

procuring the ‘716 patent which rendered the patent unenforceable

by McKesson in this infringement action, and the finding that

this is an exceptional case, the court declines, in its

discretion, to award attorney fees to Bridge. In this case,

requiring each side to bear its own fees is a fair allocation of

the burdens of litigation as between the parties. 

IT IS SO ORDERED.

DATED: September 6, 2006.

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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