Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02177/USCOURTS-cand-3_15-cv-02177-16/pdf.json

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

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CAVE CONSULTING GROUP, INC.,

Plaintiff,

v.

TRUVEN HEALTH ANALYTICS INC.,

Defendant.

Case No. 15-cv-02177-SI 

ORDER GRANTING IN PART

DEFENDANT’S MOTION FOR 

ATTORNEYS’ FEES AND 

NONTAXABLE EXPENSES

Re: Dkt. No. 348

On March 2, 2018, the Court held a hearing on the motion by defendant Truven Health 

Analytics (“Truven”) for attorneys’ fees and nontaxable expenses related to Truven’s defense 

against plaintiff Cave Consulting Group’s (“CCGroup”) assertion of U.S. Patent No. 8,340,981 

(“the ’981 patent”). For the reasons set forth herein, the Court GRANTS in part Truven’s motion 

as to CCGroup’s liability for fees under 35 U.S.C. § 285. Truven is directed to recalculate its fees 

in accordance with this Order, and resubmit its request and supporting documentation no later than 

April 6, 2018. CCGroup may submit a response no later than April 13, 2018, and Truven may 

submit a reply by April 20, 2018. The Court will then take the matter under submission and issue 

an order shortly thereafter.

BACKGROUND

In December 2014, prior to filing this lawsuit, CCGroup sent Truven a letter listing the 

’981 patent, as well as five other patents, and asserting that “certain of Truven’s products 

generally relate to the technology described and claimed in CCGroup’s patents.” Dkt. No. 348-11. 

Among the other patents listed were U.S. Patent No. 7,739,126 (“the ’126 patent”), U.S. Patent 

No. 8,768,726 (“the ’726 patent”), and U.S. Patent No. 8,340,981 (“the ’981 patent”). Id. 

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The ’126 patent issued from U.S. Patent Application No. 10/794,216 (“the ’216 

application”), having an effective filing date of March 2, 2004. Dkt. No. 358-8 (’126 Patent at 

cover page). The application giving rise to the ’981 patent, U.S. Patent Application No. 

13/012,219 (“the ’219 application”), was filed on January 24, 2011, as a continuation-in-part 

(“CIP”)1of another application that was in turn a continuation2of the ’216 application. Dkt. No. 

1-1 (’981 Patent at cover page). The ’981 patent claims priority to the ’216 application. Id. The 

’726 patent was filed in 2013, and claims priority to the ’216 and the ’219 applications. Dkt. No. 

1-2 (’726 Patent at cover page).

On May 14, 2015, CCGroup filed this lawsuit alleging that Truven infringed numerous 

claims of the ’726 patent and claims 13 and 20 of the ’981 patent. Dkt. No. 1. In its infringement 

contentions, CCGroup expressed its intent to “claim a priority date at least as early as March 2, 

2004” for all asserted claims, and identified “its own Marketbasket System as practicing at least 

claims 13 and 20 of the ’981 patent . . . .” Dkt. No. 348-6 at 3:18-22. In response to Truven’s 

interrogatories, CCGroup again stated that the “asserted claims are entitled to a priority date of 

March 2, 2004” and identified the “Marketbasket System as practicing and/or embodying the 

limitations of the asserted claims.” Dkt. No. 348-5 at 4:19-5:2. CCGroup later stated in its 

response to Truven’s Request for Admissions that “its own system, which existed prior to March 

2, 2004, used medical claims data to form episodes of care.” Dkt. No. 348-7 at 3:3-4. It is not 

disputed that as early as March 14, 2006, CCGroup made its Marketbasket System publicly 

available. Dkt. No. 348-8. 

On November 13, 2015, Truven served its invalidity contentions on CCGroup. Dkt. No. 

362-3. In those contentions, Truven asserted that the priority date for the ’981 patent was the 

 

1 A continuation-in-part application is “an application filed during the lifetime of an earlier 

. . . application, repeating some substantial portion or all of the earlier . . . application and adding 

matter not disclosed in the earlier . . . application.” Manual of Patent Examining Procedure 

(“MPEP”) § 201.08 (9th ed. Oct. 2015).

2 A continuation application is “an application for the invention(s) disclosed in a prior-filed 

. . . application . . . . The disclosure presented in the continuation must not include any subject 

matter which would constitute new matter if submitted as an amendment to the parent 

application.” MPEP § 201.07.

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filing date of the ’981 patent application, January 24, 2011, and that the priority date could not be 

March 2, 2004, because (a) the ’981 patent issued from a CIP of an earlier application and (b) the 

patent claims encompassed new matter not disclosed in the earlier applications. Dkt. No. 362-3. 

Specifically, Truven asserted,

The ’981 patent was filed on January 24, 2011 as a continuation-in-part of 

application No. 12/769,090 (“the ’090 application”), filed on April 28, 2010, now 

abandoned. The ‘090 application is a continuation of application No. 10/794,216 

(“the ’216 application”), filed on March 5, 2004, now issued as U.S. Patent 

Number 7,739,126.3

In order for the ‘981 patent to claim priority to the ’090 and ’216 

applications, the claims in the ’981 patent must be “supported by the specification 

and claims of the parent application.” M.P.E.P. § 706.02(VI); see also Cordance 

Corp. v. Amazon.com, Inc., 658 F.3d 1330, 1334-1335 (Fed. Cir. 2011).

The claims in the ’981 patent are not supported by the specification and 

claims of the parent applications. For example, all independent claims in the ’981 

patent include at least the new matter directed to “variable window periods” and 

“static window periods.” See U.S. Pat. No. 8,340,981, claims 1, 11, 12, 13, 20, 21, 

col. 45, l. 44 – col. 48, l. 5, Figs. 3-5. This new matter directed to “variable 

window periods” and “static window periods” is not mentioned, disclosed, or 

supported in the parent ’090 and ’216 applications.

Thus, all claims in the ’981 patent “have an effective filing date equal to the 

filing date of the new application,” which is January 24, 2011. See M.P.E.P. 

§ 706.02(VI).

Id.

Five days later, on November 18, 2015, CCGroup filed an amended complaint that 

continued to allege that the ’981 patent was valid and that Truven infringed it. Dkt. No. 44 at 

¶¶ 10, 17. CCGroup also attached as an exhibit a Certificate of Correction (“Certificate”) for the 

’981 patent issued by the U.S. Patent and Trademark Office (“PTO”) on September 22, 2015.4 Id.

at ¶ 8. The Certificate corrected a phrase in claim 13, one of the claims asserted in this case, to 

replace “variable window periods episodes of care” with “variable window periods to identify 

episodes of care.” Dkt. No. 44-2.

 

3

 The ’126 patent claims the benefit of Provisional Application Ser. No. 60/549,601, filed 

March 2, 2004.

4

Truven notes that CCGroup submitted the request for the Certificate one month after 

filing the suit against Truven, on June 12, 2015. Dkt. No. 348 at 4 n.3; Dkt. No. 348-10.

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On October 12, 2016, Truven informed CCGroup that the priority date for the ’981 patent 

was January 24, 2011, and that the CCGroup Marketbasket System therefore invalidates its patent

under 35 U.S.C. § 102(b).5 Dkt. No. 348 at 2:20-22; Dkt. No. 358 at 5:8-9. CCGroup states that it 

notified Truven of its intent to drop the ’981 patent from suit the same day. Dkt. No. 358 at 5:8-

10. CCGroup states that it informed the Court of its intent to withdraw the ’981 patent at a case 

management conference held on October 14, 2016. Id. at 5:10-12; Dkt. No. 85. The Court’s 

minutes for that conference states that “Counsel are in the process of discussing the possibility of 

withdrawing the '981 patent and filing an amended complaint.” Dkt. No. 85. CCGroup states that 

it offered to give Truven a covenant not to sue on the existing claims of the ’981 patent, but that

Truven rejected the offer. Dkt. No. 358 at 6:2-6.

On November 4, 2016, CCGroup moved for leave to file an amended complaint, in which 

CCGroup would withdraw its claim under the ’981 patent. Dkt. No. 95. In its opposition to that 

motion, Truven noted that it “proposed a joint dismissal with prejudice, with an unrestricted 

covenant not to sue and payment of the fees Truven has incurred in defending against the ’981 

Patent,” and that CCGroup ignored the proposal. Dkt. No. 110 at 1:11-14. 

On December 2, 2016, CCGroup filed a petition with the Patent and Trademark Office 

(“PTO”) requesting ex parte reexamination of the ’981 patent because there were substantial new 

questions as to the validity of the ’981 patent due to, inter alia, questions about whether the ’981 

patent was entitled to the priority date of the ’126 date and whether the ’981 patent was 

invalidated by prior art. Dkt. No. 129-1. CCGroup’s request for reexamination proposed 

amending the independent claims of the ’981 patent to delete “the recitation of the ‘variable 

window periods,’” and thus, according to CCGroup’s request, “resulting in all of the subject 

matter of independent claims 1, 11, 12, 13, 20, and 21 as amended being conclusively supported 

by the disclosure of the parent ‘126 patent.” Id. at 7.

This Court granted CCGroup’s motion for leave to file an amended complaint on 

December 22, 2016, under the conditions that the withdrawal of the claim under the ’981 patent 

 

5 A patent is invalid if the invention was publically used or on sale in this country for more 

than one year before the priority date. 35 U.S.C. § 102(a)-(b).

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was with prejudice and that CCGroup execute a covenant not to sue Truven on the existing claims 

of the ’981 patent. Dkt. No. 136 at 2:4-6.

On January 9, 2017, CCGroup filed another motion for leave to file an amended complaint, 

requesting permission to add claims related to misappropriation of trade secrets. Dkt. No. 138. 

CCGroup argued that during discovery it had obtained evidence showing Truven had 

misappropriated CCGroup’s trade secrets. Id. at 2:16-27. The Court granted CCGroup’s motion. 

Dkt. No. 156.

On February 21, 2017, CCGroup filed its third amended complaint, which removed the 

claim under the ’981 patent and added the trade secret misappropriation claims. Dkt. No. 159. 

Truven moved to dismiss the newly added claims and the Court granted the motion in part and 

denied it in part. Dkt. Nos. 167, 205. Subsequently, CCGroup dropped the non-patent claims, 

leaving only its claim under the ’726 patent. Dkt. No. 223. On December 15, 2017, this Court 

granted Truven’s motion for summary judgment of invalidity of the ’726 patent claims under 35 

U.S.C. § 101. Dkt. No. 342. 

On January 18, 2018, Truven moved for attorneys’ fees and nontaxable expenses related to 

its defense against the ’981 patent, pursuant to 35 U.S.C. § 285, 28 U.S.C. § 1927 and under the 

inherent power of this Court. Dkt. No. 348. Truven seeks to recover fees and expenses related to 

the ’981 patent between the day CCGroup sued Truven (May 14, 2015) and when CCGroup filed 

its third amended complaint withdrawing the claim under the ’981 patent (February 21, 2017). 

Dkt. No. 348 at 9:19-22, 11:2-5. During this period, Truven estimates it incurred total patentrelated fees of $816,721.84 and nontaxable expenses of $38,956.06. Id. As the ’981 and ’726 

patents are related, Truven notes that “much of the same analysis and discovery applie[d] to both 

patents.” Id. at 10:7-8. Thus, Truven requests 25% of the fees and expenses related to all patent 

work, or “$204,180.46 in fees and $9,739.02 in nontaxable expenses, for a total of $213,919.48.” 

Id. at 11:8-10.

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DISCUSSION

I. Attorneys’ fees under 35 U.S.C. § 285

A. Legal Standard

Section 285 of the Patent Act provides that a court may award “reasonable attorney fees to 

the prevailing party” in “exceptional cases.” 35 U.S.C. § 285. An exceptional case under § 285 is 

“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.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 

1749, 1756 (2014). District courts “may determine whether a case is ‘exceptional’ in the case-bycase exercise of their discretion, considering the totality of the circumstances.” Id. 

Under its discretion, a district court may consider factors such as “the litigant’s objective 

unreasonableness in litigating the case, subjective bad faith, frivolousness, motivation, and the 

need in particular circumstances to advance considerations of compensation and deterrence.” 

Bayer CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302, 1306 (Fed. Cir. 2017) (citing 

Octane Fitness, 134 S. Ct. at 1756-56, 1756 n.6) (internal quotation marks omitted). A “case 

presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself 

apart from mine-run cases to warrant a fee award.” Octane Fitness, 134 S. Ct. at 1757. Where a 

“patentee is manifestly unreasonable in assessing infringement, while continuing to assert 

infringement in court, an inference is proper of bad faith, whether grounded in or denominated 

wrongful intent, recklessness, or gross negligence.” Eltech Sys. Corp. v. PPG Indus., Inc., 903 

F.2d 805, 811 (Fed. Cir. 1990); Haynes Int’l, Inc. v. Jessop Steel Co., 8 F.3d 1573, 1579 (Fed. Cir. 

1993), decision clarified on reh’g, 15 F.3d 1076 (Fed. Cir. 1994) (“A frivolous infringement suit 

is one which the patentee knew or, on reasonable investigation, should have known, was 

baseless.”). The movant must show that it is entitled to fees under § 285 by a preponderance of 

the evidence. Octane Fitness, 134 S. Ct. at 1758.

B. Analysis

It is undisputed that Truven is the prevailing party with regard to the ’981 patent 

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infringement claims. Truven argues that this case is “exceptional” under 35 U.S.C. § 285 because 

CCGroup asserted the ’981 patent when CCGroup knew or should have known that the patent was 

invalidated by its own product. Truven contends that CCGroup chose to file the ’981 application 

as a continuation-in-part, which by definition means that it has “add[ed] matter not disclosed in 

the said earlier nonprovisional application.” MPEP § 201.08. Truven argues that when CCGroup 

filed the ’981 patent application, it added “variable window periods,” which was not disclosed in 

the earlier ’126 patent. See Dkt. No. 348-9 at 67-68 (redline comparison of the ’126 and ’981 

patent specifications showing “variable window periods” as new matter added to the ’981 patent). 

Thus, Truven argues, CCGroup should have known the ’981 patent’s priority date was January 24, 

2011, and not March 5, 2004. Truven also argues that CCGroup repeatedly claimed that its 

Marketbasket System product practiced the asserted claims of the ’981 patent, and thus that 

CCGroup knew or should have known that its product, which was publicly available by at least 

March 14, 2006, invalidated the ’981 patent.

CCGroup argues that this case is not exceptional because the “[t]he § 102(b) issue arises 

from a technical oddity relating to the structure of the ‘981 patent claims.” Dkt. No. 358 at 8:8-9. 

CCGroup argues that both the original ’126 patent and the ’981 patent describe the CCGroup 

Marketbasket System, and that “[i]t is counterintuitive to think that the same product, described in 

both the original patent and the child patent, can be prior art to the child patent.” Id. at 12-15. 

CCGroup asserts that the phrase “a set consisting of static window period and variable window 

periods” recited in the ’981 patent claims uses a “claiming convention” called a “Markush” group, 

which sets forth two or more alternatives of a group. Id. CCGroup argues that “[t]hus, the ‘126 

patent discloses an embodiment of the claims in the later-filed ‘981 patent”—“static window 

period”—but that “[t]he problem, however, is that the ‘126 patent does not describe every

embodiment of the ‘981 patent claims, because the ‘variable window periods’ were first described 

in the later-filed application.” Id. at 8:23-9:6. CCGroup argues that because of this “technical 

oddity” in how alternative embodiments were claimed, the ’126 patent disclosed “a system of the 

sort claimed” in the ’981 patent, but was prior art under § 102(b). Id. 

The Court agrees with Truven and finds that this case is exceptional because CCGroup 

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knew or should have known that the ’981 patent was invalid prior to filing suit. “Under 35 U.S.C. 

§ 120, ‘a claim in a later application receives the benefit of the filing date of an earlier application 

so long as the disclosure in the earlier application meets the requirements of 35 U.S.C. § 112, ¶ 1, 

including the written description requirement, with respect to that claim.’” Cordance Corp. v. 

Amazon.com, Inc., 658 F.3d 1330, 1334 (Fed. Cir. 2011) (quoting Tech. Licensing Corp. v. 

Videotek, Inc., 545 F.3d 1316, 1326 (Fed. Cir. 2008)). The MPEP states that when a patent 

“applicant files a continuation-in-part whose claims are not supported by the parent application, 

the effective filing date is the filing date of the child CIP.” MPEP § 2133.01. Further, any “prior 

art disclosing the invention . . . more than 1 year prior to the filing date of the child will bar the 

issuance of a patent under . . . 35 U.S.C. [§] 102(b).” Id. 

Here, CCGroup chose to file the ’981 patent as a continuation-in-part, presumably at least 

in part because the ’981 application added new material—the “variable window periods”— that 

was not disclosed in the parent application (the ’216 application, which issued as the ’126 patent). 

Dkt. No. 348-9 at 67-68. In order for the asserted claims of the ’981 patent to receive the benefit 

of the filing date of the ’126 patent, there must be adequate written description in the ’126 patent 

disclosure to support the asserted claims. CCGroup’s “technical oddity” argument acknowledges 

that the “variable window periods” were first described in the ’981 patent application, and 

therefore that there is no written description support for the independent claims of the ’981 patent 

in the ’126 patent disclosure. Accordingly, the ’981 patent was not entitled to the earlier filing 

date, and CCGroup could and should have recognized, based on the relationship between the ’981 

and ’126 patents, that the priority date of the ’981 patent was January 24, 2011. See Cordance 

Corp., 658 F.3d at 1334-35 (patent claims in later application could not claim priority to earlier 

application because asserted claims in later patent was not supported by disclosure in earlier 

patent).

Further, there was ample evidence to show the Marketbasket System was used and 

publicly available more than one year before January 2011, the filing date of the ’981 patent. In 

its communications with Truven, CCGroup repeatedly asserted that the Marketbasket System 

practiced “the limitations of the asserted claims,” which included “claims 13 and 20 of the ’981 

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patent.” See Dkt. Nos. Dkt. No. 348-5, 348-6. CCGroup also admitted that its system “existed 

prior to March 2, 2004.” See Dkt. No. 348-7. It is undisputed that the Marketbasket System was 

publicly available as early as March 2006. See Dkt. No. 348-8. Therefore, CCGroup knew that its 

own product practiced the asserted claims of the ’981 patent as early as March 2004, and made the 

product publicly available as early as March 2006. CCGroup does not dispute these facts.

Asserting patent claims that “a cursory review of the asserted patent’s prosecution history 

would have revealed” to be invalid may constitute “gross negligence or studied ignorance, neither 

of which justifies placing the burden” of litigation on the defendant. ICU Med., Inc. v. Alaris 

Med. Sys., Inc., No. SA CV 04-00689 MRP (VBKx), 2007 WL 6137003, at *5 (C.D. Cal. Apr. 16, 

2007) (“Alaris”), aff’d, 558 F.3d 1368 (Fed. Cir. 2009). In Alaris, the plaintiff asserted patent 

claims that were identical to claims of an earlier-issued, related patent, and therefore were invalid 

for double-patenting. Id. The Alaris court found that the plaintiff was “at best grossly negligent” 

in failing to notice the double-patented claims, despite the issue being overlooked by the PTO 

during prosecution of the patent application. Id. Both patents at issue were the plaintiff’s patents, 

derived from the same application, shared the same specification, had “the same inventor,” and 

were filed and prosecuted “by the same patent lawyers.” Id. These facts suggested that the 

plaintiff “did not perform any reasonable investigation of the asserted patents and their relatedness 

before initiating the litigation . . . .” Id. The court found that the plaintiff “must have been acutely 

aware of the interrelatedness of the two patents” because “immediately prior to filing” the suit, the 

plaintiff had requested from the PTO a Certification of Correction that “tied” the prosecution 

history of one of the two patents to the second patent and their shared filing date. Id. The court 

concluded that the plaintiff “should have known” the “obvious flaws” of double-patenting in its 

asserted patent before and after commencement of litigation. Id.; see also Logic Devices, Inc. v. 

Apple Inc., No. C 13-02943 WHA, 2014 WL 6844821, at *4 (N.D. Cal. Dec. 4, 2014) (finding the 

case exceptional where the plaintiff should have known that the asserted patent was invalid for 

failure to file a terminal disclaimer to overcome obviousness-type double patenting, and the 

plaintiff was unreasonable in conducting its litigation).

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The Court finds CCGroup’s failure to recognize that its own Marketbasket System was 

invalidating prior art for the ’981 patent, based on the patent’s relationship with the ’126 patent, 

was grossly negligent, just as the Alaris court found the plaintiff was grossly negligent when it 

failed to “perform a reasonable investigation of the asserted patents and their relatedness” that 

would have revealed invalidity of the asserted claims “before initiating the litigation.” See Alaris, 

2007 WL 6137003, at *5. CCGroup owned both the ’981 and ’126 patents, both patents were 

derived from the same parent application (the ’216 application), and shared a common inventor

(Douglas Cave),6just as in Alaris, where the plaintiff owned both patents at issue, the patents were 

derived from the same application and had the same inventor. See ’981 Patent at cover page; ’126 

Patent at cover page; Alaris, 2007 WL 6137003, at *5. Further, in June 2014, before filing this 

lawsuit, CCGroup acknowledged in a filing with the PTO that the ’219 application (which issued 

as the ’981 patent) included new matter. See Dkt. No. 362-2 at 8 (in connection with the 

prosecution of a later-filed application, Application Number 14/269,084, CCGroup asserted: 

“The matter in these claims [in the ‘084 Application] does not include any new matter introduced 

in CIP parent U.S. Patent Application Number 13/012,219, filed 01/24/2011, and issued as U.S. 

Patent Number 8,340,981. Rather, these claims include only matter disclosed in parent U.S. 

Patent Application Number 10/794,216, filed 3/5/2004, and issued as U.S. Patent Number 

7,739,126.”); Alaris, 2007 WL 6137003, at *5. Thus, CCGroup must have been aware of the 

implications of the CIP filing and the relationship between the ’981 and ’126 patents, just as the 

Alaris court found that the plaintiff “must have been acutely aware of the interrelatedness of the 

two patents” at issue there, based on the plaintiff’s earlier representations to the PTO. See Alaris, 

2007 WL 6137003, at *5. 

 

6

 The ’126 patent has an additional inventor, Kyu Sung Cho. See Dkt. No. 129-1 at 12.

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CCGroup argues that the priority date of the ’981 patent “escaped the notice of both the 

applicant and the Examiner during prosecution,” that the “issue was just so subtle as to pass 

undetected by the Examiner,” that the “Examiner endorsed the claims and allowed them to issue 

without amendment,” and that CCGroup relied on the statutory presumption of validity of issued 

patents. Id. at 9:8-10:10. CCGroup cannot place the burden of determining the proper priority 

date of the ’981 patent on the PTO. As an initial matter, the MPEP provides that the patent 

examiner is not required to determine whether a CIP application is entitled to the priority date of 

the parent application, unless the applicant relies on that priority date in a proceeding before the 

PTO. See MPEP § 201.08.7 Here, there is no evidence that the CCGroup relied on the priority

date of the ’216 application during prosecution of the ’981 patent application, so the patent 

examiner had no reason to look into the issue.

Further, CCGroup could not have had a presumption of validity of the ’981 patent priority 

date when that issue was not raised during prosecution. “The rebuttable presumption of validity 

that attaches to an issued patent extends to a CIP application’s claim to the priority filing date of a 

parent application in cases where the PTO explicitly has made a finding that the CIP application is 

entitled to the benefit of that date.” Bone Care Int’l, LLC v. Pentech Pharm., Inc., 741 F. Supp. 2d 

865, 872-73 (N.D. Ill. 2010) (citing PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299, 1305 

(Fed. Cir. 2008)). Here, CCGroup has not presented any evidence that the PTO made an explicit 

finding of the ’981 patent’s entitlement to the ’216 application filing date. Thus, no presumption 

of validity attached to the claimed priority date of the ’981 patent.

CCGroup also asserts that it “immediately withdrew” the claim related to the ’981 patent 

“once the issue arose.” Dkt. No. 358 at 8:3. CCGroup relies on Intellectual Ventures I LLC v. 

Capital One Financial Corporation, No. 1:13CV0740 (AJT/TCB), 2015 WL 7283108, at *6 (E.D. 

Va. Nov. 17, 2015), for the proposition that a case is not exceptional where a patentee acts with 

 

7

“The Office does not need to make a determination as to whether the requirement of 35 

U.S.C. 120 that the earlier nonprovisional application discloses the invention of the second 

application in the manner provided by 35 U.S.C. 112(a) [including the written description 

requirement] is met unless the filing date of the earlier nonprovisional application is relied upon in

a proceeding before the Office.” MPEP § 201.08.

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“reasonable dispatch” in dismissing claims when the merits become clear. Dkt. No. 358 at 8:3-6. 

The Court finds that Intellectual Ventures is distinguishable from the present case. There, 

the plaintiff asserted five patents against the defendant, but voluntarily dismissed most of the 

claims after claim construction, in part because the plaintiff found proving defendant’s liability to 

be “problematic.” Intellectual Ventures, 2015 WL 7283108, at *1. However, the plaintiff realized 

the weakness of its case only “through the Court’s rulings.” Id. at * 6. Here, the § 102(b) issues 

regarding the ’981 patent did not present themselves as a result of the Court’s rulings, but rather 

were present before the inception of this lawsuit and should have been discovered based upon a 

sufficient pre-filing investigation.

The Court also disagrees with CCGroup’s characterization that it withdrew its claim under 

the ’981 patent with “due dispatch.” On November 13, 2015, Truven served its invalidity 

contentions informing CCGroup of its position that the effective filing date of the ’981 patent was

January 24, 2011. Dkt. No. 362-3. Thus, by November 13, 2015, CCGroup had been provided 

with actual notice of all of the information necessary to conclude that the Marketbasket System 

was invalidating prior art for the ’981 patent. Notwithstanding this information, CCGroup filed an 

amended complaint shortly thereafter which continued to allege infringement of the ’981 patent. 

Dkt. No. 44. CCGroup did not withdraw its claim under the ’981 patent for almost a year, and did 

so only after Truven notified CCGroup of the § 102(b) issue in October 2016, and after litigation 

regarding the proper method of dismissal. Dkt. No. 348 at 2:20-22; Dkt. No. 358 at 5:8-9. Under 

these circumstances, the Court finds this case exceptional. See Bayer, 851 F.3d at 1306 (affirming 

the district court’s award of attorneys’ fees where the district court found the plaintiff’s conduct in 

litigating the case “in the face of evidence that contradicted its [litigation position] was objectively 

unreasonable”).8

 

8 Because this case is exceptional under § 285, the Court finds it unnecessary to address 

Truven’s alternative requests for fees and expenses pursuant to 28 U.S.C. § 1927 or the Court’s 

inherent power. 

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II. Reasonable Fee Award

In the event the Court awards Truven fees and costs, the parties disagree regarding the 

proper methodology to calculate a reasonable fee. Truven contends that CCGroup’s assertion of 

the ’981 patent at most doubled the amount of work, and Truven “conservative[ly]” requests 25% 

of the total fees for patent-related work incurred from the filing of the complaint until the ’981 

patent was withdrawn to account for the “overlap in defending against the two related patents.”

Dkt. No. 362 at 6:24-7:4.9 Truven urges the Court to allocate fees using “a global fee analysis to 

balance all interests rather than a more granular analysis which will consume time and resources 

unnecessarily.” Dkt. No. 348 at 10:12-11:1.

CCGroup opposes Truven’s requested award amount on two grounds. First, CCGroup 

argues that fees should be allocated under a “but-for” standard and that Truven should not be 

compensated for any fees “it would have incurred even if the ’981 patent had never been 

asserted.” Dkt. No. 358 at 11:13-17. Second, CCGroup argues that Truven’s work related to the 

’981 patent after October 12, 2016, was “unnecessary and the result of Truven’s own choice” 

because Truven knew the patent was not at issue after that date. Dkt. No. 358 at 11:13-16, 13:12-

25. 

A. “But-for” Standard

In Fox v. Vice, the Supreme Court held that when a plaintiff asserts a mix of frivolous and 

non-frivolous claims, the defendant may be entitled to recover only costs “incurred because of, but 

only because of, [the] frivolous claim.” 563 U.S. 826, 836 (2011). In Fox, the plaintiff sued the 

defendant under state law and also asserted federal civil rights claims under 42 U.S.C. § 1983. Id.

at 829-30. After discovery, the plaintiff admitted the federal claims were not valid, and the district 

 

9

In compliance with Civil Local Rule 54-5(b)(2)-(3), Truven submitted: A summary of 

tasks performed by each person involved (Dkt. No. 348-3); a summary of the time spent by each 

person and his or her hourly rates (Dkt. No. 348-2); a statement describing how time records were 

kept (Dkt. No. 348-1 at ¶¶ 3-4); a description of the relevant qualifications and experience (Dkt. 

No. 348-4); and report indicating the customary hourly charges of IP litigation in the San 

Francisco Bay Area (Dkt. No. 348-14). Dkt. No. 348-1; Dkt. No. 362 at 7:8-20. All fees and 

nontaxable expenses are related to the patent claims, and exclude expenses related to non-patent 

claims. Id. at 11:2-5. 

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court dismissed them with prejudice. Id. at 830. After the state-law claims were remanded to state 

court, the defendant moved for attorney’s fees under § 1988, which allows award of “reasonable 

attorney’s fee to a prevailing party in certain civil rights cases.” Id. at 829-30. In granting the 

defendant’s fees for defending the entire suit in federal court, the district court had found that 

allocation of costs was unnecessary because the “various claims arose out of the same transaction 

and were so interrelated that their prosecution or defense entailed proof or denial of essentially the 

same facts.” Id. at 831. The Supreme Court reversed and held that the district court must 

“determine whether the fees requested would not have accrued but for the frivolous [federal] 

claim.” Id. at 839-40. There were two main policy reasons underlying that conclusion. First, the 

Supreme Court found that the “relevant purpose of § 1988 is to relieve defendants of the burdens 

associated with fending off frivolous litigation.” Id. at 836. Second, § 1988 did not warrant 

windfalls that the defendant would receive under a “more permissive test.” Id. at 837. The 

Supreme Court has held that “our case law construing what is a ‘reasonable’ fee applies 

uniformly” to all federal fee shifting statutes that permit the award of reasonable attorney fees to a 

prevailing party. City of Burlington v. Dague, 505 U.S. 557, 562 (1992). 

This Court finds that the “but for” standard applies, and thus Truven is entitled to recover 

only those fees and costs it incurred because of CCGroup’s assertion of the ’981 patent, such as 

fees related to infringement and invalidity arguments specific to the ’981 patent, and fees related 

to the motion for attorneys’ fees. The Court notes that Truven does not actually dispute that the

“but for” standard applies. Instead, Truven asserts that its request for 25% of the total patent fees 

incurred during the period the ’981 patent was at issue is a “reasonable and conservative 

approach” to determining what fees and costs are attributable to the ’981 patent. However, Truven 

acknowledges that given the substantial similarity between the ’726 and ’981 patents, much of the 

time spent litigating this case was applicable to both patents. See Dkt. No. 362 at 8:6-9:7 (Truven 

discussing its work on various issues). The Court finds that while Truven’s 25% flat rate request 

is not unreasonable in theory, Truven has not cited any authority that would permit the Court to 

award fees under that methodology. The Court further finds that the supporting documentation 

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submitted by Truven does not satisfy the “but-for” standard.10 Accordingly, the Court directs 

Truven to submit a revised fee and cost request supported by documentation that seeks only those 

fees and expenses that were incurred as a result of defending against CCGroup’s claims under the 

’981 patent.11

B. Time Period Eligible for Fee Award

CCGroup also contends that Truven should not be compensated for work done after 

CCGroup informed Truven of its intention to withdraw the ’981 patent claim in October 2016. 

CCGroup cites Romag Fasteners, Inc. v. Fossil, Inc., 866 F.3d 1330, 1336 (Fed. Cir. 2017), for the 

proposition that formal withdrawal of a claim is not required to find it withdrawn when the parties 

and the court know that the defendant intends to drop its claim. 

The Court finds that CCGroup’s reliance on Romag is misplaced. In Romag, the district 

court had “concluded that [the defendant] declined to abandon [its] defenses until after trial,” and 

that the “failure to formally withdraw its . . . invalidity defenses until after the close of evidence” 

was a “key factor for awarding fees to” the plaintiff. Id. at 1336. On appeal, the Federal Circuit 

reversed the fee award, holding that the district court had “clearly erred” in finding that the 

defenses were not withdrawn until after trial because the record showed there was “full awareness 

between the parties and the district court that the patent invalidity defenses were withdrawn before 

trial.” Id. at 1338. The Federal Circuit additionally noted that the district court had made no 

finding that the defendant’s invalidity defenses were objectively unreasonable. Id. 

Here, unlike in Romag, the Court has concluded that the assertion of the ’981 patent 

renders this case exceptional so as to warrant a fee award. Further, although CCGroup informed 

Truven in October 2016 that it intended to withdraw the ’981 patent, a dispute regarding the ’981 

 

10 At the hearing, Truven’s counsel stated that two timekeepers independently arrived at 

the 25% estimate based on their review of time entries.

11

 To the extent that CCGroup asserts that Truven should only be permitted to recover fees 

and costs for work relating to the “maximum duration rule” recited in the ’981 patent claims (and 

not recited in the ’726 patent), the Court disagrees. Although it is true that much of the work on 

the patent claims overlapped, there may be other work specific to the ’981 patent that would not 

have been performed but for the inclusion of that patent in this case.

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patent continued to exist because the parties could not agree regarding the appropriate mechanism 

for dismissal of the ’981 patent claims, thus requiring further litigation until the ’981 claims were 

dismissed in February 2017. The Court ultimately agreed with Truven that the dismissal should 

be with prejudice and under the condition that CCGroup execute a covenant not to sue Truven on 

the existing claims of the ’981 patent. Under the circumstances of this case, the Court finds that 

the relevant time period for awarding a reasonable fee award related to defending against the ’981 

patent is between May 14, 2015 and February 21, 2017.

CONCLUSION

For the foregoing reasons and for good cause shown, the Court hereby GRANTS in part 

Truven’s motion for attorney’s fees and nontaxable expenses pursuant to 35 U.S.C. § 285. Truven 

is directed to recalculate its fees in accordance with this Order, and resubmit its request and 

supporting documentation no later than April 6, 2018. CCGroup may submit a response no later 

than April 13, 2018, and Truven may submit a reply by April 20, 2018. The parties may submit 

the additional briefing in the form of letter briefs supported by declarations and exhibits. The 

Court will take the matter under submission and issue an order regarding the fee award shortly 

thereafter.

IT IS SO ORDERED.

Dated: March 14, 2018 ______________________________________

SUSAN ILLSTON

United States District Judge

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