UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

SUNDANCE, INC., and

MERLOT TARPAULIN AND SIDEKIT

MFG. CO., INC.,

Plaintiffs,

Case No. 02-73543

-vs- HON. AVERN COHN

DE MONTE FABRICATING, LTD.,

QUICK DRAW TARPAULIN SYSTEMS,

INC., and WALTER DE MONTE,

Defendants.

/

MEMORANDUM AND ORDER

DENYING DEFENDANTS’ MOTION FOR ATTORNEY FEES

I.

This is a patent case. The patent-in-suit, U.S. Patent No. 5,026,109 (the ’109

patent), covers a Segmented Cover System. As explained in the Abstract:

The present invention covers a segmented cover system

utilizing a series of cover sections, which can be of any size or

shape, and a series of curved or straight supporting bows to

form a cover assembly which allows for the easy replacement

of a cover section or a bow without disassembling the entire

cover section.

The commercial embodiment of the ’109 patent is a retractable segmented covering system

for the top of truck and trailer bodies.

A jury found the ’109 patent invalid and infringed by defendants. The Court granted

plaintiffs’ motion for judgment as a matter of law, setting aside the jury’s finding of invalidity,

and found the patent valid. On appeal the Federal Circuit, in a decision reported at 550

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F.3d 1356 (Fed. Cir. 2008), reversed and found the patent invalid.

Now before the Court is defendants’ motion for attorneys’ fees “because Plaintiffs

and their attorneys knew or should have known of the frivolous nature of the lawsuit at the

time of filing the complaint and because they made intentionally misleading and baseless

arguments regarding validity of the asserted patent claim throughout the course of the

litigation, making the case exceptional under 35 USC 285.”

The motion is DENIED. The reasons follow. What is exceptional is the request for

attorneys’ fees considering the record in the case.

II.

The law on what constitutes an “exceptional case” under § 285 is well known and

requires no extended discussion. As stated in Robert L. Harmon, Patents and the Federal

Circuit §17.3 Attorney Fees (8th ed. 2007):

(a) Determination of Entitlement

From early on, federal courts refused to adopt the

English Rule requiring assessment of attorney fees against a

losing party. Under the American Rule, the prevailing litigant

is ordinarily not entitled to any attorney fees absent statutory

authority. A rationale for this rule is that one should not be

penalized for litigating. . . . [I]n patent cases, [equitable power

to make whole a party] is . . . limited to “exceptional cases,” as

provided in 35 U.S.C. § 285. Allowance of fees only in

exceptional cases is based on the premise that courts should

attempt to strike a balance between the interest of the patentee

in protecting its statutory rights and the interest of the public in

confining such rights to their legal limits.

. . . .

The purpose of § 285 is to provide discretion where it

would be grossly unjust that the winner be left to bear the

burden of its own counsel fees, which prevailing litigants

normally bear. It is intended to reimburse a party that is injured

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when forced to undergo an exceptional case, not the party’s

attorneys. . . .

. . . . Nor are all successful defendants entitled to attorney fees.

The requirement in § 285 of establishing an exceptional case

remains a formidable and adequate barrier to unwarranted

awards.

As explained in Delta-X Corp. v. Baker Hughes Production Tools, Inc., 984 F.2d 410,

414 (Fed. Cir. 1993):

For good reasons, this court affords trial judges

discretion to award enhanced damages and attorney fees. The

trial judge, after presiding over the preparation and trial of the

case, can best weigh the relevant considerations, such as the

closeness of the case, the tactics of counsel, the flagrant or

good faith character of the parties’ conduct, and any other

factors contributing to imposition of punitive sanctions or fair

allocation of the burdens of litigation.

When validity of a patent is at issue, the test for an exceptional case is quite strict:

Absent misconduct by the patentee in the litigation or in securing the

patent, a trial court may only sanction the patentee if the litigation is both

brought in subjective bad faith and is objectively baseless. There is a

presumption that the assertion of infringement of a duly granted patent is

made in good faith. Thus, the underlying improper conduct and the

characterization of the case as exceptional must be established by clear and

convincing evidence.

Complex Litig. Comm., Am. Coll. of Trial Lawyers, Anatomy of a Patent Case 126 ( Fed.

Judicial Ctr. 2009).

III.

The Federal Circuit’s decision is in two (2) parts. In the first part the panel held that

defendants’ expert who opined that the ’109 patent was invalid for obviousness was not

qualified to express an opinion because of his lack of expertise in the pertinent art.

Peculiarly, while plaintiffs’ pretrial objection to this expert’s testifying because of his lack of

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 The panel decision has been described as applying a “strict KSR standard to

find obviousness, including a further diminished role for objective indicia to rebut prima

facie obviousness.” Hal Wegner’s Cited E-mails, Jan. 2009, internetsightings.com/

HAL_2009_01.pdf.

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expertise was denied, no objection was raised at trial to his testifying, and the issue was

not raised by either party in the appeal.

In the second part of its decision, reviewing the Court’s JMOL de novo, the panel

held “no [expert] testimony was required because there are no underlying factual issues

in dispute as to obviousness.” 550 F.3d at 1365. In so stating, the panel quoted KSR

International Co. v. Teleflex, Inc., 550 U.S. 398, 427 (2007):

Where, as here, the content of the prior art, the scope of the

patent claim, and the level of ordinary skill in the art are not in

material dispute, and the obviousness of the claim is apparent

in light of these factors, summary judgment is appropriate.

The panel combined two (2) references, U.S. Patent No. 3,415,260 issued to Hall

covering an Extensible Canopy Structure (Hall), and U.S. Patent No. 4,189,178 issued to

Cramaro covering a Tarpaulin Cover System (Cramaro). No useful purpose is to be served

by describing in detail how the panel reached the conclusion that the combination of Hall

and Cramaro made obvious the limitations of Claim 1 of the ’109 patent.1

IV.

Review of the record in this case establishes the following:

• Suit was filed in this district on September 04, 2002, following a prior suit in

the Western District of Pennsylvania which was dismissed for lack of

personal jurisdiction. Between the date of filing and October 24, 2007, the

date of the Notice of Appeal, the case generated 284 docket entries. The

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Court entered at least fifteen (15) significant orders in the course of the case

as listed in Exhibit A, attached.

• De Monte never moved for summary judgment of invalidity.

• Cramaro was cited as a reference in the ’109 patent. Hall was not.

• Twice during the course of the case defendants asked the Patent Office to

reexamine the ’109 patent, raising the question of patentability based on the

combination of Cramaro and Hall. Twice patentability was confirmed. Ex

Parte Reexamination Certificate (5277th); Ex Parte Reexamination Certificate

(5759th).

• Hall’s method of removing a cover section was distinguished in the

interpretation of “independent” in the Decision on Claim Construction.

• At trial De Monte did not assert that a cover section of Hall can be removed

independently of the other cover sections. De Monte first argued this in its

Reply Brief in the appeal to the Federal Circuit.

• An infringement suit by plaintiffs against Aero Industries, Inc. prior to this

case being filed in this Court was resolved by Aero taking a license to

practice the ’109 patent.

• The Court in its Memorandum and Order Granting Plaintiffs’ Motion for a

Judgment as a Matter of Law or for New Trial distinguished the combination

of Cramaro and Hall to arrive at the invention—a segmented tarp with each

section independently removable used for a truck cover.

V.

The ’109 patent was not only duly granted; it was thrice examined. That the Court

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and three (3) patent examiners got it wrong in the view of the Federal Circuit does not

make this an exceptional case. The case was a close one. The issue of obviousness,

particularly the “independence” of the panels called for by Claim 1 of the ’109 patent was

vigorously contested at a time before the Supreme Court’s decision in KSR. There was

nothing untoward in the conduct of plaintiffs’ counsel. The argument for non-obviousness

in the two (2) reexaminations was fairly presented to the Patent Office. Defendants’

counsel had ample opportunity to present its view on obviousness to the Patent Office.

The Patent Office was not deceived in any way. The Patent Office disagreed with

defendants as did the Court. Defendants have given the Court no good reason to look

beyond the American Rule requiring each party to bear its own expenses, except for the

fact that a panel of the Federal Circuit found the ’109 patent to be invalid for obviousness.

And as to that finding, in light of the record in the case, the Court is constrained to observe

what Justice Jackson said in his concurring opinion in Brown v. Allen, 344 U.S. 443, 540

(1953):

We are not final because we are infallible, but we are infallible

only because we are final.

SO ORDERED.

Dated: May 11, 2009 s/ Avern Cohn 

AVERN COHN

UNITED STATES DISTRICT JUDGE

I hereby certify that a copy of the foregoing document was mailed to the attorneys of record

on this date, May 11, 2009, by electronic and/or ordinary mail.

 s/ Julie Owens 

Case Manager, (313) 234-5160

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