United States Court of Appeals 

for the Federal Circuit ______________________ 

CHECKPOINT SYSTEMS, INC.,

Plaintiff-Appellant,

v.

ALL-TAG SECURITY S.A. AND

ALL-TAG SECURITY AMERICAS, INC.,

Defendants-Appellees,

AND

SENSORMATIC ELECTRONICS CORPORATION,

Defendant-Appellee.

______________________ 

2012-1085

______________________ 

Appeal from the United States District Court for 

the Eastern District of Pennsylvania in No. 01-CV2223, Judge Petrese B. Tucker. 

______________________ 

Decided: March 25, 2013

______________________ 

 ROBERT J. PALMERSHEIM, Schopf & Weiss, LLP, of 

Chicago, Illinois, argued for plaintiff-appellant. With him 

on the brief were STEVEN A. WEISS and LESLEY G. SMITH. 

Of counsel on the brief were DENNIS R. SUPLEE and
2 CHECKPOINT v. ALL TAG

THOMAS W. HAZLETT, Schnader Harrison Segal & Lewis 

LLP, of Philadelphia, Pennsylvania. 

 THEODORE A. BRIENER, Breiner & Breiner, L.L.C., of 

Alexandria, Virginia, argued for defendants-appellees. Of 

counsel on the brief were TRACY ZURZOLO QUINN, Reed 

Smith LLP, of Philadelphia, Pennsylvania, and M. KELLY 

TILLERY, ERIK N. VIDELOCK and CHARLES S. MARION, 

Pepper Hamilton, LLP, of Philadelphia, Pennsylvania. 

______________________ 

Before NEWMAN, LOURIE, and SCHALL, Circuit Judges. 

NEWMAN, Circuit Judge. 

Checkpoint Systems, Inc. (“Checkpoint”) sued All-Tag 

Security S.A., All-Tag Security Americas, Inc., and an AllTag customer Sensormatic Electronics Corporation (collectively, “All-Tag”) for infringement of U.S. Patent No. 

4,876,555 (“the ’555 patent”), entitled “Resonance Label 

and Method for its Fabrication.” A jury found the ’555 

patent not infringed, invalid, and unenforceable. The 

district court entered judgment on the verdict, held the 

case “exceptional” in terms of 35 U.S.C. §285, and awarded the defendants approximately $6.6 million in attorney 

fees, costs, and interest. The patent term has expired, 

and only the award of attorney fees is appealed. We 

reverse the award, for the requirements of §285 were not 

met.

BACKGROUND

Checkpoint and All-Tag are competitors in the manufacture and sale of “resonance tags.” Resonance tags are 

electronic anti-shoplifting devices that are attached to 

merchandise whereby if the attached tag is not deactivated, for example by a cashier at check-out, the tag triggers 

an alarm when the tagged goods move past detectors 

located at the store’s exit.
 CHECKPOINT v. ALL TAG 3

The patented resonance tag is constructed of three 

layers: a middle dielectric layer sandwiched between two 

conducting layers. The tag is deactivated in the check-out 

procedure by passing a strong current through the tag, 

which creates a short circuit between the conducting 

layers whereby no alarm is given to the detectors. Checkpoint’s ’555 patent is for a resonance tag that can be 

deactivated “at a lower current and with greater reliability.” ’555 patent Abstract. This property is achieved by 

placing a “throughhole” or “continuous hole” in the middle 

dielectric layer. Id. Claim 1 is representative:

1. A deactivatable resonance label, comprising:

a dielectric layer having first and second opposed faces;

a first conducting layer on the first face of the 

dielectric layer, the first conducting layer being 

shaped to form an inductor and a first capacitor 

plate;

a second conducting layer on the second face 

of the dielectric layer, the second conducting layer 

being shaped to form a second capacitor plate, the 

first and second conducting layers being at least 

partially superimposed, said first and second conducting layers and said dielectric layer forming 

together an oscillating circuit; and

shorting means for enabling creation of a 

short-circuit between the first and second conducting layers when it is desired to deactivate the oscillating circuit, the shorting means being 

comprised of at least one throughhole passing 

through the dielectric layer to provide a short circuit path between the first and second conducting 

layers.

The issue of infringement was focused on whether AllTag’s resonance tags have such a throughhole in the 
4 CHECKPOINT v. ALL TAG

dielectric layer. The attorney fee award was based on 

Checkpoint’s presentation of expert testimony analyzing 

the All-Tag tags, for the district court found that the tags 

that were examined by the Checkpoint expert were not 

the accused tags manufactured by All-Tag in Belgium, but 

earlier tags manufactured by All-Tag in Switzerland.

Checkpoint’s expert was Dr. Markus Zahn, professor 

of electrical engineering at MIT. Checkpoint furnished 

Dr. Zahn with a roll of All-Tag tags to test for the infringing throughhole. To expose the critical dielectric layer, 

Dr. Zahn dissolved the conductive aluminum layer that 

covered the dielectric material. Dr. Zahn then examined 

the tags using a high-powered microscope; he observed 

that they had a throughhole in the dielectric layer, and he 

passed colored water through the hole to confirm this 

observation. Dr. Zahn’s expert report, deposition, and 

testimony at trial described his procedures and results, 

including photographs.

Upon reviewing Dr. Zahn’s deposition exhibits a few 

days before trial, All-Tag Security S.A.’s President and 

CEO Olivier Boels stated his belief that Dr. Zahn had 

tested tags that were not the current accused products. 

Mr. Boels stated that the tags that were tested were made 

by All-Tag Security A.G. in Switzerland, and were not the 

current tags which are made by All-Tag Security S.A. in 

Belgium. The record states that the roll of tested tags 

was acquired from an All-Tag customer “in the marketplace.” Dr. Zahn testified that the serial number of the 

tags he tested was listed on All-Tag’s website at the time 

of trial.

All-Tag moved to exclude Dr. Zahn from testifying, 

arguing that his infringement opinion was fatally flawed 

because the tags he examined were not the tags accused 

of infringement. The district court denied All-Tag’s 

motion and permitted Dr. Zahn to testify.
 CHECKPOINT v. ALL TAG 5

Dr. Zahn testified that All-Tag’s resonance tags contained a throughhole, and met all the terms of the asserted claims of Checkpoint’s ’555 patent. Dr. Zahn based his 

infringement opinion on his examination of the All-Tag 

tags, and on two All-Tag patents, U.S. Patent No. 

5,187,466 (“the ’466 patent”) and No. 7,023,343 (“the ’343 

patent”). All-Tag stated that these patents generally 

describe the process that All-Tag Security S.A. was using

in Belgium to produce the resonance tags that are 

charged with infringement, the ’343 patent describing 

improvements over the process described in the ’466 

patent. Dr. Zahn explained that both of the All-Tag 

patents describe products having a hole in the dielectric 

layer, as required by the claims of the Checkpoint patent 

in suit. Dr. Zahn concluded that tags produced in accordance with the process in the All-Tag patents would infringe the Checkpoint ’555 patent. 

The record states that in 1994 All-Tag moved its 

manufacture of resonance tags from Switzerland to Belgium, and transferred its machinery and equipment to a 

newly formed Belgian company. The Belgian company 

resumed making resonance tags on the same equipment 

within about a week of the move.

Checkpoint filed this infringement suit in May 2001 

against the All-Tag Belgian manufacturer and its United 

States company, in the United States District Court for 

the Eastern District of Pennsylvania. During pre-trial 

procedures, Checkpoint asked All-Tag to admit that its 

resonance tags contained a throughhole. All-Tag responded that its tags were made “generally in accordance 

with” All-Tag’s ’466 patent and the then-pending application for the ’343 patent. All-Tag stated that it used the 

manufacturing process described in the ’466 patent until 

April 2001, and that it thereafter modified the process as 

described in the ’343 application. Both patents describe

methods of producing at least one “hole” or “crater” or 
6 CHECKPOINT v. ALL TAG

“material free” area in the dielectric layer of a three-layer 

resonance tag.

The ’466 patent describes making a resonance tag by 

burning “at least one hole” in the dielectric material using 

a heated rod. ’466 patent col.2 ll.65-66. A “complete 

melting of the material” forms the “holes (craters).” Id.

col.3 ll.18-22. The heated rod melts the dielectric material, which is “displaced completely” and “removed completely.” Id. col.4 ll.6-22. This leaves a “hole 6” and an 

“air gap S.” Id. Fig. 4. Checkpoint’s expert Dr. Zahn 

referred to this description of the All-Tag process as 

producing a product covered by Checkpoint’s ’555 patent. 

The ’343 patent states that its object is to produce a 

resonance tag “having as small as possible a material free

distance (deactivation area) between two opposite capacitor plates.” ’343 patent col.2 ll.50-57. The ’343 patent 

describes a process whereby a heated tool melts away the 

dielectric material such that “[a] short circuit is thus 

obtained between the plates without any dielectric material remaining between them.” Id. col.3 ll.6-21. The 

process is said to “ensure” that “there is no dielectric 

material between the capacitor plates in the deactivation 

zone.” Id. col.3 ll.45-48. The figures show this materialfree gap 7 between the capacitor plates. Id. Fig. 6. Dr. 

Zahn referred to this description as well. 

At the close of Checkpoint’s infringement case, AllTag moved for judgment as a matter of law, on the ground 

that Dr. Zahn’s testimony was unreliable because he did 

not know All-Tag’s exact process and did not test All-Tag’s 

present products. The court denied the motion, stating 

that “[t]he testimony is sufficient at this point for us to 

continue this matter.”

All-Tag presented no contradictory evidence. AllTag’s expert Dr. Christopher Rose testified that he had 

not examined the All-Tag tags. Dr. Rose testified:
 CHECKPOINT v. ALL TAG 7

I don’t have any evidence to present to this jury to 

say that there is or is not a hole, that there is 

short-circuiting through the hole or there is not 

short-circuiting through the hole. You have to 

find these things out.

Dr. Rose did not state that the accused tags did not contain a hole as described in the All-Tag manufacturing 

patents. No All-Tag witness so testified, and All-Tag’s 

counsel did not so argue.

All-Tag renewed its JMOL motion at the end of the 

evidentiary presentations. The court again denied the 

motion, stating that “the evidence is sufficient to go to the 

jury on the issue of infringement.” 

Although All-Tag had acknowledged in its Admissions 

that its tags were made “generally in accordance” with its 

patents, All-Tag argued to the jury that Dr. Zahn did not 

know what “generally” meant and so could not definitively 

determine whether the All-Tag tags were within the 

Checkpoint patent. The jury returned a verdict in favor of 

All-Tag, finding that All-Tag did not infringe the ’555 

patent and that the ’555 patent was invalid and unenforceable. Judgment was entered on the verdict. Checkpoint Sys., Inc. v. All-Tag Sec. S.A., No. 01-cv-2223 (E.D. 

Pa. June 20, 2008), ECF No. 275.

All-Tag then moved for attorney fees pursuant to 35 

U.S.C. §285:

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

The district court granted the motion. The court explained that the case was exceptional because Checkpoint 

through its expert witness did not inspect the tags it 

accused of infringement, despite having ample opportunity to do so. The district court stated, “that Checkpoint 

never looked at the accused products in relation to the 

’555 patent . . . alone warrants an exceptional case find-
8 CHECKPOINT v. ALL TAG

ing.” Checkpoint Sys., Inc. v. All-Tag Sec. S.A., No. 01-cv2223, 2011 WL 5237573, at *1 n.1 (E.D. Pa. Nov. 2, 

2011). This appeal is directed to the award of attorney 

fees; the ’555 patent has expired. 

DISCUSSION

The general rule, called the “American Rule,” is that 

each side shall normally bear its litigation burdens. The 

philosophy of the American Rule is to avoid that “the poor 

might be unjustly discouraged from instituting actions to 

vindicate their rights if the penalty for losing included the 

fees of their opponents’ counsel.” Fleischmann Distilling 

Corp. v. Maier Brewing Co., 386 U.S. 714, 718 (1967); see

Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 

240, 251 (1975) (explaining the concern that “losing 

litigants were being unfairly saddled with exorbitant fees 

for the victor’s attorney”). 

The American Rule is not absolute, for the policy of 

avoiding undue burden on access to judicial remedy gives 

way when litigation is devoid of any justification, or is 

tainted by grievous misconduct. Section 285 codifies for 

patent cases the policy of “compensating the prevailing 

party for the costs it incurred in the prosecution or defense of a case where it would be grossly unjust, based on 

the baselessness of the suit or because of litigation or 

Patent Office misconduct, to require it to bear its own 

costs.” Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 

687 F.3d 1300, 1309-10 n.1 (Fed. Cir. 2012). To receive 

attorney fees under §285, “a prevailing party must establish by clear and convincing evidence that the case is 

‘exceptional.’” Id. at 1308.

In turn, patentees seeking to assert their governmentgranted patent rights, and accused infringers with 

grounds for believing the patent to be invalid or not 

infringed, are shielded from the additional litigation 

burden of fee-shifting when their positions are reasonable. 

In Highmark the court explained: “It is established law 
 CHECKPOINT v. ALL TAG 9

under section 285 that absent misconduct in the course of 

the litigation or in securing the patent, sanctions may be 

imposed against the patentee only if two separate criteria 

are satisfied: (1) the litigation is brought in subjective bad 

faith, and (2) the litigation is objectively baseless.” Id. 

“To be objectively baseless, the infringement allegations 

must be such that no reasonable litigant could reasonably 

expect success on the merits.” Id. at 1309 (quoting Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 

F.3d 1254, 1260 (Fed. Cir. 2008)).

On appellate review of an attorney fee ruling this 

court determines de novo whether the litigation was 

objectively baseless, id. at 1309-10 & n.1, and the district 

court’s findings regarding subjective bad faith are reviewed for clear error. Id. at 1310. Thus this court may 

conduct “a retrospective assessment of the merits of the 

entire litigation” to determine “whether the record established in the proceeding supports a reasonable argument 

as to the facts and law.” Id. at 1310 n.1.

Here, the district court stated: “The Court further 

found that Plaintiff’s claim was brought in bad faith, the 

basis for its finding of an ‘exceptional’ case.” The district 

court faulted Checkpoint for “only examin[ing] tags from 

All-Tag A.G. of Switzerland, not the Actual Accused 

Product manufactured by All-Tag S.A. of Belgium.” The 

district court stated that “All-Tag provided all parties 

with samples of the Accused Product on November 22, 

2002, giving Checkpoint ample time to have the expert’s 

infringement analysis completed.”

Checkpoint argues that it was not objectively baseless 

to bring or continue this suit based on the tags tested by 

Dr. Zahn, even if those tags were made in Switzerland 

before the move to Belgium. Checkpoint stresses that 

when All-Tag moved its equipment from Switzerland to 

Belgium, the Belgian operation resumed manufacture 

within a week, on the same equipment. All-Tag did not 
10 CHECKPOINT v. ALL TAG

show at trial that All-Tag Switzerland’s resonance tags 

differed from All-Tag Belgium’s tags in any respect material to infringement of the ’555 patent, although All-Tag 

witnesses testified that All-Tag was continually making 

manufacturing improvements. 

There was no evidence that All-Tag’s equipment produced tags with throughholes in Switzerland but without 

throughholes in Belgium. In a pre-trial motion for summary judgment, All-Tag’s counsel stated that “it is undisputed that All-Tag S.A. purchased equipment and other 

assets from All-Tag A.G., and continued to manufacture 

the same resonant tags which were previously manufactured by All-Tag A.G.” Checkpoint Sys., Inc. v. All-Tag 

Sec. S.A., No. 01-cv-2223 (E.D. Pa. Aug. 15, 2006), ECF 

No. 165, at 4.

As we have discussed, Dr. Zahn referred to the description of All-Tag’s products in All-Tag’s patents, for AllTag stated that it was practicing the process in these 

patents. Mr. Boels, All-Tag’s CEO, testified that the AllTag patents explain how All-Tag manufactured its resonance tags:

Q. So if somebody wanted to understand how AllTag makes its product, is it enough to just read 

the patent? Does the patent tell you everything 

about how you actually make your product?

A. I believe. I think so.

The ’343 patent states that the process “ensures that 

there is no dielectric material between” the conductive 

layers. ’343 patent col.3 ll.45-48. Dr. Zahn reviewed the 

’343 patent and determined that a resonance tag made in 

accordance with that method would have a hole in the

dielectric layer. Both the ’466 and ’343 patents show that 

the products have holes in the dielectric, as claimed in 

Checkpoint’s ’555 patent. 
 CHECKPOINT v. ALL TAG 11

All-Tag argues that Dr. Zahn’s reliance on the All-Tag 

patents was unreasonable because of the qualifier “generally” in All-Tag’s pre-trial “Admission” that its manufacturing process practiced the All-Tag patents. All-Tag 

states that “generally” does not mean “exactly,” and that 

Checkpoint should not have relied on the admission. 

However, a party may rely on an admission as “conclusively established” unless the admission is recanted. See

Fed. R. Civ. P. 36(b) (“A matter admitted under this rule 

is conclusively established unless the court, on motion, 

permits the admission to be withdrawn or amended.”); 

Ajinomoto Co. v. Archer-Daniels-Midland Co., 228 F.3d 

1338, 1351 (Fed. Cir. 2000) (pre-trial infringement admissions were binding because accused infringer “offered no 

correction of these admissions before the court’s judgment”).

All-Tag provided no evidence and presented no argument that its pre-trial admission was incorrect. All-Tag’s 

expert Dr. Rose testified that he did not examine the 

accused tags, although Dr. Rose conceded that All-Tag 

would infringe if the “physical reality” matched the description in the All-Tag patents. As to All-Tag’s ’466 

patent, Dr. Rose testified:

So, if the physical reality is exactly [as shown in 

the patent], if that is the physical reality, then 

again, we are done, I agree.

Similarly, as to the ’343 patent, Dr. Rose testified:

So, if the product reflected -- so, if the recipe specified in that patent gave you exactly what they say 

in the patent . . . then again I think we are done. 

Because what they say in the patent is that there 

is an air gap, there is no dielectric in between anything . . .

What that means is if the physical reality of the 

product is exactly as described in the patent, then 
12 CHECKPOINT v. ALL TAG

I -- I think we would have infringement . . . . I 

can’t say infringement. I would say that we have 

a throughhole.

All-Tag cites L & W, Inc. v. Shertech, Inc., 471 F.3d 

1311 (Fed. Cir. 2006), where this court rejected the assessment of liability based solely on the alleged infringer’s

statements that the accused products are “covered” by its 

own patent, because the patent included multiple embodiments and it was unclear whether the patent disclosed

the critical infringing feature. In contrast, All-Tag’s ’466 

and ’343 patents are specific to resonance tags having a

hole in the dielectric; the All-Tag patents describe no 

embodiments without the hole, which is the critical feature of Checkpoint’s ’555 patent. All-Tag’s admission that 

its products are made “generally in accordance” with its

patents could reasonably have been relied on by Checkpoint and its expert Dr. Zahn. Such reliance was not 

“objectively baseless.” See Martek Biosciences Corp. v. 

Nutrinova, Inc., 579 F.3d 1363, 1374 (Fed. Cir. 2009)

(rejecting “a general rule requiring one who alleges infringement of a claim containing functional limitations to 

perform actual tests or experiments on the accused product or method”).

The infringement charge was not shown to have been 

made in bad faith or objectively baseless. The district 

court’s determination that this was an exceptional case 

under §285 is not supported by the record. The award of 

attorney fees with costs and interest is reversed.

REVERSED