United States Court of Appeals 

for the Federal Circuit ______________________ 

CHECKPOINT SYSTEMS, INC.,

Plaintiff-Appellant

v.

ALL-TAG SECURITY S.A., ALL-TAG SECURITY 

AMERICAS, INC., SENSORMATIC ELECTRONICS 

CORPORATION, KOBE PROPERTIES SARL,

Defendants-Appellees

______________________ 

2016-1397

______________________ 

Appeal from the United States District Court for the 

Eastern District of Pennsylvania in No. 2:01-cv-02223-

PBT, Judge Petrese B. Tucker.

______________________ 

Decided: June 5, 2017

______________________ 

ROBERT J. PALMERSHEIM, Honigman Miller Schwartz 

and Cohn LLP, Chicago, IL, argued for plaintiff-appellant. 

Also represented by ANAND C. MATHEW; DENNIS R.

SUPLEE, NANCY WINKELMAN, Schnader, Harrison, Segal & 

Lewis LLP, Philadelphia, PA.

M. KELLY TILLERY, Pepper Hamilton LLP, Philadelphia, PA, argued for all defendants-appellees. Defendantappellee Sensormatic Electronics Corporation also represented by CHARLES S. MARION, ERIK N. VIDELOCK. 
2 CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 

THEODORE A. BREINER, Breiner & Breiner, Alexandria, VA, for defendants-appellees All-Tag Security S.A.,

All-Tag Security Americas, Inc., Kobe Properties SARL. 

Also represented by TRACY ZURZOLO QUINN, Reed Smith 

LLP, Philadelphia, PA.

______________________ 

Before NEWMAN, LOURIE, and MOORE, Circuit Judges.

NEWMAN, Circuit Judge.

This is the second attorney fee appeal arising from a 

patent infringement suit brought by Checkpoint Systems, 

Inc. (“Checkpoint”) against All–Tag Security S.A., All–Tag 

Security Americas, Inc., Sensormatic Electronics Corp., 

and Kobe Properties SARL (collectively, “All–Tag”). The 

district court deemed the case “exceptional” and awarded

attorney fees to All–Tag.1 We conclude that the court 

erred in its application of fee-shifting principles; the 

award is reversed. 

BACKGROUND

U.S. Patent No. 4,876,555 (“the ’555 patent”) relates 

to improved anti-theft tags that are attached to merchandise, and deactivated when the goods are purchased. The 

accused tags are manufactured in Europe, and imported 

into the United States. Checkpoint brought an infringement suit in the Eastern District of Pennsylvania. Trial 

was to a jury, who found the ’555 patent not infringed, 

invalid, and unenforceable. Following the verdict, the 

district court found the case to be “exceptional” under 35 

1 Checkpoint Sys., Inc. v. All-Tag Security S.A., 

2015 WL 4941793 (E.D. Pa. Aug. 19, 2015) (“Dist. Ct. 

Op.”).

 
CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 3

U.S.C. § 285, and awarded the defendants approximately 

$6.6 million in attorney fees, costs, and interest. The 

district court stated that the case was “exceptional” 

because Checkpoint’s expert witness based his infringement opinion on examination of imported tags that were 

manufactured by All–Tag in Switzerland, although the 

accused tags were manufactured by All–Tag in Belgium.

Checkpoint Sys., Inc. v. All-Tag Sec. S.A., No. 01-CV-2223, 

2011 WL 5237573, at *1 n.1 (E.D. Pa. Nov. 2, 2011) (“Dr. 

Zahn’s factual assumptions were derived from his review 

of All–Tag’s patents, rather than its actual accused products. . . . The evidence established that Checkpoint never 

looked at the accused products in relation to the ’555 

patent. This alone warrants an exceptional case finding.”) 

(internal citations omitted)).

On appeal to us, Checkpoint pointed to evidence in 

the record explaining that the tags from Belgium were 

manufactured on the same machines that All–Tag transferred from Switzerland to Belgium. There was no contrary evidence. We affirmed the judgment entered on the 

jury verdict, but reversed the attorney fee award, holding 

that “[t]he infringement charge was not shown to have 

been made in bad faith or objectively baseless.” Checkpoint Sys., Inc. v. All–Tag Security S.A., 711 F.3d 1341, 

1348 (Fed. Cir. 2013). 

All-Tag sought certiorari, which was granted, with the 

opinion vacated, and remanded to this court, Kobe Properties SARL v. Checkpoint Sys., Inc., 134 S. Ct. 2134 (2014), 

in conjunction with the Supreme Court’s decisions on feeshifting in Octane Fitness, LLC v. ICON Health & Fitness, 

Inc., 134 S. Ct. 1749 (2014), and Highmark Inc. v. Allcare 

Health Management System, Inc., 134 S. Ct. 1744 (2014).

On remand from the Supreme Court, we remanded to 

the district court for further consideration of the attorney 

fee award in light of the Court’s decisions. Checkpoint 

Sys., Inc. v. All–Tag Security S.A., 572 F. App’x 988 (Fed. 
4 CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 

Cir. 2014). In the remand order, we instructed the district court to “consider the guidance from our prior opinion in which we explained that tests or experiments on 

the actual accused products are not always necessary to 

prove infringement.” Id. at 989.

The district court again held the case to be exceptional, citing the same ground, viz., that Checkpoint’s pre-suit 

investigation was inadequate because Checkpoint’s expert 

inspected tags produced in Switzerland rather than in 

Belgium. Dist. Ct. Op. at *4. The district court also found 

Checkpoint’s pre-suit investigation, based on an European 

infringement verdict against All–Tag on a counterpart of 

the ’555 patent and two infringement opinions from 

counsel, to be inadequate because the infringement opinions “were given years before filing.” Id. Finally, the 

district court cited Checkpoint’s “improper motivation” 

behind the lawsuit, because Checkpoint brought suit “to 

interfere improperly with Defendants’ business and to 

protect its own competitive advantage.” Id. at *3.

Checkpoint appeals, arguing that its expert proceeded 

reasonably in light of the available information, for it was 

never disputed that the tags tested by the expert were 

produced on the same machines that were transferred to

Belgium. Checkpoint states that it had a reasonable, 

good faith basis for bringing this infringement action, and 

that application of the Court’s rulings in Octane Fitness

and in Highmark do not support the award of attorney 

fees. 

DISCUSSION

Section 285 of the Patent Act provides for the award 

of attorney fees in “exceptional cases.” In Octane Fitness

the Court explained that fee awards are for “the rare case 

in which a party’s unreasonable conduct—while not 

necessarily independently sanctionable—is nonetheless so 

‘exceptional’ as to justify an award of fees.” 134 S. Ct. at 

1757. The Court explained that the standard applied by 
CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 5

the Federal Circuit had been too rigorous, and that “an 

‘exceptional’ case is simply 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.” Id. at 1756.

On appeal, all aspects of a district court’s § 285 determination are reviewed for an abuse of discretion. 

Highmark, 134 S. Ct. at 1749. A district court abuses its 

discretion when “it base[s] its ruling on an erroneous view 

of the law or a clearly erroneous assessment of the evidence.” Id. at 1748 n.2 (internal citations omitted). Here, 

we find error in the district court’s legal analysis and 

assessment of the record evidence.

Checkpoint states that its litigating position was of 

objectively reasonable strength as to law and fact, despite 

the error as to which sample tag was provided to its 

expert for analysis. The manufacture of that tag in 

Switzerland rather than in Belgium was made known by 

All-Tag before trial, and All–Tag attempted to exclude 

Checkpoint’s expert’s testimony pre-trial and moved for 

judgment as a matter of law post-trial. The district court 

denied both motions. 

Although the jury found against Checkpoint, the district court denied JMOL, and we affirmed, the district

court agreed that Checkpoint’s claims were not frivolous. 

The district court nonetheless found the case to be exceptional, explaining: 

Frivolousness is not required to find exceptionality under Section 285. See Octane Fitness, LLC, 

134 S. Ct. at 1756 n.6 (listing “frivolousness” as 

only one of several “nonexclusive . . . factors” to be 

considered in the totality of the circumstances). 

Certainly, Checkpoint may rely on this Court’s 

denial of Defendants’ Daubert and JMOL motions 
6 CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 

to indicate the reasonableness of its claims, but 

doing so is not dispositive.

Dist. Ct. Op. at *5. The aspects that the district court 

stated were dispositive were Checkpoint’s motivation in 

bringing the lawsuit, inadequate pre-suit investigation, 

and the failure of Checkpoint’s expert to inspect the 

correct accused product.

The district court stated that Checkpoint brought suit

for an improper purpose, that is, to “interfere improperly” 

with All-Tag’s business and “to protect its own competitive advantage.” Dist. Ct. Op. at *3. The district court 

cited Checkpoint’s lawsuits against other asserted infringers, its market share, and its acquisition of competing producers as showing the improper motive of 

“protect[ing] its own competitive advantage.” Id. However, the patent law provides the statutory right to exclude 

those that infringe a patented invention. Enforcement of 

this right is not an “exceptional case” under the patent 

law.

All-Tag argues that it was appropriate to consider 

Checkpoint’s competitive motivation because the Supreme 

Court mentioned “motivation” as a factor to be considered. 

Octane Fitness, 134 S. Ct. at 1756 n.6 (instructing that 

when evaluating the totality of the circumstances “district 

courts could consider a ‘nonexclusive’ list of ‘factors,’ 

including ‘frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the 

case) and the need in particular circumstances to advance 

considerations of compensation and deterrence.’” (internal 

citations omitted)). Indeed, “motivation” to harass or 

burden an opponent may be relevant to an “exceptional 

case” finding. See SFA Sys., LLC v. Newegg Inc., 793 F.3d 

1344, 1350 (Fed. Cir. 2015) (“[A] pattern of litigation 

abuses characterized by the repeated filing of patent 

infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s 
CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 7

claims, is relevant to a district court’s exceptional case 

determination under § 285.”). However, motivation to 

implement the statutory patent right by bringing suit 

based on a reasonable belief in infringement is not an 

improper motive. A patentee’s assertion of reasonable 

claims of infringement is the mechanism whereby patent 

systems provide an innovation incentive. 

Here, no such harassment or abuse is shown. In Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943, 954 (Fed. Cir. 2010), 

this court explained that there is a “presumption that an 

assertion of infringement of a duly granted patent is made 

in good faith.” Checkpoint states that it had obtained two 

infringement opinions from counsel and previously obtained judgments against All-Tag for infringement of the 

Swiss counterpart of the ’555 patent.

Further, Checkpoint points to the district court’s finding that Checkpoint had sufficient evidence of infringement to survive summary judgment motions and a 

Daubert challenge, and to proceed to a jury trial. See 

ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 875 (Fed.

Cir. 2010) (“[T]he district court’s denial of summary 

judgment of noninfringement reflects the belief that it 

was reasonable for ResQNet to have retained that patent 

for suit.”). “Absent misrepresentation to the court, a 

party is entitled to rely on a court’s denial of summary 

judgment and JMOL . . . as an indication that the party’s 

claims were objectively reasonable and suitable for resolution at trial.” Medtronic Navigation, 603 F.3d at 954.

The district court also found the expert’s failure to 

test an accused product supported the exceptional case 

finding and fee award. Dist. Ct. Op. at *4. In light of the 

guidance in the remand order, the district court “clarified” 

its earlier finding on this point. Id. The district court 

found Checkpoint’s expert’s reliance on two of All–Tag’s 

manufacturing process patents, the ’466 and ’343 patents, 
8 CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 

as evidence of infringement “insufficient,” stating “there 

was evidence that All–Tag’s manufacturing processes 

were not the same as those disclosed in the ’466 and ’343 

patents, making comparisons of the patents, instead of 

the actual products, insufficient.” Id.

There was no representation by All–Tag that the accused products were different from the tested products, 

and the district court did not so find. There was no allegation of falsity or fraud or bad faith on the part of 

Checkpoint or its expert. Further, All–Tag’s witness 

testified that the All–Tag patents explained how All–Tag 

manufactured its resonance tags, agreeing with counsel 

that to understand the process by which the accused tags 

were produced, it was “enough to just read the patent,” 

and providing no additional details. See Checkpoint Sys., 

Inc., 711 F.3d at 1347 (citing trial testimony). This aspect 

does not support the “exceptional case” ruling against 

Checkpoint. 

CONCLUSION

The Court has cautioned that fee awards are not to be 

used “as a penalty for failure to win a patent infringement 

suit.” Octane Fitness, 134 S.Ct. at 1753 (quoting Park–In–

Theatres, Inc. v. Perkins, 190 F.2d 137, 142 (9th Cir.

1951)). The legislative purpose behind § 285 is to prevent 

a party from suffering a “gross injustice”: “The exercise of 

discretion in favor of [awarding attorney fees] should be 

bottomed upon a finding of unfairness or bad faith in the 

conduct of the losing party, or some other equitable consideration of similar force, which makes it grossly unjust 

that the winner of the particular law suit be left to bear 

the burden of his own counsel fees.” S. Rep. No. 1503, 

79th Cong., 2d Sess. (1946) (addressing the § 70 precursor 

to § 285); see also Octane Fitness, 134 S. Ct. at 1753 (“The 

provision enabled [district courts] to address ‘unfairness 

or bad faith in the conduct of the losing party, or some 

other equitable consideration of similar force,’ which 
CHECKPOINT SYSTEMS, INC. v. ALL-TAG SECURITY S.A. 9

made a case so unusual as to warrant fee-shifting.” (quoting Park–In–Theatres, 190 F.2d at 142)). 

We conclude that the district court erred, and thus 

abused its discretion, in its assessment of “exceptional 

case,” for the record shows that the charge of infringement was reasonable and the litigation was not brought 

in bad faith or with abusive tactics. The award of attorney fees under 25 U.S.C. § 285 is reversed.

REVERSED