Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180328_0000772.SNY.htm/qx
Timestamp: 2019-04-20 11:17:27+00:00

Document:
FindACase | Joao Control & Monitoring Systems, LLC v. Digital Playground, Inc.
Joao Control & Monitoring Systems, LLC v. Digital Playground, Inc.
CITY OF YONKERS, et al, Defendants.
Defendants in these related patent infringement actions - a group of entities referred to as the "Manwin Defendants" and American Traffic Solutions, Inc. ("ATS") - collectively move for attorneys' fees pursuant to 35 U.S.C. § 285, 28 U.S.C. § 1927, and the Court's inherent power. For the reasons set forth below, Defendants' motions are denied.
After Plaintiff dismissed its appeal to the Federal Circuit, Defendants filed a pre-motion letter seeking leave to move for attorneys' fees under 35 U.S.C. § 285 (the Patent Act), 28 U.S.C. § 1927, and the Court's inherent authority. (Doc. No. 161.) The Manwin Defendants argue that fees are justified as a result of (1) Plaintiffs inadequate presuit investigation (including Plaintiffs assertion of claims that were barred by the doctrine of collateral estoppel); (2) Plaintiffs "'merifless" substantive positions; and (3) Plaintiffs "unreasonable" conduct throughout this litigation. (Doc. No. 175.) ATS, for its part, argues that fees are warranted because of (1) Plaintiffs opposition to its entry into this case and subsequent attempt to maintain two lawsuits against it; (2) Plaintiffs dilatory or otherwise improper conduct during discovery and settlement negotiations; and (3) Plaintiffs unnecessary motion practice. (12-cv-7734, Doc. No. 264.) Because each Defendant adopted the arguments made in the other Defendant's brief, the Court treats the arguments as made by both Defendants.
Section 285 of the Patent Act authorizes courts to "award reasonable attorney fees to the prevailing party" in "exceptional cases." 35 U.S.C. § 285. "[A]n '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." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). Unlike the Federal Circuit's previously applicable test, which required a finding of either "litigation-related misconduct of an independently sanctionable magnitude" or "that the litigation was both 'brought in subjective bad faith' and 'objectively baseless, '" Octane Fitness permits district courts to ''determine whether a case is 'exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances." Id. (quoting Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005)). In doing so, courts are directed to consider factors including, but not limited to, "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." Id. at 1756 n.6 (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)). ''After Octane Fitness, a fee- seeking party must show that it is entitled to § 285 fees by a 'preponderance of the evidence."' Bayer CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302, 1305 (Fed. Cir. 2017) (quoting Octane Fitness, 134 S.Ct. at 1758).
Defendants argue that Plaintiffs substantive positions were unreasonable throughout this lawsuit because Plaintiff should have either (1) realized before bringing suit that the '046 and '010 patents were invalid under 35 U.S.C. § 103, which dictates that "[a] patent for a claimed invention may not be obtained" if the "claimed invention as a whole would have been obvious" at the time the patent application was filed, or (2) understood, after the Supreme Court issued its opinion in Alice Corp. Pty. Ltd v. CLS Bank Int'l, 134 S.Ct. 2347 (2014), that the '046 and '010 were directed at patent-ineligible abstract ideas and did not sufficiently transform those ideas into patent-eligible inventions within the scope of 35 U.S.C. § 101. (Manwin Mot. at 13-14; ATS Mem. at 14-16.) Although the Court agrees that Plaintiffs case was weak, the Court cannot agree that it was so "exceptionally meritless" as to justify the award of fees based on this factor alone. Octane Fitness, 134 S.Ct. at 1757 (noting that, in some circumstances, "exceptionally meritless claims" may justify fee-shifting without regard to other considerations).

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