Opinion ID: 1037493
Heading Depth: 2
Heading Rank: 1

Heading: Exceptional Case Standard

Text: O2 Micro asserts that the district court applied the wrong legal standard in declaring the case exceptional. It faults the district court for failing to make findings concerning O2 Micro’s “bad faith” in bringing an “objectively baseless” litigation, which it argues is required by Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993). Citing Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., O2 Micro contends that sanctions under § 285 may be imposed only when there is evidence that the losing party brought the objectively baseless litigation in bad faith. 393 F.3d 1378, 1381 (Fed. Cir. 2005). MONOLITHIC POWER SYSTEMS, INC. v. O2 MICRO 11 INTERNATIONAL LTD. We have observed that, as a general matter, many forms of misconduct can support a district court’s exceptional case finding, including inequitable conduct before the U.S. Patent and Trademark Office (“PTO”); litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit; or willful infringement. Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1380 (Fed. Cir. 2001) (citing Hoffmann-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000)). And, as we made clear in Rambus Inc. v. Infineon Technologies AG, “[l]itigation misconduct and unprofessional behavior may suffice, by themselves, to make a case exceptional under § 285.” 318 F.3d 1081, 1106 (Fed. Cir. 2004). Indeed, it is only absent litigation misconduct or misconduct in securing the patent that we require the finding of both “bad faith” and “objectively baseless” litigation to warrant sanctions under § 285. Brooks Furniture, 393 F.3d at 1381. In other words, litigation misconduct alone may suffice to make a case exceptional. In its opinion, the district court cited Brooks Furniture for the exceptional case standard: “A case may be deemed exceptional when there has been some material inappropriate conduct related to the matter in litigation, such as . . . misconduct during litigation, vexatious or unjustified litigation, conduct that violates FED. R. CIV. P. 11, or like infractions.” Exceptional Case Order, at . Moreover, before discussing the various instances of O2 Micro’s misconduct, the district court also cited Taltech Ltd. v. Esquel Enterprises Ltd., 604 F.3d 1324, 1329 (Fed. Cir. 2010), to clarify that “[l]itigation misconduct and unprofessional behavior are relevant to the award of attorney fees, and may suffice to make a case exceptional.” Exceptional Case Order, at . Thus, O2 Micro is incorrect in suggesting that findings of “bad faith” and “objectively baseless” litigation are always required in addition to a “litigation misconduct” finding for 12 MONOLITHIC POWER SYSTEMS, INC. v. O2 MICRO INTERNATIONAL LTD. an exceptional case. The district court applied the correct standard. It also correctly explained that, having found O2 Micro’s litigation misconduct sufficient to render the case exceptional, it need not also consider whether O2 Micro committed inequitable acts before the PTO or filed an objectively baseless litigation.