Opinion ID: 4539687
Heading Depth: 2
Heading Rank: 1

Heading: The Patent Infringement Claim

Text: The district court determined that this case was exceptional, in part, because Munchkin unreasonably chose to defend the validity of its patent in light of its allegedly glaring weakness. Munchkin at 8–9. But neither LNC’s fee motion nor the district court’s opinion comes close to supporting the conclusion that Munchkin acted unreasonably. Claim 1 of the ’993 patent claims a “spillproof drinking assembly” having a container body and a neck that extends from the container body’s upper end. ’993 patent at claim 1. The claim further recites that the outer surface of the container body’s upper end “extends below the neck radially outward to define a shoulder,” and that “a platform is disposed on the shoulder.” Id. Before both the district court and the Patent Board in the co-pending IPR, LNC’s invalidity challenge focused on two prior art references, Whiteman and Atkins. A cornerstone of LNC’s challenge was the need to garner a favorable, broad claim construction for the claim term “a platform is disposed on the shoulder” to ensure that the claims would be broad enough to read on the prior art references. In effect, the dispute centered on Munchkin’s position that the claim “require[s] the neck to join the container body [such that] the platform cannot be disposed between the shoulder and the neck.” See Luv n’ Care, Ltd. v. Munchkin, Inc., No. IPR201500872, at 10 (P.T.A.B. Sept. 15, 2016) (internal quotations omitted). But LNC’s construction did not contain such a requirement. The district court rejected LNC’s construction in its Markman order and adopted Munchkin’s narrower construction, considerably undermining LNC’s invalidity theory based on Whiteman and Atkins. The district court’s decision awarding LNC its attorney’s fees never adequately explains why Munchkin’s validity position was unreasonable when the district court’s claim construction ruling favored Munchkin and erected a serious hurdle to LNC’s invalidity challenge. The district Case: 19-1454 Document: 50 Page: 11 Filed: 06/08/2020 MUNCHKIN, INC. v. LUV N' CARE, LTD. 11 court attempted to sidestep this hurdle by dismissing its own Markman claim construction as merely a non-final, interim order. Munchkin at 11. But the possibility of reconsideration of the claim construction, whether by the district court or this court, is immaterial. The relevant question for purposes of assessing the strength of Munchkin’s validity position is not whether its proposed construction is correct; rather the relevant question is whether it is reasonable. Stone Basket Innovations, LLC v. Cook Med. LLC, 892 F.3d 1175, 1180 (Fed. Cir. 2018); SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015). Here, neither the district court’s opinion nor LNC’s fee motion attempted to address, in any fact-intensive way, the relative strength and reasonableness of Munchkin’s validity position. The fact that Munchkin’s validity defense was keyed to its claim construction argument—an argument that the district court itself had accepted in its Markman order— made the need for a full and detailed explanation in this case for why Munchkin’s litigating position was exceptionally weak all the more imperative. The district court was also led astray by LNC’s argument that Munchkin was unreasonable in maintaining its patent infringement lawsuit once the Patent Board instituted the IPR on the ’993 patent, because (1) published statistics at the time indicated that the Patent Board cancels some of a patent’s instituted claims 85% of the time and cancels all of the instituted claims 68% of the time, (2) the Patent Board’s final decision found all of the ’993 patent’s claims unpatentable, and (3) this court summarily affirmed that decision. These IPR statistics combined with the merits outcome are not enough, for they tell us nothing about the “substantive strength of [Munchkin’s] litigating position (considering both the governing law and the facts of the case).” Octane Fitness, 572 U.S. at 554 (emphasis added). That Munchkin’s patent was ultimately held unpatentable does not alone translate to finding its defense of the patent unreasonable. SFA Sys., 793 F.3d at 1348. Nor Case: 19-1454 Document: 50 Page: 12 Filed: 06/08/2020 12 MUNCHKIN, INC. v. LUV N' CARE, LTD. are the merits outcomes of other patent owners’ IPR cases material, as those case outcomes are based on their own, different facts. The upshot of LNC’s statistics and outcome-based argument would be to subject every patent owner to paying a § 285 fee award in a patent suit anytime its patent is canceled in a co-pending IPR proceeding, without any consideration of the relative strength of the patent owner’s legal theories, claim construction arguments, or proffered evidence in defense of the patent. That form of short-cut thinking is wholly incompatible with Octane Fitness’s fact-dependent, “case-by-case” requirement, and we reject it. In this case, LNC cannot point to any statement by the Patent Board suggesting that it viewed Munchkin’s position to be frivolous or anything out of the ordinary, nor did it or the district court ever conduct that required substantive analysis to demonstrate that Munchkin’s defense was so meritless as to stand out from the norm. Moreover, that the Patent Board adopted LNC’s preferred claim construction does not automatically indicate that it was unreasonable for Munchkin to rely on the district court’s claim construction, given that the two proceedings applied different claim construction standards. Similarly, we find the district court’s finding that the Playtex Twist ‘N Click cups represented “another indication of substantive weakness” of the ’993 patent’s validity to be wholly conclusory and cannot support a determination of exceptionality. The district court opinion, like LNC’s fee motion, fails to offer any details explaining how these Playtex cups invalidate the patent claims, and why it would be unreasonable to suggest otherwise. The district court instead appeared to assume that Munchkin’s failure to disclose the Playtex cups to the USPTO during patent examination alone was proof that Munchkin knew its validity position lacked merit. LNC’s fee motion simply asserts that “Munchkin was more than aware that the validity of the ‘993 patent was seriously placed in question as a result of highly material prior art patents, bottle and Case: 19-1454 Document: 50 Page: 13 Filed: 06/08/2020 MUNCHKIN, INC. v. LUV N' CARE, LTD. 13 Playtex Twist ‘N Click cup products that were not considered by the Patent Examiner during prosecution of the ‘993 patent application.” J.A. 3607. Whether styled as an invalidity or inequitable conduct theory, LNC’s motion needed to go much further than this statement to meet its burden of proof. In fact, the Playtex cups were not even officially part of the record, as the district court had never ruled on LNC’s motion to amend its invalidity contentions to add the Playtex cups. Such a superficial case cannot support a finding of exceptionality, even under the very deferential standard of review. In sum, after reviewing the district court opinion and considering all the arguments, we conclude that no adequate case has been made for finding that Munchkin’s position and conduct relating to its patent infringement claim support a determination that this case is “exceptional” under § 285. The district court’s finding to the contrary was an abuse of discretion. 2