Court Opinion

ID: 4649064
Source: CourtListenerOpinion
Date Created: 2021-01-05 16:00:42.116655+00
Date Added: 2024-06-11T08:01:21.021798
License: Public Domain

Case: 20-1639   Document: 41     Page: 1   Filed: 01/05/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

   INNOVATION SCIENCES, LLC, FKA VIRGINIA
        INNOVATION SCIENCES, INC.,
               Plaintiff-Appellant

                            v.

                 AMAZON.COM, INC.,
                   Defendant-Appellee
                 ______________________

                       2020-1639
                 ______________________

    Appeal from the United States District Court for the
 Eastern District of Virginia in No. 1:16-cv-00861-LO-MSN,
 Judge Liam O'Grady.
                   ______________________

                Decided: January 5, 2021
                 ______________________

     DONALD LEE JACKSON, Davidson Berquist Jackson &
 Gowdey, LLP, McLean, VA, for plaintiff-appellant. Also
 represented by JAMES DANIEL BERQUIST, WALTER D. DAVIS,
 JR.

    J. DAVID HADDEN, Fenwick & West, LLP, Mountain
 View, CA, for defendant-appellee. Also represented by
 SAINA S. SHAMILOV, RAVI RAGAVENDRA RANGANATH;
Case: 20-1639    Document: 41      Page: 2    Filed: 01/05/2021

 2              INNOVATION SCIENCES, LLC   v. AMAZON.COM, INC.

 JEFFREY A. WARE, Seattle, WA; TODD RICHARD GREGORIAN,
 San Francisco, CA.
                 ______________________

     Before LOURIE, SCHALL, and MOORE, Circuit Judges.
 PER CURIAM.
     Innovation Sciences, LLC (“Innovation”) appeals from
 a decision of the United States District Court for the East-
 ern District of Virginia awarding attorney fees to Ama-
 zon.com, Inc. (“Amazon”). See Innovation Scis., LLC v.
 Amazon.com, Inc., No. 1:16-cv-00861, 2020 WL 4934272
 (E.D. Va. Feb. 18, 2020) (“Fees Decision”). We affirm.
                        BACKGROUND
      This appeal marks the third time this case has come
 before this court. In its original complaint, Innovation ac-
 cused Amazon of infringing eleven patents. The district
 court held that eight of those patents (“the ’492 patent fam-
 ily”) were directed to subject matter ineligible under 35
 U.S.C. § 101. Va. Innovation Scis., Inc. v. Amazon.com,
 Inc., 227 F. Supp. 3d 582 (E.D. Va. 2017) (“101 Decision”).
 We affirmed without opinion pursuant to Federal Circuit
 Rule 36. See Va. Innovation Scis., Inc. v. HTC Corp., 718
 F. App’x 988 (Fed. Cir. 2018).
     The remaining three patents—U.S. Reissue Patent
 46,140 (“the ’140 patent”), U.S. Patent 9,369,844 (“the ’844
 patent”), and U.S. Patent 8,135,398 (“the ’398 patent”)—
 proceeded to claim construction. After claim construction,
 Innovation stipulated to noninfringement of the asserted
 claims of the ’844 patent, the district court granted sum-
 mary judgment of noninfringement of the asserted claims
 of the ’398 patent, and the district court found that the as-
 serted claim of the ’140 patent was directed to subject mat-
 ter ineligible under 35 U.S.C. § 101. See Va. Innovation
 Scis., Inc. v. Amazon.com, Inc., No. 1:16-cv-00861, 2017 WL
 11500121 (E.D. Va. Dec. 22, 2017). Amazon moved for
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 INNOVATION SCIENCES, LLC   v. AMAZON.COM, INC.             3

 attorney fees pursuant to 35 U.S.C. § 285, but the court
 declined to consider the motion until appeals were ex-
 hausted. See Fees Decision, 2020 WL 4934272, at *1.
     Innovation appealed the district court’s claim construc-
 tion and summary judgment orders. We affirmed on all is-
 sues relating to the ’398 and ’140 patents. See Innovation
 Scis., LLC v. Amazon.com Inc., 778 F. App’x 859, 871 (Fed.
 Cir. 2019). Regarding the ’844 patent, we affirmed three of
 the four disputed claim constructions, reversed the remain-
 ing construction, and remanded the case because “the stip-
 ulation d[id] not specify whether our affirmance of all but
 one of the appealed constructions [wa]s dispositive.” Id.
 On remand, Innovation stipulated to dismissal.
     Once the deadline passed for Innovation to petition the
 Supreme Court for a writ of certiorari, Amazon renewed its
 motion for attorney fees. The district court granted Ama-
 zon’s motion. The court found that this was an exceptional
 case. Fees Decision, 2020 WL 4934272, at *2. Specifically,
 the court found that “Innovation’s lawsuit was substan-
 tively weak before claim construction,” and “[f]ollowing the
 Markman hearing, . . . each claim was baseless.” Id. The
 court thus concluded:
    Innovation’s litigation positions were so substan-
    tively weak after the claim construction occurred
    that this case stands out from others. First, Inno-
    vation should have known each of its claims had
    become baseless upon issuance of the Markman or-
    der. Second, continuing to litigate each claim was
    objectively unreasonable.
 Id. at *3 (footnote omitted). Innovation appealed, and
 we have jurisdiction under 28 U.S.C. § 1295(a)(1).
                         DISCUSSION
     A court “in exceptional cases may award reasonable at-
 torney fees to the prevailing party.” 35 U.S.C. § 285. An
 exceptional case is one that, under the totality of the
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 4              INNOVATION SCIENCES, LLC   v. AMAZON.COM, INC.

 circumstances, “stands out from others with respect to the
 substantive strength of a party’s litigating position” or “the
 unreasonable manner in which the case was litigated.” Oc-
 tane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S.
 545, 554 (2014).
      We review a district court’s grant of attorney fees un-
 der 35 U.S.C. § 285 for abuse of discretion. Highmark Inc.
 v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559, 561 (2014).
 Abuse of discretion is “a highly deferential standard of ap-
 pellate review.” Bayer CropScience AG v. Dow AgroSci-
 ences LLC, 851 F.3d 1302, 1306 (Fed. Cir. 2017). To meet
 that standard, the moving party must show that the dis-
 trict court has made “a clear error of judgment in weighing
 relevant factors or in basing its decision on an error of law
 or on clearly erroneous factual findings.” Mentor Graphics
 Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374, 1377
 (Fed. Cir. 1998) (citing A.C. Aukerman Co. v. R.L. Chaides
 Constr. Co., 960 F.2d 1020, 1039 (Fed. Cir. 1992) (en banc)
 abrogated on other grounds by SCA Hygiene Prods. Aktie-
 bolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954
 (2017)). “Because the district court lives with the case over
 a prolonged period of time, it is in a better position to de-
 termine whether a case is exceptional and it has discretion
 to evaluate the facts on a case-by-case basis.” Raniere v.
 Microsoft Corp., 887 F.3d 1298, 1308–09 (Fed. Cir. 2018)
 (citing SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1351
 (Fed. Cir 2015)). Thus, “[w]e generally ‘give great defer-
 ence to the district court’s exercise of discretion in award-
 ing fees.’” ThermoLife Int’l LLC v. GNC Corp., 922 F.3d
 1347, 1356 (Fed. Cir. 2019) (quoting Energy Heating, LLC
 v. Heat On-The-Fly, LLC, 889 F.3d 1291, 1307 (Fed. Cir.
 2018)).
                               I
     Innovation argues that the district court abused its dis-
 cretion in finding the case exceptional. We disagree. We
 have held that a district court is “within the scope of its
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 INNOVATION SCIENCES, LLC   v. AMAZON.COM, INC.              5

 discretion in finding [a] case to be exceptional based on the
 weakness of [a party’s] § 101 arguments and the need to
 deter similarly weak arguments in the future.” See Inven-
 tor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d
 1372, 1377–78 (Fed. Cir. 2017). We have also frequently
 held that a case is exceptional when a party continues to
 litigate claims that have become baseless in view of a dis-
 trict court’s claim construction opinion. See, e.g., Ad-
 justaCam, LLC v. Newegg, Inc., 861 F.3d 1353, 1360 (Fed.
 Cir. 2017); Taurus IP, LLC v. DaimlerChrysler Corp., 726
 F.3d 1306, 1326–29 (Fed. Cir. 2013). Based on those legal
 propositions, the district court did not abuse its discretion
 in finding this case exceptional.
     Innovation asserted eleven patents against disparate
 technologies. Yet, eight of the patents, including more than
 two thirds of the asserted claims in the litigation, were held
 unpatentable on the pleadings. See 101 Decision, 227 F.
 Supp. 3d at 604–05. In holding those patents ineligible, the
 district court noted that the ’492 patent family’s “sweeping
 universe of preemption is its downfall.” Id. at 595. The
 district court was within its discretion when it relied on
 that earlier finding to determine that the case was “weak
 at inception.” Fees Decision, 2020 WL 4934272, at *2.
      The district court did not stop there. Consistent with
 its obligation to consider the totality of the circumstances,
 the district court proceeded to consider the effects that the
 claim construction proceedings had on the remaining as-
 serted claims. The court relied on the fact that Innovation
 was on notice from the claim construction opinion itself
 that the ’140 patent was legally insufficient either as pa-
 tent ineligible subject matter or because it lacked written
 description. Id. The court further relied on the fact that
 Innovation continued to rely on infringement theories for
 the ’398 patent that were plainly inconsistent with two sep-
 arate claim constructions. Id. at *3. And, for the ’844 pa-
 tent, the court relied on the fact that Innovation failed to
 articulate an infringement theory. Id. In fact, the court
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 6              INNOVATION SCIENCES, LLC   v. AMAZON.COM, INC.

 relied on our observation that Innovation’s lack of clarity
 regarding its infringement theory left us “with no choice
 but to remand” the case rather than affirm the final judg-
 ment. Id. On this record, we find no abuse of discretion in
 the district court’s conclusion that “Innovation’s litigation
 positions were so substantively weak after the claim con-
 struction occurred that this case stands out from others.”
 Id.
                              II
     Before concluding, we must address one additional is-
 sue. In its responsive brief, Amazon argues:
     The Section 101 issue was not close: the district
     court noted that the ’492 patent family claims
     “lacked any inventive concept and threatened a
     ‘sweeping universe of preemption.’” And this Court
     found the ruling uncontroversial enough to merit
     summary affirmance under Federal Circuit
     Rule 36.
 Appellee Br. 17. (emphasis added). To the extent that ar-
 gument attempts to tie the fact of an earlier Rule 36 affir-
 mance without opinion to the later imposition of sanctions
 by the district court, we hasten to urge caution. To be sure,
 we take no issue with Amazon arguing that, in this case,
 the § 101 question was not close. Moreover, as explained
 above, we find no abuse of discretion in the district court’s
 reliance on the weakness of Innovation’s § 101 positions to
 support an award of attorney fees. However, we categori-
 cally reject the implication of Amazon’s argument that an
 affirmance by this court under Federal Circuit Rule 36 pro-
 vides any information about whether a case was close, friv-
 olous, or noncontroversial.
     Federal Circuit Rule 36 allows the court to issue judg-
 ments of affirmance without issuing an opinion. Fed. Cir.
 R. 36. An affirmance issued under Rule 36 “simply con-
 firms that the trial court entered the correct judgment.”
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 INNOVATION SCIENCES, LLC   v. AMAZON.COM, INC.              7

 Rates Tech., Inc. v. Mediatrix Telecom, Inc., 688 F.3d 742,
 750 (Fed. Cir. 2012). In essence, the rule embodies a recog-
 nition of the reality that not every case has precedential
 value, and, especially in the context of Rule 36, not every
 case requires an opinion. United States Surgical Corp. v.
 Ethicon, Inc., 103 F.3d 1554, 1556 (Fed. Cir. 1997) (“The
 Rule permits the court to dispense with issuing an opinion
 that would have no precedential value, when the circum-
 stances of the rule exist.”). The history of a litigation and
 appeal in such cases ought to leave little doubt why the de-
 cision of the lower tribunal was affirmed.
      But, importantly, nothing in the rule or in our prece-
 dent suggests that a summary affirmance under Rule 36 is
 an indication that a case was meritless, frivolous, or even
 weak. On the contrary, “[a]s we have explained on several
 occasions, ‘[a]ppeals whose judgments are entered under
 Rule 36 receive the full consideration of the court, and are
 no less carefully decided than the cases in which we issue
 full opinions.’” Phil-Insul Corp. v. Airlite Plastics Co., 854
 F.3d 1344, 1354 (Fed. Cir. 2017) (quoting United States
 Surgical, 103 F.3d at 1556). Accordingly, while our affir-
 mance of the patent ineligibility of the ’492 patent family
 confirmed that the district court correctly decided that is-
 sue in this case, the fact that we decided to affirm without
 opinion under Rule 36 has no bearing on the strength or
 weakness of Innovation’s position or, ultimately, on
 whether Amazon should be entitled to attorney fees.
                         CONCLUSION
     We have considered Innovation’s remaining arguments
 but we find them unpersuasive. We therefore affirm the
 district court’s decision to award attorney fees.
                         AFFIRMED
                            COSTS
     Costs to Amazon.