Court Opinion

ID: 4640904
Source: CourtListenerOpinion
Date Created: 2020-12-09 16:01:29.816594+00
Date Added: 2024-06-11T08:00:18.137524
License: Public Domain

Case: 20-1483   Document: 49     Page: 1    Filed: 12/09/2020

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                      WPEM, LLC,
                    Plaintiff-Appellant

                            v.

                      SOTI INC.,
                   Defendant-Appellee
                 ______________________

                       2020-1483
                 ______________________

    Appeal from the United States District Court for the
 Eastern District of Texas in No. 2:18-cv-00156-JRG, Chief
 Judge J. Rodney Gilstrap.
                  ______________________

                Decided: December 9, 2020
                 ______________________

    WILLIAM PETERSON RAMEY, III, Ramey & Schwaller,
 LLP, Houston, TX, for plaintiff-appellant.

    ROBERT L. GREESON, Norton Rose Fulbright US LLP,
 Dallas, TX, for defendant-appellee. Also represented by
 STEPHANIE DEBROW, Austin, TX; ERIK OWEN JANITENS,
 Houston, TX.
                  ______________________
Case: 20-1483     Document: 49     Page: 2    Filed: 12/09/2020

2                                        WPEM, LLC   v. SOTI INC.

    Before PROST, Chief Judge, MAYER and MOORE, Circuit
                          Judges.
 PROST, Chief Judge.
     WPEM, LLC (“WPEM”) appeals a decision by the
 United States District Court for the Eastern District of
 Texas granting SOTI Inc.’s (“SOTI”) motion to recover at-
 torneys’ fees. See WPEM, LLC v. SOTI Inc., No. 2:18-cv-
 00156, 2020 WL 555545 (E.D. Tex. Feb. 4, 2020) (“Deci-
 sion”). For the reasons below, we affirm.
                               I
     WPEM sued SOTI for infringing U.S. Patent
 No. 9,148,762 (“the ’762 patent”). WPEM based its in-
 fringement allegations on the user manual for version 11
 of SOTI’s MobiControl Speed Lockdown (“the Accused
 Technology”). See J.A. 54–78. Among other arguments,
 SOTI responded that the user manual for version 10 of the
 Accused Technology—which included the same accused
 features—predated the ’762 patent. See Decision, 2020 WL
 555545, at *1. That is, that the Accused Technology was
 itself prior art. Id.
     Shortly thereafter, WPEM’s counsel made several set-
 tlement requests to SOTI—all of which SOTI declined. Af-
 ter failing to obtain any sort of license fee for the
 ’762 patent, WPEM unilaterally moved to dismiss its
 claims against SOTI. WPEM’s motion also requested that
 each party bear its own costs and fees. SOTI agreed that
 the case should be dismissed but filed a motion for attor-
 neys’ fees.
      The court agreed to dismiss the case and then turned
 to SOTI’s motion for attorneys’ fees. First, it determined
 that WPEM’s infringement claims “were frivolous in light
 of the fact that the Accused Technology is in fact prior art.”
 Id. at *4. Next, it found that WPEM had failed to conduct
 an adequate pre-suit investigation. Upon completing its
 analysis of the facts and comparing the case to other
Case: 20-1483      Document: 49    Page: 3    Filed: 12/09/2020

 WPEM, LLC   v. SOTI INC.                                   3

 patent-infringement actions, the court granted SOTI’s mo-
 tion.
     WPEM timely appealed the district court’s award of at-
 torneys’ fees. We have jurisdiction under 28 U.S.C.
 § 1295(a)(1). See Bayer CropScience AG v. Dow AgroSci-
 ences LLC, 851 F.3d 1302, 1305 (Fed. Cir. 2017).
                              II
     In exceptional cases, a district court may award rea-
 sonable attorneys’ fees to the prevailing party. 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., 572 U.S. 545, 554 (2014). We
 review a district court’s determination that a case is excep-
 tional for abuse of discretion. Highmark Inc. v. Allcare
 Health Mgmt. Sys., Inc., 572 U.S. 559, 564 (2014). To meet
 the abuse-of-discretion standard, the appellant “must show
 that the district 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.” Bayer
 CropScience, 851 F.3d at 1302 (internal quotation marks
 omitted).
     WPEM contends that the district court abused its dis-
 cretion by granting SOTI’s motion for attorneys’ fees. In
 particular, WPEM argues that the court’s analysis failed to
 account for the presumptions of patent validity and en-
 forceability and that, had the court properly analyzed the
 facts, it would have found WPEM’s conduct to be reasona-
 ble—not exceptional. WPEM further contends that a “pa-
 tent plaintiff, absent reason to question validity or
 enforceability, should be able to rely on the presumption of
 validity afforded . . . without performing a separate valid-
 ity or enforceability analysis.” Appellant’s Br. 18–19.
 Based on our review of the court’s decision and the record
Case: 20-1483     Document: 49     Page: 4    Filed: 12/09/2020

4                                        WPEM, LLC   v. SOTI INC.

 before us, we hold that the court did not abuse its discretion
 in awarding SOTI its reasonable attorneys’ fees.
      Contrary to WPEM’s assertion, we do not read the dis-
 trict court’s opinion as failing to account for the presump-
 tions of validity and enforceability. Instead, the court
 based its award of attorneys’ fees, in part, on the frivolous
 nature of WPEM’s infringement position (i.e., the substan-
 tive strength of WPEM’s litigation position)—an issue that
 could have easily been foreseen with an adequate pre-suit
 investigation (i.e., the unreasonable manner in which the
 case was litigated). See Decision, 2020 WL 555545, at *4.
 As the court reasoned, because the Accused Technology is
 prior art to the ’762 patent, “if WPEM prevailed on its as-
 sertion that the Accused Technology is covered by the As-
 serted Patent, it would have had the effect of invalidating,
 rather than infringing, the Asserted Patent.” Id. Because
 it is undisputed that the Accused Technology is prior art to
 the ’762 patent, see id., WPEM could not bring a successful
 infringement suit.
     In arguing that its conduct was reasonable, WPEM
 contends that it had no reason to consider prior versions of
 the Accused Technology. 1 In finding otherwise, however,
 the court determined that a reasonable plaintiff conducting
 a minimally diligent infringement analysis would have be-
 come aware of version 10 after reviewing the version 11
 manual. Id. at *6. As support, the court noted that the
 language in the version 11 manual “provide[d] a clear indi-
 cation that there are other versions of the Accused Tech-
 nology.” Id. (“A page of the [version 11] user manual
 contains a large red box titled ‘IMPORTANT: - PLEASE

     1   To be clear, WPEM does not dispute that the ac-
 cused functionality was present in version 10, or that ver-
 sion 10 predated the ’762 patent. It instead argues that it
 had no reason to suspect that the prior version of the soft-
 ware might also overlap with its claims.
Case: 20-1483      Document: 49      Page: 5   Filed: 12/09/2020

 WPEM, LLC   v. SOTI INC.                                    5

 READ BEFORE UPGRADE’ and directs readers to a URL
 link ‘for important notes for the latest version of [the Ac-
 cused Technology].’”). As the court found, such knowledge
 would have tipped off a reasonable plaintiff to evaluate
 whether the product accused of infringement predates, and
 therefore potentially anticipates, the asserted patent
 claims. Id. at *6. Accordingly, based on the record before
 us, we conclude that the district court did not abuse its dis-
 cretion in determining that this case was exceptional.
                               III
      We have considered WPEM’s remaining arguments
 and find them unpersuasive. We therefore affirm the dis-
 trict court’s judgment.
                            AFFIRMED