Court Opinion

ID: 4174305
Source: CourtListenerOpinion
Date Created: 2017-06-05 15:04:54.386427+00
Date Added: 2024-06-11T14:38:57.925525
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

      ROTHSCHILD CONNECTED DEVICES
            INNOVATIONS, LLC,
              Plaintiff-Appellee

                           v.

    GUARDIAN PROTECTION SERVICES, INC.,
   ALARM SECURITY GROUP, LLC, CENTRAL
     SECURITY GROUP - NATIONWIDE, INC.,
  GUARDIAN ALARM COMPANY, GUARDIAN OF
   GEORGIA, INC., DBA ACKERMAN SECURITY
   SYSTEMS, ICON SECURITY SYSTEMS, INC.,
     MONITRONICS INTERNATIONAL, INC.,
               SLOMIN’S, INC.
                   Defendants

                ADS SECURITY, L.P.,
                 Defendant-Appellant
                ______________________

                      2016-2521
                ______________________

    Appeal from the United States District Court for the
Eastern District of Texas in Nos. 2:15-cv-01431-JRG-RSP,
2:15-cv-01463-JRG-RSP, 2:15-cv-01464-JRG-RSP, 2:15-cv-
01462-JRG-RSP, 2:15-cv-01496-JRG-RSP, 2:15-cv-01429-
JRG-RSP, 2:15-cv-01468-JRG-RSP, 2:15-cv-01466-JRG-
RSP, 2:15-cv-01469-JRG-RSP Judge J. Rodney Gilstrap.
                 ______________________

                 Decided: June 5, 2017
2        ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                               GUARDIAN PROT. SERVS., INC.

                  ______________________

   JAY B. JOHNSON, Kizzia Johnson PLLC, Dallas, TX,
argued for plaintiff-appellee.

    NATHAN BAILEY, Waller Lansden Dortch & Davis,
LLP, Nashville, TN, argued for defendant-appellant. Also
represented by ERIC BRANDON FUGETT.

                  ______________________

Before PROST, Chief Judge, MAYER and WALLACH, Circuit
                       Judges.
    Opinion for the court filed by Circuit Judge WALLACH.
      Concurring opinion filed by Circuit Judge MAYER.
WALLACH, Circuit Judge.
    Appellant ADS Security, L.P. (“ADS”) appeals the
opinion and order of the U.S. District Court for the East-
ern District of Texas (“District Court”) denying ADS’s
request for attorney fees pursuant to 35 U.S.C. § 285
(2012). See Rothschild Connected Devices Innovations,
LLC v. Guardian Prot. Servs., Inc., No. 2:15-cv-01431-
JRG-RSP, 2016 WL 3883549, at *4 (E.D. Tex. July 18,
2016). The District Court found that Appellee Rothschild
Connected Devices Innovations, LLC (“Rothschild”) had
not engaged in conduct sufficient to make the litigation
“exceptional,” such that ADS did not merit attorney fees
pursuant to § 285. See id. at *1–3.
    ADS appeals the District Court’s exceptional case de-
termination.   We possess subject matter jurisdiction
pursuant to 28 U.S.C. § 1295(a)(1) (2012). We reverse and
remand.
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC              3
v. GUARDIAN PROT. SERVS., INC.

                       BACKGROUND
     The instant dispute arises as a consequence of Roth-
schild’s allegation that ADS’s home security system
infringes U.S. Patent No. 8,788,090 (“the ’090 patent”).
The ’090 patent generally recites “[a] system and method
for creating a personalized consumer product,” ’090 pa-
tent, Abstract, where the system and method “enable a
user to customize products containing solids and fluids by
allowing a server on the global computer network, e.g.,
the Internet, to instruct the hardware mixing the solids
and fluids of the user’s preferences for the final mix,” id.
col. 1 ll. 58–62. Rothschild has filed numerous lawsuits
against various parties alleging infringement of the ’090
patent. J.A. 1086, 1097.
    Rothschild filed a complaint against ADS alleging in-
fringement of claim 1 of the ’090 patent. J.A. 62, 73. ADS
responded by filing an answer and counterclaims.
J.A. 84–92. ADS subsequently sent an email to Roth-
schild alleging that the ’090 patent covers patent-
ineligible subject matter under 35 U.S.C. § 101 1 and that
prior art anticipates claim 1 of the ’090 patent under 35
U.S.C. § 102(a)(1). 2 J.A. 704. ADS offered to settle the
case if Rothschild paid ADS $43,330 for attorney fees and
costs. J.A. 704. Rothschild rejected ADS’s offer. J.A. 855.

    1      “Whoever invents or discovers any new and useful
process, machine, manufacture, or composition of matter,
or any new and useful improvement thereof, may obtain a
patent therefor, subject to the conditions and require-
ments of” Title 35 of the U.S. Code. 35 U.S.C. § 101.
    2      “A person shall be entitled to a patent un-
less . . . the claimed invention was patented, described in
a printed publication, or in public use, on sale, or other-
wise available to the public before the effective filing date
of the claimed invention . . . .” 35 U.S.C. § 102(a)(1).
4       ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                              GUARDIAN PROT. SERVS., INC.

    ADS next filed a motion for judgment on the plead-
ings, arguing that claim 1 of the ’090 patent covers pa-
tent-ineligible subject matter under § 101. J.A. 93–104.
ADS also sent Rothschild a notice pursuant to Federal
Rule of Civil Procedure 11(c)(2) (“Safe Harbor Notice”), 3
which included copies of a proposed Rule 11(b) motion for
sanctions and prior art that purportedly anticipates claim
1. J.A. 270, 685. In light of the Safe Harbor Notice,
Rothschild voluntarily moved to dismiss its action. See
J.A. 247. ADS opposed and filed a cross-motion for attor-
ney fees pursuant to § 285, 4 see J.A. 249, based on its view
that Rothschild’s suit was objectively unreasonable be-
cause Rothschild knew or should have known that claim 1
covers patent-ineligible subject matter under § 101 and is
anticipated by prior art under § 102(a)(1), see J.A. 261–64.
ADS also argued that Rothschild did not intend to test the
merits of its claim and instead filed this and over fifty
other lawsuits in the District Court to “‘exploit[] the high
cost to defend complex litigation to extract nuisance value

    3   Rule 11(c)(2) explains that a motion for sanctions
under Rule 11(b) “must not be filed or be presented to the
court if the challenged paper, claim, defense, contention,
or denial is withdrawn or appropriately corrected within
21 days after service or within another time the court
sets.” In other words, before a party may seek Rule 11
sanctions against another party, the first party must
provide the second party with notice of its intent to seek
sanctions and afford the second party twenty-one days to
take corrective action. See Fed. R. Civ. P. 11(c)(2). The
twenty-one day period is known as the “safe harbor”
period. See, e.g., Orenshteyn v. Citrix Sys., Inc., 341 F.
App’x 621, 626 (Fed. Cir. 2009).
    4   The Cross-Motion included the purportedly antic-
ipatory prior art references and accompanying claim
charts that ADS included in the Safe Harbor Notice. See
J.A. 293–94, 299–332, 334–679, 685.
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC             5
v. GUARDIAN PROT. SERVS., INC.

settlements’” from various defendants. J.A. 265 (brackets
omitted) (quoting Eon-Net LP v. Flagstar Bancorp, 653
F.3d 1314, 1327 (Fed. Cir. 2011)).
    The District Court ultimately granted Rothschild’s
Motion to Dismiss and denied ADS’s Cross-Motion for
attorney fees. Rothschild, 2016 WL 3883549, at *4. As to
the latter, the District Court found that Rothschild did
not engage in conduct sufficient to make the action “ex-
ceptional” under § 285. Id. The District Court found that
Rothschild’s “decision to voluntarily withdraw its
[C]omplaint within the safe harbor period is the type of
reasonable conduct Rule 11 is designed to encourage.” Id.
at *2. The District Court also found that Rothschild
recited “non-conclusory and facially plausible arguments
supporting patent eligibility” under § 101. Id. Turning to
the anticipation allegations, the District Court found that
ADS neither filed a motion seeking to invalidate claim 1
of the ’090 patent under § 102(a)(1) nor demonstrated that
Rothschild failed to conduct a reasonable pre-suit investi-
gation of the prior art. Id. Finally, the District Court
held that Rothschild’s numerous other suits for infringe-
ment pending against other companies did not alone
make the case exceptional. Id. at *3. This appeal fol-
lowed.
                       DISCUSSION
       I. Legal Framework and Standard of Review
    A “court in exceptional cases may award reasonable
attorney fees to the prevailing party.” 35 U.S.C. § 285.
The Supreme Court has explained that an exceptional
case, though rare,
   is simply one that stands out from others with re-
   spect to the substantive strength of a party’s liti-
   gating position (considering both the governing
   law and the facts of the case) or the unreasonable
   manner in which the case was litigated. District
6       ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                              GUARDIAN PROT. SERVS., INC.

    courts may determine whether a case is “excep-
    tional” in the case-by-case exercise of their discre-
    tion, considering the totality of the circumstances.
Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.
Ct. 1749, 1756 (2014) (footnote omitted); see id. at 1757
(explaining that “a district court may award fees in the
rare case in which a party’s unreasonable conduct—while
not independently sanctionable—is nonetheless so ‘excep-
tional’ as to justify an award of fees”). In weighing the
evidence, the district court may consider, among other
factors, “frivolousness, motivation, objective unreasona-
bleness (both in the factual and legal components of the
case)[,] and the need in particular circumstances to ad-
vance considerations of compensation and deterrence.”
Id. at 1756 n.6 (internal quotation marks and citation
omitted); see also id. at 1758 (explaining that a § 285
attorney fee award is appropriate “when the losing party
has acted in bad faith, vexatiously, wantonly, or for
oppressive reasons” (internal quotation marks and cita-
tion omitted)). An exceptional case determination must
find support in a “preponderance of the evidence.” Id. at
1758.
    “We review all aspects of a district court’s § 285 de-
termination for an abuse of discretion,” Lumen View Tech.
LLC v. Findthebest.com, Inc., 811 F.3d 479, 482 (Fed. Cir.
2016) (citation omitted), including its “exceptional case
determination,” SFA Sys., LLC v. Newegg Inc., 793 F.3d
1344, 1347 (Fed. Cir. 2015) (citation omitted). An abuse
of discretion occurs when, inter alia, the district court
“base[s] its ruling on an erroneous view of the law or on a
clearly erroneous assessment of the evidence.” Highmark
Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744,
1748 n.2 (2014) (internal quotation marks and citation
omitted). “A factual finding is clearly erroneous if, despite
some supporting evidence, we are left with the definite
and firm conviction that a mistake has been made.” Insite
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC              7
v. GUARDIAN PROT. SERVS., INC.

Vision Inc. v. Sandoz, Inc., 783 F.3d 853, 858 (Fed. Cir.
2015) (internal quotation marks and citation omitted).
 II. The District Court’s Exceptional Case Determination
            Constitutes an Abuse of Discretion
     ADS challenges the District Court’s exceptional case
determination on several grounds. First, ADS alleges
that the District Court failed to properly assess the weak-
ness of Rothschild’s litigating position because claim 1 of
the ’090 patent covers patent-ineligible subject matter
under § 101 and is anticipated by the prior art under
§ 102(a)(1). See Appellant’s Br. 18–32. Second, ADS
avers that “the District Court failed to consider Roth-
schild’s willful ignorance of the prior art,” which further
demonstrates the weakness of Rothschild’s litigating
position. Id. at 32 (capitalization modified); see id. at 32–
35. Third, ADS contends that Rothschild engaged in
vexatious litigation by bringing suit solely to extract a
nuisance payment, citing the numerous lawsuits that
Rothschild has filed regarding the ’090 patent. See id. at
37–40. Fourth, ADS argues that the District Court failed
to “consider the totality of the circumstances as required
by Octane Fitness” because, inter alia, it “improperly
conflat[ed] the provisions of Rule 11 and relief under
[§] 285.” Id. at 40; see id. at 40–43.
    We need not address ADS’s first argument because
the second, third, and fourth arguments demonstrate an
abuse of discretion. We address these three arguments in
turn.
  A. The District Court Misjudged the Strength of Roth-
       schild’s Litigating Position in Consideration
                      of the Prior Art
    ADS avers that Rothschild submitted affidavits that
include statements “evidenc[ing] a conscious disregard for
Rothschild’s continuing obligation to inquire into the
merits of its case.” Id. at 33. According to ADS, the
8       ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                              GUARDIAN PROT. SERVS., INC.

District Court did “not address[] these troubling state-
ments.” Id. ADS argues that the District Court thus
“fail[ed] to properly assess the substantive strength of
Rothschild’s litigating position.” Id. at 35.
    The District Court clearly erred by failing to consider
Rothschild’s willful ignorance of the prior art. In its Safe
Harbor Notice and Cross-Motion for attorney fees, ADS
included prior art that purportedly anticipates claim 1 of
the ’090 patent. J.A. 293–94, 334–679, 685. In response
to ADS’s Cross-Motion for attorney fees, Rothschild
submitted two affidavits relevant here. In the first,
Rothschild’s counsel stated that he had “not conducted an
analysis of any of the prior art asserted in [the] Cross[-
]Motion to form a belief as to whether that prior art would
invalidate” the ’090 patent. J.A. 708. In the second,
Rothschild’s founder echoed these statements. J.A. 712–
13. However, in the same affidavits, Rothschild’s counsel
and founder both assert that they possessed a “good faith”
belief that the ’090 patent “is valid.” J.A. 708, 712. It is
unclear how Rothschild’s counsel and founder could
reasonably believe that claim 1 is valid if neither ana-
lyzed the purportedly invalidating prior art provided by
ADS. 5 More problematic here, the District Court did not

    5   Rothschild’s counsel stated during oral argument
that the affidavits meant to convey that Rothschild’s
counsel and founder had reviewed the references and
reached a conclusion different from ADS. See Oral Argu-
ment at 13:42–14:00, http://oralarguments.cafc.uscourts.
gov/default.aspx?fl=2016-2521.mp3.     That position is
unavailing for two reasons. First, the affidavits’ terms
simply do not support Rothschild’s position because they
do not include any language suggesting that Rothschild’s
counsel or founder had reviewed the references. See J.A.
707–09, 711–14. Second, Rothschild’s contention at Oral
Argument belies the position that it took during the
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC            9
v. GUARDIAN PROT. SERVS., INC.

address these incongruent statements in its analysis. See
generally Rothschild, 2016 WL 3883549. A district court
abuses its discretion when, as here, it “fail[s] to conduct
an adequate inquiry.” Atl. Research Mktg. Sys., Inc. v.
Troy, 659 F.3d 1345, 1360 (Fed. Cir. 2011).
    Other aspects of the relevant affidavits reveal addi-
tional problems with the District Court’s analysis. For
example, Rothschild’s counsel attested that ADS’s pro-
posed Rule 11(b) motion “should not be granted,” J.A. 708,
and Rothschild’s founder stated that the Rule 11(b) mo-
tion “should be found . . . meritless,” J.A. 713.   Roth-
schild’s counsel and founder reached those conclusions
without examining the purportedly anticipatory prior art
references attached to the Safe Harbor Notice. See J.A.
708, 712–13. It is unclear how Rothschild’s counsel and
founder reasonably could assert that ADS’s Rule 11(b)
Motion would be meritless if they did not assess the prior
art that accompanied the Safe Harbor Notice. Once
again, the District Court did not address these incon-
sistent statements in its analysis. See generally Roth-
schild, 2016 WL 3883549.
    Rothschild nevertheless asserts that it “brought its
claims against ADS in good faith,” that its counsel re-
viewed the prior art and determined that ADS’s home
security system infringed claim 1 of the ’090 patent, and
that it continues to believe that the ’090 patent is valid.

hearing before the District Court, at which it stated that
ADS had failed to produce the prior art references. J.A.
1116 (arguing that ADS “still ha[s] not provided evidence
to back up” the § 102(a)(1) claims). We consider “a party’s
new theories, lodged first on appeal,” only under rare
circumstances, Sage Prods., Inc. v. Devon Indus., Inc., 126
F.3d 1420, 1426 (Fed. Cir. 1997), and Rothschild has not
argued that such circumstances exist here, see generally
Appellee’s Br.
10       ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                               GUARDIAN PROT. SERVS., INC.

Appellee’s Br. 9 (footnote omitted). In support of its
position, Rothschild cites its opposition to ADS’s Cross-
Motion for attorney fees, id. at 9 nn. 33–35 (citing J.A.
693), and its Opposition in turn cites the affidavits dis-
cussed above, J.A. 693 (citing J.A. 707–08, 712). In his
affidavit, Rothschild’s counsel asserts that, before filing
the lawsuit, he made a “good faith” determination “that
the accused [ADS] products infringed at least claim 1”
and that he “assisted in preparing a claim chart identify-
ing how the elements of claim 1 of the [’090 patent] read
on the products accused of infringement.” J.A. 707, 708.
Rothschild’s counsel also asserts that he “believe[s], in
good faith, that the [’090 patent] is valid and infringed.”
J.A. 708. Rothschild’s founder makes a similar statement
as to the validity of the ’090 patent. J.A. 712.
    None of the cited statements assist Rothschild here.
In his declaration, Rothschild’s counsel states that he
“reviewed publicly available information regarding ADS’s
products and, in good faith, made a determination that
the accused products infringed at least claim 1 of the [’090
patent].” J.A. 707. Rothschild’s founder makes similar
statements in his declaration. See J.A. 712. However,
neither Rothschild’s counsel nor its founder supports their
declaration statements with examples of websites, prod-
uct brochures, manuals, or any other publicly available
information that they purportedly reviewed. 6 The conclu-
sory and unsupported statements from Rothschild’s
counsel and founder that claim 1 of the ’090 patent is
valid have no evidentiary value. See Phigenix, Inc. v.

     6 Indeed, Rothschild’s counsel conceded during oral
argument that the record contains no such foundational
evidence. See Oral Argument at 15:04–16:30, http://oralar
guments.cafc.uscourts.gov/default.aspx?fl=2016-
2521.mp3.
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC             11
v. GUARDIAN PROT. SERVS., INC.

ImmunoGen, Inc., 845 F.3d 1168, 1174–75 & n.6 (Fed.
Cir. 2017).
B. The District Court Misjudged Rothschild’s Conduct in
                    Other Litigation
     ADS next alleges that Rothschild has engaged in vex-
atious litigation related to the ’090 patent. According to
ADS, Rothschild has asserted claim 1 of the ’090 patent in
fifty-eight cases against technologies ranging from video
cameras to coffeemakers to heat pumps. Appellant’s Br.
9. Further, ADS contends that Rothschild has settled the
vast majority, if not all, of these cases for significantly
below the average cost of defending an infringement
lawsuit. See id. at 37–40. The District Court rejected
ADS’s contention, finding “the fact that a patentee has
asserted a patent against a wide variety of defendants
and settled many of those cases . . . does not alone show
bad faith.” Rothschild, 2016 WL 3883549, at *3 (empha-
sis added) (internal quotation marks and citation omit-
ted).
    The District Court based this aspect of its analysis on
a clearly erroneous assessment of the evidence. The
District Court predicated its finding on “the absence of
any showing that [Rothschild] acted unreasonably or in
bad faith in the context of this suit.” Id. (footnote omit-
ted). However, as explained above, that ancillary finding
improperly rests upon statements from Rothschild’s
counsel and founder that have no evidentiary value.
Therefore, in the absence of evidence demonstrating that
Rothschild engaged in reasonable conduct before the
District Court, the undisputed evidence regarding Roth-
schild’s vexatious litigation warrants an affirmative
exceptional case finding here. See Newegg, 793 F.3d at
1350 (“[A] pattern of litigation abuses characterized by
the repeated filing of patent infringement actions for the
sole purpose of forcing settlements, with no intention of
testing the merits of one’s claims, is relevant to a district
12      ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                              GUARDIAN PROT. SERVS., INC.

court’s exceptional case determination under § 285.”); see
also Eon-Net, 653 F.3d at 1327 (noting that settlement
offers that were “less than ten percent of the cost that [a
defendant] expended to defend suit—effectively ensured
that [a plaintiff’s] baseless infringement allegations
remain unexposed”).
C. The District Court Improperly Conflated Rule 11 with
                    35 U.S.C. § 285
    Finally, we turn to ADS’s argument that the District
Court failed to account for the totality of the circumstanc-
es by equating Rule 11 to § 285. The District Court held
that “§ 285 should [not] be applied in a manner that
contravenes the aims of Rule 11—[Rothschild]’s decision
to voluntarily withdraw its complaint within the safe
harbor period is the type of reasonable conduct [that] Rule
11 is designed to encourage.” Rothschild, 2016 WL
3883549, at *2. ADS avers that the District Court’s
analysis “improperly conflat[ed] the provisions of Rule 11
and relief under [§] 285.” Appellant’s Br. 40.
    The District Court erred as a matter of law when, as
part of its analysis, it stated that an attorney fee award
under § 285 would “contravene[] the aims of Rule 11[’s]”
safe-harbor provision. Rothschild, 2016 WL 3883549, at
*2. Whether a party avoids or engages in sanctionable
conduct under Rule 11(b) “is not the appropriate bench-
mark”; indeed, “a district court may award fees in the
rare case in which a party’s unreasonable conduct—while
not necessarily independently sanctionable—is nonethe-
less so ‘exceptional’ as to justify an award of fees.” Octane
Fitness, 134 S. Ct. at 1756, 1757.
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC         13
v. GUARDIAN PROT. SERVS., INC.

                      CONCLUSION
    We have considered ADS’s remaining arguments (ex-
cept for those related to its first point) and find them
unpersuasive. The District Court on remand shall con-
duct additional proceedings consistent with this opinion,
including those pertaining to the calculation of attorney
fees. Accordingly, the Opinion and Order of the U.S.
District Court for the Eastern District of Texas is
           REVERSED AND REMANDED
                         COSTS
   Costs to ADS.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

       ROTHSCHILD CONNECTED DEVICES
             INNOVATIONS, LLC,
               Plaintiff-Appellee

                            v.

    GUARDIAN PROTECTION SERVICES, INC.,
   ALARM SECURITY GROUP, LLC, CENTRAL
     SECURITY GROUP - NATIONWIDE, INC.,
  GUARDIAN ALARM COMPANY, GUARDIAN OF
   GEORGIA, INC., DBA ACKERMAN SECURITY
   SYSTEMS, ICON SECURITY SYSTEMS, INC.,
     MONITRONICS INTERNATIONAL, INC.,
               SLOMIN’S, INC.
                   Defendants

                 ADS SECURITY, L.P.,
                  Defendant-Appellant
                 ______________________

                       2016-2521
                 ______________________
MAYER, Circuit Judge, concurring.
     I agree with the court’s opinion, but write separately
because this case also satisfies the Supreme Court’s
admonition that “a case presenting . . . exceptionally
meritless claims may sufficiently set itself apart from
mine-run cases to warrant a fee award.” Octane Fitness,
LLC v. ICON Health & Fitness, Inc., – U.S. –, 134 S. Ct.
1749, 1757 (2014). Because the infringement complaint
filed by Rothschild Connected Devices Innovations, LLC
2       ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                              GUARDIAN PROT. SERVS., INC.

(“Rothschild”) was frivolous on its face, the district court
abused its discretion in refusing to award attorneys’ fees
under 35 U.S.C. § 285.
     Claim 1 of U.S. Patent No. 8,788,090 patent (the “’090
patent”) is directed to the abstract idea of product config-
uration, reciting “[a] system for customizing a product
according to a user’s preferences” using “a remote server
including a database.” ’090 patent col.8 ll.66–67. Both
the specification and the prosecution history indicate that
claim 1 is limited to consumable liquid products. See, e.g.,
id. col.1 ll.21–62; id. col.4 ll.40–64; Joint Appendix (“J.A.”)
769, 799–804, 821, 846–47. Nonetheless, Rothschild has
filed scores of infringement complaints, taking an excep-
tionally broad view of the scope of its patent and asserting
that it covers dozens of seemingly unrelated “products”
configured using the Internet. J.A. 99–100, 878. The
breadth of technologies that have been accused of in-
fringement is remarkable, including such diverse products
as home automation systems, home security systems, door
locks, mobile apps, thermostats, digital cameras, irriga-
tion sprinklers, coffeemakers, washers, dryers, baby
monitors, air conditioners, microwave ovens, dishwashers,
smoke detectors, ceiling fans, window shades, pool heat-
ers, telephones, and horns. See J.A. 256–58. Rothschild’s
continued assertions that its patent extends to products
simply because they are configured using the Internet, see
Brief of Plaintiff-Appellee at 19–21, are risible rather
than simply unreasonable. *

    *See, e.g., Larry Downes, The 4 Worst Patents of 2015,
Wash. Post, Dec. 14, 2015, https://www.washingtonpost.
com/news/innovations/wp/2015/12/14/the-4-worst-patents-
of-2015/?utm_term=.4c67935643cf (noting that although
the ’090 patent is “largely gibberish” and “laughably
obvious,” Rothschild “is suing everyone who connects
something to the Internet”).
ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC            3
v. GUARDIAN PROT. SERVS., INC.

    In assessing patent eligibility under 35 U.S.C. § 101,
“the underlying functional concern . . . is a relative one:
how much future innovation is foreclosed relative to the
contribution of the inventor.” Mayo Collaborative Servs.
v. Prometheus Labs., Inc., 566 U.S. 66, 88 (2012); see also
Motion Picture Patents Co. v. Universal Film Mfg. Co.,
243 U.S. 502, 511 (1917) (explaining that “the primary
purpose” of the patent system is to promote scientific
progress, not to “creat[e] . . . private fortunes for the
owners of patents”). The ’090 patent falls far beyond the
bounds of section 101 because its potential to disrupt
future innovation is staggering while its technological
contribution is non-existent.
     Because section 101 imposes “a threshold test,” Bilski
v. Kappos, 561 U.S. 593, 602 (2010), patent eligibility
issues generally can, and should, be resolved at the outset
of litigation. Neither nuanced legal analysis nor complex
technical inquiry was required to determine that the ’090
patent could not be both broad enough to cover the home
security products sold by ADS Security, L.P. (“ADS”) and
narrow enough to withstand subject matter eligibility
scrutiny. See Alice Corp. v. CLS Bank Int’l, – U.S. –, 134
S. Ct. 2347, 2356–59 (2014) (emphasizing that abstract
ideas applied using generic computer components are
patent ineligible); Intellectual Ventures I LLC v. Capital
One Bank, 792 F.3d 1363, 1369 (Fed. Cir. 2015) (conclud-
ing that a patent directed to “customizing web page
content” based upon “information known about the user”
fell outside of section 101).
    This suit never should have been filed, and ADS
deserves to be fully compensated for the significant attor-
neys’ fees it has incurred. To hold otherwise would only
“encourage the litigation of unreasonable [and] groundless
claims.” Highway Equip. Co., Inc. v. FECO, Ltd., 469
F.3d 1027, 1035 (Fed. Cir. 2006); see also Octocom Sys.,
Inc. v. Hous. Computer Servs., Inc., 918 F.2d 937, 943
(Fed. Cir. 1990) (“Where a party blindly disregards long
4       ROTHSCHILD CONNECTED DEVICES INNOVATIONS, LLC v.
                              GUARDIAN PROT. SERVS., INC.

established authority and raises arguments with no
factual foundation . . . the judicial process has not been
used, but abused.”).