Court Opinion

ID: 4198956
Source: CourtListenerOpinion
Date Created: 2017-08-26 02:02:06.921617+00
Date Added: 2024-06-11T09:23:51.059022
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                 ______________________

  ICON HEALTH & FITNESS, INC., A DELAWARE
              CORPORATION,
              Plaintiff-Appellant

                            v.

OCTANE FITNESS, LLC, A MINNESOTA LIMITED
          LIABILITY COMPANY,
          Defendant-Cross-Appellant
           ______________________

                  2016-1047, 2016-1101
                 ______________________

    Appeals from the United States District Court for the
District of Minnesota in No. 4:09-cv-00319-ADM-SER,
Judge Ann. D. Montgomery.
                ______________________

                Decided: August 25, 2017
                 ______________________

    DEANNE MAYNARD, Morrison & Foerster LLP, Wash-
ington, DC, argued for plaintiff-appellant. Also represent-
ed by MARC A. HEARRON; MICHAEL ALLEN JACOBS, ROBERT
JAMES ESPOSITO, San Francisco, CA; LARRY R. LAYCOCK,
DAVID R. WRIGHT, Maschoff Brennan Laycock Gilmore
Israelsen & Wright, Salt Lake City, UT.
2       ICON HEALTH & FITNESS, INC. V. OCTANE FITNESS, LLC

    RUDOLPH A. TELSCHER JR., Husch Blackwell LLP, St.
Louis, MO, argued for defendant-cross-appellant. Also
represented by KARA RENEE FUSSNER, DAISY MANNING.
                ______________________

    Before NEWMAN, LOURIE, and HUGHES, Circuit Judges.
HUGHES, Circuit Judge.
    The district court awarded Octane Fitness, LLC at-
torney fees under 35 U.S.C. § 285 after finding the case
exceptional. Because the district court did not abuse its
discretion in its exceptionality finding or in the amount of
the fee award, we affirm.
                             I
     ICON Health & Fitness, Inc. and Octane are competi-
tors in the exercise equipment industry. ICON initially
filed suit in the Central District of California against
Octane and Nellie’s Exercise Equipment. ICON alleged
that Octane infringed U.S. Patent No. 6,019,710 and both
parties infringed U.S. Patent No. 5,104,120. The court
determined that the claims against Nellie’s were “periph-
eral to the claims against Octane” because “Nellie’s is
merely a distributer of Octane’s equipment.” J.A. 371. It
severed Nellie’s as a party and transferred the case to the
District of Minnesota. ICON then dismissed its claims
against Nellie’s.
     In May 2009, Octane sent a letter to ICON insisting
that it dismiss the ’120 patent from the lawsuit and
putting it “on notice that Octane reserves its rights
against Icon for costs required to respond to discovery,
review documents and things produced by Icon, or other-
wise address Icon’s assertion of the ’120 patent in this
lawsuit.” J.A. 3446–48. Two weeks later, the parties filed
a stipulation dismissing with prejudice “any and all
claims against the other, asserted or unasserted, relating
to [the ’120 patent].” J.A. 386.
ICON HEALTH & FITNESS, INC. V. OCTANE FITNESS, LLC        3

     In 2011, the District of Minnesota granted summary
judgment of noninfringement in favor of Octane and
denied Octane’s motion for attorney’s fees, applying the
framework from Brooks Furniture Mfg., Inc v. Dutailier
Int’l, Inc., 393 F.3d 1378, 1381–82 (Fed. Cir. 2005) (re-
quiring clear and convincing evidence of both subjective
bad faith and objectively baseless claims). The Supreme
Court overruled the Brooks Furniture standard, holding
that “an ‘exceptional’ case is simply one that 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,” and that the burden of
proof is a preponderance of the evidence. Octane Fitness,
LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749,
1756, 1758 (2014).
    On remand, the district court found that this case is
exceptional because “Icon’s litigation position stands out
as a particularly and unusually weak case on the merits,”
J.A. 10, and “the case was litigated in a manner that
stands out from more routine patent cases,” J.A. 17. The
court did not award fees for litigation relating to the ’120
patent, finding Octane had released the claim under the
terms of the stipulation. The court also did not award
Octane fees for the appeal and remand proceedings relat-
ing to § 285 because ICON “relied on longstanding Feder-
al Circuit precedent to argue the case was not exceptional
under the Brooks Furniture standard.” J.A. 24.
    ICON appeals the exceptionality finding, and Octane
appeals the amount of the fee award. We have jurisdic-
tion under 28 U.S.C. § 1295(a)(1).
                             II
    We review factual findings underlying an exceptional
case determination for clear error, and review the court’s
determination of whether a case is “exceptional” for an
abuse of discretion. Gaymar Indus., Inc. v. Cincinnati
4      ICON HEALTH & FITNESS, INC. V. OCTANE FITNESS, LLC

Sub-Zero Prods., Inc., 790 F.3d 1369, 1372 (Fed. Cir.
2015).
    ICON argues that because the district court originally
found that the lawsuit was not objectively baseless or
brought in subjective bad faith, the district court abused
its discretion by changing course and finding the case
exceptional on remand. We disagree. ICON ignores the
significant change in law between the Brooks Furniture
framework and the Octane Fitness standard. The district
court provided a thorough analysis explaining its conclu-
sion that this case is exceptional under Octane Fitness.
Because we find no clear error in its factual findings, the
district court did not abuse its discretion in finding the
case exceptional.
    The district court began by considering the substan-
tive strength of ICON’s litigation position, and found that
ICON’s claim construction arguments “were wholly at
odds with the patent text, prosecution history, and inven-
tor testimony, and would have resulted in impermissibly
broad claims.” J.A. 5. On appeal, ICON reargues its
claim construction positions to prove that they were
reasonable. But during the first appeal, we affirmed the
district court’s claim constructions and noted that one of
ICON’s claim construction arguments was “without
merit.” Icon Health & Fitness, Inc. v. Octane Fitness, LLC,
496 F. App’x 57, 62 (Fed. Cir. 2012), rev’d on other
grounds, 134 S. Ct. 1749 (2014). Ultimately, the district
court did not clearly err by concluding that ICON’s posi-
tion was weak.
     The district court next made several factual findings
regarding the manner in which ICON litigated the case,
including that: 1) ICON initially included Nellie’s in the
lawsuit in order to increase costs to Octane; 2) ICON
failed to show that it performed sufficient pre-suit analy-
sis, and that it likely had “scour[ed] its patent portfolio in
search of a basis for bringing a lawsuit against Octane,”
ICON HEALTH & FITNESS, INC. V. OCTANE FITNESS, LLC         5

J.A. 14; 3) emails sent by an ICON employee indicated
that ICON sued based on an “[o]ld patent . . . that was
sitting on the shelf” as a way to get royalties from their
competitor, J.A. 15; and 4) “the non-commercialization of
the ’710 patent is relevant to whether awarding fees to
Octane is necessary to deter Icon from future attempts to
extract royalties to which it is not entitled from a compet-
itor who might rather settle a meritless patent infringe-
ment suit than pay the high cost to defend it,” J.A. 17.
Because the district court did not clearly err in these
factual findings, it did not abuse its discretion in conclud-
ing that “the manner of litigation was exceptionally
unreasonable.” J.A. 17.
    Because there is no clear error in its analysis of the
totality of the circumstances, the district court’s excep-
tional case determination was well within its discretion.
                             III
    Despite receiving over $1.6 million in attorney’s fees,
Octane argues in its cross-appeal that the district court
erred by not awarding fees relating to litigating the ’120
patent and the § 285 appellate and remand proceedings.
Regarding the ’120 patent, we find the parties’ stipulation
dismissing “any and all claims . . . asserted or unassert-
ed” unambiguously dismissed all claims relating to the
’120 patent, including a claim for fees under § 285. We
decline to further examine the minutia of the fee award,
as the district court has the “discretion to determine the
amount of a fee award.” Commissioner, INS v. Jean, 496
U.S. 154, 161 (1990). The district court provided a rea-
sonable analysis of the calculation of the fee award and
did not abuse its discretion in reaching the final award.
                             IV
   We have considered the remainder of the parties’ ar-
guments and find them unpersuasive. Because the dis-
6      ICON HEALTH & FITNESS, INC. V. OCTANE FITNESS, LLC

trict court did not abuse its discretion, the judgment of
the district court is affirmed.
                        AFFIRMED