Court Opinion

ID: 3174095
Source: CourtListenerOpinion
Date Created: 2016-02-05 08:30:30.442929+00
Date Added: 2024-06-11T12:05:22.868783
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

          SITE UPDATE SOLUTIONS, LLC,
                 Plaintiff-Appellee

                           v.

CBS CORP., JASONS DELI CORP, TICKETMASTER
  ENTERTAINMENT, INC., THE WALT DISNEY
       COMPANY, TIME WARNER INC.,
                 Defendants

                   NEWEGG INC.,
                 Defendant-Appellant
                ______________________

                      2015-1448
                ______________________

   Appeal from the United States District Court for the
Northern District of California in No. 5:11-cv-03306-PSG,
Magistrate Judge Paul S. Grewal.
                ______________________

               Decided: February 1, 2016
                ______________________

     JOHN J. EDMONDS, Collins, Edmonds, Pogorzelski,
Schlather & Tower PLLC, Houston, TX, argued for plain-
tiff-appellee. Also represented by SHEA NEAL PALAVAN.
2                   SITE UPDATE SOLUTIONS, LLC   v. CBS CORP.

    YAR ROMAN CHAIKOVSKY, Paul Hastings LLP, Palo
Alto, CA, argued for defendant-appellant. Also represent-
ed by PHILIP OU.

   STEVEN MOORE, Kilpatrick Townsend & Stockton
LLP, San Francisco, CA, for amici curiae Acushnet Com-
pany, Huawei Technologies Co., Ltd., Kaspersky Lab,
Limelight Networks, Inc., QVC, Inc., SAS Institute Inc.,
Symmetry LLC, Xilinx, Inc.
               ______________________

     Before PROST, Chief Judge, DYK, and REYNA, Circuit
                         Judges.
REYNA, Circuit Judge.
    Newegg Inc. (“Newegg”) appeals from the district
court’s order denying Newegg’s supplemental motion for
attorney’s fees under 35 U.S.C. § 285. The district court
denied Newegg’s motion once before, and we remanded to
the district court in view of Octane Fitness, LLC v. Icon
Health & Fitness, Inc., 134 S. Ct. 1749 (2014). On re-
mand, the district court applied the Octane Fitness stand-
ard and again denied Newegg’s request for attorney’s fees.
Because the district court did not abuse its discretion in
denying Newegg’s supplemental motion for attorney’s
fees, we affirm.
                        BACKGROUND
     In 2010, Site Update Solutions, LLC (“Site Update”)
sued 39 companies in the Eastern District of Texas,
asserting claim 8 of U.S. Patent No. RE40,683, which set
out numerous means-plus-function terms. The case was
transferred to the Northern District of California, and all
defendants except for Newegg settled with Site Update.
During claim construction, Site Update vacillated on its
theories to identify suitable structure for the means-plus-
function terms. During the Markman hearing, the dis-
trict court adopted claim constructions that undermined
SITE UPDATE SOLUTIONS, LLC   v. CBS CORP.                 3

most of Site Update’s positions. Shortly after the hearing,
Newegg and Site Update filed a stipulation to dismiss
with prejudice all claims against Newegg. Newegg moved
for attorney’s fees on the basis that the case was excep-
tional under Brooks Furniture Mfg., Inc. v. Dutailier Int’l,
Inc., 393 F. 3d 1378, 1381 (Fed. Cir. 2005). The district
court denied Newegg’s motion for fees. Newegg appealed,
and we remanded in the wake of Octane Fitness, the case
in which the Supreme Court established a new standard
for the award of attorney’s fees under § 285.
    On remand, Newegg filed a supplemental motion, ar-
guing for fees under the Octane Fitness standard. In a 33-
page opinion, the district court denied Newegg’s request
for fees. Applying Octane Fitness, the district court
provided eight reasons for denying fees: (1) Site Update’s
unreasonable claim constructions were not “so weak that
this case stands out from others because [Site Update]
abandoned its reliance on these constructions when it was
given the opportunity to do so”; (2) Site Update’s misun-
derstanding of means-plus-function law did not make the
case exceptional; (3) Site Update’s positions on necessary
structures were “unartful,” but not so frivolous to be
exceptional; (4) Site Update’s position on structures
“strains credibility,” but was not so unreasonable as to
warrant fees; (5) an incorrect proposed claim construction
is not exceptional; (6) Site Update’s infringement theories
had flaws, but losing does not compel fees; (7) Site Up-
date’s willingness to settle does not make the case excep-
tional; and (8) deterrent policy considerations are
inapposite in this case.
    Newegg appeals.          We have jurisdiction under
28 U.S.C. § 1295(a).
                   STANDARD OF REVIEW
    We review the denial of a motion for attorney’s fees
under 35 U.S.C. § 285 for abuse of discretion. Highmark
Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744,
4                    SITE UPDATE SOLUTIONS, LLC   v. CBS CORP.

1747 (2014). “A district court would necessarily abuse its
discretion if it based its ruling on an erroneous view of the
law or on a clearly erroneous assessment of the evidence.”
Id. at 1748 n.2. “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 Vision, Inc. v. Sandoz, Inc., 783 F.3d 853,
858 (Fed. Cir. 2015).
                        DISCUSSION
    Newegg argues that the district court abused its dis-
cretion in denying its request for an award of attorney’s
fees. Newegg asserts that the case stands out because
Site Update’s complaint and infringement contentions
were at all times frivolous, even as Site Update gravitated
toward arguably better positions as the case progressed.
Newegg contends that Site Update’s failure to present a
cogent argument as to the supporting structure for the
asserted means-plus-function claim cannot go unpenal-
ized. Newegg further contends that Site Update’s practice
of extracting nuisance value settlements as a business
model warrants fees. The amici add fuel to this argument
by asserting that leveraged forced settlements are a
problem in the industry, district courts need additional
guidance on awarding fees, and awarding fees can deter
meritless lawsuits.
    We conclude that the district court did not abuse its
discretion. Courts may award reasonable attorney’s fees
to the prevailing party in exceptional cases. 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 . . . or the unreasonable manner
in which the case was litigated.” Octane Fitness, 134 S.
Ct. at 1756. A district court “may determine whether a
case is ‘exceptional’ in the case-by-case exercise of their
discretion, considering the totality of the circumstanc-
SITE UPDATE SOLUTIONS, LLC   v. CBS CORP.                 5

es.” Id. The movant must show exceptionality by pre-
ponderant evidence. Id. at 1758.
    Although reasonable minds may differ, the district
court ruled from a position of great familiarity with the
case and the conduct of the parties, and it determined
that Site Update’s tactical blunders and mistakes do not
warrant fees under 35 U.S.C. § 285. The district court
noted that Site Update tried and failed, but losing a case
does not make it exceptional.
    Newegg essentially urges this Court to adopt a de no-
vo review of the district court’s findings. As we note
above, our review is limited to determining whether the
district court based its ruling on an erroneous view of the
law or on a clearly erroneous assessment of the evidence,
or otherwise abused its discretion. Highmark, 135 S.Ct.
1748 n.2. We do not agree with Newegg that this is a
situation where the district court failed to apply the
correct law. Thus, under the circumstances of this case,
our review authority is limited to whether a district
court’s findings are supported by evidence and sound
reasoning.
    The new Octane Fitness standard for an exceptional
case applies both ways: discretion is entitled to a district
court’s findings that § 285 attorney’s fees are not applica-
ble, as much as discretion is owed to findings that they
are applicable. As the Supreme Court explained, matters
of attorney’s fees, and the effective contours illuminating
this area, are committed to the sound discretion of the
trial court. Id. at 1748 (“For reasons we explain in Oc-
tane, the determination whether a case is ‘exceptional’
under §285 is a matter of discretion. And as in our prior
cases involving similar determinations, the exceptional-
case determination is to be reviewed only for abuse of
discretion.”). In this case, because we do not believe that
the district court based its ruling on an erroneous view of
the law and we are not left with a definite and firm con-
6                   SITE UPDATE SOLUTIONS, LLC   v. CBS CORP.

viction that the district court erred in its assessment of
the evidence or otherwise abused its discretion, we cannot
say that the district court erred. For these reasons, we
affirm.
                       AFFIRMED
                          COSTS
    Each party shall bear its own costs.