In a recent decision, the Federal Circuit affirmed-in-part and reversed-in-part a district court's ruling sanctioning the plaintiffs and their attorney in a case both monetarily and by striking the plaintiffs' pleadings.  The sanctionable conduct was the withholding of certain test results of the allegedly infringing product that arguably showed the product did not infringe.  The test results were disclosed to the plaintiffs' expert witness, but never disclosed to the defendants.  When asked to explain their conduct, the plaintiffs and their lawyer testified they believed (mistakenly) the results were either irrelevant or subject to work product protection, although it was never listed on a privilege log.  As a result of this, the district court struck the plaintiffs' complaint and answer to counterclaims, and also ordered the plaintiffs to pay over $121,000 in attorney fees under Rule 37, nearly $1 million in fees and expenses under the court's inherent authority, over $1.6 million in fees under § 285, and nearly $50,000 in costs under § 1920.

The Federal Circuit agreed with the district court's finding that the conduct was sanctionable, but reversed-in-part the actual sanctions applied.  Specifically, the court held striking the pleadings was too drastic a sanction.  As a result, the awards under § 285 and § 1920 were also reversed, as they have a prevailing party requirement.  The court also reversed the award under the court's inherent powers, noting that under Supreme Court jurisprudence, when a Rule provides adequate sanctioning power, a court should ordinarily rely upon the Rule rather than its inherent authority.

More detail of ClearValue, Inc. v. Pearl River Polymers, Inc. after the jump.

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In a recent decision, the Federal Circuit awarded sanctions against the plaintiff-appellant for filing and pursuing a frivolous appeal against one of four defendant-appellees.  The court observed the plaintiff-appellant failed to explain how the district court erred in its determination that this defendant did not infringe and also made misrepresentations of the record and law in its briefing on appeal.

In a separate decision under Rule 36, the court affirmed the district court's determination that the cases against each of the defendants were exceptional under 35 U.S.C. § 285 and the associated award of attorney fees against the plaintiff.  

More details of E-Pass Techs., Inc. v.  3Com Corp. after the jump.

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In a recent decision, the Federal Circuit affirmed-in-part a district court decision that a patentee had breached a duty to disclose relevant video-compression technology patents while participating in a joint video team standards-setting organization (SSO).  The Federal Circuit, however, reversed in part the district court decision finding the patents unenforceable against the world, instead holding the patents should only be held unenforceable against products embodying the applicable video standard.

The court affirmed the district court's finding that the case was exceptional and awarding attorney fees to the defendant.  The plaintiff had concealed the existence of tens of thousands of relevant documents throughout discovery, with their existence not revealed until near the end of trial (we previously blogged about the district court's decision awarding fees here).  The Federal Circuit held this litigation misconduct was sufficient to support the exceptional case finding even absent the failure to disclose the patents to the SSO.

More on Qualcomm Inc. v. Broadcom Corp. after the jump.

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In a decision Friday, the First Circuit affirmed a district court's summary judgment of trademark infringement and an associated award of the defendant's profits and attorney fees to the plaintiff.  The defendant used the plaintiff's registered marks in both the metatags of its website as well as in white text on a white background in the body of the site in an effort to cause consumers searching for the plaintiff's marks on an internet search engine to be more likely to go to the defendant's website instead.  Over the course of discovery, the defendant essentially admitted that seven of the eight Pignons factors weighed in favor of the plaintiff, and accordingly the district court granted summary judgment, awarding the plaintiff an equitable share of the defendant's profits and attorney fees.

The First Circuit affirmed, holding that even if the final factor, evidence of actual confusion, was neutral or favored the defendant, it was not error for the district court to grant summary judgment for the plaintiff given the admissions on the other seven factors.  Further, the court held the award of profits was proper, as the plaintiff only had to prove the defendant's gross sales under 15 U.S.C. § 1117(a).  Because the defendant did not offer evidence of its costs, the district court's award of profits was proper.  Further, the award of attorney fees was not an abuse of discretion, given the defendant's admission that it intentionally used the plaintiff's marks in order to divert traffic to its website.

This is an instance where companies would do well to remember that while how search engines work is generally secret, it is widely believed that metatags have no effect on search engine ranking, although some search engines may use them for indexing purposes.  However, if the point of their use is to increase the site's position in the search results (as it usually is, and was in this case), they are basically useless and, as shown here, a potential basis for liability.

More detail of Venture Tape Corp. v. McGills Glass Warehouse after the jump.

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In a decision on Friday, the Federal Circuit reversed a district court's summary judgment of invalidity and noninfringement and subsequent finding of inequitable conduct.  The court also vacated the district court's exceptional case finding and the associated award of attorney's fees.

The plaintiff was initially awarded partial summary judgment of infringement of six patents.  The district judge then assigned a special master to examine the remaining issues in the case, including invalidity and inequitable conduct.  The case was then transferred to a new judge who, without written opinion, overturned the plaintiff's ruling of summary judgment and awarded partial summary judgment of noninfringment and invalidity.  The judge then held a brief bench trial on the issue of inequitable conduct, where the plaintiff was only allowed to present inventor testimony regarding candor and good faith; all evidence of materiality was precluded.  After this trail, the court, from the bench, made a ruling of inequitable conduct against the plaintiff, ruled the case was exceptional under § 285, and awarded attorney's fees.

The Federal Circuit reversed, vacated, or remanded every ruling made by the trial court.  Specifically, the court held that in order to support a finding of inequitable conduct, there must be threshold findings of both materiality and intent to deceive.  Here, the district court only examined intent, rendering the record insufficient to support a holding of inequitable conduct.  The court also held the district court's findings regarding intent to deceive were clearly erroneous.  On top of that, the court held the summary judgment rulings "lack[ed] findings for judicial review," and that "the record show[ed] many potential issues of fact that would prevent entry of summary judgment."  Given the district judge's handling of the case, the court further ordered the case reassigned to a new trial judge on remand.

More on Research Corp. Tech., Inc. v. Microsoft Corp. after the jump.

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In a decision Wednesday, the Seventh Circuit reversed a district court's denial of attorney fees to a prevailing defendant in a copyright case.  The district court found that, as a matter of law, no copyright infringement occurred, but declined to award attorney's fees.

The Seventh Circuit reversed.  The court held the suit was frivolous, and brought in bad faith.  The plaintiff deposed all of the defendant's customers and several potential customers, resulting in the defendant losing several customers.  Further, the plaintiff was not eligible for statutory damages and had suffered no actual damages, and even if there was infringement, the defendant's profits were not tied to the infringement, as the asserted copyright was in a compilation of OSHA regulations that would be easily replaced by simply copying the appropriate regulations anew.  

The court also criticized other courts (such as the Sixth Circuit) who have held prevailing defendants are only entitled to attorney fees in copyright cases when the claims are "colorable, albeit meritless," as not in compliance with the Supreme Court's Fogerty v. Fantasy, Inc. decision.  In rejecting this position, the court offered some favorable dicta for defendants:

If there is an asymmetry in copyright, it is one that actually favors defendants. The successful assertion of a copyright confirms the plaintiff's possession of an exclusive, and sometimes very valuable, right, and thus gives it an incentive to spend heavily on litigation.  In contrast, a successful defense against a copyright claim, when it throws the copyrighted work into the public domain, benefits all users of the public domain, not just the defendant; he obtains no exclusive right and so his incentive to spend on defense is reduced and he may be forced into an unfavorable settlement.

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In a decision last week, the Federal Circuit affirmed a district court's finding of no infringement and invalidity for obviousness, and reversed the district court's finding of unenforceability due to inequitable conduct.

The Federal Circuit, citing KSR, noted that an obviousness analysis can take account the inferences and creative steps that a person of ordinary skill in the art would employ, and held that there was a only small logical gap between the prior art and the claim at issue that could be closed by a person of ordinary skill in the art pursuing known options within his or her technical grasp and therefore the claim was obvious.  

Regarding inequitable conduct, the court reaffirmed that intentionally misleading or false statements made in a petition to make special can lead to a finding of unenforceability, even if the statements do not relate to the patentability of the invention, as long as the false statement succeeds in obtaining expedited review of the application.  Here, however, the evidence was just as susceptible to the inference that intentional misrepresentations occurred as to the inference that the statements were either innocent, not misleading, or both.  As stated by the court: 

Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference.  All reasonable inferences must be drawn from the evidence, and a judgment then rendered on the evidence as informed by the range of reasonable inferences.

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In a decision yesterday, the Federal Circuit affirmed an award of attorneys' fees for a prevailing defendant in an infringement case.  The district court held the case was exceptional under § 285 because the patent holder had engaged in inequitable conduct (a finding previously affirmed), asserted frivolous claims, and engaged in litigation misconduct.  The district court also held that it would be manifestly unjust to force the defendant to pay the plaintiff's expert witness fees under Rule 26(b)(4)(C)(i).

The Federal Circuit affirmed.  While the individual acts may not have been sufficient to find the case was exceptional, the ultimate conclusion was not clearly erroneous.  The Federal Circuit was very reticent to question the district court's finding of litigation misconduct, stating:  "it ill behooves an appellate court to overrule a trial judge concerning litigation misconduct when the litigation occurred in front of the trial judge, not the appellate court."

Judge Newman dissented.  In her opinion, the district court and panel majority applied too low a standard for a case to be considered "exceptional."  Citing the Federal Circuit's previous opinion affirming the finding of inequitable conduct, she noted the court stated the actions that led to the finding "may have been an oversight."  With this low level of "bad" conduct, Judge Newman would have reversed the award of attorney fees.

More concerning Nilssen v. Osram Sylvania, Inc. after the jump.  

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In a decision yesterday, the Federal Circuit vacated an award of attorney fees under § 285.  The district court only provided a three-sentence explanation as to why the case was exceptional.  The Federal Circuit found this insufficient, as there was no explanation of the facts underlying the findings made by the court.  As a result, the court vacated the award and remanded for more detailed findings.

More detail of Innovation Techs., Inc. v. Splash! Med. Devices, LLC after the jump.

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In a decision last week, the Ninth Circuit reversed a district court's award of statutory damages for copyright infringement and affirmed the district court's default judgment award of attorney's fees for trademark infringement.  The plaintiff's copyright registration had an effective date of approximately one month after the first act of infringement, and nearly two years after first publication.

The Ninth Circuit held that the first act of copyright infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under 17 U.S.C. § 412, joining the Second, Fourth, Fifth, and Sixth Circuits in this conclusion.  Because there was no legal significance between the defendant's re- and post-registration infringement, statutory damages were unavailable.

More detail of Derek Andrew, Inc. v. Poof Apparel Corp. after the jump.

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