Three sentences insufficient to explain why a case is exceptional

June 17, 2008
Post by Blog Staff

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.

Innovation Technologies owns a patent relating to a method of irrigating wounds, and sued a competitor, Splash! Medical Devices for infringement. After the suit was pending for roughly a year, Innovation gave Splash a covenant not to sue under the patent and moved to dismiss the case with prejudice. After the district court granted the motion to dismiss, Splash moved for attorney fees under § 285. The court granted the motion, with the following explanation:

This case qualifies as an "exceptional" case under 35 U.S.C. § 285 justifying an award of attorney’s fees to Splash as the prevailing party. Splash has shown by clear and convincing evidence that Innovation knew or, on reasonable investigation, should have known, that its claims of infringement were baseless. It appears to me that the lawsuit was filed solely for the purpose of harassing a small competitor.

Innovation appealed this award.

The Federal Circuit vacated and remanded. When the motion for fees was pending before the district court, the parties raised five issues relevant to the motion:

  1. Sufficiency of the pre-filing investigation
  2. Reason for filing suit
  3. Improper litigation tactics
  4. Meaning of claim terms
  5. Reason for dismissal before claim construction

There were no factual findings on any of these issues. As a result, the Federal Circuit could neither tell which of these possible grounds formed the basis for the district court's finding that the case was exceptional, nor the underlying facts relating to such a determination. While the court noted it could "comb the record" and make such a determination, it declined to do so, as the issue was more properly considered by the district court in the first instance. As a result, the court vacated and remanded for the district court to provide more detail regarding the reason for its exceptional case finding.

To read the full decision in Innovation Techs., Inc. v. Splash! Med. Devices, LLC, click here.

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