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Archived updates for Thursday, August 17, 2006

Pre-Lawsuit Opinion and Attempts to Contact Infringer Avoid “Exceptional Case” Attorney Fees

Serio-Us Industries, Inc. v. Plastic Recovery Technologies, Corp., the Federal Circuit affirmed denial of PRT's request for "Exceptional Case" Attorney Fees under 35 U.S.C. § 285 and held that "Absent misconduct in the litigation or in securing the patent, a trial court may only sanction the patentee if both the litigation is brought in subjective bad faith and the litigation is objectively baseless."

The trial court had entered a judgment of non-infringement in favor of PRT. According to the opinion by Circuit Judge Rader,
In this case, the standards for an exceptional case mirror the standards
for deciding PRT’s counterclaims. To ascertain the exceptionality of this case,
the trial court needed to examine whether Serio-US undertook this litigation in
bad faith.

As previously noted, the trial court noted that its initial assessment of
the merits of Serio-US’s case found a likelihood of success on
infringement. The trial court also noted that Serio-US relied on the
opinion of patent counsel in initiating its action, and did not proceed without
efforts to contact PRT. Following a jury trial, the trial court again
entertained PRT’s requests for recovery in the form of a JMOL on its
counterclaims and a motion for attorney fees as an exceptional case. Even after
hearing all the evidence during the jury trial, the trial court again denied the
request for recovery.

The trial court did not entertain oral argument or issue any opinion
explaining its reasoning. See Superior Fireplace Co. v. Majestic Prods. Co., 270
F.3d 1358, 1376 (Fed. Cir. 2001). Nevertheless, other than the facts supporting
PRT’s counterclaims, which were properly dismissed, PRT did not put forth any
additional facts or conduct to support a finding that this case is exceptional.
Thus, the trial court adequately reviewed the facts that support a determination
of "an exceptional case."

Moreover, the denial of attorney fees is discretionary and "permits the
judge to weigh intangible as well as tangible factors: the degree of culpability
of the infringer, the closeness of the question, litigation behavior, and any
other factors whereby fee shifting may serve as an instrument of justice." 270
F.3d at 1378 (citing Nat’l Presto Indus., Inc. v. West Bend Co., 76 F.3d 1185,
1197 (Fed. Cir. 1996)). The trial court denied the section 285 attorney fees a
second time after hearing all of the evidence presented to the jury.

Thus, the record as a whole in this case adequately supports the denial of
attorney fees. This court detects no clear error in the trial court’s factual
findings, and no abuse of discretion in its denial of attorney fees. As a
result, this court, affirms the trial court’s denial of PRT’s 35 U.S.C. § 285
attorney fees.
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