Unlucky Horseshoes for Patent Plaintiff
The usual rule in American civil litigation is that each side pays its own attorneys regardless of who wins in the end. The patent statute provides, however, that a losing party will have to pay the winning party’s fees in an “exceptional” case. The Federal Circuit Court of Appeals has set the bar high for prevailing defendants, requiring that they prove by clear and convincing evidence that the plaintiff engaged in litigation misconduct and/or brought an objectively baseless case in subjective bad faith.
It therefore takes fairly egregious conduct by the plaintiff to trigger an exceptional case finding by a trial judge. A federal judge in Ohio in a multi–district case involving bill of lading transmission and processing systems found just such egregious conduct (HT: Docket Navigator). As laid out in the ruling below, the court found that the plaintiff and its counsel failed to conduct an adequate pre–suit investigation into the defendant’s alleged infringement. The court determined that the plaintiff did not do enough to determine whether the allegedly infringing system met a critical element of the disputed patent claims—it later became evident at summary judgment that it didn’t. And the court refused to allow the plaintiff to use a post–complaint expert report to cure the flaws in its pre–complaint investigation. Nor did the court countenance the plaintiff’s attempt to rely on an unauthenticated hearsay statement to shore up its defective claims. Finally, the court found litigation misconduct by the plaintiff for drawing unreasonable inferences from the evidence, mischaracterizing the record, and misciting or failing to cite controlling authority.
Although the exceptional case standard is high, it does appear that one area a plaintiff must be quite sure of before filing suit is the adequacy of the pre–suit investigation. Filing a case based on incomplete information, and then pursuing that case in the teeth of clear evidence undermining that claim, is exceptionally bad practice. In particular, as the court colorfully noted, patent litigation “is not horseshoes…and suing [a defendant] because it practiced most of the steps of the claimed method is not enough. [The plaintiff] was required to have a reasonable basis for alleging, and was required to adduce evidence demonstrating, that [the defendant] practiced every step of the claimed method” (brackets added and citation omitted).
IP Wise 