BakerHostetler Patent Watch: Taurus IP, LLC v. DaimlerChrysler Corp.

by BakerHostetler
Contact

While an adverse claim construction generally cannot, alone, form the basis for an exceptional case finding, [a] party cannot assert baseless infringement claims and must continually assess the soundness of pending infringement claims, especially after an adverse claim construction.

On August 9, 2013, in Taurus IP, LLC v. DaimlerChrysler Corp., the U.S. Court of Appeals for the Federal Circuit (Prost, Schall,* Reyna) affirmed-in-part and reversed-in-part the district court's judgment, inter alia, that certain claims of U.S. Patent No. 6,141,658, which related to a computer system for managing product knowledge related to products offered for sale by a selling entity, were invalid for anticipation and not infringed, and that the case was exceptional under 35 U.S.C. § 285. The Federal Circuit stated:

When assessing whether to award attorney fees under35 U.S.C. § 285, a district court engages in a two-step inquiry. The court must first determine whether the prevailing party has proved, by clear and convincing evidence, that the case is exceptional. If the court finds the case exceptional, it must determine whether an award of attorney fees is appropriate, and, if so, the amount of that award. Absent misconduct in litigation or in securing the pa¬tent, a case may be found exceptional under § 285 only if (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless. Subjective bad faith by the offending partycan be upheld on review if, despite the lack of an explicit finding by the district court, other findings of fact are compatible with, and only with, that view. There exists a "presumption that the assertion of infringement of a duly granted patent is made in good faith." Factual findings regarding subjective bad faith are reviewed for clear error. To be objectively baseless, the patentee's assertions -- whether manifested in its infringement allegations or its claim construction positions -- "must be such that no reasonable litigant could reasonably expect success on the merits." As a question of law, this court reviews a district court's determination of whether a party's claim or de-fense in a patent case is objectively baseless without deference. Because of the reputational and economic impact of sanctions, this court must carefully examine the record when reviewing an exceptional case finding. We are, however, also mindful of the fact that the district court, with its first-hand knowledge of the parties and their positions, should not be unduly second-guessed.

Having carefully considered the record before us, we conclude that the district court properly found the DaimlerChrysler Patent Suit to be exceptional. In reaching this conclusion, we find sufficient basis in the district court's findings that Taurus improperly asserted and maintained its positions in the litigation. We need not rely on the findings related to vexatious litigation or witness tampering. Rather, no reasonable litigant in Taurus's position could have expected a finding that a web surfer accessing the accused external websites satisfied the requirement for a "user," as recited in claim 16. Although reasonable minds can differ on claim construction positions, Taurus's proposed constructions of "user," and the related terms discussed above, fall below the threshold required to avoid a finding of objective baselessness. Taurus proposed that "user" either not be construed at all, or effectively not construed, as "a person who uses the claimed computer system." [H]owever, the written description provides no support for Taurus's unreasonably broad construction and instead limits the term to those with sufficient internal access to the data model to allow the creation and editing of relationship information. When patentees have sought unreasonable claim constructions divorced from the written description, this court has found infringement claims objectively baseless.

We are not persuaded by Taurus's argument that the claim construction of "user" was vague until issuance of the Summary Judgment Decision. When read in light of the specification, the district court's construction provided clear limitations on the scope of "user." Indeed, as the briefing to this court demonstrates, Taurus appears to have understood, but merely disagreed with the court's construction. Taurus is correct that this court reversed two district court decisions relied on in the Post-Trial Decision for the proposition that "Taurus's decision to proceed in the face of this court's constructions prolonged the litigation in bad faith." Those reversals did not, however, disturb the rule that a case can be found exceptional when a party prolongs litigation in bad faith. While an adverse claim construction generally cannot, alone, form the basis for an exceptional case finding, [a] party cannot assert baseless infringement claims and must continually assess the soundness of pending infringement claims, especially after an adverse claim construction. . . .

We also conclude that the district court did not clearly err in implicitly finding subjective bad faith. Although the district court did not explicitly state the facts supporting a finding of subjective bad faith, it did make sufficient factual findings for this court to uphold the implicit finding. . . . Taurus subjectively knew that the DaimlerChrysler Patent Suit lacked a reasonable basis and was, therefore, pursued and maintained in bad faith. We are not persuaded by Taurus's argument that it lacked bad faith because it dropped its infringement claims against the internal websites. Although Taurus was correct (and required) to abandon any infringement claims that had no basis in fact or law, that abandonment does not permit Taurus to maintain other infringement claims that fail to meet or exceed a reasonable threshold. In other words, doing something required of it does not grant Taurus leave to do something not permitted. In addition, although counsel for Taurus is generally correct that it can and should represent its client "zealously," attorneys are always charged with the "obligation to file cases reasonably based in law and fact and to litigate those cases in good faith." Because the findings of the district court support the conclusion that this case was exceptional under 35 U.S.C. § 285, we affirm that ruling. As Taurus does not assert that the amount of attorney fees was improper, we do not address that issue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BakerHostetler | Attorney Advertising

Written by:

BakerHostetler
Contact
more
less

BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.