Editor: Paul Stewart

Federal Circuit Summaries

Before PROST, Wallach, and Taranto.  Appeal from the Southern District of Indiana.

Summary:  In determining whether a party’s actions were “exceptional” under Octane Fitness, the District Court properly considered the totality of the evidence, including clear notice of the prevailing party’s invalidity position and litigation conduct.

Stone sued Cook in District Court alleging patent infringement. Cook petitioned for IPR of all claims of the asserted patent. Following institution of the IPR, Stone requested an adverse judgment in the IPR, and all claims of the patent were canceled. Stone then successfully moved to dismiss the district court case with prejudice.  Following the dismissal, Cook filed a motion under § 285 for attorney fees arguing that Stone’s litigation position was exceptional in view of the alleged substantive weakness of Stone’s litigation position and Stone’s pattern of vexatious litigation. The District Court denied the motion, holding that none of the evidence put forth by Cook warranted such fees.

The Federal Circuit found that the District Court did not abuse its discretion in finding that the substantive strength of Stone’s litigation position did not warrant an award of fees in view of the evidence Cook relied on–Cook’s invalidity contentions and inventor testimony. The Federal Circuit found that Cook’s invalidity contentions failed to put Stone on “clear notice” of the asserted patent’s invalidity because they merely listed 32 references, along with a blanket statement of obviousness and “inconsistent and unilluminating” claim charts. The Federal Circuit also found that the inventor’s testimony that a single claim limitation was known in the prior art did not make the case exceptional because patentability is considered by evaluating the claim as a whole. The Federal Circuit also found that the District Court did not err by factoring in Cook’s litigation conduct, emphasizing that Cook’s failure to provide early notice of its assertion of frivolousness weighed against finding the case exceptional. With respect to Cook’s vexatious litigation argument, the Federal Circuit held that the District Court did not abuse its discretion by finding that Cook failed to provide evidence that Stone’s litigation practices rise to the level exceptionality. In distinguishing Stone’s actions from behavior previously found to be exceptional, the Federal Circuit highlighted that Stone did not seek an immediate settlement, but instead litigated its position for nearly two years.

This case is: Stone Basket Innovations, LLC v. Cook Medical, LLC