Federal Circuit Judge Dyk, sitting by designation in the E.D. Texas, recently denied a 35 USC Section 285 exceptional case motion in Stragent, LLC v. Intel Corp., No. 11 C 421, Slip Op. (E.D. Tex. Aug. 6, 2014) (Dyk, J.). The opinion begins with a thorough and very useful explanation of the history of exceptional case law. It will be a good place to start when you prepare your next exceptional case brief. Judge Dyk draws the following “guidelines” based upon Octane Fitness:
1. Attorney’s fees should only be awarded in “rare and unusual circumstances.”
2. Courts must look to the totality of the circumstances in evaluating exceptional case motions. The “predominant facts,” although not the exclusive factors, are laid out in Brooks Furniture.
3. Merely losing does not make a case exceptional. If it did, every case would be exceptional.
4. The conduct underlying an exceptional case need not be “independently sanctionable” to warrant a fees award.
5. The case must be exceptional, not just individual actions or arguments.
6. The winning party’s conduct is also relevant to an exceptional case determination. This is especially true where the winning party made bad faith arguments or engaged in litigation misconduct.
After laying out the components of an exceptional case analysis, Dyk turns to what he decries as defendant’s “kitchen sink” approach to the motion. In particular and of most interest to retailers, Dyk does not accept defendant’s argument that plaintiff Stragent’s infringement theory was “implausible” because defendant never sought summary judgment, as it allegedly should have had it believed the argument truly was implausible throughout the case, instead of simply in hindsight. It was a “weak” argument, but had it truly been implausible, defendant have sought summary judgment to defeat the argument.
This is an interesting and troubling position for retailers. While there is a significant advantage in seeking summary judgment whenever possible, there are often “implausible arguments” that are not amenable to summary judgment because of potential questions of material fact, or even the timing of the motion and the Court’s time to decision relative to the trial date. So, equating a lack of a summary judgment motion with a lack of confidence in a defendant’s arguments is an unfair link, even if it is sometimes true. Hopefully, district judges will make this distinction and this will not become a standard view across district courts.