The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
Before this Court comes the motion by Defendants
Nilfisk-Advance A/S and Nilfisk Advance, Inc. (collectively
"Defendant") for attorney fees associated with a patent
infringement case in which it prevailed. For the reasons set
forth below, Defendant's motion is DENIED.
Plaintiff Minuteman International, Inc. ("Plaintiff")
unsuccessfully sued Defendant for patent infringement. Plaintiff
alleged that Defendant infringed U.S. Patent No. 4,759,094 (the
"'094 patent") by manufacturing and selling AquaMax floor
scrubbing machines. The '094 patent, issued on July 26, 1988,
relates to a carpet cleaning machine that sprays cleaning
solution on the carpet, and vacuums up the spent (i.e., dirty)
solution after the carpet is scrubbed. On September 23, 2004,
this Court granted Defendant's motion for summary judgment. This
Court agreed with Defendants that the AquaMax machine does not
infringe Claim 1 of the '094 patent, as various elements of Claim 1 are not present in the AquaMax.
This Court also ruled that there is insufficient evidence to
raise a genuine issue of material fact concerning whether the
AquaMax infringes the '094 patent under the doctrine of
equivalents. In that same order, however, this Court declined to
rule on Defendant's motion for attorney fees and costs pursuant
to 35 U.S.C. § 285. The Court set a briefing schedule to consider
the Parties' arguments on the motion.
Determining whether to award attorney fees in a patent case
takes place in two steps. First, because 35 U.S.C. § 285 (2005)
provides that a court may award attorney fees only in
"exceptional cases," the court must determine whether the case is
exceptional. The prevailing party must establish the exceptional
nature of the case by clear and convincing evidence. Second, the
court must determine whether attorney fees are appropriate. This
decision is within the discretion of the trial judge. See
Evident Corp. v. Church & Dwight Co., Inc., 399 F.3d 1310, 1315
(Fed. Cir. 2005).
Exceptional cases are those involving "inequitable conduct
before the [Patent Office]; litigation misconduct; vexatious,
unjustified, and otherwise bad faith litigation; [or] a frivolous
suit or willful infringement." Forest Laboratories, Inc. v.
Abbott Laboratories, 339 F.3d 1324, 1329 (Fed. Cir. 2003)
(internal quotation marks omitted). "A frivolous infringement
suit is one which the patentee knew or, on reasonable
investigation, should have known, was baseless." Haynes
International, Inc. v. Jessop Steel Co., 8 F.3d 1573, 1579 (Fed.
Cir. 1993), rehearing granted on other grounds, 15 F.3d 1076
(Fed. Cir. 1994). When, as here, an accused infringer prevails in a patent case,
an attorney fees award "is limited to circumstances in which it
is necessary to prevent `a gross injustice' to the accused
infringer." Forest Laboratories, 339 F.3d at 1329 (internal
citation omitted). In such cases, the Federal Circuit has "upheld
findings of exceptionality to prevent such an injustice only when
the patentee has procured its patent in bad faith (i.e.,
committed inequitable conduct before the Patent Office) or has
litigated its claim of infringement in bad faith," meaning in a
vexatious, unjustified, or frivolous manner. Id. "Mere error
[in concluding that a patent is infringed] does not approach the
level of bad faith or gross negligence necessary to characterize
a case as exceptional." Machinery Corp. of America v. Gullfiber
AB, 774 F.2d 467 (Fed. Cir. 1985). But where "the patentee is
manifestly unreasonable in assessing infringement in court, an
inference is proper of bad faith, whether grounded in or
denominated wrongful intent, recklessness, or gross negligence."
Phonometrics, Inc. v. Westin Hotel Co, 350 F.3d 1242, 1246
(Fed. Cir. 2003) (quoting Eltech Systems Corp. v. PPG
Industries, Inc., 903 F.2d 805, 811 (Fed. Cir. 1990)).
Thus, the question before the Court is whether Plaintiff knew
or should have known, on reasonable investigation, that its claim
was baseless, but pursued its claim anyway. Stated alternatively, was Plaintiff manifestly unreasonable in assessing
infringement? If so, Plaintiff has litigated in bad faith, and
this case is exceptional such that an award of attorney fees to
Defendant might be appropriate. Because Plaintiff enjoys a
presumption that it asserted infringement of a duly granted
patent in good faith, Defendant must present affirmative evidence
of bad faith. See Springs Window Fashions LP v. Novo
Industries, L.P., 323 F.3d 989, 999 (Fed. Cir. 2003).
Defendant argues that Plaintiff did not conduct reasonable
investigation before filing suit and, had it done so, Plaintiff
would have known its claim was baseless. According to Defendant,
Plaintiff demonstrated "willful blindness" to how the AquaMax
actually operates in bringing the suit. (Def.'s Reply in Support
of Def's Mot. for Attorney Fees at 2.) Specifically, Defendant
alleges that Plaintiff: (1) did not conduct a reasonable
investigation before or after filing suit, especially in failing
to examine a clear-sided AquaMax demonstration model provided by
Defendant that showed how the machine worked; (2) spoliated the
evidence upon which Plaintiff's case relied; (3) failed to
present a non-frivolous infringement argument;*fn2 (4)
changed its infringement theory after Defendant filed its Motion
for Summary Judgment; (5) did not disclose material evidence
about the operation of the AquaMax machine to its expert; and (6)
forced its expert to rely on sketches he could not authenticate. Plaintiff supplies answers to each of Defendant's contentions.
Plaintiff argues, for example, that it not only satisfied its
pretrial investigatory obligations, but it continued to test the
AquaMax (three times) during discovery. Plaintiff also notes that
it did not consider the custom-made demonstration unit provided
by Defendant the best evidence and, regardless, it could not test
the unit because its counsel and expert were unavailable at the
time. According to Plaintiff, there is no basis for concluding
that this case is an exceptional one.
The Federal Circuit found the following cases exceptional:
where the patentee continued to sue even after the court affirmed
an adverse claim construction in a related case, Phonometics,
Inc. v. Westin Hotel Co., 350 F.3d 1242 (Fed. Cir. 2003); where
the patent holder engaged in misconduct before the court by
falsifying his engineering notebooks, Aptix Corp. v. Quickturn
Design Systems, Inc., 269 F.3d 1369 (Fed. Cir. 2001); and where
the patentee failed to perform tests suggested by the alleged
infringer, and its own tests did not establish infringement, and
its own expert performed no tests concluding infringement had
taken place, Eltech Systems Corp v. PPG Industries, Inc.,
903 F.2d 805 (Fed. Cir. 1990).
By contrast, the Federal Circuit found following cases not
exceptional: where counsel performed a good-faith, informed
comparison of the asserted claims and where there was no evidence
that the plaintiff unreasonably or vexatiously multiplied
post-filing proceedings, MEMC Electronic Materials, Inc. v.
Mitsubishi Materials Silicon Corp., 420 F.3d 1369 (Fed. Cir.
2005); where the patent owner reasonably relied on several
opinions of counsel and other experts, Brooks Furniture
Manufacturing, Inc. v. Dutailier International, Inc.,
393 F.3d 1378 (Fed. Cir. 2005); where, even though it was revealed that
the lotion contained an inconsequential amount of enzyme, the
patent owner conducted an adequate pretrial investigation and had
reason to believe the patent was valid, Q-Pharma, Inc. v. Andrew
Jergens Co., 360 F.3d 1242 (Fed. Cir. 2003); even where the
patentee had allegedly been negligent in failing to properly
evaluate prosecution history, Deering Precision Instructions,
L.L.C. v. Vector Distribution Systems, Inc., 347 F.3d 1314 (Fed.
Cir. 2003); where there was no evidence of egregious misconduct
during litigation or patent prosecution amounting to inequitable
conduct, McNeil-PPC, Inc. v. L. Perrigo Co., 337 F.3d 1362
(Fed. Cir. 2003); even where the patentee failed to obtain
favorable infringement opinion of counsel and instead based its
allegations of infringement on rumor and speculation, Epcon Gas
Systems, Inc. v. Bauer Compressors, Inc., 279 F.3d 1022 (Fed.
Cir. 2002); even where there was slim evidence, from the
appellate court's perspective, of the breadth of a patentee's
pretrial investigation, Apple Computer, Inc. v. Articulate
Systems, Inc., 234 F.3d 14 (Fed. Cir. 2000); where the plaintiff
at least hired an expert and secured an opinion before trial, and
had the expert testify at trial, Zodiac Pool Care, Inc. v.
Hoffinger Industries, Inc., 206 F.3d 1408; and where the
patentee had not engaged in fraud and had pursued litigation in
the good-faith belief that the patent was valid, Argus Chemical
Corp. v. Fibre Glass-Evercoat Co., Inc., 812 F.2d 1381 (Fed.
The instant case is, admittedly, a close one in that it shares
qualities of the both exceptional and non-exceptional cases cited
above. As in Eltech, Plaintiff did not test the AquaMax in the
manner Defendant suggested (that is, by testing the clear-sided
demonstration unit Defendant provided), preferring instead to
test commercial machines as the best evidence. In addition, much
like the tests conducted by the Eltech plaintiff failed to
indicate infringement, Plaintiff's expert testified that he
believed the AquaMax's recovery tank was completely enclosed in,
not side-by-side with, the solution tank. That the AquaMax's
tanks were not in side-by-side relation was one reason this Court granted summary
judgment in Defendant's favor.
On the other hand, as in the cases cited above that did not
result in an award of attorney fees, Plaintiff's counsel
performed a good-faith comparison of the AquaMax machine and the
'094 patent. Plaintiff reasonably relied on this opinion. As
demonstrated by Epcon, even where the opinion was founded on
rumor the Federal Circuit has declined to impose attorney fees.
In fact, Plaintiff could, under Zodiac Pool Care, prevail on
Defendant's motion merely because Plaintiff hired an expert and
secured an opinion before trial. Plaintiff was negligent in not
following up to examine the clear-side demonstration unit once
its counsel and expert were available (or in not insisting on
their availability) and in failing to preserve the evidence upon
which its case relied (the AquaMax machine it rented in order to
investigate the infringement), but as Deering Precision
Instructions showed, mere negligence is not ...