Wednesday, May 1, 2019

Federal Circuit Affirms "Unusual" Exceptional Case Determination

The case is ThermoLife Int'l LLC v. GNC Corp., opinion by Judge Taranto (joined by Judges Bryson and Stoll).  Stanford University (a co-plaintiff) granted ThermoLife an exclusive license to four patents, described in the opinion as claiming "methods and compositions involving the amino acids arginine and lysine, to be ingested to enhance vascular function and physical performance" (p.3).  Plaintiffs sued various companies, some of which settled, for infringement.  The district court held all of the claims in suit invalid, and that decision was not on appeal here.  The district court also concluded that the case was exceptional, and therefore merited an award of attorneys' fees, based primarily on what it characterized as the plaintiffs' inadequate pre-filing investigation. This determination is the issue on appeal.  

In particular, the district court held that an adequate investigation would have disclosed that at least one gram of L-arginine was required to infringe claim 1 of one of the four patents in suit, and that the accused products, all of which were publicly available, did not meet this requirement.  Without my going through all of the evidence the district court considered on exceptionality (as the Federal Circuit opinion does), suffice to say that the appellate court recognizes that it is "unusual" to base a fee award on matters that "had nothing to do with the only issues litigated to reach the judgment on the merits."  It concludes nevertheless that the district court did not abuse its discretion, noting among other things that the plaintiffs "did not discuss any of the other claims to show why they differed as to the adequacy of the pre-suit investigation" (p.11) and that the plaintiffs "had an opportunity to meet the contentions made in the fees motion" (p.17).   

Apropos of attorneys' fee awards in the U.S., I would also call readers' attention to Christine Armellino and Robert Frederickson's informative post on IP Watchdog, titled Examining Octane Fitness Five Years On.  The post includes statistics on the number of exceptional case decisions and grant rates, as well as descriptive analysis of the various types of conduct that have resulted in a finding of, or have been held not to constitute, exceptional circumstances.

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