Thursday, July 2, 2020

Federal Circuit Vacates Denial of Attorneys' Fees

The case is Electronic Communication Technologies, LLC v., LLC, precedential opinion by Judge Wallach, joined by Chief Judge Prost and Judge Dyk.  Long story short, the plaintiff asserted claim 11 of U.S. Patent No. 9,373,261 ("Secure Notification Messaging with User Option to Communicate with Delivery or Pickup Representative") against the defendant, and has asserted that or related patents against hundreds of other companies.  In this action, after the court dismissed the complaint on the pleadings, the defendant petitioned for attorneys' fees,  but the district court (citing the wrong statute, namely section 1117 of the Lanham Act) denied the request.  The Federal Circuit vacates and remands:
The District Court clearly erred by failing to address ECT’s manner of litigation and the broader context of ECT’s lawsuit against ShoppersChoice. . . . These are relevant considerations. . . . Before the District Court was evidence that ECT sent standardized demand letters and filed repeat patent infringement actions to obtain low-value “license fees” and forcing settlements. . . . For example, ShoppersChoice provided the District Court with evidence that, between 2011 and 2015, ECT, under its former name Eclipse, filed lawsuits against at least 150 defendants, alleging infringement of claims in the ’261 patent and in other patents in the ’261 patent’s family. . . . This number does not reflect the additional pre-litigation demands made by ECT. . . . ECT’s demand for a low-value settlement—ranging from $15,000 to $30,000—and subsequent steps—such as failure to proceed in litigation past claim construction hearings—indicates the use of litigation to achieve a quick settlement with no intention of testing the strength of the patent or its allegations of infringement. . . .  
Indeed, the True Grit opinion [Kindred Studio Illustration & Design, LLC v. Elec. Commc’n Techs., LLC, Case No. 2:18-cv-07661-GJS, 2019 WL 3064112 (C.D. Cal. May 23, 2019), another case involving the plaintiff's assertion of the '261 Patent] reveals problems with the District Court’s analysis. The opinion provided a detailed account of ECT’s practice of seeking nuisance-value license fees. . . . 
In addition, the Federal Circuit concludes that the district court "clearly erred by failing to consider the objective unreasonableness of ECT’s alleging infringement of claim 11 against ShoppersChoice," and recommends that, on remand, the court apply 35 U.S.C. § 285 (the Patent Act provision on attorneys' fees), not the Lanham Act--even though, the court states, "the exceptional case standard pertaining to 35 U.S.C. § 285 applies to 15 U.S.C. § 1117."

Dennis Crouch has an interesting write-up on this case on Patently-O

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