Federal Circuit Affirms Finding of Exceptionality

The case is Energy Heating, LLC v. Heat On-the-Fly, LLC , precedential opinion by Judge Prost, joined by Chief Judge Moore and Judge Stoll.  The case is before the Federal Circuit for a second time.  The first time around, the court affirmed a judgment that HOTF’s patent was unenforceable due to inequitable conduct, in particular what the court describes as the withholding of “information from the [USPTO] . . .  about substantial on-sale and public uses of the claimed invention  . . . before the patent’s critical date” (p.4).  The court remanded, however, for the district court to reconsider its decision denying attorneys' fees under 35 U.S.C. § 285.  On remand, the district court found that the case was exceptional, and the Federal Circuit now concludes that this was not an abuse of discretion.  Specifically, the court rejects HOTF’s arguments that the lower court “based its decision on an erroneous factual finding,” that it “failed to address or properly weigh the relevant factors,” and that it “failed properly to apply the law.”  On the second of these, the court states, inter alia, that “contrary to HOTF’s assertion, the district court was not required to affirmatively weigh HOTF’s purported ‘lack of litigation misconduct. . . .  In other words, while the ‘manner’ or ‘broader conduct’ of litigation is relevant under § 285, the absence of litigation misconduct is not separately of mandatory weight” (p.9; emphasis in original).  In addition:

 

HOTF contends that the district court misapplied the law because it “viewed an inequitable conduct finding as mandating a finding of exceptionality.” . . . Not so. The district court correctly explained that “[a] finding of inequitable conduct does not mandate a finding of exceptionality.” . . . And while the district court stated that after Octane Fitness “it appears other courts have universally” found “exceptionality if inequitable conduct is found,” the district court nonetheless appropriately considered the governing law and the facts of this case in reaching its conclusion. . . . We discern no legal error and so no abuse of discretion in the district court’s application of the relevant law (p.10).