Tumultuous Alice Landscape Justifies Denying Fees under § 285

Jason Bourgeois

IP Portfolio Manager

Contact: jason@ipval.com

Two District Court Judges in the past 7 days have declined to award attorney fees following successful  § 101 validity challenges. Both Judges cited the “unsettled and rapidly evolving” post-Alice landscape of patent eligibility under  § 101 as reason to deny the  § 285 motion for fees.

In Clarilogic, Inc. v. FormFree Holdings Corporation (3-15-cv-00041), the Plaintiff Clarilogic filed a declaratory judgement action against the Defendant FormFree Holdings seeking to invalidate U.S. Patent No. 8,762,243. Judge Sabraw of the Southern District of California granted Plaintiff’s motion for Summary Judgement of Invalidity under  35 U.S.C. § 101 but denied Plaintiff’s following motion under 35 USC § 285 for attorney fees because defendant’s litigation positions were not baseless.  The Court noted that “the patent issued after the Supreme Court’s decision in Alice. The patent is presumed valid, ‘and this presumption exists at every stage of the litigation.'”

The Court then notes that the context of the litigation does not support an award of fees, stating that “Defendant…did not initiate the litigation. In Defendant’s view, it merely defended ‘a presumptively valid patent and preserve[d] its counterclaims in an action it did not initiate in a forum it did not choose.'” The Court seems to express some sympathy for patent holders struggling with the Alice regime: “[t]he Defendant argues that while it was aware Alice ‘would create difficultly[,]’ it defended the patent in good faith.” In concluding the Judge Sabraw declined “to find that the substantive weakness of Defendant’s position was so objectively apparent as to render the case exceptional.”

In YYZ LLC v. Pegasystems Inc., (1-13-cv-00581), the Defendants (HP, Adobe and Pegasystems) sought summary judgement of invalidity against Plaintiff YYZ LLC’s patents (7,062,749 and 7,603,674). The court granted Defendant’s motion but declined to grant Defendant’s follow on motion for attorney fees under 35 U.S.C. § 285.

The Court  concluded that the Plaintiff’s litigation positions were not baseless, noting”[D]efendant focuses on the very invalidity arguments presented in the summary judgment briefing. The court expended considerable effort in reaching its invalidity determination and analyzed those very arguments in its opinion. Defendant’s characterization of plaintiff’s arguments as ‘reckless’ and its claims as ‘clearly invalid’ is in contradiction to the court’s position that the § 101 analysis is an evolving state of the law and a difficult exercise, which does not lend itself to, e.g., shifting fees pursuant to 35 U.S.C. § 285.”

While both of these cases resulted in further culling of patent owner’s rights, the silver lining is that District Court Judges seem to be recognizing that the Alice regime is largely unworkable.

Read: Delaware District Court: Electronic Maps are Still Patent Eligible 

Read: 101 Frustrations