Docket No. 2016-1576
DYK, MAYER, REYNA
May 11, 2017
Brief Summary: DC award of attorney fees to Dow affirmed as NOVA’s litigation position was found to be “objectively baseless” under Octane Fitness (US 2014).
Summary: NOVA appealed DC award of almost $2.5 million in attorney fees under § 285 to Dow related to its already-decided infringement action regarding US Pat. Nos. 5,847,053 and 6,111,023 (the “2010 judgment” awarding $61+ million in damages to Dow). The patents were held invalid for indefiniteness in “Dow II” (Fed. Cir., 2015) under the intervening Nautilus decision (US 2014) but that “decision…did not disturb the 2010 judgment relating to pre-verdict infringement”. “During the supplemental-damages phase of the infringement action” (the 2010 judgment), “NOVA became aware of evidence allegedly showing that Dow and its counsel had committed fraud on the court” but it was too late to file a motion to set aside that judgment (FRCP 60(b)(3)). “NOVA then filed a separate action in equity” to obtain “relief from the 2010 judgment.” NOVA alleged Dow misrepresented its ownership of the asserted patents and that its expert “had provided conflicting testimony…during a separate litigation in Canada (the ‘Canadian action’).” Dow moved to dismiss the action, which was granted by the DC and affirmed by the FC (2015). Dow then moved for sanctions, attorneys’ fees and costs under § 285. The DC found that “NOVA did not file the equity action in bad faith” but did award attorney’s fees “based on the weakness of NOVA’s litigating position and the manner in which NOVA pursued this case” (its “claims for relief ‘just didn’t stand up’ and were ‘not even plausible’…NOVA ‘could have dealt with the situation’ in ‘less inflammatory ways’”). In this appeal, NOVA challenged the DC’s exceptional-case determination (Octane Fitness, US 2014 (“one that stands out…or the unreasonable manner in which the case was litigated”, DC considers “totality of the circumstances”), arguing that the DC “look[ed] to NOVA’s pursuit of the equity action as ‘[t]he overriding factor’, rather than considering the totality of the circumstances” and that the equity action “could be subject of a fee award.” This FC panel agreed with NOVA that the “mere filing” of the equity action cannot “render a case exceptional under § 285” (“A party whose only option for relief from a prior judgment is to file a separate action in equity should be disincentivized from doing so if that party has a plausible basis for relief.”) However, the FC panel explained, it still needed to consider whether NOVA’s litigating position was “objectively baseless” under Octane Fitness, noting that “[i]t is the ‘substantive strength of the party’s litigating position’ that is relevant…not the correctness or eventually success of that position” (SFA Sys., FC 2015). And it concluded the DC “did not abuse its discretion in holding that NOVA’s litigating position was objectively baseless” because, e.g., the allegedly inconsistent expert testimony upon which it relied on “did not directly relate to the limitation that had been the focus of the parties’ underlying infringement suit.” NOVA also unsuccessfully argued the DC should have compared this case to other equity actions and not to other patent cases.