Checkpoint Systems, Inc. v. All-Tag Security, S.A. et al.


Docket No. 2016-1397

NEWMAN, LOURIE, MOORE
June 5, 2017

Brief Summary: DC grant of attorney fees under § 285 because, e.g., “[e]nforcement of” Checkpoint’s right to “protect its own competitive advantage” “is not an ‘exceptional case’ under the patent law”.

Summary: Checkpoint appealed award of attorney fees to All-Tag under § 285 after the DC found US 4,876,555 regarding “anti-theft tags that are attached to merchandise, and deactivated when the goods are purchased.” In a first appeal, the FC panel reversed the award of attorney fees since “[t]he infringement charge was not shown to have been made in bad faith or objectively baseless” (Checkpoint, FC 2013). All-Tag was granted certiorari (Kobe, US 2014) and the decision remanded in view of Octane Fitness (US 2014) and Highmark (US 2014). The FC then remanded the case to the DC which “again held the case to be exceptional” because, e.g., “Checkpoint’s pre-suit investigation” was “inadequate because the infringement opinions ‘were given years before filing’” and it showed “the improper motive of ‘protect[ing] its own competitive advantage.’” The FC panel explained that an “exceptional case” is “one that stands out from the others with respect to the substantive strength of a party’s litigating position…or the unreasonable manner in which the case was litigated” under a “preponderance of the evidence” (Octane Fitness, US 2014). It also explained that while “‘motivation’ to harass or burden an opponent may be relevant to an ‘exceptional case’ finding” (SFA Sys., FC 2015), “[e]nforcement of” Checkpoint’s right to “protect its own competitive advantage” “is not an ‘exceptional case’ under the patent law” (“[M]otivation to implement the statutory patent right by bringing suit based on a reasonable belief in infringement is not an improper motive. A patentee’s assertion of reasonable claims of infringement is the mechanism whereby patent systems provide an innovation incentive.”) The DC “also found the expert’s failure to test an accused product supported the exceptional case finding and fee award” and “Checkpoint’s expert’s reliance on two of All-Tags manufacturing process patents…as evidence of infringement ‘insufficient’”. However, the FC found “[t]here was no representation by All-Tag that the accused products were different from the tested products, and the [DC] did not so find”, “[t]here was no allegation of falsity or fraud or bad faith on the part of Checkpoint or its expert”, and “All-Tag witness…agree[d] with counsel that to understand” All-Tag’s process, “it was ‘enough to just read the patent’”, all of which it found not to “support the ‘exceptional case’ ruling against Checkpoint.” The FC panel noted that “[t]he Court has cautioned that fee awards are not to be used ‘as a penalty for failure to win a patent infringement suit’” (Octane, US 2014), “[t]he legislative purpose behind § 285” being “to prevent a party from suffering a ‘gross injustice’”. It concluded the DC “erred, and thus abused its discretion” and reversed the award of attorney fees under § 285.

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