AdjustaCam, LLC v. Newegg, Inc. et al.

Docket No. 2016-1882

July 5, 2017

Brief Summary: DC denial of Newegg’s motion for attorneys’ fees under § 285 was reversed and remanded since, e.g., the DC did not “actual[] assess the totality of the circumstances” as required under Octane Fitness.

Summary: AdjustaCam sued multiple defendants for patent infringement and voluntarily dismissed most defendants early in litigation but continued against Newegg, “including through a Markman order and extended expert discovery.” “AdjustaCam voluntarily dismissed its infringement claims against Newegg with prejudice” “[j]ust before summary judgment briefing”, Newegg then filed a motion for attorneys’ fees which was denied (e.g., “Newegg ‘failed to prove AdjustaCam acted inappropriately”). Newegg’s first appeal was remanded in view of Octane Fitness (US 2014) (“Newegg’s ‘arguments appear to have significant merit, particularly [its] argument that AdjustaCam’s continued pursuit of its infringement claims after the [DC] construed the claim term ‘rotatably attached’ was baseless”), but the DC once again denied Newegg’s motion (e.g., “AdjustaCam’s methodology of calculating damages was not ‘so outrageous and unreliable to support an award of attorney fees.”) This opinion relates to Newegg’s appeal of that second denial. This FC panel opinion explained that DC denials of attorneys’ fees under § 285 are reviewed for an abuse of discretion (Highmark, US 2014; MarcTec, FC 2012). Under Octane Fitness (US 2014), “an exceptional case” providing for attorneys’ fees under § 285 “is simply one that stands out from others with respect to the substantive strength of a party’s litigation position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” The FC panel explained that a DC “abuses its discretion when its ruling rests on an erroneous legal conclusion or on a clearly erroneous assessment of the evidence” (Highmark; Apple, FC 2015) or “makes a ‘clear error of judgment in weighing relevant factors’” (Bayer CropScience, FC 2017; Univ. Utah, FC 2017 and Checkpoint Sys., FC 2017 (deference to DC is not absolute)). Here, the FC panel found the DC abused its discretion by not awarding attorneys fees to Newegg because “it failed to follow [their] mandate on remand” (the Octane standard) by not “actually assess[ing] the totality of the circumstances” (“there is no evidence that the [DC] properly weighed the issues” in view of Octane). It also found the DC abused its discretion because “its decision was based on ‘a clearly erroneous assessment of the evidence’” because, e.g., “AdjustaCam’s suit became baseless after the [DC’s] Markman order” (“the evidence proferred by AdjustaCam showed that AdjustaCam’s lawsuit was baseless…there is no possible way for Newegg’s products to infringe the ‘343 patent…These are traits of an exceptional case.”) The FC panel also found that “AdjustaCam litigated the case in an ‘unreasonable manner’” as evidenced by “AdjustaCam’s repeated use of after-the-fact declarations”, and that “[t]he irregularities in AdjustaCam’s damages model and the purported nuisance value of many of its settlements should have played a role in the evaluation of whether this case is exceptional.” Accordingly, the DC denial of Newegg’s motion for attorneys’ fees under § 285 was reversed and remanded.

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