Stone Basket Innovations, LLC v. Cook Medical LLC

Docket No. 2017-2330

June 11, 2018

Brief summary: DC finding of no exceptionality and denial of attorney’s fees under § 285 affirmed since, e.g., “Stone’s litigating position did not ‘stand[] out from others.’”

Summary: Cook appealed DC denial of attorney’s fees under § 285 regarding litigation of Stone’s US 6,551,327. The FC panel considered whether the DC “erred in its assessment of: (1) the substantive strength of Stone’s litigating position, and (2) the alleged pattern of vexatious litigation by Stone.” The FC panel opinion explained that under Octane Fitness (US 2014), DCs “may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances” and such decision are reviewed “for abuse of discretion” (Highmark, US 2014; Rothschild, FC 2017 (“erroneous view of the law or on a clearly erroneous assessment of the evidence”)). Regarding the “substantive strength” analysis, Cook argued the DC “disregarded both the law and the facts showing the weakness of [Stone’s] patent claims” (e.g., in a deposition, “the ‘327 patent inventor stated, regarding the additional of the ‘sheath movement element’ in claim 1 to overcome an examiner’s rejection, ‘I realize there is nothing novel about it’” and “Stone filed a motion requesting adverse judgment in the IPR proceeding” which was granted and resulted in cancellation of all of the ‘327 patent’s claims). But the FC panel found the DC “did not err in finding Stone lacked any type of ‘clear notice’ of the ‘327 patent’s invalidity by service of Cook’s invalidity contentions” (e.g., those “fall short of notifying how Leslie renders the ‘327 patent obvious” and since the reference “is listed on the face” of the ‘327 patent, “the examiner is presumed to have considered it” (Shire, FC 2015); PowerOasis, FC 2008 (“where a party only relies on prior art considered by an examiner in its invalidity contentions, that party has the burden to ‘overcome the deference that is due” to the PTO); SFA, FC 2015 (“a strong or even correct litigating position is not the standard by which we assess exceptionality”); “[a] post-issuance statement regarding a single element of a claimed invention does not establish invalidity” (Graham, US 1996 ([w]e must consider the subject matter sought to be patented taken as a whole”)) and “concluding that Stone’s litigating position did not ‘stand[] out from others.’” And regarding some of Cook’s behavior throughout the litigation (e.g., “Cook could not explain why it did not make its assertion of frivolousness of the claims known to Stoner sooner”), the FC panel explained that “a party cannot simply hide under a rock, quietly documenting all the ways it’s been wronged, so that it can march out its ‘parade of horribles’ after all is said and done” (citing C.D. Cal., Mar. 20, 2018). The FC panel also noted that its “holding with respect to this factor does not disturb the rule that ‘a party cannot assert baseless infringement claims and must continually assess the soundness of pending infringement claims” (Taurus IP, FC 2013; Medtronic, FC 2010). The FC panel also found no error with the DC’s finding a lack of evidence that Stone had sued Cook or “other defendants, ‘for the sole purpose of forcing settlements, without any intention of testing the merits of its claim” (Eon-Net, FC 2011). Thus, the DC finding of no exceptionality and denial of attorney’s fees under § 285 was affirmed.

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