In Chalumeau Power Systems LLC v. Alcatel-Lucent, et al., C.A. No. 11-1175-RGA (D. Del. Sept. 12, 2014), Judge Richard G. Andrews recently determined that defendants were entitled to attorneys’ fees and costs under Section 285. Plaintiff had dismissed its complaint, citing a change in “the economics of the case” as a result of defendants’ new licensing defense; defendants then filed the instant motion. Id. at 1.
Applying the Supreme Court’s standard for Section 285 awards, see Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014), the Court first concluded that plaintiff’s infringement theories and claim construction positions were frivolous. See id. at 2-6. Once the Court requested documentary evidence of plaintiff’s pre-suit investigation, it became clear that plaintiff had not “vetted” every accused patent family before filing suit, as it had previously claimed to have done. Id. at 3. The Court observed that the single, 5-page document produced in camera grouped claim limitations too broadly, “encompassing multiple disputed terms in each group.” Id. at 4. The Court explained that “[a] pre-suit investigation which lumps so many limitations together does not demonstrate an adequate investigation into whether the accused device infringes each and every claim limitation.” Id. The Court then analyzed plaintiff’s claim construction positions, and found them similarly frivolous. See id. at 4-6.
The Court also found that plaintiff’s litigation conduct warranted a finding that the case was exceptional. Plaintiff had opposed defendants’ motion to add a license defense as futile, even though plaintiff now claimed that it was this defense that had caused it to drop the suit. Id. at 6-7. The Court concluded that plaintiff’s litigation strategy was to “extort a settlement fee” as it “st[rung] out the case in the hopes that [defendant] would incur fees while [plaintiff] would not. [Plaintiff] did not even disclose an expert until” days before the close of fact discovery.” Id. at 7.