In EON Corp. IP Holdings, LLC v. Flo TV Inc., et al., C.A. No. 10-812-RGA (D. Del. May 27, 2014), Judge Richard G. Andrews denied defendant FLO TV Inc.’s (“FLO TV”) motion for attorney’s fees, which followed the Court’s grant of summary judgment in favor of defendants based on the court finding eight computer-implemented means-plus-function terms in asserted U.S. Patent No. 5,663,757 (“the ’757 Patent”) indefinite. Id. at 1-2.
Judge Andrews first discussed the Supreme Court’s recent decisions finding the Federal Circuit’s test for attorney’s fees under 35 U.S.C. § 285 too rigid. As Judge Andrews explained, the Supreme Court defines an “exceptional case” under § 285 as “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” (citing Octane Fitness, LLC v. ICON Health & Fitness, 134 S. Ct. 1749 (2014) and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014)) (emphasis added). Judge Andrews further explained that the Supreme Court’s more flexible standard permits district court judges to exercise their discretion on case-by-case basis and to consider the totality of the circumstances when considering an award of attorney’s fees. Judge Andrews found that neither definition of an “exceptional case” set forth by the Supreme Court was satisfied. Id. at 2-3.
Specifically, Judge Andrews found that EON did not litigate the case unreasonably. Id. at 4. According to Judge Andrews, the “main thrust of FLO TV’s argument appears to be that EON should have dropped the case, or entered into a settlement, because the potential recovery from FLO TV would be dwarfed by the costs of litigation.” Id. Judge Andrews had outlined in detail how plaintiff EON Corp. IP Holdings, LLC’s (“EON”) prospect of “obtaining a large monetary judgment from FLO TV steadily declined as the case progressed.” Id. at 1-2. Nevertheless, Judge Andrews found FLO TV’s argument to fail for at least two reasons. First, arguments by both sides “regarding the size of the potential recovery [were] speculative and [could not] form the basis for an award of attorney’s fees,” given that liability and damages were bifurcated, and no discovery had been conducted with respect to damages. Id. at 4. Second, Judge Andrews noted that the Court is “unaware of any de minimis exception for infringement.” Id. That is, “[i]t cannot be the case that a plaintiff may be subjected to monetary sanctions for failing to drop a case against a defendant if the cost of litigation exceeds the potential recovery.” Id. Judge Andrews did leave open the possibility, however, that “a party’s approach to settlement [may be] so unreasonable as to justify an ‘exceptional’ finding.” Id.
While it did not appear that FLO TV made any arguments to this end, Judge Andrews also noted that “[t]he substantive strength of EON’s case was not so conspicuously deficient as to justify the award of attorney’s fees.” Id. at 3. As Judge Andrews explained, the case “turned on a complex and evolving area of law-the construction of computer-implemented means-plus-function terms,” and that the decision “was not an easy one.” Id. In this regard, Judge Andrews noted that the Court “heard oral argument, scheduled a supplemental evidentiary hearing, and ordered post-trial briefing on the issue.” Id. Additionally, the fact that EON is appealing the Court’s decision to the Federal Circuit suggested to Judge Andrews that EON “maintains faith in the strength of its position.” Id.