United States District Court, D. Delaware
Richard D. Kirk, Esq., Stephen B. Brauerman, Esq., Bayard, P.A., Wilmington, DE; Eric W. Buether, Esq. (argued), Christopher M. Joe, Esq., Brian A. Carpenter, Esq., Buether Joe & Carpenter, LLC, Dallas TX, counsel for Plaintiff Vehicle Operation Technologies LLC.
Benjamin J. Schladweiler, Esq., Ross, Aronstam & Moritz LLP, Wilmington, DE; Eric A. Buresh, Esq., Jason R. Mudd, Esq. (argued), Ajay A. Sharma, Esq., Erise IP, P.A., Overland Park, KS, counsel for Defendant Ford Motor Company.
Sean T. O'Kelly, Esq., O'Kelly Ernst & Bielli, Wilmington, DE; Charles Gorenstein, Esq., Michael T. Smith, Esq., Ali M. Imam, Esq., Birch Stewart Kolasch & Birch LLP, Falls Church, VA, counsel for Defendant Mitsubishi North America.
RICHARD G. ANDREWS, District Judge.
Presently before the Court is Defendants' Motion to Declare These Cases Exceptional Pursuant to 35 U.S.C. § 285. (D.I. 67). 1 The matter has been fully briefed. (D.I. 68, 72, 80). The Court heard oral argument on June 19, 2015. (D.I. 83 [hereinafter, "Tr."]).
On April 5, 2013, Plaintiff Vehicle Operation Technologies brought six separate actions against Honda, BMW, Ford, General Motors, Nissan, and Porsche alleging infringement of U.S. Patent No. 7, 145, 442 ("the '442 patent"). Plaintiff filed an additional suit against Mitsubishi on April 23, 2013. On September 30, 2013, Mitsubishi, Porsche, BMW, Ford, Nissan, and General Motors filed motions for Rule 11 sanctions. (D.I. 21). On January 24, 2014, the Court ordered early claim construction in order to focus expert discovery and summary judgment motion practice. (D.I. 33).
On July 1, 2014, the Court held a Markman hearing and oral argument on the Rule 11 motions. (D.I. 52, 53). The '442 patent is directed to a vehicle operation display system. The issue at the Markman hearing was whether the display must be dedicated. At the Markman hearing, Defendants argued that the applicants disclaimed non-dedicated displays. (D.I. 52). Plaintiff argued that the applicants made no prosecution disclaimer. ( Id. ). I agreed with Defendants, holding that "the inventor repeatedly and unambiguously disclaimed the plain reading of the term display." (D.I. 53 at 8).
On September 12, 2014, I dismissed the case as a sanction for Plaintiffs Rule 11(b)(2) violation. (D.I. 62) I found that Plaintiff failed to conduct an objectively reasonable pre-suit investigation. (D.I. 63 at p. 20). I did not grant monetary sanctions at that time due to a 1 All citations to the docket are to C.A. 13-539. procedural defect. ( Id. at p. 24). All Defendants other than Ford and Mitsubishi subsequently stipulated to dismissal.
The Patent Act provides that "in exceptional cases [the court] may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. Thus, under the statute there are two basic requirements: (1) that the case is "exceptional" and (2) that the party seeking fees is a "prevailing party." The Supreme Court recently defined an "exceptional" case 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." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). When determining whether a party is a prevailing party, the Federal Circuit has followed the Supreme Court's definition of a prevailing party as used in other fee-shifting statutes. Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1320 (Fed. Cir. 2004). In Inland Steel, the Federal Circuit held that district courts are to "apply the general principle that to be a prevailing party, one must receive at least some relief on the merits, which alters... the legal relationship of the parties." Id. (quotation marks omitted, ellipses in original).
The Federal Circuit's definition of a prevailing party derives from a series of Supreme Court decisions. The term "prevailing party" is "a legal term of art." Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep't of Health & Human Res., 532 U.S. 598, 603 (2001). The Supreme Court defined a prevailing party, for the purpose of attorney's fees shifting, to be a party which "succeed[s] on any significant issue in litigation which achieves some of the benefit the part[y] sought in bringing suit." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (defining a prevailing party in the context of a 42 U.S.C. § 1988 attorney fee-shifting claim). The Supreme Court later held that, while it is "settled law... that relief need not be judicially decreed in order to justify a fee award, " there must be at least the "settling of some dispute which affects the behavior of the defendant towards the plaintiff." Hewitt v. Helms, 482 U.S. 755, 761 (1987) (italics omitted). The Supreme Court then further refined its previous rulings by holding that the relief must actually affect the parties' behavior. Farrar v. Hobby, 506 U.S. 103, 111 (1992). Furthermore, the Court emphasized that "the touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties." Id. (brackets omitted); see also Lefemine v. Wideman, 133 S.Ct. 9, 11 (2012). Independent of what relief is received, it "must directly benefit [the party] at the time of the judgment or the settlement." Id. Even "nominal damages suffices under this test." Buckhannon Bd & Care Home, Inc., 532 U.S. at 604 (citing Farrar ). Finally, the Supreme Court has made clear that:
We have only awarded attorney's fees where the plaintiff has received a judgment on the merits or obtained a court-ordered consent decree - we have not awarded attorney's fees where the plaintiff has secured the reversal of a directed verdict or acquired a judicial pronouncement that the defendant has violated the Constitution unaccompanied by judicial relief. Never have we awarded attorney's fees for a nonjudicial alteration of actual circumstances.
532 U.S. 598, 605-06 (2001). In sum, precedent from both the Supreme Court and the Federal Circuit make clear that for a party to be a prevailing party, that party must win a dispute within the case in favor of it that materially alters the ...