United States District Court, D. Delaware
before me are Defendant Payoneer Inc.'s Motion for
Exceptional Case and Defendant Stitch Labs, Inc.'s Motion
for Attorneys' Fees Pursuant to 35 U.S.C. § 285.
(C.A. 18-444, D.I. 25; C.A. 18-445, D.I. 21). The Parties
have fully briefed the issue. (C.A. 18-444, D.I. 26, 30, 32;
C.A. 18-445, D.I. 22, 29, 32). For the reasons set out below,
Defendants' Motions are GRANTED.
filed Complaints against Defendants on March 23, 2018,
alleging infringement of U.S. Patent No. 9, 569, 755
('755 Patent). (C.A. 18-444, D.I. 1; C.A. 18-445, D.I.
1). On May 16, 2018, Defendants filed Motions to Dismiss for
Failure to State a Claim based on patent ineligibility of the
'755 Patent under 35 U.S.C. § 101. (C.A. 18-444,
D.I. 7, 8; C.A. 18-445, D.I. 9, 10). I heard argument on
October 24, 2018 and granted the motions on November 26,
2018. (D.I. 22 ). Specifically, I found that the
'755 Patent was directed to the patent ineligible
abstract idea of bookkeeping and did not contain an inventive
concept. (Id. at 7).
Patent Act provides that "in exceptional cases [the
court] may award reasonable attorney fees to the prevailing
party." 35 U.S.C. § 285. 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 defines
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).
undisputed that Defendants are prevailing parties. Thus, the
only issue is whether the cases are exceptional.
is no question that the '755 Patent is patent ineligible
under the Federal Circuit's current precedent. In fact,
the Patent is reminiscent of patents which courts were
invalidating in the immediate wake of Alice, five
years ago. Since Alice, the law of patent
eligibility has perhaps become unpredictable and unclear on
the fringes. But one thing has remained true: patents which
look like Alice are ineligible. I have rarely been
more confident in the patent ineligibility of a set of claims
or more confident in the unreasonableness of a Plaintiffs
decision to sue on a patent. Thus, this case fits the bill of
"one that stands out from others" with regard to
the substantive weakness of Plaintiff s litigation position.
informs me that the Examiner allowed the '755 Patent
despite a remarkable/ow Section 101 rejections. (D.I. 30 at
2-4). It argues that this supports its position that it was
reasonable to assert the patent. (Id.). I do not
agree. All patents are issued by the Patent Office. A blanket
application of Plaintiff s position would effectively relieve
patentholders from independently evaluating the strength of
their patents prior to suing. This is problematic, however,
as all plaintiffs have a duty to critically assess the merits
of their case prior to suit. I will not adopt a position
which relieves patent plaintiffs from that
duty. The issuance of a patent cannot and should
not be a license to sue with abandon. range .
also argues that the Patent Office's continued issuance
of substantially identical patents supports its position.
(D.I. 30 at 10-11). This argument is similarly unpersuasive.
Patent examiners are non-lawyers. An examiner's opinion
on the legal question of patent eligibility does not relieve
a patent attorney from her obligation to make an independent
assessment based on an evaluation of the relevant law.
further argues that the law is unclear and that it made
reasonable arguments in response to Defendants' motions.
(D.I. 30 at 11-15). I disagree. As I discussed in my
Memorandum Opinion, the claims of the '755 Patent are
"plainly directed at a patent ineligible concept"
and "amount to no more than the underlying idea."
(D.I. 22 at 5). This was not a "borderline case"
with an unpredictable result. Any reasonable patent attorney
with an understanding of Section 101 law could have predicted
Plaintiff argues that awarding fees will have a
"chilling effect" on patents. (D.I. 30 at 19-20).
It states, "If attorneys' fees are awarded under the
facts in this case, then there is no situation in which a
patent owner could safely assert infringement of a recently
issued patent without fear of being subject to attorneys'
fees if the patent is held ineligible for patenting."
This statement is overblown. More accurately put, awarding
fees will have a chilling effect on asserting a patent
without first assessing the patent's weaknesses
considering current caselaw. I do not view this result as a
negative. Rather, it is a result that benefits the public
generally by decreasing instances of transparently meritless
patent litigation-one of the many goals of the attorneys'
should not have filed suit asserting the clearly patent
ineligible claims of the '755 Patent. Its decision was
unreasonable under the law and its behavior should be
deterred. Thus, I will grant Defendant Payoneer Inc.'s
Motion for Exceptional Case (D.I. 25) and Defendant Stitch