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Altair Logix LLC v. Caterpillar Inc.

United States District Court, D. Delaware

July 17, 2019

ALTAIR LOGIX LLC, Plaintiff,
v.
CATERPILLAR INC., Defendant.

          Timothy Devlin, Devlin Law Firm LLC, Wilmington, DE; David R. Bennett, Direction IP Law, Chicago, IL - attorneys for Plaintiff.

          Elizabeth S. Fenton, Saul Ewing Arnstein & Lehr LLP, Wilmington, DE; Colm MacKernan, Origin Ltd., London - attorneys for Defendant.

          MEMORANDUM OPINION

          NOREIKA, U.S. DISTRICT JUDGE.

         Presently before the Court is the motion of Defendant Caterpillar Inc. (“Defendant” or “Caterpillar”) to declare this case exceptional under 35 U.S.C. § 285. (See D.I. 20). For the reasons set forth below, Defendant's motion is DENIED.

         I. BACKGROUND

         On December 27, 2018, Plaintiff Altair Logix LLC (“Plaintiff) filed the present action, alleging that the Caterpillar CAT S41 phone directly infringes claim 1 of U.S. Patent No. 6, 289, 434 (“the '434 Patent”). (D.I. 1 ¶ 26; see also Id. ¶¶ 26-36). On January 28, 2019, Defendant filed an Answer (D.I. 9) and also moved to dismiss the Complaint in its entirety under Rules 12(b)(1), (2), (3) and (6) of the Federal Rules of Civil Procedure and pursuant to 28 U.S.C. § 1338 (see D.I. 10 & 11). In support of its motion, Defendant argued that it is not the entity that makes, uses, sells or offers to sell the accused CAT S41 phone and, therefore, this Court did not have subject matter jurisdiction over the dispute or personal jurisdiction over Defendant because it committed no acts of patent infringement (in Delaware or anywhere else). (See, e.g., D.I. 11 at 1-2). Plaintiff responded on February 19, 2019, agreeing that the case should be dismissed with prejudice, particularly in that Plaintiff had provided Defendant with an executed covenant not to sue for infringement of the '434 Patent. (D.I. 17 at 5-7; see also D.I. 18). On the same date, Plaintiff filed its own motion to dismiss under Rule 12(b)(1), requesting that the Court also dismiss Defendant's declaratory-judgment counterclaim of noninfringement with prejudice. (See D.I. 14 & 15; see also D.I. 16). The cross-motions to dismiss were fully briefed on March 5, 2019. (See D.I. 19 & 21).

         On March 7, 2019, the Court dismissed all claims against Defendant with prejudice because it was apparent that both sides agreed such a dismissal was warranted. (See D.I. 22 at 2). In the same order, the Court also dismissed Defendant's counterclaim of noninfringement without prejudice because the controversy had been mooted. (Id.). While briefing on the cross-motions for dismissal was underway - i.e., before the Court dismissed Plaintiff's claims with prejudice - Defendant filed the present motion to declare this case exceptional under § 285. (See D.I. 20; see also D.I. 19). Briefing on Defendant's motion under § 285 was completed on March 19, 2019. (See D.I. 23 & 24).

         II. LEGAL STANDARDS

         Section 285 of the Patent Act provides that a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. An exceptional case within the meaning of the statute is “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., 572 U.S. 545, 554 (2014). Whether a case is exceptional is a question committed to the Court's discretion, and the Court must consider the totality of the circumstances in reaching its conclusion. Id. In assessing the totality of the circumstances, the Court may consider, inter alia, “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 554 n.6. A party seeking attorneys' fees must show the case is exceptional by a preponderance of the evidence. Id. at 557-58. The Court may award attorneys' fees in “the rare case in which a party's unreasonable conduct - while not necessarily independently sanctionable - is nonetheless so ‘exceptional' as to justify an award of fees.” Id. at 555.

         III. DISCUSSION

         Defendant asserts that the present case is exceptional within the meaning of § 285 because Plaintiff purportedly had no basis to initiate this suit because Defendant is not the entity that makes, uses, sells or offers to sell the accused CAT S41 phone. (See D.I. 20 ¶¶ 2-3, 23, see also D.I. 24 at 3-4). Defendant argues that a simple pre-suit investigation would have revealed that another entity - Bullitt Mobile Ltd. - is responsible for the accused product. (See D.I. 20 ¶¶ 3-9; see also D.I. 24 at 3-4). Moreover, according to Defendant, Plaintiff and its counsel knew or should have known that Bullitt Mobile was the proper party based on prior proceedings in the Eastern District of Texas. (D.I. 20 ¶¶ 4-5; see also D.I. 19 at 1-3). Before reaching the substance of these arguments, the Court must first address a threshold issue - i.e., whether Defendant's motion to declare this case exceptional is procedurally proper in light of the facts of this case.

         A. Procedural Requirements for a Motion for Attorneys' Fees Under § 285

         Section 285 provides that the Court may award reasonable attorneys' fees in exceptional cases to the prevailing party. In this case, Defendant became the “prevailing party” when the Court dismissed Plaintiff's claims against Defendant with prejudice - i.e., this dismissal constituted the necessary judicially sanctioned change in legal relationship of the parties sufficient to make Defendant the “prevailing party.” See Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1035 (Fed. Cir. 2006) (“[A]s a matter of patent law, the dismissal with prejudice, based on the covenant and granted pursuant to the district courts discretion . . . has the necessary judicial imprimatur to constitute a judicially sanctioned change in the legal relationship of the parties, such that the district court properly could entertain FECO's fee claim under 35 U.S.C. § 285.”).

         Defendant, however, filed the present motion under § 285 before the Court ordered dismissal of Plaintiff's claims. (Compare D.I. 20 (Defendant's motion), with D.I. 22 (dismissal of Plaintiff's claims with prejudice)). In the Court's view, Defendant's motion under § 285 was premature because it was made before there was judicial action that conferred prevailing party status to one side. That is, this Court agrees with other courts that have found that a motion seeking relief under § 285 must be made after judgment or some other judicially sanctioned change in the legal relationship of the parties. See, e.g., Novartis Corp. v. Webvention Holdings LLC, No. CCB-11-3620, 2015 WL 3901639, at *5 (D. Md. June 22, 2015) (“Although it is clear that Novartis seeks an attorneys' fee award, its pending motion for an exceptional case finding, standing alone, does not appear to comply with Rule 54(d)(2)(B). As an initial matter, because it was filed before the court's present dismissal order, Novartis's motion was ...


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