United States District Court, D. Minnesota
Larry R. Laycock, Esq., Maschoff Brennan, Salt Lake City, UT; and Lawrence M. Shapiro, Esq., and X. Kevin Zhao, Esq., Greene Espel, PLLP, Minneapolis, MN, on behalf of Plaintiff.
Rudolph A. Telscher, Jr., Esq., and Daisy Manning, Esq., Harness, Dickey & Pierce, P.L.C., St. Louis, MO, on behalf of Defendant.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
On April 1, 2015, the undersigned United States District Judge heard oral argument on Defendant Octane Fitness, LLC's ("Octane") Renewed Motion for Attorney's Fees and Costs [Docket No. 260] and Motion to Strike or, in the Alternative, Motion to Reopen Discovery [Docket No. 272]. Octane argues that it is entitled to attorney's fees under § 285 of the Patent Act based on the new standard announced by the Supreme Court in this case. See Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749 (2014). The Federal Circuit has remanded the case to this Court for consideration of whether, under the newly-announced standard, this is an exceptional patent case that warrants an award of attorney's fees. See Icon Health & Fitness, Inc. v. Octane Fitness, LLC, 576 F.Appx. 1002 (Fed. Cir. 2014). Plaintiff Icon Health & Fitness, Inc. ("Icon") opposes the motions. For the reasons set forth below, the Court finds this case to be exceptional under § 285 and grants the renewed motion for attorney's fees and costs. The motion to strike is denied as moot.
In this patent infringement case, Icon alleged that Octane infringed Icon's U.S. Patent No. 6, 019, 710 (the "'710 patent"). See Telscher Decl. [Docket No. 262] Ex. S ("'710 patent"). The '710 patent covers an elliptical machine designed to minimize floor space needed and allow for adjustable stride length. Although the '710 patent was issued in 2000, it was never commercialized due to the lack of buyer interest and the complexity and expense of the machine. Id . Ex. D ("Dalebout Dep.") 28:15-31:4; 34:23-36:14.
Icon alleged that two models of elliptical machines manufactured and sold by Octane, the Q45 and Q47, infringed claims 1-5, 7, and 9-11 of the '710 patent. These claims are all directed to the elliptical machine's linkage system that connects the foot rail to the frame via the "stroke rail." Octane denied the infringement allegations and counterclaimed for declaratory judgment of non-infringement, invalidity, and unenforceability of the '710 patent.
On December 22, 2010, this Court issued a Claim Construction Order [Docket No. 144]. Thereafter, on June 17, 2011, this Court granted summary judgment of noninfringement to Octane. See Mem. Op. & Order [Docket No. 187] ("Summary Judgment Order).
In July 2011, Octane moved for an award of attorney's fees under § 285 of the Patent Act, which authorizes a court to award reasonable attorney's fees to the prevailing party in "exceptional" patent cases. 35 U.S.C. § 285. In determining whether Octane was entitled to attorney's fees under the statute, the Court applied the then-prevailing standard from Brooks Furniture Mfg., Inc. v. Dutailier Intern., Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). Absent misconduct in litigation or in securing a patent, a case was deemed "exceptional" under Brooks Furniture only if a party can show by clear and convincing evidence "both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless." Id. at 1381. Based on this standard, this Court concluded that Octane had not established by clear and convincing evidence that the litigation was brought in subjective bad faith and was objectively baseless. Mem. Op. & Order, Sept. 6, 2011 [Docket No. 220] ("Fee Order") at 2-8. As a result, this Court held that the case was not exceptional and that an award of attorney's fees was not warranted. Id. at 8. The Federal Circuit affirmed this holding. See Icon Health & Fitness, Inc. v. Octane Fitness, LLC., 496 F.Appx. 57, 65 (Fed. Cir. 2012) (reh'g en banc denied, Dec. 27, 2012).
The Supreme Court granted certiorari on the § 285 issue and reversed, rejecting the Brooks Furniture framework as "unduly rigid" and "so demanding that it would appear to render § 285 largely superfluous." Octane, 134 S.Ct. at 1755, 1758. As a result, the Supreme Court announced a new standard for determining whether a case is "exceptional" under § 285 and remanded the case to the Federal Circuit for further proceedings. Id. at 1758. In turn, the Federal Circuit vacated this Court's judgment on the § 285 issue and remanded "for application in the first instance of the new standard whether, under the totality of the circumstances, this case stands out from others with respect to the substantive strength' of ICON's litigation position or was litigated in an unreasonable manner." Icon, 576 F.Appx. at 1005 (quoting Octane, 134 S.Ct. at 1756).
A. Renewed Motion for Attorney's Fees
Section 285 of the Patent Act provides: "The court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. The "patently clear" text of § 285 "imposes one and only constraint on district courts' discretion to award attorney's fees in patent litigation: The power is reserved for exceptional' cases." Octane, 134 S.Ct. at 1755-56.
Because the Patent Act does not define "exceptional, " it is given its ordinary meaning of "uncommon, rare, or not ordinary." Id . (quotations omitted). Thus,
an "exceptional" case is 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. District courts may determine whether a case is "exceptional" in the case-by-case exercise of their discretion, considering the totality of the circumstances.
Id. at 1756.
There is "no precise rule or formula" for determining whether a case is exceptional. Id . Instead, district courts are to exercise discretion in considering the non-exclusive list of factors: "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 1756 n.6.
In addition to adopting a discretionary, flexible approach for determining whether a case is exceptional under § 285, the Supreme Court rejected the clear and convincing standard of evidence required under Brooks Furniture and held instead that a patent litigant may establish entitlement to fees by a preponderance of the evidence. Id. at 1758.
1. Substantive Strength of Litigation Position
Octane argues that this case "stands out" in terms of the weakness of Icon's infringement allegations because Octane's machines did not have any of the patentable features of the '710 patent, and because the '710 patent would have been invalid under Icon's overly broad interpretation of the claims. Icon responds that its litigation position was not unreasonable because the Court found that Octane's devices lacked only two elements of the disputed patent claims, and Octane conceded the presence of one of those elements (a "stroke rail") during a significant portion of the litigation.
"[C]ourts have awarded attorneys' fees under Section 285 where a party advances arguments that are particularly weak and lack support in the record or seek only to re-litigate issues the court has already decided." Intex Recreation Corp. v. Team Worldwide Corp., ___ F.Supp. 3d ___, No. 4-1785, 2015 WL 135532, at *3 (D.D.C. Jan. 9, 2015). As explained below, Icon's arguments with regard to two critical elements of claim 1 (the only independent claim in the '710 patent) were particularly weak because they were ...