Bad day for Adams at CAFC
Four separate issues are appealed to this court.
ASUS appeals (1) the adverse inference sanction and (2)
the denial of its motion for JMOL. PMAA cross appeals
(1) the grant of summary judgment dismissing its trade
secrets claim and (2) the refusal to grant it attorney fees
under 35 U.S.C. § 285.
Of the first issue:
ASUS appeals from the district court’s imposition of an adverse inference sanction for spoliation of evidence. This court reviews such procedural matters not unique to patent law under the law of the regional circuit. Sitrick v. Dreamworks, LLC, 516 F.3d 993, 1002 (Fed. Cir. 2008). The Tenth Circuit reviews a district court’s ruling on a motion for spoliation sanctions for abuse of discretion. Burlington N. and Santa Fe Ry. Co. v. Grant, 505 F.3d 1013, 1032 (10th Cir. 2007).
A spoliation sanction is proper under Tenth Circuit law when “(1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.” Burlington N., 505 F.3d at 1032. An adverse inference sanction in particular “must be predicated on the bad faith of the party destroying the records.” Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir. 1997) (emphasis added). The district court committed legal error by imposing an adverse inference sanction absent a finding of bad faith. “A district court by definition abuses its discretion when it makes an error of law.” Koon v. United States, 518 U.S. 81, 100 (1996). Accordingly, we reverse the district court’s imposition of an adverse inference sanction, and consider whether there is adequate evidence to support the jury verdicts against ASUS absent such adverse inferences.
Of the second issue:
In sum, PMAA has failed to present substantial evidence of infringement within the United States after May 3, 2001. Accordingly, the district court erred in denying ASUS’s post-verdict motion for JMOL, and this court reverses that determination.
Of the trade secrets claim:
In sum, there is no genuine issue of material fact that PMAA had constructive knowledge of its trade secrets claim by March 4, 2004, more than three years before it brought its claim against ASUS on May 3, 2007. The district court’s grant of summary judgment is thus af- firmed.
Of the attorney fees matter:
“A district court abuses its discretion when ‘its deci- sion is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary or fanciful.’” Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1328 (Fed. Cir. 2003) (quot- ing Cybor Corp. v. FAS Techs., 138 F.3d 1338, 1460 (Fed. Cir. 1998)). None of these situations is present here. To the contrary, it was reasonable for the district court to decide against imposing two different penalties for the same conduct. Furthermore, this court’s determination with respect to ASUS’s motion for JMOL of noninfringe- ment means that PMAA is no longer a “prevailing party” in the case, making attorney fees under § 285 inappropri- ate. 35 U.S.C. § 285 (“The court in exceptional cases may award reasonable attorney fees to the prevailing party.”) (emphasis added).