Thursday, April 13, 2017

CAFC addresses award of attorneys’ fees in Gravelle/Kaba case

Gravelle has been designing, marketing, and distributing
electronic key-cutting machines for more than 20
years. From 1998 until around 2014, Gravelle sold a keycutting
machine model called the CodePro 4500.


Beginning around 2008, Kaba began marketing its EZ
Code machine. It marked two features, the “automatic
blade detection” and “automatic calibration,” as “patent
pending,” although no patent application for those features
was ever filed. Kaba sold 687 EZ Code machines
between 2008 and 2015. Although Gravelle contacted
Kaba three times to investigate the truth of Kaba’s “patent
pending” claims—by email on October 8, 2008; by
phone on August 7, 2013; and by email on August 20,
2013—Kaba did not respond, and it continued to use the
false marking through at least September 10, 2013.

There was a standing issue in the case

In the false-marking context, the injury must be
one inflicted on a firm’s competitive activity, caused by
the false marking. Id. at 1402; see id. at 1400 n.3.
The district court held that Gravelle failed to establish
a competitive injury and therefore lacked statutory
standing. Although the parties disputed whether Gravelle
and Kaba were direct competitors, the court assumed
that they were and still granted summary judgment that
Gravelle had not shown the required competitive injury.
It is enough that the district
court correctly concluded that Gravelle did not put forth
sufficient evidence to connect the decline in CodePro 4500
sales to Kaba’s false marking of its machine as “patent
pending.” Indeed, Gravelle admitted that the reason the
CodePro 4500 sales declined after 2006 was that Kaba
had purchased the rights to the machine in November of
2006 and Gravelle “was not permitted to sell any more of
these machines, save the 10 he had remaining in shop
inventory.” Appellant’s Reply 3. In light of that admission,
no reasonable jury could infer from Gravelle’s decline
in CodePro 4500 sales around the time of Kaba’s
false marking that the decline was an injury caused by
the false marking.

The issue here

On May 23, 2016, Kaba filed a motion for attorneys’
fees. Although Gravelle did not respond, the district court
addressed the motion on its merits, granting it on July 15,
2016. The court held that this was an exceptional case
under 35 U.S.C. § 285 and 15 U.S.C. § 1117(a) and a case
involving a “complete absence of a justiciable issue of
either law or fact raised by the losing party in any pleading”
under N.C. Gen. Stat. § 6-21.5. Fees Order 5–6. The
amount of fees has yet to be determined.


The district court awarded Kaba attorneys’ fees for all
three of Gravelle’s causes of action. Unusual circumstances
are present here: we have questions about the
soundness of the stated bases for the award and no meaningful
help from the parties in reviewing the award. In
various situations, we have vacated and remanded for
further consideration where “[w]e are unable to provide
appellate review to the court’s exercise of discretion.” S.C.
Johnson & Son, Inc. v. Carter-Wallace, Inc., 781 F.2d 198,
201 (Fed. Cir. 1986) (exceptional case determination); see,
e.g., High Point Design LLC v. Buyers Direct, Inc., 730
F.3d 1301, 1319 (Fed. Cir. 2013) (amendment of pleadings);
Paice LLC v. Toyota Motor Corp., 504 F.3d 1293,
1315 (Fed. Cir. 2007) (ongoing royalties). The particular
reason for that inability here may be unique to this case,
but the result, we conclude, should be the same: vacatur
and remand for further consideration.

In this court, Gravelle, proceeding pro se, amended
his original notice of appeal so as specifically to add the
Fees Order to the appeal, and he included a challenge to
the Fees Order in the “informal brief” he subsequently
filed under this Court’s Rule 28(g), using the questionand-answer
format of this Court’s Form 12. In the informal
brief, Gravelle extensively laid out his disagreement
with various determinations by the district court, including
the key determination that he had provided no proof
of injury caused by the challenged conduct. In his answer
to Form 12’s question # 6 (“What action do you want the
court to take in this case?”), he included this separately
numbered statement: “2. Plaintiff further requests that
this court reverse the District Court Order granting
Kaba’s motion for attorney fees. [See A23–29].” Appellant’s
Br. 12. Gravelle thus appealed the Fees Order.
In his informal brief, however, Gravelle did not present
separate analyses of why the Fees Order and the
Summary Judgment Order should be reversed. In the
absence of separate arguments, his challenge to the Fees
Order could reasonably be read as entirely dependent on
his challenge to the Summary Judgment Order, i.e., as
contending only that, if summary judgment was reversed,
reversal of the fees award followed a fortiori. Kaba appears
to have so read Gravelle’s challenge to the Fees
Order: in its brief, Kaba nowhere defends, or even discusses,
the Fees Order, evidently treating that order as
standing or falling with the Summary Judgment Order.
But that understanding of Gravelle’s challenge on appeal
to the Fees Order is not the only permissible one.
This court generally interprets the pleadings of a pro se
plaintiff liberally. See, e.g., Durr v. Nicholson, 400 F.3d
1375, 1380 (Fed. Cir. 2005). Our Form 12 for informal
briefs, which Gravelle used, contemplates considerable
informality, which is reflected in practice. And in this
case, when Kaba sought fees, the district court proceeded
to apply the legal standards governing fees—which are
more demanding than the standard Kaba had to meet to
secure summary judgment—even though Gravelle did not
file an opposition to the fees motion, let alone present an
argument against fees distinct from his earlier argument
against summary judgment. In these circumstances,
Gravelle’s informal brief can reasonably be read, and we
concluded it should be read, as a request that this court
determine whether the causation evidence passed the test
of non-frivolousness even if it did not entitle him to a
Nevertheless, neither Gravelle nor Kaba has provided
any meaningful help in evaluating the Fees Order under
the governing standards.
Such a reading of the cited passage from Gravelle’s
deposition appears to be clearly erroneous. The passage
says only that (the un-counseled) Gravelle would drop the
Second Claim for Relief of his Complaint, which sought
(aside from disgorgement of Kaba’s profits) only the $500-
per-unit fine that the 2011 amendments to 35 U.S.C.
§ 292(a) newly restricted to suits by the federal government.
See J.A. 46 (Complaint); Kaba Ilco’s App’x to
Statement of Material Facts in Support of its Mot. for
Summ. J. Ex. 1 at 169:1–20, Gravelle v. Kaba Ilco Corp.,
No. 5:13-cv-642-FL (E.D.N.C. Dec. 9, 2015), ECF No. 55.
The passage does not on its face concede lack of injury
caused by Kaba’s false marking. Moreover, in opposing
summary judgment, Gravelle explained that he had not
conceded that issue, J.A. 169, and the district court, in
granting Kaba summary judgment, ruled on the falsemarking
claim on the merits of the causation issue, nowhere
referring in that ruling to the supposed deposition

Of summary judgment:

The court must view all facts and draw reasonable inferences
in the light most favorable to the nonmoving party.
Scott v. Harris, 550 U.S. 372, 378 (2007). Conclusory and
speculative assertions about a material fact are insufficient
to create a triable issue on that fact. See Dash v.
Mayweather, 731 F.3d 303, 311 (4th Cir. 2013); Madey v.
Duke Univ., 307 F.3d 1351, 1363 (Fed. Cir. 2002).
But the award of fees here is not so self-evidently correct
that we think the Order should be affirmed, even under
the abuse-of-discretion standard of review, without further
consideration on remand given the absence of meaningful
argument in this court.

From footnote 6:

A plaintiff may lose its claims on summary judgment
without that fact requiring a fee award or implying
that the claims were objectively unreasonable or frivolous.
See, e.g., Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605
F.3d 1305, 1315 (Fed. Cir. 2010) (in patent context);
Kohler v. Bed Bath & Beyond of California, LLC, 780 F.3d
1260, 1266–67 (9th Cir. 2015) (non-patent context).




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