Friday, December 27, 2013

CAFC reviews "exceptional case," Brooks Furniture Manufacturing v. Dutailier in Kilopass v. Sidense

The case Kilopass v. Sidense is about exceptional cases and attorneys' fees, and the outcome was

In sum, we vacate the district court’s decision denying the motion for attorneys’ fees and remand for consideration of whether Kilopass’s doctrine of equivalents theory was objectively baseless, and then, whether the totality of the circumstances demonstrates that Kilopass acted with subjective bad faith. If the district court determines that the case is exceptional after applying the correct legal standards, it should then determine, in its discretion, whether to award attorneys’ fees under § 285. Alterna- tively, the trial court may, in its discretion, award fees based on alternative grounds for doing so, if such grounds exist.

Because the district court’s decision was premised on an incorrect legal standard, the decision of the district court is vacated and remanded.

Thus, the appellant Sidense "won" against the plaintiff-patentee Kilopass (represented by Durie Tangri, LLP ). The discussion of "exceptional case" (35 USC 285) is lengthy and begins around page 11.

Of note to technology people is the discussion of "how" this case came about. Kilopass is the patentee-plaintiff in the matter, and sought outside counsel advice on the strength of their infringement claims:

Despite that advice from its Perkins patent counsel that Sidense did “NOT infringe [the] claims literally,” and that Kilopass’s case was “much tougher,” Kilopass re- tained the law firm of Morrison Foerster (“MoFo”) to conduct another analysis. (...)

MoFo then immediately began its “more detailed investigation” in order to meet Kilopass’s deadline. However, eight days later, on March 27, 2008, Kilopass instructed MoFo to stop all work on the project. The reason is unclear, but MoFo subsequently sent Kilopass an invoice for 44 hours of work “relating to Kilopass’s investigation of potential infringement claims against Sidense.” J.A. 11490. The invoice was accompanied by “a preliminary infringement chart for the ’751 patent reflect- ing [MoFo’s] analysis.” Id.
The infringement chart provided an analysis concern- ing the doctrine of equivalents and concluded that “Kilopass appears to have a reasonable argument that Sidense’s field oxide region is equivalent to the doped region in claim 1 of the ’751 patent, and therefore satisfies this limitation.” J.A. 11497. With regard to literal in- fringement, the MoFo counsel opined:
[I]f “doped region” is defined as an area on the semiconductor where the electrical properties have been changed, it may be difficult to argue that the field oxide region is a doped region . . . . If, however, “doped region” could reasonably be defined more broadly as simply an area to which a dopant is applied, then we may be able to argue that the field oxide region is a “doped region.” De- termining the potential viability of this argument will require additional investigation, technical feedback from Kilopass and possibly input from an independent expert.
Although MoFo’s preliminary infringement chart opined favorably to Kilopass regarding the doctrine of equivalents, there is no evidence in the record that MoFo’s analysis was complete at that time, nor is there any evidence that Kilopass considered MoFo’s preliminary infringement chart in deciding to bring suit against Sidense. Kilopass retained MoFo to conduct an infringe- ment analysis but terminated that relationship only eight days later. (...)

In other words, it appears that Kilopass officials had already set their mind prior to learning of MoFo’s infringement analysis.
In 2008, a team of engineers led by Kilopass’s CTO sent an exemplary Sidense memory device to a third- party for reverse-engineering. After receiving the results, the CTO created a slide presentation for a meeting of Kilopass’s board noting that Kilopass had retained the law firm SNR Denton to investigate potential infringe- ment against Sidense. The CTO also stated that Denton “[a]ttorneys don’t have a conclusion yet as to the reading of 1st doped region and STI region” and that their “formal analysis [was] in progress.” J.A. 11296. However, in the CTO’s opinion, “[f]rom an engineer’s perspective,” Sidense infringed under the doctrine of equivalents. Id. (...)

On May 14, 2010, Kilopass filed suit against Sidense in the United States District Court for the Northern District of California, alleging both literal infringement and infringement under the doctrine of equivalents.
During the course of the proceedings, the district court discovered that Kilopass was making claim con-struction arguments to the United States Patent and Trademark Office Board of Patent Appeals and Interfer- ences (the “Board”) that were directly contrary to those being made to the court in order to distinguish over a key piece of prior art during a concurrent inter partes re- examination. Kilopass, 2012 WL 3545286, at *6. The district court admonished Kilopass for engaging in “gamesmanship.” J.A. 5990–91. (...)

After ruling that Kilopass had disavowed claim scope and striking evidence relating to Kilopass’s theory of equivalence, the district court granted Sidense summary judgment of noninfringement. Id. at *10. The district court reasoned that Kilopass ignored “numerous differ- ences” between the patent claims and Sidense’s accused products and that Peng, a named inventor on all three patents in suit, admitted before Kilopass filed suit that Kilopass had actually considered using Sidense’s design but chose not to because it resulted in a larger cell size. Id. at *9.

As to attorneys' fees:

While that appeal was pending, Sidense filed a motion in the district court for an award of attor- neys’ fees pursuant to 35 U.S.C. § 285. Relying on the standard set forth by a panel of this court in Brooks Furniture Manufacturing v. Dutailier, Inc., 393 F.3d 1378 (Fed. Cir. 2005), the district court denied the motion

The arguments

Sidense argues that the district court erred in not finding this case “exceptional” under Brooks Furniture because Kilopass’s claims were objectively baseless and brought in subjective bad faith. In the alternative, Sidense urges us to change the standard for assessing exceptionality under § 285 as set out in Brooks Furniture and cases that followed. Kilopass responds that, as the trial court found, it had a good faith basis for bringing and pursuing its infringement claims against Sidense’s prod- ucts. Kilopass also argues that we should not alter our exceptional case standard.


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