Wednesday, May 01, 2019

Stanford University loses appeal of attorneys fees case

The outcome of the CAFC decision:

Nevertheless, we see no abuse of discretion in the district court’s
determination of exceptionality based on plaintiffs’
inadequate pre-suit investigation of infringement

The patents at issue:

Stanford owns U.S. Patent Nos. 5,891,459, 6,117,872,
6,646,006, and 7,452,916, which claim methods and compositions
involving the amino acids arginine and lysine, to be
ingested to enhance vascular function and physical performance.


Some months later, in February 2013, Stanford exclusively licensed
the four patents to ThermoLife. From
March 19, 2013, to December 11, 2013, ThermoLife filed a
total of eighty-one infringement suits, including suits
against Hi-Tech and Vital, in the Southern District of California.

The argument against Stanford and co-plaintiff ThermoLife:

Rhetoric aside, they [defendants] made two related arguments
for exceptionality that are relevant here.4 Their main argument
was that plaintiffs did not conduct an adequate
pre-suit investigation into infringement, an investigation
that would have revealed that the accused products did not
infringe claim 1 of the ’459 patent, the only claim Hi-Tech
and Vital specifically discussed. One premise of the argument
was that the accused products all contained less than
one gram of L-arginine (or its hydrochloride salt) per serving.5
The other premise was that plaintiffs’ own validity
expert made clear in his 2015 deposition testimony and2016 trial testimony
that studies published before these
suits were filed showed that amounts of L-arginine less
than one gram were ineffective to enhance nitric oxide production
(being too small an increase over the regular human intake of arginine). See J.A. 10456, 10461−63. Based
on those premises, Hi-Tech and Vital argued that plaintiffs
would have discovered that the accused products did not
infringe had they read the labels on the accused products
and conducted simple tests before suing. In their secondary argument,
Hi-Tech and Vital broadened their focus and
accused plaintiffs of filing many suits, without adequate investigation,
simply to try to extract nuisance-value settlements.

At the district court level

In April 2017, the district court issued its decision on
the motions for attorney’s fees. ThermoLife Int’l, LLC v.
Myogenix Corp., No. 13-cv-651, 2017 WL 1235766 (S.D.
Cal. Apr. 4, 2017) (Fees Op.). The court began by striking
the Woods declaration. The court explained that plaintiffs
could have presented the same information in their initial
opposition to the attorney’s fees motions, that the declaration went
beyond providing facts about their counsel’s prefiling investigation,
and that Hi-Tech and Vital had no opportunity to conduct discovery regarding
the new statements and arguments. Id. at *2–3.

A summary of the CAFC determination:

We conclude that the district court in this case acted
within its discretion in determining, on the limited arguments
plaintiffs made in response to the fee motions, that
plaintiffs did not conduct an adequate pre-suit investigation
into infringement by Hi-Tech and Vital. That determination would suffice to support the exceptional-case
determination. And we read the district court’s additional
discussion of plaintiffs’ filing of numerous suits on the patents
at issue here as itself ultimately resting on the same
lack of adequate pre-suit investigation, not simply on ThermoLife’s
limited product sales, the expiration dates of three
of the four patents, the number of suits filed, or the
amounts of the settlements. For those reasons, we affirm
the exceptional-case determination.


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