Digest of LUMEN VIEW TECHNOLOGY LLC, V. FINDTHEBEST.COM, INC., Nos. 2015-1275, 2015-1325 (Fed. Cir. Jan. 22, 2016). On appeal from S.D.N.Y. Before Lourie, Moore, and Wallach.
Procedural Posture: Plaintiff appealed from the district court’s decisions finding the case exceptional and awarding enhanced attorney’s fees to Defendant. CAFC affirmed in part, vacated in part, and remanded for recalculation of a reasonable award of attorney’s fees and further findings relating to attorney conduct.
- Attorney’s Fees—Exceptionality Finding: The district court dismissed the case on the pleadings holding that the claims of the asserted patent were directed to an abstract idea and invalid for failure to claim patentable subject matter under 35 U.S.C. § 101. Defendant moved for an award of attorney’s fees under 35 U.S.C. § 285. The district court granted Defendant’s motion, finding that case was exceptional under the totality of the circumstances analysis enumerated in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). According to the district court, the suit was frivolous and objectively unreasonable because the accused infringers clearly did not infringe, and “the most basic” investigation prior to filing the lawsuit would have made the noninfringement clear. The district court also concluded that the Plaintiff was seeking a “nuisance settlement” via a “predatory strategy” that showed the need for deterrence. The CAFC affirmed, declining to find an abuse of discretion by the district court in finding the case exceptional under § 285 and in deciding to award attorney’s fees. The CAFC found the lawsuit was baseless because the Plaintiff’s infringement allegations were poorly supported, particularly in light of the parties’ communications and claim constructions. Although the Plaintiff’s litigation conduct was not independently sanctionable, the CAFC ruled the district court reasonably determined the case was exceptional.
- Attorney’s Fees—Calculation of Award: In calculating the attorney’s fee award, the district court utilized the lodestar method, which provides a presumptively reasonable fee amount by multiplying a reasonable hourly rate by the reasonable number of hours required to litigate a comparable case. The district court then enhanced the lodestar by a multiplier of two, citing “the need to deter the plaintiff’s predatory strategy, the plaintiff’s desire to extract a nuisance settlement, the plaintiff’s threats to make the litigation expensive, and the frivolous nature of the plaintiff’s claims.” Lumen View Tech. LLC v. Findthebest.com, Inc., 63 F. Supp. 3d 321, 326 (S.D.N.Y. 2014). The district court concluded that the lodestar amount alone would be insufficient to deter similar conduct by Plaintiff in the future, as it was uncharacteristically low due to the court’s expeditious resolution of the case. The CAFC agreed that the award calculation is within the discretion of the district court judge but found that deterrence is not an appropriate justification for increasing a fee award under § 285. The CAFC expounded that § 285 only specifies “reasonable attorney fees” once an exceptional case is found, unlike sanctions under Fed. R. Civ. P. 11, which are explicitly tied to an amount that suffices to deter repetition of conduct. The CAFC emphasized that the lodestar method yields a presumptively reasonable attorney fee amount, and the adjustment of the lodestar amount has been reserved for situations in which the prevailing party’s attorney’s performance or conduct somehow is not factored into the calculation. However, factors outside the realm of performance or conduct attributable to the prevailing party’s attorney have not been accepted as justifying an enhancement. Accordingly, the CAFC found that the district court had failed to provide proper support for its decision to enhance the lodestar amount by the specified multiplier as a reasonable fee award.