Plaintiff Innovation Sciences, LLC (“Innovation”) initiated a patent infringement action against Defendant Amazon.com (“Amazon”). The original complaint asserted three groups of patents, encompassing a total of ten patents.

After the district court found certain of the patents invalid because they were abstract and the Federal Circuit affirmed, Innovation filed an amended complaint to assert an additional patent and that patent along with two others that were not initially dismissed proceeded to claim construction. After claim construction, the district court granted Amazon’s motion for summary judgment, holding that Amazon was not infringing one of the patents, that one patent was invalid and Innovation stipulated to noninfringement of the last patent but reserved its right to appeal the construction issue.

The Federal Circuit affirmed as to two of the patents, and affirmed in part, vacated in part, and remanded the stipulated judgment of noninfringement as to that patent. After that, Innovation jointly stipulated to dismissal.

The district court then addressed Amazon’s motion for attorney’s fees.

The district court determined that Amazon had shown that the case was exceptional in light of the totality of the circumstances. As explained by the district court, “[u]nder Octane, an infringement lawsuit which was substantively weak when it was filed can become exceptional when claim construction renders the claims therein baseless. See AdjustaCam, LLC v. Newegg, Inc., 861 F.3d 1353, 1360 (Fed. Cir. 2017). Here, Innovation’s claims were baseless after claim construction. Nonetheless, Innovation continued to litigate these exceptionally weak claims, and this case stands out from others as a result.”

The district court further explained:

Innovation’s lawsuit was substantively weak before claim construction. The majority of the asserted claims, the ‘492 patent family, were dismissed because the patents were invalid on their face. Those patents, found invalid under 35 U.S.C. § 101, were directed to patent-ineligible subject matter. They lacked any inventive concept and threatened a “sweeping universe of preemption.” Dkt. 57 at 16. However, the fact that Amazon did not challenge the 198 or ‘844 patent, and the fact that Amazon’s challenge to the ‘140 patent failed, shows that while the case was weak at inception Innovation’s litigation position was not so extraordinarily weak as to be exceptional prior to construction. Following the Markman hearing, however, each claim was baseless.

As a result, the district court found that Innovation’s “litigation positions were so substantively weak after the claim construction occurred that this case stands out from others. First. Innovation should have known each of its claims had become baseless upon issuance of the Markman order. Second, continuing to litigate each claim was objectively unreasonable. Accordingly, this is an exceptional case, and it became exceptional upon issuance of the claim construction order.”

Innovation Sciences, LLC, f/k/a, Virginia Innovation Sciences, Inc. Amazon.com, Inc., Case No. 1:16-cv-00861 (E.D. Va. February 2020)