When a party took an objectively baseless claim construction position that was not supported by the evidence and there was no showing to negate subjective bad faith, the court found the assertion of infringement of that claim made the case exceptional under 35 U.S.C. § 285, supporting an award of attorney’s fees apportionable only to that claim.

This case came to the Federal Circuit on appeal of the district court’s finding that the case was exceptional under 35 U.S.C. § 285 on the basis that the patentee had (1) pursued frivolous infringement claims; (2) asserted meritless legal positions; (3) shifted its claim construction positions; and (4) made misrepresentations in connection with a motion to transfer venue.

The central issue was whether the patentee’s infringement counterclaims against the alleged infringer were frivolous, which requires establishing that the litigation was (1) brought in subjective bad faith; and (2) objectively baseless. The court found that the “objective prong requires a retrospective assessment of the merits of the entire litigation determined based on the record ultimately made in the infringement proceedings.” Similarly, the assessment of subjective bad faith takes into account the totality of the circumstances and considers whether a case may initially have been brought in good faith but then continued in bad faith.

The court then applied the objective/subjective standard on a claim-by-claim basis. The patentee’s assertion of infringement of claim 102 directed to an “integrated health care management system” warranted an exceptional case. This claim term in the preamble was clearly a claim limitation because it was cited in the body of the claim on an antecedent basis, limiting the claim in a way that rendered it not infringed. Further, the patentee had agreed earlier in the case in a Joint Claim Construction statement that the preamble of the claim was limiting, and did not otherwise offer any plausible arguments why the preamble was not limiting.  

The court further found subjective bad faith because the patentee knew or should have known that the allegation of infringement of the claim was unreasonable. Another factor in the court’s decision was that the patentee did not present evidence, such as an adequate pre-filing investigation, to negate a claim of bad faith. The court reached the opposite conclusion with respect to claim 52. While the court did not adopt the patentee’s construction of a claim term relating to the entering of data symbolic of symptoms for tentatively identifying proposed treatments, the court did not find the construction objectively unreasonable because there was some support for the patentee’s construction in the patent specification.

The court also rejected the district court’s findings that the following alleged litigation misconduct by the patentee made the case exceptional: (1) asserting a frivolous legal position based on res judicata and collateral estoppel; (2) shifting the claim construction position throughout the course of the proceedings; (3) making misrepresentations in connection with a motion to transfer venue. The patentee’s res judicata and collateral estoppel argument based on the alleged infringer’s “virtual representation” in a previous litigation was not wholly without merit, even though it was later withdrawn. The patentee had submitted a construction of two key claim terms and modified the construction three times, but because the changes did not change the substance of the construction, the court found “[t]hese linguistic shifts in the proposed claim construction are insufficient to constitute litigation misconduct and an exceptional case finding.” Finally, the district court improperly sanctioned the patentee for representations made in the motion to transfer because a court cannot issue sanctions for conduct that occurred solely before a different tribunal.

The court remanded the case for a calculation of attorneys’ fees based on the frivolity of the claim 102 allegations only.

A copy of the opinion can be found here