Federal Circuit Summaries

Before Wallach, Chen, and Stoll. Appeal from the United States District Court for the District of Delaware.

Summary: Even if a patentee’s initial complaint was reasonable, the patentee can be liable for attorney fees under 35 U.S.C. § 285 if it does not reassess the merits of its case in view of new controlling law.

In December 2013, the district court denied two motions to dismiss asserting invalidity of the patent in suit under § 101. In June 2014, the Supreme Court decided Alice, construing § 101. The parties continued to litigate the case until BBB filed a § 101 motion based on Alice in February 2015, which the district court granted. After the Federal Circuit affirmed that decision, the district court found the case was “exceptional” under § 285 and awarded attorney fees for all time spent after Alice through appeal. The patentee, Inventor Holdings (IH), appealed.

The Federal Circuit held this was not a close case under Alice and the claims were not “anywhere near[] the margins of patent-eligibility.” IH asserted its actions were reasonable because Alice was not a change in the law and IH had relied on the district court’s denial of the pre-Alice § 101 motions. The Federal Circuit rejected those arguments because “It was IH’s responsibility to reassess its case in view of new controlling law.” Thus, the Federal Circuit concluded that “the district court acted within the scope of its discretion in finding this case to be exceptional based on the weakness of IH’s § 101 arguments and the need to deter similarly weak arguments in the future.” The Federal Circuit also affirmed the award of attorney fees on appeal because the district court had authority to award fees for “the entire case, including the § 101 appeal.”