Abbott Point of Care Inc. v. Epocal, Inc.
MEMORANDUM OPINION AND ORDER that Epocal's Motion for a finding that this case is exceptional and for an award of attorney's fees is DENIED as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 11/5/2012. (AHI)
2012 Nov-05 PM 12:40
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
ABBOTT POINT OF CARE,
Civil Action No. CV-08-S-543-NE
MEMORANDUM OPINION AND ORDER
On May 10, 2012, following the trial of this case, the jury returned a verdict
finding that defendant, Epocal, Inc. (“Epocal”), did not infringe any of the claims of
the patents owned by plaintiff Abbott Point of Care, Inc. (“Abbott”), and that Epocal
did not tortiously interfere with the employment contracts of any of Abbott’s former
employees.1 That verdict represented a fully favorable decision for Epocal, and it was
entered as the judgment of this court on May 18, 2012.2 On June 1, 2012, Epocal
filed a “Motion for a Finding That This Case is Exceptional and Recovery of
Attorneys’ Fees is Warranted under 35 U.S.C. § 285 and the Court’s Inherent
Power.”3 That motion is addressed in this opinion.
See doc. no. 326 (Jury Verdict Form).
Doc. no. 329.
Doc. no. 334. For ease of reference, the court will refer to Epocal’s motion throughout this
opinion as simply a Motion for Attorneys’ Fees.
“Exceptional Case” Standard
Epocal’s primary argument, and the one the court will address first, is that it
should be awarded attorneys’ fees because this is an “exceptional case” under 35
U.S.C. § 285. Attorney’s fees are not automatically recoverable in a patent case.
Instead, the statute upon which Epocal relies provides that “[t]he court in exceptional
cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285
(emphasis supplied). That standard was elucidated by the Eleventh Circuit as
Once it is determined that the party seeking fees is a prevailing party,
determining whether to award attorneys’ fees under 35 U.S.C. § 285 is
a two-step process. Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324,
1327-28 (Fed. Cir. 2003). First, a prevailing party must establish by
clear and convincing evidence that the case is “exceptional.” Id. at
1327. An award of fees against a patentee can be made for a frivolous
claim, inequitable conduct before the Patent and Trademark Office, or
misconduct during litigation. Beckman Instruments, Inc. v. LKB
Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989). Second, if the
case is deemed exceptional, a court must determine whether an award of
attorneys’ fees is appropriate and, if so, the amount of the award. Forest
Labs., 339 F.3d at 1328. “[T]he amount of the attorney fees [awarded]
depends on the extent to which the case is exceptional.” Special
Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1344 (Fed. Cir. 2001).
Highmark, Inc. v. Allcare Health Management Systems, Inc., 687 F.3d 1300, 1308
(Fed. Cir. 2012) (alterations in original).4
In this case, the parties have agreed that the proceedings with regard to attorneys’ fees
Here, it cannot reasonably be disputed that Epocal, having received a fully
favorable jury verdict, was the prevailing party in this litigation. Thus, the remaining
inquiry is whether this case is “exceptional” under § 285. The Highmark opinion
speaks to that issue in the following passages.
It is established law under section 285 that absent misconduct in the
course of the litigation or in securing the patent, sanctions may be
imposed against the patentee only if two separate criteria are satisfied:
(1) the litigation is brought in subjective bad faith, and (2) the litigation
is objectively baseless. Brooks Furniture Mfg., Inc. v. Dutailier Int’l,
Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). The requirement that the
litigation be objectively baseless “does not depend on the state of mind
of the [party] at the time the action was commenced, but rather requires
an objective assessment of the merits.” Id. at 1382. “To be objectively
baseless, the infringement allegations must be such that no reasonable
litigant could reasonably expect success on the merits.” Dominant
Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed.
Cir. 2008) (internal quotation marks omitted).
Furthermore, even if the claim is objectively baseless, it must be
shown that lack of objective foundation for the claim “was either known
or so obvious that it should have been known” by the party asserting the
claim. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007);
see also iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1377 (Fed. Cir.
2011). This is known as the subjective prong of the inquiry. This same
objective/subjective standard applies for both patentees asserting claims
of infringement and alleged infringers defending against claims of
infringement. See iLOR, 631 F.3d at 1377.
Highmark, 687 F.3d at 1308-09 (alteration in original, emphasis supplied).
should be bifurcated in accordance with this standard. Thus, the court will decide whether defendant
is entitled to attorneys’ fees before requiring the parties to submit documentation supporting the
amount of those fees.
In addition, there is an alternative standard available. Even when a prevailing
party cannot demonstrate both objective baselessness and subjective bad faith, that
party can still recover attorney’s fees under the “exceptional case” standard if it can
prove, by clear and convincing evidence, that the losing party engaged in some kind
of litigation misconduct. See id. at 1308 (employing the “subjective bad faith” and
“objectively baseless” standard only “absent misconduct in the course of the
litigation”) (emphasis supplied).
Quite apart from the frivolity of the alleged infringement claims,
an exceptional case finding can also be supported by litigation
misconduct. MarcTec [LLC v. Johnson & Johnson], 664 F.3d [907,]
919 [(Fed. Cir. 2012)] (“[I]t is well-established that litigation
misconduct and ‘unprofessional behavior may suffice, by themselves, to
make a case exceptional under § 285.’” (quoting Rambus Inc. v. Infineon
Techs. AG, 318 F.3d 1081, 1106 (Fed. Cir. 2003))); Brooks Furniture,
393 F.3d at 1381 (“A case may be deemed exceptional when there has
been . . . misconduct during litigation, . . . conduct that violates Fed. R.
Civ. P. 11, or like infractions.”). “Litigation misconduct generally
involves unethical or unprofessional conduct by a party or his attorneys
during the course of adjudicative proceedings,” and includes advancing
frivolous arguments during the course of the litigation or otherwise
prolonging litigation in bad faith. See Old Reliable [Wholesale, Inc. v.
Cornell Corp.], 635 F.3d [539,] 549[ (Fed. Cir. 2011)]; Computer
Docking Station Corp. [v. Dell, Inc.], 519 F.3d [1366,] 1379[ (Fed. Cir.
2008)]. A finding of exceptionality based on litigation misconduct,
however, usually does not support a full award of attorneys’ fees. See
Beckman, 892 F.2d at 1553-54. Instead, the fee award “must bear some
relation to the extent of the misconduct,” Special Devices, 269 F.3d at
1344 (quoting Read Corp. v. Portec, Inc., 970 F.2d 816, 831 (Fed. Cir.
1992)), and compensate a party for the “extra legal effort to counteract
the [ ] misconduct,” Beckman, 892 F.2d at 1553.
Highmark, 687 F.3d at 1315-16 (alterations to case citations supplied, other
alterations in original).
Subjective bad faith and objectively baseless litigation
Epocal contends that Abbott’s infringement claims were objectively baseless
because there was no basis for the opinion of Abbott’s expert that Epocal’s device
contained a “gas equilibration reservoir” as required by the relevant patents, and
because Abbott never analyzed whether the oxygen and carbon dioxide levels in
Epocal’s device “reflect substantially a predetermined composition of calibrant
gases,” as also was required by the patents.5
That argument is short-circuited by three of this court’s previous rulings. First,
this court entered an order on February 9, 2012, denying Epocal’s motion for
summary judgment because there were “genuine issues of material fact precluding the
entry of judgment as a matter of law in defendant’s favor on all of plaintiff’s claims.”6
The case proceeded to trial, and the court denied two motions by Epocal for judgment
as a matter of law: one after the close of Abbott’s case-in-chief,7 and another at the
close of all the evidence.8
See doc. no. 333 (Epocal’s brief in support of motion for attorneys’ fees), at 27-30.
Doc. no. 216, at 1.
See doc. no. 317 (motion for judgment as a matter of law); Clerk’s minute entry of
proceedings dated May 7, 2012 (noting that Epocal’s motion for judgment as a matter of law was
overruled by oral order).
See Clerk’s minute entry of proceedings dated May 9, 2012 (noting that Epocal’s renewed
The Federal Circuit has clearly held that, “[a]bsent misrepresentation to the
court, a party is entitled to rely on a court’s denial of summary judgment and JMOL
. . . as an indication that the party’s claims were objectively reasonable and suitable
for resolution at trial.” Medtronic Navigation, Inc. v. BrainLAB Medizinische
Computersysteme, 603 F.3d 943, 954 (Fed. Cir. 2010) (alteration and emphasis
supplied) (citing ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 875 (Fed. Cir.
2010); Forest Labs., 339 F.3d at 1330; Beckman Instruments, 892 F.2d at 1551;
Browning v. Kramer, 931 F.2d 340, 345 (5th Cir. 1991); Ruben v. Warren City Sch.,
825 F.2d 977, 988 (6th Cir.1987); Schlaifer Nance & Co. v. Estate of Warhol, 194
F.3d 323, 338 (2d Cir.1999)). In Medtronic, the Federal Circuit found that the district
court erred in characterizing the plaintiff’s claims as “frivolous,” despite having
previously denied the defendant’s motion for summary judgment and each of the
defendant’s motions for judgment as a matter of law during trial. Medtronic, 603
F.3d at 954. Based on this authority, unless Epocal can show that Abbott made some
kind of misrepresentation to the court during the course of defending against Epocal’s
motion for summary judgment and motions for judgment as a matter of law, it would
be inconsistent for the court, having denied those three motions, to now hold that
plaintiff’s infringement claims were “objectively baseless.”
motion for judgment as a matter of law was overruled by oral order).
Epocal asserts that “Abbott’s decision to flip-flop positions after an adverse
claim construction” constituted a misrepresentation to the court.9 More specifically,
Epocal asserts in its reply brief that
Abbott ditched its initial theory and adopted a contrary position on “gas
equilibration reservoir” to keep this litigation alive after the Court’s
claim construction ruling. In effect, Abbott misled the Court and Epocal
that the basis for its assessment of infringement theories was reasoned
— grounded in a comparison of the claim language as Abbott thought
it should be construed and the Epocal product — rather than expedient.
After claim construction, Abbott had an obligation to concede
infringement, but rather than do so, decided to prolong this litigation by
adopting a contrary position.10
Epocal also appears to assert that Abbott made misrepresentations to the court
because it failed to conduct a proper investigation before filing suit.11 Presumably,
the argument is that, by filing suit, Abbott misrepresented that there was a proper
basis for its claims, when in reality Abbott did not have enough information to make
But shifting litigation theories and inadequate pre-suit investigations are not
the kind of “misrepresentations” that can undermine a district court’s denial of
summary judgment or judgment as a matter of law. Instead, according to Medtronic,
Doc. no. 342 (Epocal’s reply brief in support of motion for attorneys’ fees), at 15.
Id. at 15-16 (emphasis in original).
Id. at 16 (“Second, contrary to Abbott’s argument, the Federal Circuit’s Medtronic
Navigation decision does not foreclose a finding of an exceptional case when the patentee failed to
perform a reasonable investigation to assess infringement before filing suit.”).
the denial of summary judgment and/or judgment as a matter of law must actually
have been obtained as a result of a misrepresentation of the evidence. See Medtronic,
603 F.3d at 954 (“Of course, if the party’s success at the summary judgment stage is
due to false or misleading representations about its evidence, the party cannot rely on
the district court’s denial of summary judgment to shield it from liability for
sanctions.”) (emphasis supplied). Epocal has presented nothing to convince the court
that Abbott actually made false or misleading representations about the evidence at
either the summary judgment stage or at trial.
During oral argument on the present motion, Epocal’s attorney asserted that
Abbott’s interpretation of some experimental reports generated by Epocal scientist
Dr. Anca Varlan during the development of Epocal’s accused product was “almost
a misleading presentation of evidence.”12 As an initial matter, it is difficult to
imagine how information that defense counsel himself characterizes as almost
misleading can constitute clear and convincing evidence of misrepresentation.
Moreover, even disregarding counsel’s use of the adjective “almost,” the court has
seen no clear and convincing evidence that Abbott made misrepresentations to the
court in order to survive summary judgment and/or judgment as a matter of law.
Epocal asserts that Dr. Tusa, Abbott’s expert witness, should not have relied upon Dr.
Transcript of October 23, 2012 oral argument, at 33 (emphasis supplied).
Varlan’s reports because those reports did not actually reach the conclusions Dr. Tusa
claimed they reached.13 Even if Epocal is correct in asserting that Dr. Tusa took Dr.
Varlan’s statements out of context, that is not a sufficiently egregious
misrepresentation to negate the effect of this court’s denial of summary judgment and
judgment as a matter of law. A misconstruction is not the same thing as a
misrepresentation. Instead, Epocal’s arguments go more toward the weight to be
afforded Dr. Tusa’s testimony. Indeed, in its Daubert motion to exclude Dr. Tusa’s
testimony, Epocal objected to Dr. Tusa’s reliance upon Epocal’s internal
documentation, including Dr. Varlan’s experimental reports, instead of conducting
his own independent experiments. The court refused to strike Dr. Tusa’s testimony
on this or any other ground, stating that “If Epocal believes that Dr. Tusa
misconstrued the results of its internal tests, or that other, more recent data might
have caused him to reach a different conclusion, then Epocal can raise those issues
on cross-examination.”14 Epocal did just that during trial, and apparently was
By way of example, Dr. Varlan used terms such as “equilibrate” and “reservoir” in her
reports. Those are words that also are included in the claim descriptions of the challenged patents.
Abbott argued, through its expert Dr. Tusa, that Dr. Varlan’s use of those words indicated Epocal’s
infringement, but Epocal maintains that Dr. Varlan’s reports use the terms differently than they are
used in the patent. Epocal asserts that Dr. Varlan’s reports discussed both the conduit and the
calibrant pack, while Dr. Tusa’s expert report only discussed the conduit; that Dr. Varlan’s reports
discussed all four walls of the conduit, while Dr. Tusa accused only the side walls as infringing; and
that Dr. Tusa relied upon Dr. Varlan’s reports to assert that the “substantially reflects” claim term
was met, when Dr. Varlan’s experiments did not actually even address that question. Transcript of
October 23, 2012 oral argument, at 31-41.
Doc. no. 215 (memorandum opinion and order on Daubert motions), at 26.
successful in convincing the jury to afford Dr. Tusa’s opinion little or no weight. Dr.
Tusa’s opinions may have been unconvincing, but that does not mean that Dr. Tusa
misrepresented anything to the court or to the jury.
In summary, Epocal has failed to establish that Abbott’s infringement claims
were “objectively baseless.” There consequently is no need to proceed to the second
prong of the inquiry, i.e., whether Abbott brought the claims in subjective bad faith.
See, e.g., Highmark, 687 F.3d at 1308 (requiring proof of both objective baselessness
and subjective bad faith); Brooks Furniture Manufacturing, 393 F.3d at 1381 (“Since
we conclude that the first requirement (subjective bad faith) is not satisfied here, we
need not decide whether the second (objectively baseless) standard was met.”).
Thus, Epocal can recover attorneys’ fees under the “exceptional case” standard
only if it can establish that Abbott engaged in litigation misconduct.
Epocal asserts in its reply brief that
there is clear and convincing evidence of at least the following material
inappropriate conduct by Abbott during this litigation: (1) failing to
perform a reasonable investigation of infringement before filing this
lawsuit . . . ; (2) requesting expedited discovery to obtain samples of
Epocal’s product but not testing Epocal’s product once it received the
expedited discovery; (3) flipping positions after receiving an adverse
ruling during claim construction . . . ; (4) constantly shifting
infringement theories in search of a “gas equilibration reservoir”; and
(5) raising arguments at trial that were contrary to the Court’s claim
Epocal also asserted in its initial brief that Abbott engaged in litigation misconduct
by “piling on allegations, only to . . . abandon them on the eve of (and during) trial.”16
Because Abbott’s conduct is alleged to be part of an overall “strategy of
vexatious litigation,” the cumulative effect of all of Abbott’s alleged actions may
support a finding of litigation misconduct, even if none of the individual allegations
would be sufficient standing alone. See E-Pass Technologies, Inc. v. 3Com Corp.,
559 F.3d 1374, 1378 (Fed. Cir. 2009) (upholding the district court’s finding of
litigation misconduct based on the “totality of the circumstances”) (alteration
supplied); Beckman Instruments, 892 F.2d at 1552 (“While it is difficult to infer bad
Doc. no. 342, at 5-6 (footnotes omitted).
Doc. no. 333, at 24. Epocal also makes much of an email sent on January 25, 2008 by
Peter Farrell, Abbott’s Divisional Vice-President of Global Marketing, to Glynn Perry, Abbott’s
Divisional Vice-President of Global Sales and Service. See doc. no. 340, Exhibit 6 (Declaration of
Peter Farrell) ¶¶ 2, 14 & Exhibit A. In that email, Farrell stated that the “primary goal” of Abbott’s
suit against Epocal was “[t]o slow them down (commercial and development) by diverting resource
(money and expertise). To publically show customers that we think they are infringing so they do
not consider Epocal seriously. This will include a detailed explanation to make the customers
understand.” Farrell Declaration, Exhibit A. At oral argument, Epocal’s counsel stated that this
email constituted “smoking gun” evidence that Abbott brought this lawsuit in bad faith. Transcript
of October 23, 2012 oral argument, at 26. See also doc. no. 333, at 31-32. There is some debate as
to whether Farrell actually had anything to do with Abbott’s decision to file this lawsuit, and whether
Epocal has any other evidence of Abbott’s alleged bath-faith motivation for filing suit. See Farrell
Declaration ¶¶ 15-18; doc. no. 340, Exhibit 5 (Declaration of Greg Arnsdorff) ¶¶ 31-36. Regardless
of Farrell’s level influence over the decision to file suit, that evidence does not bear on the issue of
Abbott’s litigation misconduct. It would only be relevant to the issue of whether Abbott knowingly
brought an objectively baseless lawsuit with bad faith motivations, but the court did not reach that
inquiry because Epocal has not presented clear and convincing evidence that this lawsuit was
faith on the part of LKB when each action is viewed individually, when viewed
together, we cannot say that the district court’s finding of vexatious litigation was
clearly erroneous.”). It must also be remembered that
[t]here is a presumption that the assertion of infringement of a
duly granted patent is made in good faith. Springs Willow Fashions, LP
v. Novo Indus., L.P., 323 F.3d 989, 999 (Fed. Cir. 2003). Thus, the
underlying improper conduct and the characterization of the case as
exceptional must be established by clear and convincing evidence.
Beckman, 892 F.2d at 1551.
Brooks Furniture Manufacturing, 393 F.3d at 1382.
Epocal first asserts that Abbott failed to conduct a proper investigation into the
potential merits of its claims before filing suit. The court is not convinced that Epocal
has presented clear and convincing evidence that Abbott failed to conduct an
adequate pre-suit inquiry. Epocal points to Abbott’s decision not to test a sample of
the Epocal test card Abbott had in its possession prior to filing suit,17 but this court
has already held that Abbott’s expert witness was not required to conduct
independent testing in order for his testimony to be acceptable under Daubert.18 If
an expert witness’s testimony can be deemed sufficiently reliable for presentation to
the jury even though he did not conduct independent testing, then a plaintiff should
See doc. no. 333, at 5.
See doc. no. 215, at 25-26.
not be required to conduct similar testing before deciding to file suit.
Epocal asserted during oral argument that this case is like Judin v. United
States, 110 F.3d 780 (11th Cir. 1997), in which the Eleventh Circuit held that a patent
infringement plaintiff had failed to conduct the pre-suit inquiry required by Federal
Rule of Civil Procedure 11. Id. at 781.19 Prior to filing suit, the plaintiff in the Judin
case and his attorney observed the accused device (a bar code scanner) in use, but did
Transcript of October 23, 2012 oral argument, at 49-53. Rule 11 provides, in pertinent
part, that by signing a pleading, an attorney
certifies that to the best of the person’s knowledge, information, and belief, formed
after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically
so identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence
or, if specifically so identified, are reasonably based on belief or a lack of
Fed. R. Civ. P. 11(b). The Rule 11 inquiry is not the same as the “litigation misconduct” inquiry
under § 285, but the Federal Circuit has held that a Rule 11 violation may be considered as one factor
in assessing litigation misconduct under § 285. See Brooks Furniture Manufacturing, Inc. v.
Dutailier International, Inc., 393 F.3d 1378, 1381 (11th Cir. 2005) (“A case may be deemed
exceptional when there has been some material inappropriate conduct related to the matter in
litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent,
misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R. Civ.
P. 11, or like infractions.”) (citations omitted) (emphasis supplied).
not ask the defendant for a sample of the allegedly infringing device or otherwise try
to obtain one. The plaintiff also relied on his own experience and familiarity with the
devices, and his attorney accepted his client’s assessments of the defendant’s alleged
infringement because of the client’s experience. Id. at 781-82. The Federal Circuit
In this case, prior to the filing of the suit, neither Judin or his counsel
had made a reasonable effort to ascertain whether the accused devices
satisfied the two key claim limitations, either literally or under the
doctrine of equivalents. No adequate explanation was offered for why
they failed to obtain, or attempted to obtain, a sample of the accused
device from the Postal Service or a vendor so that its actual design and
functioning could be compared with the claims of the patent. Under
these circumstances, there is no doubt that Judin failed to meet the
minimum standards imposed by Rule 11, and his attorney acted
unreasonably in giving blind deference to his client and assuming his
client had knowledge not disclosed to the attorney.
Id. at 784.
This court finds Judin to be distinguishable from the present circumstances.
Abbott conducted a more thorough inquiry than did the plaintiff in Judin, primarily
because Abbott did actually obtain a sample of at least part of the accused device (i.e.,
the Epocal test card). Abbott attempted to develop procedures to test the card, but the
procedures either proved ineffective, or they could not be implemented because
Abbott did not also have a sample of the Epocal card reader until after it filed suit.20
Doc. no. 340, Exhibit 4 (Declaration of Mike Zelin) ¶¶ 48-50.
Mike Zelin, Abbott’s Divisional Vice-President of Research and Development and
one of the named inventors on the patents Epocal allegedly has infringed, testified
that, before deciding to file suit, he also examined a publicly available abstract related
to Epocal’s 510(k) application, which contained clinical data.21 Once he received a
sample of the Epocal test card, Zelin physically inspected it to determine how the card
might be controlling oxygen in the calibrant fluid during the calibration process.
Based on his experience in the industry, Zelin knew of only three possible methods
by which oxygen could be controlled, and he was able to determine during his
physical inspection that the Epocal test card did not employ two of those methods.
The only remaining method involved the use of technology similar to that described
in Abbott’s patents.22 Zelin also examined copies of Epocal’s own patents related to
the test card system, and those documents further supported his conclusion that
Epocal’s device was using the technology described in the claims of Abbott’s
patents.23 The court finds that Zelin’s actions constituted a sufficient pre-suit inquiry
to avoid a finding of litigation misconduct. See Q-Pharma, Inc. v. Andrew Jergens
Co., 360 F.3d 1295, 1302-03 (Fed. Cir. 2004) (sanctions not awarded under either
Rule 11 or § 285 when, prior to filing suit, the plaintiff acquired a sample of the
Id. ¶¶ 3, 7, 34.
Id. ¶¶ 40-43.
Id. ¶¶ 44-46.
accused product, reviewed advertising and promotional materials, and compared the
product to the patent claims, despite the fact that the plaintiff did not conduct
chemical testing of the accused product).
Epocal also asserts that Abbott engaged in litigation misconduct by requesting
expedited discovery to obtain samples of Epocal’s product, but then not testing the
product once it was produced. This appears to be a continuation of Epocal’s
argument that Abbott failed to conduct an adequate pre-suit investigation. Now,
Epocal is arguing that Abbott failed, after filing suit, to take all possible steps to
ensure it had a valid claim. As much as the court does not appreciate the fact that
Abbott wasted the court’s time by filing the motion for expedited discovery, but then
failed to conduct testing on the discovery it obtained, Epocal has not cited any
authority to support its assertion that Abbott’s behavior constituted litigation
misconduct. To hold that it did would contradict the court’s prior rulings that Dr.
Tusa was permitted to testify despite not having conducted independent scientific
testing, and that Abbott had presented sufficient evidence to survive Epocal’s motion
for summary judgment.
Changing positions after claim construction
Abbott also did not engage in litigation misconduct by changing its litigation
strategy after receiving an unfavorable claim construction ruling.24 It is, of course,
true that the claim construction decision often does mark the end of a patent
infringement case, either by encouraging a settlement, or by prompting an immediate
appeal by the party who received an unfavorable construction. See, e.g., Every Penny
Counts, Inc. v. American Express Co., 563 F.3d 1378, 1381 (Fed. Cir. 2009) (noting
that, after the claim construction hearing, the plaintiff “admitted that it could not
prove infringement against either set of defendants under [the court’s] construction,
stipulated to the entry of final judgment in both cases and brought separate appeals”).
But, while that course of action is available to litigants, or even common, there is no
authority suggesting that it is required. To the contrary, the Federal Circuit has held
that a party is free to alter its litigation strategy after receiving an unfavorable claim
construction. See Lava Trading, Inc. v. Sonic Trading Management, LLC, 445 F.3d
1348, 1353 (Fed. Cir. 2006) (holding that a party was not judicially estopped “from
departing from a claim construction theory unsuccessfully advocated before the trial
court”). Moreover, this court’s local patent rules explicitly allow for an amendment
to a party’s preliminary infringement contentions after the claim construction ruling.25
Epocal asserts that Abbott and Dr. Tusa originally argued during claim construction that
the gas equilibration reservoir was not distinct from the conduit, but then changed positions, after
receiving the court’s claim construction ruling, to assert that the reservoir was distinct from the
conduit. See doc. no. 333, at 20-21; doc. no. 342, at 6-9.
See Local Patent Rule 3.6(a) (“If a party claiming patent infringement believes in good
faith that the Court’s Claim Construction Ruling so requires, not later than 30 days after service by
Finally, while it would have been wrong, as Epocal suggests, for Abbott to continue
to litigate this case after it knew its claims could not succeed,26 there is no indication
that Abbott ever had any such knowledge. To the contrary, as discussed, above,
Abbott was entitled to rely upon this court’s denial of Epocal’s motions for summary
judgment and judgment as a matter of law in deciding to proceed with this litigation.
Shifting infringement theories
The court also is not persuaded that the changes in Abbott’s infringement
theories as the case progressed constituted litigation misconduct. Epocal has cited
some authority for finding litigation misconduct when a party repeatedly makes
shifting, meritless arguments. See, e.g., Takeda Chemical Industries, Ltd. v. Mylan
Laboratories, Inc., 459 F. Supp. 2d 227, 240-41 (S.D. N.Y. 2006); Cartner v. Alamo
Group, Inc., No. 1:7 CR 01589, 2011 WL 4457665, at *3-4 (N.D. Ohio Sept. 23,
2011). But here, Abbott’s evolving infringement theories were found to have at least
colorable merit at various stages in the litigation, including: when the court denied
Epocal’s motion for summary judgment; when the court denied Epocal’s motions for
the Court of its Claim Construction Ruling, that party may serve ‘Final Infringement Contentions’
without leave of court that amend its ‘Preliminary Infringement Contentions’ with respect to the
information required by Patent R. 3-1(c) and (d).”).
See doc. no. 333, at 21-22 (citing Phonometrics, Inc. v. ITT Sheraton Corp., 64 F. App’x
219, 221 (Fed. Cir. 2003) (holding that it was not clearly erroneous for the district court to find the
case “exceptional” when the plaintiff “continued to litigate the case even after it knew that it could
not prevail on the merits”).
judgment as a matter of law at the close of plaintiff’s case-in-chief, and again at the
close of all of the evidence; and when, during discovery, this court denied Epocal’s
motion to strike Dr. Tusa’s supplemental expert report.27 Moreover, Epocal raised in
its Daubert motion some challenges to Dr. Tusa’s testimony due to the alleged shift
in his theories, but the court rejected those challenges and found Dr. Tusa’s testimony
sufficiently reliable to be presented to the jury. Epocal remained free to crossexamine Dr. Tusa and other Abbott witnesses regarding Abbott’s changing
infringement theories, and, in fact, Epocal did so during trial. Thus, there is no
evidence supporting Epocal’s argument that Abbott’s changing theories should be
considered litigation misconduct.
Arguments at trial that were inconsistent with the court’s
Epocal asserts that “Abbott pressed at least two arguments at trial that blatantly
ignored this Court’s claim construction ruling.”28 Specifically, Epocal asserts that
Abott improperly advanced an argument that the plastic walls of the Epocal device
were “distinguished from the conduit” because they were located over a heat source,
and that Abbott ignored the claim limitations “compartment” and “holds dissolved
See doc. no. 144.
Doc. no. 342, at 6 n.3.
gases” as separate requirements.29 The only case cited by Epocal to support that
argument, Cartner v. Alamo Group, Inc., No. 1:07-cv-1589, 2011 WL 4436652 (N.D.
Ohio Mar. 30, 2011), is distinguishable because it was decided under a different
standard. In Cartner, the district court held that the plaintiffs’ allegations of
infringement were frivolous because the plaintiffs unreasonably ignored certain of the
court’s claim constructions and unreasonably maintained certain other claim
constructions that had been rejected by the court. Id. at *15. As such, the plaintiffs
“knew or should have known that these arguments were baseless,” and there was clear
and convincing evidence of bad faith. Thus, the court in Cartner was addressing
whether the plaintiff had brought and advanced objectively meritless litigation in
subjective bad faith, not whether the plaintiffs had engaged in litigation misconduct.
Moreover, regardless of that distinction, Epocal has not presented clear and
convincing evidence of litigation misconduct in this regard. The jury was capable of
determining for itself whether the evidence presented was consistent with this court’s
claim construction rulings.
Abandonment of claims and theories during litigation
Finally, the court is not convinced that Abbott’s decision to abandon certain
claims and theories at various points during the litigation constitutes litigation
misconduct.30 The court acknowledges that asserting baseless theories and then
dropping then at some later strategic point in the litigation is one factor that can be
considered in evaluating a party’s litigation misconduct, but usually only if there is
some additional evidence that those decisions were part of a larger strategy of
vexatious litigation. See, e.g., Beckman Industries, 892 F.2d at 1551-52 (finding of
litigation misconduct based on party’s decision to drop two claims during the
litigation, in addition to evidence that another claim was meritless and that the party
had repeatedly violated an injunction). Indeed, the Federal Circuit has recently made
clear that “[a] decision by a party to narrow its case for presentation to a jury does not
generally suggest manipulation of the litigation process.” Medtronic, 603 F.3d at 959.
See also Q-Pharma, 360 F.3d at 1304 (“[W]e fail to see how a changed legal theory
that leads to the voluntary dismissal of a lawsuit can amount to bad faith litigation.”).
There is no evidence of special circumstances in this case to warrant a finding
of litigation misconduct on the basis of Abbott’s narrowing of claims for trial. Abbott
asserts that it decided to drop its willfulness and doctrine of equivalents theories
because the court’s pretrial rulings indicated that Epocal would be allowed to present
certain unfavorable evidence only if those theories remained at issue. That is a
For example, Abbott decided, prior to the pretrial conference, not to pursue any claims for
infringement of the ‘455 patent. It also dropped its claims for willful infringement and infringement
under the doctrine of equivalents before trial. During trial, it dismissed certain aspects of its tortious
legitimate strategic decision, not litigation misconduct. Epocal also points to
Abbott’s decision not to pursue its claim for infringement of the ‘455 patent, but
Epocal has already agreed not to pursue a claim for fees with regard to the ‘455
patent,31 and the court approved that agreement.32 Finally, Epocal points to Abbott’s
decision to abandon certain portions of its tortious interference claim before that
claim went to the jury, but Abbott’s behavior with regard to that state law claim has
no bearing on Epocal’s entitlement to attorneys’ fees pursuant to § 285, which applies
only to patent infringement claims. See Stickle v. Heublein, Inc., 716 F.2d 1550, 1564
(Fed. Cir. 1983) (holding that “an award of attorney fees for the breach of warranty
claim is not authorized under § 285”). Epocal acknowledges as much by seeking fees
related to the tortious interference claim pursuant to the court’s inherent authority, not
Totality of the circumstances
Even considering the totality of all the circumstances, including all of the
specific arguments addressed above, the court concludes that Epocal has not
presented clear and convincing evidence of Abbott’s litigation misconduct to warrant
a finding of “exceptional circumstances” under § 285. Some of Epocal’s arguments
Doc. no. 224 ¶ 2.
Doc. no. 226.
See § I(B), infra.
concern issues that have been already been presented to the court, either on summary
judgment, in Daubert motions, or in motions in limine, but the court never prevented
Abbott from presenting evidence based on Epocal’s objections. Many of Epocal’s
other arguments are essentially another way of asserting that Abbott’s claims were
objectively baseless, and those arguments are foreclosed by this court’s prior rulings.
Abbott vigorously litigated its claims for patent infringement, and it no doubt made
certain decisions during the course of the litigation that had as much or more to do
with strategy than the merits of the claims. But neither that, nor the fact that Abbott
ultimately was unsuccessful in convincing the jury that Epocal infringed its patents,
means that Abbott engaged in “litigation misconduct,” as that term is used by courts
applying the “exceptional circumstances” standard of § 285. Generally, the cases
finding litigation misconduct have involved much more serious misbehavior than
what is alleged here, like repeated misrepresentations to the court or to the opposing
party, the withholding of important testimony or documentation, or the advancement
of clearly frivolous theories. See, e.g., MarcTec, 664 F.3d at 919-20 (holding that the
plaintiff “engaged in litigation misconduct when it: (1) misrepresented both the law
of claim construction and the constructions ultimately adopted by the court; and (2)
introduced and relied on expert testimony that failed to meet even minimal standards
of reliability”), Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1324 (Fed. Cir.
2011) (finding litigation misconduct when the offending party destroyed relevant
documents, failed to offer a construction for any disputed claim terms, lodged
incomplete and misleading extrinsic evidence with the court, submitted declarations
that contradicted earlier deposition testimony by the declarants, and generally
displayed a “lack of regard for the judicial system”); ICU Medical, Inc. v. Alaris
Medical Systems, Inc., 558 F.3d 1368, 1380 (Fed. Cir. 2009) (upholding a finding of
litigation misconduct against a party who had “made ‘multiple, repeated
misrepresentations . . . to the Court regarding its own patents in an effort to conceal
what are now characterized as errors’”). Here, Abbott’s case ultimately proved to be
a weak one, but it was not a meritless one. Abbott may not have made defending the
case easy for Epocal, but there is no evidence that Epocal’s defense was rendered
impossible, or even unfairly complicated, by Abbott’s alleged misrepresentations or
In summary, the court simply cannot hold that Abbott engaged in litigation
misconduct. Therefore, there is no basis for finding “exceptional circumstances”
under 35 U.S.C. § 285, and Epocal is not entitled to recover attorneys’ fees under that
Epocal also seeks an award of expert witness fees and fees related to Abbott’s
tortious interference claim pursuant to the court’s inherent authority to award such
fees.34 The Eleventh Circuit has held that
[t]he key to unlocking a court’s inherent power is a finding of bad faith.
See In re Mroz, 65 F.3d 1567, 1575 (11th Cir.1995). “A finding of bad
faith is warranted where an attorney knowingly or recklessly raises a
frivolous argument, or argues a meritorious claim for the purpose of
harassing an opponent. A party also demonstrates bad faith by delaying
or disrupting the litigation or hampering enforcement of a court order.”
Primus Automotive Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th
Cir. 1997) (internal quotation and citation omitted).
Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998) (alteration supplied).
An attorney who knowingly or recklessly pursues a frivolous
claim acts in bad faith. Schwartz v. Million Air, Inc., 341 F.3d 1220,
1225 (11th Cir. 2003). Knowingly and recklessly filing a complaint
without investigating the law or facts, particularly in light of opposing
party’s warning that the facts do not support a claim, may support a
showing of bad faith. Smith v. Grand Bank & Trust of Fla., [193 F.
App’x 833] (11th Cir. 2006).
Fowler v. Merrill Lynch Credit Corp., No. Civ.A. 1:00CV1641GET, 2006 WL
2224019, *3 (N.D. Ga. Aug. 2, 2006) (alteration supplied).
The Federal Circuit has also shed light on the interplay between § 285 fees for
“exceptional circumstances” and fees awarded pursuant to a court’s inherent
authority.35 In MarcTec, the Federal Circuit held that
Epocal resorts to the court’s inherent authority for these fees because expert witness fees
and fees related to non-patent claims are unavailable under § 285.
Epocal correctly points out that, because the court’s inherent authority does not arise out
of § 285, the court is not limited to the requirements of that statute and the case law construing it
when deciding whether to award fees pursuant to its inherent authority, and the Federal Circuit does
A district court has inherent authority “to impose sanctions in the
form of reasonable expert fees in excess of what is provided for by
statute.” Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381,
1391 (Fed. Cir. 2008). Use of this inherent authority is reserved for
cases where the district court makes a “finding of fraud or bad faith
whereby the ‘very temple of justice has been defiled.’” Amsted Indus.
Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 378 (Fed. Cir. 1994)
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 46, 111 S. Ct. 2123,
115 L. Ed.2d 27 (1991)). Accordingly, not every case that qualifies as
exceptional under § 285 will also qualify for sanctions under the court’s
inherent power. Id.
MarcTec, 664 F.3d at 921. The Federal Circuit similarly emphasized the “narrow
view of the role of inherent authority as a basis for imposing sanctions for
misconduct” in Medtronic, stating that “a case must be ‘sufficiently beyond
“exceptional” within the meaning of section 285 to justify . . . a sanction under the
court’s inherent power.’” Medtronic, 603 F.3d at 966 (citations omitted) (ellipses in
Based on this authority from the Eleventh and Federal Circuits, it would be
inconsistent to impose attorneys’ or expert witness fees under the court’s inherent
authority when the court already has determined that Epocal is not entitled to fees
under the “exceptional case” standard of § 285. There is no evidence here to support
a finding of the extraordinary level of bad faith behavior that would be required to
not necessarily provide the controlling authority. That does not mean, however, that Federal Circuit
cases cannot be helpful in the analysis, particularly in assessing the interplay between the statute and
the court’s inherent power.
support an award of attorney’s fees under the court’s inherent authority.
II. CONCLUSION AND ORDER
Based on the foregoing, Epocal’s motion for a finding that this case is
exceptional and for an award of attorney’s fees is DENIED.
DONE and ORDERED this 5th day of November, 2012.
United States District Judge
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