Spectros Corp. v. Thermo Fisher Scientific, Inc.
Filing
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ORDER by Judge ARMSTRONG denying 103 Motion for Attorney Fees; sustaining 115 Report and Recommendations.; granting 118 Motion DE NOVO DETERMINATION (lrc, COURT STAFF) (Filed on 11/13/2012)
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UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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OAKLAND DIVISION
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7 SPECTROS CORP.,
Plaintiff,
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vs.
10 THERMO FISHER SCIENTIFIC d/b/a
NANO DROP,
Case No: C 09-01996 SBA
ORDER GRANTING PLAINTIFF’S
MOTION FOR DE NOVO
DETERMINATION OF
DISPOSITIVE MATTER AND
DENYING DEFENDANT’S
MOTION FOR ATTORNEYS’ FEES
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Defendant.
Dkt. 103, 115, 118
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Defendant Thermo Fisher Scientific’s (“TFS”) prevailed in this patent infringement
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action brought by Plaintiff Spectros Corporation (“Spectros”). Thereafter, TFS filed a
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motion for attorneys’ fees under 35 U.S.C. § 285, which provides that a court “may award
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reasonable attorney fees to the prevailing party” in “exceptional cases.” 35 U.S.C. § 285.
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On referral from this Court, Magistrate Judge Nandor Vadas (“the Magistrate”) issued a
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Report and Recommendation in which he recommended granting in part and denying in
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part TFS’s fee motion.
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Spectros has filed objections to the portion of the Magistrate’s recommendation to
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award fees, and has filed a Motion for De Novo Determination of Dispositive Matter
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Referred to Magistrate Judge Nandor Vadas. Dkt. 118. Having read and considered the
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papers filed in connection with this matter and being fully informed, the Court hereby
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GRANTS the motion for de novo review, SUSTAINS Spectros’s objections and DENIES
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TFS’ motion for attorneys’ fees. The Court, in its discretion, finds this matter suitable for
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resolution without oral argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).
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I.
BACKGROUND
On May 6, 2009, Spectros filed the instant patent infringement action against TFS,
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alleging that its NanoDrop 3300 spectrometer (“NanoDrop” or “accused device”) infringed
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claims 1 through 4 of United States Patent No. 6,711,426 (“the ’426 patent” or “patent-in-
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suit”), which is owned by Spectros. After the lawsuit was filed, TFS sought reexamination
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of the patent-in-suit by the United States Patent and Trademark Office (“PTO”). On April
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19, 2011, the PTO issued a reexamination certificate which cancelled claims 1 through 10
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and 24 through 32 of the ‘426 Patent, but confirmed the validity of claims 11 through 23.
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Dkt. 62-2. As a result, the four claims allegedly infringed by TFS were cancelled, and
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hence, were no longer actionable.
In light of the PTO’s decision on reexamination, Spectros moved this Court for leave
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to amend its complaint to allege that the NanoDrop infringed claim 19 of the ‘426 Patent.
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Incorporating the limitations of claim 1, claim 19 reads as follows:
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An improved broadband spectroscopy illuminator comprising:
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[a] a broadband light source and
[b] an optical coupling means for coupling the light source to a
target region,
[c] said source and optical coupling means configured and
arranged to achieve an improved efficiency of delivery to said
region with a high optical density of at least 1 mW/cm2 and a
low transferable thermal load of no more than 100 mW heat per
mW usable optical power delivered,
[d] wherein said illuminator further comprises a light collection
fiber, said light collection fiber integrated into said illuminator
and optically coupled to said target region.
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Am. Compl. Ex. A (‘426 patent, col. 27, ln. 7-17; col. 28, ln. 20-23) (emphasis added), Dkt.
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62. TFS opposed the proposed amendment as futile. The Court, however, granted
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Spectros’s motion. The Court found that in light of the liberal policy of permitting
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amendments under Federal Rule of Civil Procedure 15, the issue of futility could not be
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resolved at that time based on the limited record presented. Dkt. 61 at 2. Spectros filed its
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First Amended Complaint on May 5, 2011. Dkt. 62.
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On December 7, 2011, the Court held a claim construction hearing to address the
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following disputed claim terms: (1) “illuminator”; (2) “light collection fiber”;
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(3) “integrated into said illuminator”; and (4) “optical coupling means for coupling the light
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source to a target region.” Dkt. 76. The centerpiece of the parties’ dispute was the issue of
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whether the “illuminator” was the entire device (Spectros’s position) or only that portion of
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a device that generates broadband light (TFS’ position). At the outset of the hearing, the
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Court indicated its inclination to agree with Spectros’s contention that illuminator need not
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be construed; however, to the extent a construction was necessary, the Court indicated that
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it should be “a device that generates broadband light and delivers that light to a target
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region or sample.” Reporter’s Transcript (“RT”) at 5:10-18 (emphasis added), Dkt. 110-1.
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After extensive oral argument, however, the Court agreed with TFS’ proposed construction
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and construed “illuminator” as: “That portion of a device that generates broadband light
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and delivers that light to a target region or sample.” Id. at 17:17-81:16 (emphasis added);
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see also Claim Construction Order at 1, Dkt. 76.
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The Court’s construction of “illuminator” effectively vitiated Spectros’s claim of
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infringement because the part of the NanoDrop that correlated to the “illuminator” lacked
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the requisite integrated “light collection fiber,” as specified in claim 19. Consequently,
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TFS requested that Spectros dismiss the action. Steier Decl. ¶ 7, Dkt. 103-1. Spectros
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refused. Id. As a result, TFS filed a motion for summary judgment, which the Court
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granted on May 31, 2012. Dkt. 100. With regard to Spectros’s claim of literal
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infringement of Claim 19, the Court found that such claim failed on the ground that “it is
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clear that the NanoDrop does not have a ‘light collection fiber’ that is ‘integrated into said
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illuminator’—as specified in the ‘426 patent.” Order at 8. The Court also rejected
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Spectros’s claim based on the doctrine of equivalents as procedurally-barred and lacking in
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substantive merit. Id. at 11. Spectros appealed the Court’s ruling, but voluntarily
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dismissed its appeal on September 17, 2012. Dkt. 116.
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In the meantime, on June 14, 2012, TFS filed a motion for attorneys’ fees. Dkt. 103.
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TFS argued that Spectros engaged in litigation misconduct by continuing to litigate its
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claims (1) notwithstanding the PTO’s cancellation of most of the claims of the ‘426 patent,
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and (2) after the Court’s claim construction ruling which effectively defeated Spectros’s
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remaining claim of infringement. The Court referred the motion to a magistrate judge for
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findings and recommendations. Dkt. 104. On September 17, 2012, the Magistrate issued
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his Report and Recommendation in which he recommended partially granting the motion
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for attorneys’ fees in accordance with 35 U.S.C. § 285. See Report and Recommendation
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(“Report”), Dkt. 115. The Magistrate rejected TFS’s contention that Spectros engaged in
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litigation misconduct when it amended its complaint to add a patent infringement claim
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based on claim 19 of the patent-in-suit. Report at 5. However, he agreed that TFS had
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shown by clear and convincing evidence that the case became “exceptional” under § 285
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when Spectros refused to dismiss the action following the Court’s construction of the term
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“illuminator.” Id. In addition, the Magistrate found it significant that Spectros failed to
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support its opposition to TFS’s summary judgment motion with an expert declaration. Id.
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at 6-7. The Magistrate recommended awarding $109,466.23 in fees and costs. Id. at 8.
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On October 1, 2012, Spectros filed objections to the Report. Objections, Dkt. 117.
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First, “Spectros objects to the Magistrate’s recommendation that the district court declare
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this case exceptional when Spectros did not dismiss the case after the district court
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construed the term ‘illuminator.’” Id. at 2. Second, “Spectros objects to the Magistrate’s
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recommendation that the district court award to TFS those reasonable fees and costs it
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incurred in defending the action after it asked Spectros to dismiss the case on December 19,
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2011.” Id. Spectros accompanied its objections with a Motion for De Novo Determination
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of Dispositive Matter Referred to Magistrate Judge Nandor Vadas. Dkt. 118. The matter
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has been fully briefed and is ripe for adjudication.
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II.
LEGAL STANDARD
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A motion for attorneys’ fees may be referred to a magistrate judge for findings and
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recommendations in accordance with 28 U.S.C. § 636(b)(1)(B). See Estate of Conners by
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Meredith v. O’Connor, 6 F.3d 656, 659 (9th Cir. 1993). Once findings and
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recommendations are served, the parties have fourteen days to file specific written
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objections thereto. 28 U.S.C. § 636(b); Fed. R. Civ. P. 72(b)(2). The district court must
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make a de novo determination of those portions of the magistrate judge’s report to which a
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party has interposed an objection. Dawson v. Marshall, 561 F.3d 930, 932 (9th Cir. 2009)
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(citing 28 U.S.C. § 636(b)(1)(C)). “The district judge may accept, reject, or modify the
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recommended disposition; receive further evidence; or return the matter to the magistrate
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judge with instructions.” Fed. R. Civ. P. 72(b)(3).
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III.
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DISCUSSION
In patent infringement actions, a district court “may award reasonable attorney fees
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to the prevailing party” in “exceptional cases.” 35 U.S.C. § 285. A fee request is analyzed
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under a two-step inquiry. MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 916 (Fed.
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Cir. 2012). “First, the court must determine whether the prevailing party has proved by
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clear and convincing evidence that the case is exceptional. . . . If the district court finds that
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the case is exceptional, it must then determine whether an award of attorney fees is
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justified.” Id.
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A case may be deemed “exceptional” when there has been “willful infringement,
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fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious
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or unjustified litigation, conduct that violates the Federal Rule of Civil Procedure 11, or like
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infractions.” Id. “Absent litigation misconduct or misconduct in securing the patent, a
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district court can award attorney fees under § 285 only if the litigation is both: (1) brought
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in subjective bad faith; and (2) objectively baseless.” Id. This standard requires that the
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patentee’s case have “no objective foundation” and that the plaintiff “actually know this.”
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Id.
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“To be objectively baseless, the infringement allegations must be such that no
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reasonable litigant could reasonably expect success on the merits.” Highmark, Inc. v.
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Allcare Health Management Systems, Inc., 687 F.3d 1300, 1309 (Fed. Cir. 2012). “With
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respect to the subjective prong, ‘there is a presumption that an assertion of infringement of
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a duly granted patent is made in good faith.’” Id. (quoting Medtronic Navigation, Inc. v.
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BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943, 954 (Fed. Cir. 2010)).
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Thus, the subjective prong must be established with clear and convincing evidence. iLOR,
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LLC v. Google, Inc., 631 F.3d 1372, 1377 (Fed. Cir. 2011).
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TFS contends that Spectros acted unreasonably in refusing to dismiss its case and by
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insisting on opposing TFS’s summary judgment motion in light of the Court’s construction
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of the disputed claim terms. The Court disagrees. The mere fact that Spectros did not
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prevail at the claim construction hearing with respect to the term “illuminator” did not ipso
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facto obligate Spectros to abandon its action against TFS. See Medtronic Navigation, Inc.
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v. BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943, 954-55 (Fed. Cir.
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2010). Rather, the proper analysis in such a circumstance is as follows:
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The salient inquiry is whether [plaintiff]’s claims were so
lacking in merit that [plaintiff] was legally obligated either to
abandon its case altogether or to limit itself to challenging the
district court’s claim construction order on appeal. If
[plaintiff]’s infringement claims were not frivolous or
objectively unreasonable, [plaintiff] was entitled to pursue those
claims, and its ultimate lack of success does not render the case
exceptional.
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Id. at 954. In Medtronic, the Federal Circuit found that the plaintiff’s infringement claims
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were neither frivolous nor objective unreasonable. As a result, the appellate panel held that
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the district court erred in ruling that the plaintiff had “a legal obligation not to oppose
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[defendant]’s summary judgment motions” following the issuance of the court’s claim
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construction order. Id. at 954-55.
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Here, the Court must presume, as a threshold matter, that Spectros’s patent
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infringement claim “is made in good faith.” Id. at 954. To overcome that presumption,
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there must be clear and convincing evidence “that the patentee’s infringement claims were
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vexatious, unjustified, or frivolous, and were pursued in bad faith.” Id. Based on the
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record presented, the Court is not persuaded that TFS has made a sufficient showing to
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overcome the presumption that Spectros made a good faith claim of patent infringement.
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As both parties acknowledge, Spectros’s infringement claim turned largely on whether the
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“illuminator” disclosed in the patent-in-suit was the entire device or only a portion of it.
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The Court’s initial inclination was to agree with Spectros’s contention that “illuminator”
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referred to the entire device. It was only after extensive oral argument and the tutorial that
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the Court was ultimately persuaded by TFS’s position that the “illuminator” is a component
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of the device—not the entire device. The Court’s reconsideration of its initial inclination
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and the extensive argument on the issue strongly militate against any suggestion by TFS
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that Spectros’s infringement claim was frivolous or objectively unreasonable.
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In sum, the Court determines that Spectros’s position on claim construction was not
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“so unreasonable that no reasonable litigant could believe it would succeed.” iLOR, 631
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F.3d at 1378 (citing Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d
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1254, 1260 (Fed.Cir. 2008)). Spectros was therefore entitled to pursue its patent
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infringement claim, “and its ultimate lack of success does not render the case exceptional.”
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Medtronic, 603 F.3d at 954.
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IV.
CONCLUSION
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The Court accepts the Magistrate’s unchallenged determination that Spectros did not
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engage in litigation misconduct by pursuing this action following the PTO’s reexamination
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of the patent-in-suit. However, upon de novo review, the Court disagrees that Spectros’s
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decision to move forward with the litigation after the claim construction hearing and
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subsequent loss on summary judgment renders this case “exceptional” for purposes of 35
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U.S.C. § 285. Accordingly,
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IT IS HEREBY ORDERED THAT:
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1.
Spectros’s Motion for De Novo Determination of Dispositive Matter Referred
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to Magistrate Judge Nandor Vadas is GRANTED. The Court SUSTAINS Spectros’s
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objections and DENIES TFS’ motion for attorneys’ fees.
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IT IS SO ORDERED.
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This Order terminates Docket 103, 115 and 118.
Dated: November 13, 2012
______________________________
SAUNDRA BROWN ARMSTRONG
United States District Judge
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