CANVS Corporation v. Nivisys, LLC
Filing
89
ORDER denying 85 Defendant NVISYS, LLC's Motion for Fees and Costs; denying as moot 86 Plaintiff CANVS Corporation's Motion to Strike. Signed by Judge Sheri Polster Chappell on 2/18/2016. (LMF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
CANVS CORPORATION,
Plaintiff,
v.
Case No: 2:14-cv-99-FtM-38MRM
NIVISYS, LLC,
Defendant.
/
ORDER1
This matter comes before the Court on Defendant Nivisys, LLC's Motion for Fees
and Costs (Doc. #85) filed on December 1, 2015. Plaintiff CANVS Corporation filed a
Response in Opposition (Doc. #88) on December 28, 2015. The matter is ripe for review.
Background
This is a patent infringement action. CANVS owns United States Patent No.
6,911,652 (“‘652 Patent” or “Patent”), titled “Low Light Imaging Device.” The Patent
describes a device that combines the benefits of night vision and thermal vision
technology to create an enhanced image, providing the user a tactical advantage in low
light environments. ‘652 Patent. Nivisys manufactures and sells Thermal Acquisition Clip-
1
Disclaimer: Documents filed in CM/ECF may contain hyperlinks to other documents or websites. These
hyperlinks are provided only for users’ convenience. Users are cautioned that hyperlinked documents in
CM/ECF are subject to PACER fees. By allowing hyperlinks to other websites, this Court does not endorse,
recommend, approve, or guarantee any third parties or the services or products they provide on their
websites. Likewise, the Court has no agreements with any of these third parties or their websites. The
Court accepts no responsibility for the availability or functionality of any hyperlink. Thus, the fact that a
hyperlink ceases to work or directs the user to some other site does not affect the opinion of the Court.
On System (“TACS”) products2 that, when attached to certain models of night vision
devices, also create a device that combines night vision and thermal vision technology.
CANVS filed this action believing these TACS products induce infringement and
contribute to the direct infringement of the Patent.
Nivisys responded by filing
counterclaims for non-infringement and invalidity of the Patent. After the Court held a
Markman hearing and construed the claims at issue (Doc. #73), the parties filed a Joint
Motion for Consent Judgment (Doc. #79). The Court granted the Motion and entered
judgment in favor of Nivisys on both the infringement claims and non-infringement
counterclaim. (Doc. #80). The parties then agreed to voluntarily dismiss the invalidity
counterclaim. (Doc. #82). With no claims remaining, Nivisys now seeks to recover the
costs and fees it incurred in defending this action.
Discussion
A court may award reasonable attorney fees to the prevailing party of an
“exceptional” patent case. See 35 U.S.C. § 285. For many years, a case was exceptional
only if it either involved “material inappropriate conduct” or was both “objectively baseless”
and “brought in subjective bad faith.” See Brooks Furniture Mfg., Inc. v. Dutailier Int’l,
Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). Recently, however, the Supreme Court
relaxed these requirements. See Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
134 S. Ct. 1749 (2014). Now, a patent case is exceptional if it “stands out from others
with respect to the substantive strength of a party’s litigating position (considering both
the governing law and the facts of the case) or the unreasonable manner in which the
case was litigated.” Id. at 1756. “[T]here is no precise rule or formula for making these
2
Nivisys also manufactures and sells a mobile version of its product, known as a TACS-M. The Court will
refer to both versions as “TACS.”
2
determinations.” Id. (alteration and citation omitted). This is a discretionary inquiry,
considering the totality of the circumstances. Id.
1. Nivisys Qualifies as the Prevailing Party
To qualify as the prevailing party, the Federal Circuit requires “(1) that the party
receive[] at least some relief on the merits, and (2) that relief [] materially alter the legal
relationship between the parties by modifying one party’s behavior in a way that ‘directly
benefits’ the opposing party.” SSL Servs. LLC v. Citrix Sys., Inc., 769 F.3d 1073, 1086
(Fed. Cir. 2014) (citations omitted). Although Nivisys neglects to argue why it qualifies as
the prevailing party, CANVS argues that two facts prevent Nivisys from achieving this
status: (1) Nivisys’ invalidity counterclaim was voluntarily dismissed, and (2) Nivisys
obtained a consent judgment in its favor, not a judgment on the merits. The Court
disagrees.
Contrary to CANVS’ argument, a party need not prevail on every claim to achieve
prevailing party status. See id. So the fact that the parties agreed to voluntarily dismiss
Nivisys’ invalidity counterclaim does not prevent Nivisys from achieving this status.3 The
same holds true for the consent judgment. This judgment provides at least some relief
on the merits and materially alters the parties’ relationship in a way that directly benefits
Nivisys. To be sure, the Federal Circuit routinely affirms fee awards under § 285 arising
from the entry of a consent judgment. See, e.g., Cartner v. Alamo Group, Inc., 561 F.
3
It appears CANVS provided Nivisys with a covenant not to sue in order to facilitate this voluntary dismissal.
(Doc. #86-1 at 20-26). If this is true, Nivisys is the prevailing party as to the invalidity counterclaim. See
Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1035 (Fed. Cir. 2006) (“[A]s a matter of patent law, the
dismissal with prejudice, based on the covenant [not to sue] and granted pursuant to the district court’s
discretion under Rule 41(a)(2), has the necessary judicial imprimatur to constitute a judicially sanctioned
change in the legal relationship of the parties, such that the district court properly could entertain [a party’s]
fee claim under 35 U.S.C. § 285.”).
3
App’x 958 (Fed. Cir. 2014) (affirming a fee award under § 285 in a case where “the parties
agreed to a consent judgment of noninfringment”).
Thus, Nivisys qualifies as the
prevailing party in this action.
2. Nivisys’ Arguments that this Action is Exceptional are Unpersuasive
Having achieved this status, Nivisys posits two theories for why this case is
exceptional. The first alleges CANVS improperly filed suit against a product with features
that it disclaimed during patent prosecution. This argument is unpersuasive. When
addressing whether fees should be awarded for “litigation pursued in spite of casedispositive specifications or prosecution histories,” courts typically allow fees only where
“the plaintiff asserted its claim in bad faith”; “proposed a frivolous claim construction”;
“ignored the entirety of the specification and prosecution history”; and “derived no support
from the intrinsic record.” Vasudevan Software, Inc. v. Microstrategy, Inc., No. 11-CV06637-RS, 2015 WL 4940635, at *4 (N.D. Cal. Aug. 19, 2015) (citation omitted). This
includes both pre-Octane decisions such as MarcTec, LLC v. Johnson & Johnson, 664
F.3d 907 (Fed. Cir. 2012), and post-Octane decisions such as Vasudevan. None of these
acts are present here.
The prosecution history shows CANVS secured its patent by distinguishing prior
art. (Doc. #73 at 17). That distinction, as CANVS explained at the time, was the
invention’s ability to separately and independently control its thermal image adjustment
assembly and image intensification adjustment assembly.4 (Doc. #73 at 17). This ability
provided a significant advantage over prior art because the user gained precise control
The “thermal image adjustment assembly” adjusts the thermal image whereas the “image intensification
adjustment assembly” adjusts the night vision image.
4
4
over how much of the thermal image or night vision image5 appeared in the final,
combined fusion image. (Doc. #73 at 17). Yet, according to Nivisys, the accused product
cannot independently and separately adjust both image adjustment assemblies.
As Nivisys explains, the accused product is a thermal imaging system that attaches
to pre-owned night vision devices.
Once attached, the accused product creates a
combination thermal-night vision image by feeding the thermal image into the night vision
device’s lens. While the thermal image adjustment assembly is found on the accused
product itself, the image intensification adjustment assembly is found on the pre-owned
night vision device. As part of the accused product itself, the thermal image adjustment
assembly can independently and separately control the quantity of thermal image being
fed into the night vision device lens. Whereas the image intensification adjustment
assembly, as part of the night vision device into which the thermal image is fed, cannot
independently adjust the night vision image. This is because after the thermal image is
fed into the night vision device, it joins the night vision image before the night vision image
reaches its respective adjustment assembly. So, as Nivisys explains, when a user
attempts to adjust the brightness of the night vision image, the user also adjusts some
aspect of the thermal image that is being fed into the night vision device. Because
CANVS disclaimed any product lacking the ability to independently adjust both
assemblies while it was prosecuting the Patent, Nivisys believes this action rises to the
level of exceptionality.
Nivisys relies on MarcTec, 664 F.3d 907, to support this argument. In MarcTec,
the patentee secured a patent for his surgical implant by distinguishing prior art on two
5
The night vision image is also known as an enhanced photon based image. For simplicity, the Court will
use the term “night vision image.”
5
basis – (1) by explaining that his invention used a coating material that required heat to
bond, and (2) by disclaiming “stents.” 664 F.3d at 912-913. Faced with indisputable
evidence that the accused product bonded at room temperature and qualified as a stent,
the patentee proposed a claim construction that lacked any requirement for heat. The
Federal Circuit found this proposed construction was both frivolous and asserted in bad
faith. Id. at 918. The Federal Circuit explained that the patentee could not “claim to be
ignorant of the references to heat in the claims, the language in the specification
discussing the importance of heat to the bonding process, or [the patentee’s] statements
to the PTO.” Id. at 919.
Because the proposed construction “was so lacking in any
evidentiary support,” the Federal Circuit found that the action was exceptional under the
stringent pre-Octane standard.
Unlike the patentee in MarcTec, CANVS did not ignore the entirety of the
specification and prosecution history when it brought this action and asserted its proposed
constructions. When confronted with its statements to the PTO relating to the separate
and independent control feature, CANVS conceded it was bound to its statements. Yet
it also fashioned an argument for why its proposed construction complied with both the
specification and prosecution history. While this argument proved unsuccessful, there is
no evidence this argument was asserted in a frivolous manner or in bad faith. Nor did
CANVS misrepresent the law to the Court or encourage the Court to ignore the intrinsic
record. Simply put, CANVS’s pursuit of this action in the face of its statements to the PTO
does not warrant finding this case is exceptional, even under the less stringent postOctane standard.
6
Nivisys also posits that this action is exceptional because CANVS “filed suit without
any basis for its allegation that the accused product satisfies the three ‘image’ limitations
of the asserted claims.” The Court disagrees. Similar to its argument above, Nivisys
argues the accused product lacks another requisite feature of the Patent – the ability to
generate three distinct images. While the accused product can generate a separate and
distinct thermal image, it cannot generate separate and distinct night vision and output
images. This is because once the thermal image is fed into the night vision device, the
night vision device can produce only a night vision image that incorporates some aspect
of the thermal image. And, without separate and distinct thermal and night vision images,
the accused product cannot combine these images into the final, fused image, as required
by the Patent.
The only support Nivisys provides for the above argument is View Eng’g, Inc. v.
Robotic Vision Sys., Inc., 208 F.3d 981 (Fed. Cir. 2000). But View Eng’g does not support
Nivisys’ argument. There, the Federal Circuit analyzed whether the district court abused
its discretion in awarding sanctions under Fed. R. Civ. P. 11, not whether the case was
exceptional for the purposes of awarding fees under § 285. View Eng’g, Inc., 208 F.3d
at 985. The Federal Circuit focused on several facts not present here. Most notably, the
Federal Circuit found the patentee “had no basis for its [infringement] counterclaims.” Id.
Instead of conducting a pre-suit investigation of the accused product, the patentee based
its infringement claims on the alleged infringer’s advertising materials and statements
made to its customers. Id. When asked “exactly why, on an element by element basis,”
the patentee felt the accused product infringed on one of the patents, the patentee
7
“responded that it could not do so in that sort of detail until it learned what [the accused
product] actually did.” Id.
Notwithstanding the fact that Nivisys is seeking fees pursuant to § 285 rather than
Rule 11, View Eng’g is distinguishable from this case. Unlike the patentee in View Eng’g,
there is no evidence CANVS summarily filed this action without any basis for its
infringement claims. Although entry of the Consent Judgment prevented the Court from
analyzing the infringement claims, CANVS insists that it conducted a pre-suit investigation
and had an expert witness ready to testify in support of its claims. There is no reason for
the Court to doubt this averment. Nor is the Court aware of any other reason to find this
case is exceptional. After the Court issued its Claim Construction Order, CANVS decided
against pursuing this action further and agreed to a consent judgment in Nivisys’ favor.
This concession “undoubtedly reflect[s] fulfillment of [CANVS’] duty to assess the
soundness of its pending claims and to accurately represent to the Court the strengths of
[its] case.” Mears Tech., Inc. v. Finisar Corp., No. 2:13-CV-376-JRG, 2015 WL 9269243,
at *3 (E.D. Tex. Dec. 21, 2015). Without any evidence illustrating that the substantive
strength of CANVS’ litigating position or CANVS’ conduct in this action rises to the level
of exceptionality, the Court declines to make such a finding.6
Accordingly, it is now
ORDERED:
1. Defendant NVISYS, LLC's Motion for Fees and Costs (Doc. #85) is DENIED.
2. Plaintiff CANVS Corporation’s Motion to Strike (Doc. #86) is DENIED as moot.
6
CANVS initially responded to the instant Motion by filing a Motion to Strike (Doc. #86). Having determined
the instant Motion will be denied, the Motion to Strike is denied as moot.
8
DONE and ORDERED in Fort Myers, Florida, this 18th day of February, 2016.
Copies: All Parties of Record
9
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