SFP Works, LLC v. Buffalo Armory, LLC

Filing 117

ORDER Accepting 108 Report and Recommendation. Signed by District Judge Denise Page Hood. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
SFP WORKS, LLC,
Plaintiff,

Case No. 14-13575

v.

Case No. 16-13575
Honorable Denise Page Hood

BUFFALO ARMORY, LLC,
Defendant.
I
ORDER ACCEPTING REPORT AND RECOMMENDATION

This matter comes before the Court on Magistrate Judge David R. Grand's
Report and Recommendation (Doc. #108) regarding Defendant's Motion for
Award of Attorneys' Fees. (Doc. #86). Defendant filed objections in response to
Magistrate Judge Grand's Report, and Plaintiff SFP filed a brief in opposition to
Defendant's objections to the Report.

Even though neither the Report and

Recommendation nor the Local Rules provide for such a filing, Defendant filed a
reply to Plaintiffs response, which the Court has reviewed and considered.
I.

Background
Plaintiff brought this action alleging that Defendant infringed Plaintiffs

patent, U.S. Patent No. 8,480,824 (the "824 Patent"), by using Plaintiffs patented
steel treatment technology after Defendant's license granting the right to use that
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process expired. The case was assigned to U.S. District Judge Gerald E. Rosen.
On October 31, 2016, Judge Rosen entered an Opinion and Order granting
Defendant's motion for summary judgment on Plaintiffs patent infringement
claim (the "Opinion"). (Doc. #83). In the Opinion, Judge Rosen found that
Defendant's "Star Process" did not infringe on the 824 patent because, in the Star
Process, steel is heated for 5.6 seconds, not "rapidly heat[ed], within 5 seconds," as
set forth in the relevant claims of the 824 Patent. (Id. at 6-18). Judge Rosen also
held that Plaintiffs infringement claim under the "doctrine of equivalents" failed
because it was barred by the principle of prosecution history estoppel. (Id. at 1826).
Defendant then filed a Motion for Award of Attorneys' Fees as the
prevailing party under 35 U.S.C. § 285. (Doc. #86). Defendant claims that
Plaintiffs patent infringement claims "were incredibly weak and contradicted by
the prosecution history, the specification of the 824 patent, and Plaintiffs
discovery responses." Id. Defendant asserts that the bases for Plaintiffs
infringement claims were "objectively unreasonable," making this case
"exceptional" within the meaning of Section 285, such that an award of more than
$587,000 in attorneys' fees and expenses is justified.

On February 1, 2017,

because of Judge Rosen's retirement, this case was randomly reassigned to the
undersigned.
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II.

Legal Standard

Section 285 provides that a court "in exceptional cases may award reasonable
attorney fees to the prevailing party." 35 U.S.C. § 285. Recently, the Supreme
Court set forth the standard for determining whether a case is "exceptional" under
§ 285:
... an "exceptional" case is simply one that 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. District Courts
may determine whether a case is "exceptional" in the case-by-case
exercise of their discretion, considering the totality of the
circumstances.

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756
(2014). In Octane Fitness, despite articulating a less rigid standard than previously
had existed, the Supreme Court emphasized that a fee award under § 285 should
still be the exception, not the rule. Id. at 1757. Factors to be considered in
determining whether a case is "exceptional" include, but are not limited to,
"frivolousness, motivation, objective unreasonableness (both in the factual and
legal components of the case) and the need in particular circumstances to advance
considerations of compensation and deterrence." Id. at 1756, n. 6 (internal
quotations omitted).

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In its Motion for Award of Attorneys' Fees, Defendant primarily argues that
attorneys' fees are appropriate in this case under the "objective unreasonableness"
prong of the "exceptional circumstances" analysis.

III.

Magistrate Judge Grand's Report and Recommendation

Magistrate Judge Grand recommended that the Court deny Defendant's
Motion for Award of Attorneys' Fees under Section 285. Magistrate Judge Grand
concluded that Defendant failed to show that Plaintiff: ( 1) initiated the lawsuit
without an adequate pre-filing investigation or for vexatious purposes, or (2)
engaged in litigation misconduct. (Doc. # 108 at 6). Magistrate Judge Grand stated
that the Opinion does not reflect that Judge Rosen believed Plaintiffs arguments
were frivolous, exceptionally weak, or advanced in bad faith. Magistrate Judge
Grand stated that: (a) Judge Rosen noted that Plaintiff presented evidence of some
"actual

infringement;"

and (b)

at oral argument,

Defendant's

counsel

acknowledged that Defendant's process was capable of functioning in a manner
that would infringe on Plaintiffs patent. (Doc. # 108 at 6 (citing Doc. #83 at 1518)). Magistrate Judge Grand found that the arguments presented by Plaintiff are
not objectively unreasonable, this case is more typical than exceptional, and an
award of attorneys' fees is not warranted. Id. at 5-6.

IV.

Analysis
A. "Drawing the Steel" Limitation
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Defendant's first objection the Report and Recommendation was that
Magistrate Judge Grand should have analyzed the objective reasonableness of
Plaintiffs arguments regarding the "drawing the steel" limitation. (Doc. #110 at 5).
Defendant contests Magistrate Judge Grand's rejection of the "drawing the steel"
limitation argument solely because the Court declined to address the issue in the
Opinion. Id. Defendant argues that the "drawing the steel" limitation argument
was substantively weak and objectively unreasonable, one reason this case is
exceptional and stands out from other cases. Id. at 7.
Like the Magistrate Judge, the Court is not persuaded by Defendant's
contention that the "drawing the steel" limitation argument supports a finding that
this is an exceptional case.

The Court notes that, in the Opinion, Judge Rosen

expressly declined to address the issue of the "drawing the steel" limitation. As
such, the Magistrate Judge had no basis upon which to determine whether the
"drawing the steel" limitation argument was reasonable. Notwithstanding a general
cite to the Octane Fitness decision in conjunction with arguing that the Magistrate
Judge did "not take into account the 'totality of the circumstances' presented by
this case," Defendant has not cited any specific authority that required the
Magistrate Judge (or the Court) to evaluate a Plaintiffs claim that Judge Rosen did
not address in the Opinion. The Court also notes that Plaintiffs argument was

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supported by the op1mon of an expert (even if the expert's opm1on was
unreasonable or arbitrary, as Defendant contends).

B. Actual Infringement
The Defendant next argues that Magistrate Judge Grand erred in concluding
that Defendant's process actually infringed Plaintiffs patent. Id. at 9. Defendant
argues that Judge Rosen never concluded in the Opinion that Plaintiff produced
evidence of Defendant's process actually infringing Plaintiffs patent, even on a
limited basis. (Citing Doc. #83 at 15-18). Defendant also argues that, as a
fundamental element of patent law, there can be no infringement unless the
accused process reads on each limitation of at least one claim of the patent. (Doc.

# 110 at 10). Defendant asserts that because there was no evidence presented that
the "drawing the steel" limitation was met, no reasonable argument could be made.
Defendant concludes that Magistrate Judge Grand' s belief that Plaintiff had a
reasonable basis to bring its lawsuit is legally incorrect. Id. at 11.
Plaintiff responds that Magistrate Judge Grand did not make a determination
of infringement but simply observed "evidence of some actual infringement" due
to evidence that Defendant ran its process at infringing line speeds. (Doc. #112 at
16) Plaintiff contends that evidence that Defendant operated at infringing speeds
on even some occasions disposes of Defendant's "objectively unreasonable"
argument. Id.

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The Court notes that Judge Rosen rejected Plaintiffs actual infringement
argument because Plaintiff did not identify it during discovery, but Judge Rosen
observed that Plaintiff supplied "data from runs of Defendant's accused process in
early April 2015, disclosing line speeds of 55 or 60 IPM." (Doc. #83, at 15). The
Court also notes that Plaintiffs expert opined that Defendant's process satisfied the
"rapidly heating" element, which infringed on the '824 Patent. (Doc. #91 at 15-17).
Although Judge Rosen disagreed with the expert's opinion, there is no basis for the
Court to find that Plaintiff was unreasonable in relying on the expert's opinion.
For the foregoing reasons, the Court is not persuaded that the Magistrate
Judge concluded there was actual infringement, nor does the Court find that
Plaintiffs infringement claim was objectively unreasonable, such that the Court
should conclude that this is an exceptional case.

C. Alleged Frivolity of Plaintiffs Claims
Defendant argues that Magistrate Judge Grand erred in concluding that,
based on the Opinion, Plaintiffs arguments were not frivolous. (Doc. #110 at 12).
Defendant states that Plaintiffs "literal infringement contentions were based on an
expert report expressly identified in the Court's Opinion as 'wholly arbitrary."'
(Doc. #110 at 13 (citing Doc. #83 at 12) (emphasis in original)). Defendant further
states that Plaintiffs doctrine of equivalents argument was based on the assertions
of counsel and unsupported by the record. (Doc. # 110 at 13 ). Defendant concludes
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that the above circumstances demonstrate that Plaintiffs claims were frivolous. Id.
at 13.
The Court is not persuaded by Defendant's argument regarding frivolity.
First, in the Opinion, Judge Rosen did not state that the expert's report was
"wholly arbitrary." Rather, he stated that the expert's "segregation of the first 0.6
seconds of this heating process seems wholly arbitrary, ... " Second, and again, it
is the expert's analysis or conclusion that Judge Rosen rejected. The Court did not
state, nor suggest or imply, that Plaintiffs cause of action was arbitrary. Third,
although Defendant argues that Plaintiffs doctrine of equivalents argument was
unsupported by anything but assertions of counsel, Defendant does not explain
why it is unsupported, nor does Defendant cite any instances of assertions of
counsel. Fourth, Judge Rosen's extensive analysis of the doctrine of equivalents
analysis (see Doc. #83, at 18-26), and the absence of any suggestion by Judge
Rosen of bad faith or frivolity by Plaintiff, disfavor a finding that Plaintiffs claim
was objectively unreasonable or that this is an exceptional case for purposes of
Section 285.
In conclusion, the Court has had an opportunity to review this matter and
finds that Magistrate Judge Grand reached the correct conclusions for the proper
reasons.

Finding

no

error

in

Magistrate

Judge

Grand's

Report

and

Recommendation, the Court adopts the Report and Recommendation in its entirety.
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For the reasons stated above,
IT IS ORDERED that the Report and Recommendation [Docket No. 108] is
ADOPTED as this Court's findings of fact and conclusions of law.
IT IS FURTHER ORDERED that Defendant's Motion for Award of
Attorneys' Fees [Doc. #86] is DENIED.

~

September / 3 , 2017

United States District Judge

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