University of Manitoba, The v. Dragerwerk Ag & Co. KGaA et al

Filing 120

ORDER by Chief Judge Ralph R. Erickson denying 104 Motion for Attorney Fees; and denying as moot 116 Motion to Strike Exhibits. (SH)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
NORTHEASTERN DIVISION
The University of Manitoba, a
Manitoban Body Corporate,
Civil Case No. 2:13-cv-48
Plaintiff,
MEMORANDUM OPINION AND
ORDER DENYING MOTION FOR
ATTORNEYS FEES AND COSTS
AND MOTION TO STRIKE
EXHIBITS A-H

vs.
Draeger Medical, Inc., a Pennsylvania
Corporation,
Defendant.
I.

INTRODUCTION AND SUMMARY OF DECISION
Before the Court is Defendant Draeger Medical, Inc.’s (“Draeger”) motion for

attorney fees and costs1 and Plaintiff The University of Manitoba’s (“U of M”) motion to
strike exhibits A-H of Draeger’s memorandum in support of its motion for fees and
costs.2 Draeger contends this case “the clearest of all possible ‘exceptional’ cases” under
35 U.S.C. § 285 and thus it is entitled to an award of approximately $1.6 million in legal
fees.3 The U of M has opposed the motion for attorneys fees and also seeks to strike
exhibits that were not attached to the original memorandum.
Because the parties presented two reasonable claim constructions for the term in
dispute, this case is not “exceptional” within the meaning of § 285. Draeger’s motion is
DENIED. The U of M’s motion to strike exhibits A-H is DENIED as moot.

1

Doc. #104.

2

Doc. #117.

3

Doc. #111, p. 3.

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II.

BACKGROUND
The complaint in this action was filed on June 28, 2013. The litigation began

with three related patents. It was contentious from its inception. The parties were
unable to reach agreements on even basic issues, such as scheduling deadlines or the
entry of a consent judgment.4 By early December 2013, the U of M informed the Court
during a status conference of its intention to dismiss the claims regarding two of the
patents.5 On December 20, 2013, the U of M formally moved to dismiss the claims
pertaining to U.S. Patent Nos. 5,941,841 and 6,027,498.6 The Court dismissed the
claims relating to these two patents and reserved ruling on Draeger’s claim for attorney
fees until the conclusion of the case.7
The patent in dispute pertained to an invention directed at varying the flow of
biological fluids to an organ during controlled life support conditions. The alleged
infringement centered on construction of the term “controlled life support conditions.”
The U of M, relying on the plain language in the claim, proposed a construction in which
the medical life support system is the primary source of biological fluid to an organ.
Draeger countered with a proposal based on claim disavowal contained in the
prosecution history where the life support system involves no patient breathing effort.
On June 16, 2014, the Court issued its final claim construction order on patent
5,647,350 (“the ‘350 Patent”). The Court’s final construction of the term “controlled life

4

Docs. #47, 50, 51 & 93.

5

Doc. #50.

6

Doc. #59.

7

Doc. #87.

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support conditions” rendered the U of M’s infringement claim untenable. The U of M
consented to the entry of judgment8 and has appealed the Court’s claim construction
order.9
III.

ANALYSIS
Draeger contends that each of the patent infringement claims asserted by the U of

M were fatally flawed because a reasonable investigation would have demonstrated the
baseless infringement allegations or invalidity of the patent.
Section 285 of the Patent Act provides that “[t]he court in exceptional cases may
award reasonable attorney fees to the prevailing party.”10 District courts are to exercise
their discretion in making the exceptional-case determination.11 Entitlement to fees
under § 285 is governed by a preponderance of the evidence standard.12
As recently explained by the United States Supreme Court in Octane Fitness, LLC
v. ICON Health & Fitness, Inc., the meaning of “exceptional case” under § 285 is
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.13
Under Octane, “a district court may award fees in the rare case in which a party’s
unreasonable conduct–while not necessarily independently sanctionable–is nonetheless

8

Doc. #93.

9

Doc. #106.

10

35 U.S.C. § 285

11

- - U.S. - - , 134 S.Ct. 1749, 1756 (2014); Highmark Inc. v. Allcare Health Mgmt. Sys., - - U.S. - -, 134
S.Ct. 1744 (2014).
12

Id. at 1757-58.

13

Id.

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so ‘exceptional’ as to justify an award of fees.”14 The litigation need not be both
objectively baseless and brought in subjective bad faith to award fees. “[A] case
presenting either subjective bad faith or exceptionally meritless claims may sufficiently
set itself apart from mine-run cases to warrant a fee award.”15
Although there is no precise rule or formula for making this determination, the
Supreme Court has suggested that district courts may look to a “nonexclusive” list of
factors, including “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.”16 Upon consideration of the
suggested factors, the Court finds this is not an exceptional case warranting the award of
attorneys fees.
The Court first considers the two patents that were dismissed early on in the
litigation. The Court never reached the merits of whether the patents are invalid
because the claims pertaining to the two patents were dismissed by the U of M within six
months of the commencement of the suit. Draeger was not required to bring a motion to
dismiss, nor does it appear it expended much in the way of time or resources prior to
dismissal of the claims. Magistrate Judge Karen K. Klein allowed Draeger to propose
two questions to the U of M regarding the patents and set a deadline for responding to
the inquiries. The U of M did not respond to the questions, but rather moved to dismiss
the claims. Whether or not the patents were “obviously invalid” is not an issue the Court

14

134 S.Ct. at 1757.

15

Id.

16

Id. at 1756 n.6 (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)).

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reached, and is not a basis in which the Court is inclined to award attorneys fees. In
light of the limited expenditure of time or resources regarding the two patents that were
dismissed, the Court finds the issues are not ones that stand out as being exceptionally
frivolous or objectively unreasonable.
Turning to the ‘350 Patent, Draeger asserts that the U of M based its claims on a
“misrepresentation so obvious i[t] startles the rational mind.”17 Draeger suggests that
the U of M commenced this litigation under two possible theories: (1) the U of M hoped
it could persuade a court “inexperienced with patent matters to radically misapply the
law of claim interpretation”, or (2) the U of M sought to wear down Draeger with the
rigors and cost of litigation such that it would simply pay the U of M to go away.18
Draeger’s theories are overreaching and belied by the record.
Parties involved in patent litigation routinely disagree about the construction of
claim terms. An adverse claim construction does not necessarily mean that no
reasonable patentee would have pursued such an interpretation. In support of their
positions in this case, the U of M relied on the precise claim language while Draeger
relied on the prosecution history. The Court issued a tentative claim construction, held a
Markman hearing, and then re-examined the entire record before reaching a final
decision. The diligence undertaken by the Court leads to the inescapable conclusion
that the U of M’s arguments were not frivolous, objectively unreasonable, or baseless.
The Court ultimately concluded the U of M disavowed the claim coverage it was seeking
to enforce during the prosecution history. Nonetheless, the disavowal is no where near
17

Doc. #113, p. 1.

18

Doc. #111, p. 3.

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as clear as Draeger claims in its memorandum in support of its request for attorneys
fees.
Even under the less restrictive standard articulated in Octane, the Court finds
this case does not stand out as being frivolous or prosecuted in an unreasonable
manner. Because the case is not exceptional, the Court declines to award attorneys fees
under § 285 of the Patent Act.
IV.

DECISION
Upon consideration of the totality of the circumstances, the Court finds this is not

an exceptional case under § 285. Draeger’s motion for attorneys fees and costs is
DENIED. The U of M’s motion to strike exhibits A-H is DENIED as moot.
IT IS SO ORDERED.
Dated this 17th day of December, 2014.
/s/ Ralph R. Erickson
Ralph R. Erickson, Chief Judge
United States District Court

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