Chaffin v. Braden et al

Filing 80

MEMORANDUM AND ORDER granting 73 Motion for Attorney's Fees. Counsel shall promptly confer and attempt to agree on an appropriate amount of attorney's fees and expenses incurred by Defendants. If counsel and the parties are unable to agre e on an appropriate amount, Defendants shall file their request for fees and non-taxable costs, with supporting affidavits and documentation, by August 26, 2016. Plaintiff shall file any opposition by September 16, 2016, and any reply must be filed by September 23, 2016.(Signed by Judge Nancy F Atlas) Parties notified.(TDR, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
VICTORIA DIVISION
MARK N. CHAFFIN,
Plaintiff,
v.
MICHAEL R. BRADEN and
LBC MANUFACTURING,
Defendants.

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August 01, 2016
David J. Bradley, Clerk

CIVIL ACTION NO. 6:14-0027

MEMORANDUM AND ORDER
This patent case is before the Court on the Motion for Attorney’s Fees and NonTaxable Costs Under 35 U.S.C. § 285 (“Motion for Fees”) [Doc. # 73] filed by
Defendants Michael R. Braden and LBC Manufacturing (“LBC”), to which Plaintiff
Mark N. Chaffin filed a Response [Doc. # 75], and Defendants filed a Reply [Doc.
# 76]. The Court has carefully reviewed the record. Based on this review and the
application of governing Supreme Court authority, the Court grants Defendants’
Motion for Fees.
I.

BACKGROUND
Plaintiff Mark N. Chaffin is the inventor and owner of United States Patent No.

6,932,912 (the ’912 Patent), entitled “Wastewater Treatment System of Residential
Septic Systems.” The patent covers a wastewater treatment system in which liquid
chlorine is continuously drawn from a chlorine supply canister into a storage-mixing
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tank containing sewage effluent. Specifically, a pump in the storage-mixing tank
circulates the sewage effluent through a venturi chamber and creates suction which
continuously draws chlorine into the flowing sewage effluent stream, mixing the
chlorine and the sewage effluent.
In April 2014, Chaffin sued Defendants alleging infringement of Claims 7, 20,
21, 22, and 24 of the ’912 Patent. Specifically, Plaintiff alleged that Defendants’
liquid chlorinators “LBC 500” and “LBC-IM” (the “Accused Devices”) infringe these
five claims of the ’912 Patent.
Following a Markman hearing, the Court issued a Memorandum and Order on
Claim Construction, and later granted Defendants’ Motion for Summary Judgment.
The Court noted that the evidence in the record, including videotaped testing
conducted by Plaintiff, demonstrated that the Accused Devices do not continuously
draw chlorine from the supply canister.
Plaintiff filed his Motion to Reconsider, which the Court denied by
Memorandum and Order [Doc. # 79] entered July 26, 2016. Defendants’ Motion for
Fees has been fully briefed and is now ripe for decision.
II.

LEGAL STANDARD FOR AWARD OF FEES UNDER § 285
Section 285 of the Patent Act authorizes a district court to award attorney’s fees

in patent cases that the Court deems exceptional. The statute provides that “[t]he court

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in exceptional cases may award reasonable attorney fees to the prevailing party.” 35
U.S.C. § 285. The Federal Circuit has interpreted § 285 to allow an award of
expenses as well as fees. See Central Soya Co., Inc. v. Geo. A. Hormel & Co., 723
F.2d 1573, 1578 (Fed. Cir. 1983); Maxwell v. Angel-Etts of California, Inc., 53 F.
App’x 561, 569 (Fed. Cir. Dec. 13, 2002).
“The Patent Act does not define ‘exceptional, so we construe it in accordance
with [its] ordinary meaning.” Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
__ U.S. __, 134 S. Ct. 1749, 1756 (2014). The Supreme Court held that “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.” Id. “District courts may determine whether a case is ‘exceptional’ in the
case-by-case exercise of their discretion, considering the totality of the
circumstances.” Id. The Supreme Court held that “there is no precise rule or formula
for making these determinations, but instead equitable discretion should be exercised
in light of the considerations we have identified.” Id. (citing Fogerty v. Fantasy, Inc.,
510 U.S. 517, 534 (1994)). In Fogerty, in the copyright infringement context, the
Supreme Court listed factors for the Court to consider when determining whether fees
should be awarded: “frivolousness, motivation, objective unreasonableness (both in

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the factual and legal components of the case) and the need in particular circumstances
to advance considerations of compensation and deterrence.” See Fogerty, 510 U.S.
at 534, n.19.
The Court “may award fees in the rare case in which a party’s unreasonable
conduct – while not necessarily independently sanctionable – is nonetheless so
‘exceptional’ as to justify an award of fees.” Octane Fitness, 134 S. Ct. at 1757.
Indeed, 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.” Id.
The Supreme Court in Octane Fitness rejected the Federal Circuit’s requirement
that proof of entitlement to fees under § 285 must be by clear and convincing
evidence. Id. at 1758. Instead, the proper standard of proof for purposes of § 285 is
the preponderance of the evidence standard applicable to other aspects of patentinfringement litigation. See id.
III.

ANALYSIS
Plaintiff and Braden, who first met in 2000, have been selling liquid

chlorinators for sewage systems since at least 2002. In January 2002, Braden filed a
patent application and, in September 2003, the United States Patent and Trademark
Office (“PTO”) granted Braden’s application and issued United States Patent No.
6,627,071 (the “Braden Patent”).

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Meanwhile, in February 2003, Plaintiff filed a patent application that contained
nineteen (19) claims. Claims 16-19 were allowed, Claims 1-8, 11, 14, and 15 were
rejected, and Claims 9, 10, 12, and 13 were objected to. See PTO Action [Doc. # 183]. Specifically, Claims 7, 8, 11 and 14 were rejected as being anticipated by the
Braden Patent. See id. In response, Plaintiff added five new claims to the application.
See Response [Doc. # 18-1]. Additionally, Plaintiff amended Claim 7 to include, inter
alia, the limitation that the “chlorine is continuously drawn into the venturi chamber.”
See id. at 14. The PTO again rejected Claim 7, as well as the newly-added Claims 2024 as anticipated by the Braden Patent. See PTO Action [Doc. # 18-5]. The PTO
questioned whether the Braden Patent failed to disclose a system having “continuous
drawing of chlorine into the venturi chamber” as asserted by Plaintiff in his response.
See id. at 5. Plaintiff again asserted in his response to the second PTO Action, filed
March 17, 2005, that his patent application disclosed a system and method in which
chlorine was continuously drawn from a chlorine supply canister into the venturi
chamber, a limitation Plaintiff maintained was not included in the Braden Patent. See
Response [Doc. # 18-6], pp. 13-15. Thereafter, on August 23, 2005, the PTO issued
the ’912 Patent to Plaintiff.
In late 2013 or early 2014, Plaintiff purchased one of Defendants’ liquid bleach
chlorinators and conducted videotaped testing on the device. See Plaintiff’s Depo.,

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Exh. A to Motion for Fees, p. 33. The videotaped test, which was an important part
of the summary judgment record in this case, clearly revealed times when only air,
without any chlorine, was being drawn from the supply canister into the venturi
chamber. See Memorandum and Order [Doc. # 70], p. 6.
After conducting the videotaped test, Plaintiff sent Defendants a letter dated
February 24, 2014. See Cease and Desist Letter, Exh. D to Motion for Fees. In the
letter, Plaintiff stated that he had “recently tested” one of Defendants’ liquid bleach
chlorinators. See id. at 1. Plaintiff stated that the tests “clearly prove” infringement
and that Plaintiff believed Defendants’ infringement was willful. See id. at 2.
Plaintiff then presented Defendants with a “one-time NON-NEGOTIABLE offer” to
avoid litigation. See id. at 5 (emphasis in original). Plaintiff demanded that
Defendants immediately stop selling “all infringing products,” that Braden turn over
to Plaintiff all his inventory and all his intellectual property rights, that Braden provide
Plaintiff with Defendants’ “entire most current customer list, including contact
information and addresses,” that Braden sign a 10-year non-compete agreement, and
that Defendants pay monetary compensation to Plaintiff. See id. at 5-6. Plaintiff
demanded a response by March 7, 2014, only 11 days after the date of the letter that
was sent to Defendants by Express Mail. See id., p. 6.

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Defendants, through counsel, responded to Plaintiff by letter dated March 7,
2014. See Defendants’ Letter, Exh. E to Motion for Fees. Defendants requested
copies of Plaintiff’s testing procedures, data, and results. See id. at 2. Defendants
suggested that the test results seemed to indicate that chlorine was pumped only
sporadically, “not unlike trying to suck the last few drops up a straw, with air ahead
and below the isolated drops of fluid.” Id. Defendants stated that receiving the
“testing procedures and detailed results” would allow them to address Plaintiff’s
concerns. See id. Defendants commented that patent litigation is expensive for
everyone, likely exceeding any potential recovery. See id. at 2-3.
Plaintiff responded with a letter dated March 20, 2014. See March 2014 Letter,
Exh. F to Motion for Fees. The letter advised Defendants that “Mr. Chaffin will not
provide any further information regarding the testing.” See id. at 1 (emphasis in
original). In the next sentence, Plaintiff reiterated that he was “unwilling to provide
further details regarding his testing procedures and results.” See id. Plaintiff further
advised that “Mr. Chaffin will not agree to additional time for [Defendants] to
investigate.” Id. (emphasis in original). Plaintiff stated again that his “offer was
NON-NEGOTIABLE” and accused Braden of “stealing from him for at least six
years.” Id. at 2 (emphasis in original). Plaintiff agreed that “patent litigation is
costly,” and advised Defendants that, if he was “forced to seek remedy in the courts,

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Mr. Chaffin will pursue the maximum amount, including treble damages for willful
infringement and attorney fees for an exceptional case.” Id. at 2-3 (emphasis added).
Plaintiff filed this lawsuit on April 16, 2014.1 The parties identified disputed
claim terms in the ’912 Patent and filed briefing on their suggested construction of
those disputed terms. Following a hearing, the Court issued is Memorandum and
Order on Claim Construction. The parties filed dispositive motions, which were
briefed by the parties and decided by the Court in a Memorandum and Order [Doc. #
70] entered May 23, 2016. On March 6, 2016, Defendants filed the pending Motion
for Fees.

On March 20, 2016, Plaintiff filed a Motion for Clarification and

Reconsideration, which was denied by Memorandum and Order [Doc. # 79] entered
July 26, 2016.
The Court has considered the totality of the circumstances as described above.
The Court has considered the evidence regarding Plaintiff’s motivation, specifically
the letters Plaintiff sent to Defendants in early 2014. Based on its consideration of the
full record, the Court has determined that this is an exceptional case for purposes of

1

In the Original Complaint for Patent Infringement [Doc. # 1], Plaintiff also asserted
a false marking claim under 35 U.S.C. § 292, a false advertising claim under 15
U.S.C. § 1125(a), and a tortious interference with prospective relations claim under
Texas law, but he later abandoned these three claims.

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§ 285 both with respect to the substantive weakness of Plaintiff’s position on
infringement and the unreasonable manner in which Plaintiff has handled this dispute.
With reference to the substantive weakness of Plaintiff’s position, the
videotaped evidence that Plaintiff admitted having prior to filing this lawsuit
established that the Accused Devices did not continuously draw chlorine from the
supply canister into the venturi chamber, an element that Plaintiff relied upon to
overcome the PTO’s rejection of Claim 7 in his patent application. After the Court
granted Defendants’ Motion for Summary Judgment, Plaintiff filed a Motion for
Reconsideration that was substantively weak. Although each patent suit, unless
settled, will have a party that is unsuccessful, Plaintiff in this case persisted in
asserting meritless positions for over two years. This causes Plaintiff’s case to stand
out from others with respect to the substantive weakness of his legal positions.
The case is also exceptional in terms of the unreasonable manner in which the
case was handled by Plaintiff, both before and after the lawsuit was filed. Plaintiff in
his first letter to Defendants admitted having already engaged in the videotaped testing
– the primary evidence on non-infringement. Plaintiff threatened to sue Defendants
and to seek treble damages and attorneys’ fees unless Braden gave Plaintiff his entire
inventory, his customer list, his patent rights, a 10-year non-compete agreement, and
paid monetary compensation. Plaintiff stated that the “offer” was non-negotiable.

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Plaintiff refused to provide Defendants with additional information regarding the
videotaped testing and would not agree to allow Defendants an opportunity to
investigate Plaintiff’s claims. Plaintiff accused Braden of stealing from him for six
years.
When Braden failed to comply with Plaintiff’s non-negotiable “offer” without
an opportunity to obtain additional information or to conduct his own investigation,
Plaintiff filed this lawsuit asserting claims of patent infringement, false marking under
35 U.S.C. § 292, false advertising under 15 U.S.C. § 1125(a), and tortious interference
with prospective relations under Texas law. Plaintiff eventually abandoned the claims
other than patent infringement, but not until the case had been pending for over two
years.
After the Court granted Defendants’ Motion for Summary Judgment, based in
large part on the evidence from Plaintiff’s videotaped testing in 2013, Plaintiff filed
a Motion for Reconsideration. Plaintiff argued that the Court was required to construe
claim terms that neither party identified as disputed. Plaintiff’s unreasonable position
in connection with the Motion for Reconsideration required Defendants to expend
additional time and resources to respond.
Based on the totality of the circumstances, the Court has determined that this
is an exceptional case under § 285. The case is exceptional both with respect to the

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weakness of Plaintiff’s positions on the merits, and with respect to Plaintiff’s
unreasonable conduct both before and during the litigation. As a result, Defendants
are entitled to an award of attorneys’ fees and non-taxable costs.
IV.

CONCLUSION AND ORDER
Defendants have demonstrated that this is an exceptional case for which

reasonable fees and expenses may be awarded under § 285. Under the specific
circumstances in this case, the Court exercises its discretion to award reasonable fees
and expenses. As a result, it is hereby
ORDERED that Defendants’ Motion for Fees [Doc. # 73] is GRANTED. It
is further
ORDERED that counsel shall promptly confer and attempt to agree on an
appropriate amount of attorneys’ fees and expenses incurred by Defendants. It is
further
ORDERED that, if counsel and the parties are unable to agree on an
appropriate amount, Defendants shall file their request for fees and non-taxable costs,
with supporting affidavits and documentation, by August 26, 2016. Plaintiff shall file
any opposition by September 16, 2016, and any reply must be filed by September
23, 2016.

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SIGNED at Houston, Texas, this 1st day of August, 2016.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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