Certusview Technologies, LLC v. S & N Locating Services, LLC et al

Filing 579

OPINION AND ORDER. The Court DENIES 573 Motion for Attorney Fees and Exceptional Case Finding. Signed by District Judge Mark S. Davis on 2/9/18. (bpet)

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UNITED STATES DISTRICT COURT FILED '• 1 FOR THE EASTERN DISTRICT OF VIRGINIA Norfolk Division FEB - 9 2018 CERTUSVIEW TECHNOLOGIES/ CLERK, U.S. DISTRICT COURT LLC, NORFOLK. VA Plaintiff, C i v i l Action No. V. S&N LOCATING SERVICES, 2:13cv346 LLC, and S&N COMMUNICATIONS, INC., Defendants. OPINION AND This matter is before the ORDER Court on "Defendants' Motion for Exceptional Case Finding and Attorneys' by S&N Locating Services, LLC and {collectively "Defendants" or "S&N"). motion. S&N Renewed Fees," filed Communications, EOF No. 573. Inc. In their Defendants request that the Court award them attorneys' fees because this is an "exceptional case" within the meaning of 35 U.S.C. § 285. The motion has been fully briefed. the Court finds that oral argument is not necessary, Because the matter is now ripe for decision. I. Plaintiff, "Certusview") technology FACTUAL AND PROCEDURAL BACKGROUND CertusView holds for infrastructure, the Technologies, five prevention at issue in LLC related of this patents, damage matter: {"Plaintiff" to or involving underground United States Patent No. 8,340,359 8,265,344 ("'204 ("'359 («'344 Patent")/ Patent")/ Patent"), United United United States States Patent Patent"), and United States Patent No. (collectively, Order, 17-18, the 542. Patent No. Patent No. No. 8,290,204 8,532,341 8,407,001 "Patents-in-Suit"). ECF No. States ("'341 ("'001 Patent") August 2, 2016 Op. & The Patents-in-Suit issued in 2012 and 2013. CertusView's products were developed as a means to improve record-keeping and documentation of "locate operations," id. at 23, that marking is, "the application of paint, object or material to flags, indicate the or some other presence of an underground facility," Joint Claim Construction Chart 2, ECF No. 101-2. Specifically, related 24. to the CertusView's Patents-in-Suit e-Sketch claim technology. inventions ECF No. 542, at Stated broadly, the e-Sketch technology allows locators to document a searchable locate operation more electronic and additional record specific that data accurately includes regarding and such the to create a documentation locate operation. Id. On May 29, action in December alleging this 6, 2013, Court 2013, infringement Compl., ECF No. 55. CertusView filed a patent against CertusView of the S5cN. Compl., filed five an ECF infringement No. amended Patents-in-Suit. 1. On complaint, See Am. On December 23, 2013, S&N filed an Answer denying CertusView's allegations of counterclaims against CertusView, infringement and asserting seeking declaratory judgments of non-infringement and invalidity regarding all five in-Suit. S&N's Answer, No. After the Supreme Court issued its June 2014 Alice 61.^ decision, on October 28, issuance of a number Affirmative of -- asserted patent claims Pleadings, 12(c), Countercls., following a claim construction order, Judgment on the Procedure 2014 Defenses, Patents- -- and a S&N Markman hearing, limitation on the filed a Motion pursuant to Federal Rule of contending that the ECF for Civil Patents-in-Suit were invalid as they did not claim patentable subject matter under 35 U.S.C. § 101. Mot. J., ECF No. 197. On January 21, 2015, the Court granted S&N's Motion for Judgment on the Pleadings and found were that all invalid of for the failure under 35 U.S.C. § 101. On November patent") issued. '646 patent, asserted 10, claim of patentable 2015, U.S. Patent Patents-in-Suit subject 9,183,646 Id^ at 1, ECF No. 576-3. under the matter Sec. 101 Op. & Order, ECF No. 250. ^Related U.S. that the '646 patent is 13/950,655, to claims [a] filed on Jul. ("the '646 "On the face of the Application Date,' it shows ^ [c] ontinuation of application No. 25, 2013, which is a continuation of ^ S&N's Answer was amended two additional times after the Court issued its Section 101 Opinion Affirmative Defenses, and Order. and Countercls., S^ S&N's ECF No. First 253; Am. Answer, S&N's Second Am. Answer, Affiinnative Defenses, and Countercls., ECF No. 336. application No. 13/796,487, filed on Mar. 12, 2013, 8,532,341 . . Patent No. . Teja Aff. 8,532,341 ('the at 2, ECF '341 patent') No. is the to the 646 patent and was asserted in this "The '646 Generate patent is Electronic titled Apparatus, Records of now Pat. No. 576-1. ''U.S. 'parent patent' litigation." Systems Underground and methods Facility to Marking Operations Performed with GPS-Enabled Marking Devices." 1. Id. Id. at The '341 patent is titled Electronically Documenting Locate Operations for Underground Utilities. Because the '646 patent is a Id. at 14, continuation of the ECF No. 250. '341 patent, "they share the same specification and are directed to the same invention, though there may be some variation in the scope of the subject matter claimed in the two patents." at 2; Transco Products Inc. v. Performance Contracting, F.3d 551, 555-56 (Fed. Cir. 1994) claims the same invention ECF No. 576-1, Inc., 38 ("A 'continuation' application claimed in an earlier application, although there may be some variation in the scope of the subject matter claimed. See MPEP § 201.07."). The '341 patent issued September 10, 2013, over three months after this suit was filed, but before the Alice decision of June 19, 2014. issued November 10, after Alice 2015, "over a CertusView submitted this Court's the examiner." 576-1, at 2 Pl.'s Resp. year § 101 Opp'n at (attaching exhibit 9, showing The '646 patent and after [Opinion and] ECF No. 576; Order to ECF No. Information Disclosure statement signed by Examiner Bhatnagar disclosing § 101 Order at entry C488). On March 8, trial on 2016, S&N's CertusView for the matter proceeded to a five-day bench declaratory inequitable judgment conduct. counterclaim The Court then against took the matter under advisement pending submission of post-trial briefs. On June 15, CertusView Judgment Partial 2016, after filed of its Patent Recons., the Motion conclusion for Partial Ineligibility under ECF No. 533. On of 35 the bench Reconsideration U.S.C. August 2, § 101. 2016, denied S&N's declaratory judgment counterclaim for conduct on each of the five grounds alleged. & Order, ECF No. 542. On August 10, 2016, ECF No. 545. the of Mot. Court inequitable August 2, 2016 Op. the CertusView's motion for partial reconsideration. & Order, trial, Court denied Reconsid. Op. Final judgment was entered on August 10, 2016. Final Judg., ECF No. 547. On August 24, 2016, Defendants filed their Exceptional Attorneys' second Fees. Motion ECF No. 549. the Court denied Defendants' Defendants' for Case Finding By Order of November 21, and 2016, second motion without prejudice to right to refile their motion within fourteen (14) days after the United States Court of Appeals for the Federal Circuit issued a mandate finalizing the Plaintiff's pending appeal. judgment on the merits of Mem. Order, ECF No. 560. The Federal Circuit affirmed this Court's § 101 invalidity ruling on August 11, 2017, ECF No. 570, and issued a mandate finalizing the judgment on September 18, 2017, ECF No. 571. S&N filed this renewed motion for exceptional case finding and attorneys' on October 2, 2017. Certusview opposes such motion. fees ECF No. 573. II. LEGAL STANDARD Pursuant to Section 285 of the Patent Act, 35 U.S.C. § 285, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party. . in accordance with Construing the word ''exceptional [its] ordinary meaning," the Supreme Court recently explained 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. 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, 1749, 1756 LLC v. ICON Health & Fitness, Inc., may award unreasonable fees conduct sanctionable award of Ct. (2014). Under the standard adopted in Octane Fitness, court 134 S. fees." in - the rare while not is nonetheless so Id. at 1757. case in which necessarily 'exceptional' a independently evidence to the court may "consider ^ The parties do not dispute that S&N is the prevailing party. 6 party's as to justify an When weighing the determine whether a case is exceptional, "a district a 'nonexclusive' motivation, legal circumstances deterrence," factors of 'factors,' including objective unreasonableness components 510 U.S. list 517, to Id. of case) advance 19 (both in the factual and and the considerations at 1756 n.6 534 n. district the 'frivolousness, need of in compensation (quoting Fogerty v. (1994)) particular Fantasy, courts may utilize case Inc., (noting a nonexclusive list of in determining whether to award fees vinder similar provision in Copyright Act) . exceptional and determination must "preponderance of the evidence." find Any such support Octane Fitness, in a 134 S. Ct. at 1758. III. DISCUSSION Defendants S&N move for an exceptional case finding on the grounds that Plaintiff CertusView unreasonable patent claims, an unreasonable manner. and 2) 1) asserted objectively conducted the litigation in Defs.' Br. Support 1, ECF No. 574. A. Assertion of Objectively Unreasonable Patent Claims S&N alleges that Plaintiff Certusview asserted objectively unreasonable patent claims maintained this action for to the abstract idea of when it "knowingly were claims that, facially and infringement of patent claims drawn documenting a locate process that has long been performed by hand claims filed ineligible "[a]s a result, from the operation - a even though its outset." Id. S&N CertusView's continued assertion of the claims-in-suit in the face of such authority was objectively unreasonable." exceptional Id. at because 2. S&N argues CertusView that knowingly this case is also asserted facially ineligible patent claims for more than a year and half. 3. S&N relies on Inventor Holdings, Inc. , No. 14-448-GMS, 2016 U.S. LLC v. Dist. Id. at Bed Bath & Beyond, LEXIS 70345 at *6-7 (D. Del. May 31, 2016)^ as a case on point, noting that the patent holder there (2010) and before Alice Corp. S. Ct. 2347 Alice, like filed (2014), suit after Bilski Pty. v. Ltd. Kappos, U.S. 593 CLS Bank Int^l, v. 561 134 and the court found that especially after the patent owner "was on notice that its claims, the claims in Bilski and Alice, . . . were much objectively ineligible under § 101" so as to support an exceptional case finding. at ECF No. 574 4. S&N concludes that, because CertusView has knowingly asserted claims that describe a manual process simply being implemented electronically using computing components, and because Supreme Court precedent before this suit and many claims as opinions after unpatentable, filing have CertusView squarely has rejected asserted such objectively baseless patent claims rendering this case truly exceptional. Id. at 9. ^ This decision was affirmed by the Federal Circuit on December 8, 2017, after the close of briefing on this motion. Inventor Holdings, LLC V. Bed Bath & Beyond, Inc., 876 F.3d 1372 8 (Fed. Cir. 2017). Certusview responds that its patent eligibility positions were sufficiently strong to overcome an exceptional case finding because it acted reasonably suit as " [i] t on under [Mayo Collaborative Servs. 66 matter", No. fact that (2012)], its that they patents v. were examined Prometheus Labs, claimed and issued Inc., patent-eligible 1, 4-5. 566 subject and were entitled to a presumption of validity. 576, p. this not unreasonable for CertusView to conclude, based U.S. the was in bringing and maintaining ECF CertusView asserts that the two-part test for patent eligibility established in 2012 in Mayo (prior to the filing of this suit) , applied to the ^^law of nature" exception, and that such test was extended to the "abstract idea" exception to patentability in 2014 134 S. Ct. 2347. (after this suit was filed) by Alice, ECF No. 576 at 1, 11. Certusview goes on to note that even after the Supreme Court's Alice decision, "the Patent Office allowed issuance of a closely related continuation patent of the e-Sketch patents-in-suit - underscoring reasonable minds could differ regarding eligibility." Certusview further argues that it was not that Id. at 1. unreasonable "to conclude, based on the Patent Office's repeated allowances of e- Sketch patents after Mayo, and the allowance continuation patent after Alice was decided, claimed patent-eligible subject matter." Id. of another that its patents As support evolving state for of this § position, 101 CertusView jurisprudence points after Alice, to the and this Court having twice observed that the eligibility issues in this case were "s\ibstantial and novel" as evidenced by S&N's delay of seventeen months Certusview its further "patents [and] in while posits were this CertusView's raising later suit lawsuit a § that, 101 notwithstanding invalidated was defense. pending after . . 'exceptional,' position was ultimately incorrect." . Id. the Alice that even if fact was does at 5. that decided not make CertusView's Id. at 1. In reply, S&N argues that "CertusView's infringement claims were objectively unreasonable from the outset in light of the Supreme Court's clear guidance in Bilski v. Kappos, 561 U.S. 593 (2010) and Mayo . . both of which issued CertusView filed this action on May 29, 2013." at 3, ECF No. 577. Moreover, S&N argues, well before Defs'. Reply Br. "[w]hile CertusView may claim some arguable \mcertainty in the law under Bilski, by the time claims of Alice, CertusView covered an abstract was idea and on that ample the notice that its introduction of a computer did not alter the result that they were ineligible." Id. at 5-6. 1. PresTimption Coupled with Post-Mayo Issuance Section 282(a) of the Patent Act provides that "[a] patent shall be presumed valid," and that "[t]he burden of establishing 10 invalidity of a party patent or any claim thereof shall rest on the asserting such CertusView argues invalidity." that [w] hen 35 [it] U.S.C. § filed this case, 282(a). [it] was entitled to rely on the presumption that the Patent Office did its job, and that patent claims issued under the current legal standards are CertusView valid concludes when that, issued." since ECF each No. asserted 576, at 5. patent issued after the Supreme Court's decisions in Bilski and Mayo, it was not unreasonable for it to conclude that patents issued by the Patent Office under the prevailing Mayo standard eligibility were in fact eligible for patenting. for Id. patent at 5-6. S&N does not question whether there is a presumption of validity in this context, instead responding that ''the mere fact that the Patent Office issued its claims after Bilski and Mayo does not mean that it was objectively reasonable to conclude that those claims were eligible, particularly after Alice" and in light of CertusView's continuing light of new case law. analysis then of moves this on to obligation to ECF No. 577, at 4. argument with the the reevaluate effect of its case The Court begins its asserted presumption, such in presumption on and patents issued after Bilski and Mayo. The statutory presumption of validity created by 35 U.S.C. § 282(a) is recognized by the Federal Circuit as a presumption of validity regarding issues of abstractness. 11 CLS Bank Int'1. V. Alice Corp. 2014) (Lourie, Pty. J. , Dyk, Ltd., J. , 717 F.3d Prost, J. , 1269, 1304 Reyna, J., (Fed. Cir. Wallach, J. , ) (concurring)("it bears remembering that all issued patent claims receive a statutory presumption of validity" with obviousness and enablement, 101 is raised proceedings") J., as a basis J., as that presumption applies when § for invalidity (citation omitted); O'Malley, ..."[a]nd, in district court (Rader, C.J., Linn, J., Moore, concurring-in-part and dissenting-in- part)("Because we believe the presumption of validity applies to all challenges to patentability, 101 and the exceptions thereto, issued patent based on a subject matter evidence."), V. Lenovo (Fed. Cir. relied 772 on F.3d must aff'd, (United 134 S.Ct. concurrence 709, 720-21 to proven 2347 Inc., 2016)(explaining the we find that any attack on an challenge be States) including those under Section in (Fed. by Fed. although Ultramercial, Cir. eligibility of clear (2014); 664 that the 2014) and convincing see Tranxition, Appx. the Inc. and 968, 972 that LLC, the "presumption of validity does not apply to challenges under 101," 1 court Hulu, held Inc. n. district v. the § the court was not persuaded that the district court was correct that a presumption of validity does not apply); Ultramerical, 772 F.3d at 720-21 (Mayer, contra J., concurring)(concluding that because the United States Patent and Trademark Office applies an "insufficiently 12 rigorous subject matter eligibility standard, no presumption of eligibility- should attach when assessing whether claims meet the demands of section 101"). proposition Therefore, that the this statutory Court begins presumption the validity of with that attaches to a patent does in fact apply to the determination of abstractness under § 101. right to Homeland vigorously Housewares Moreover, enforce LLC v. its ''[a] patent holder has the presumptively Sorensen Research valid & Dev. patent." Trust, 581 Fed. Appx. 877, 881 (Fed. Cir. 2014). The Court must next consider the effect of this presumption on patents issued after Bilski and Mayo but before Alice, as S&N argues that in unreasonable the light for patents, of Bilski CertusView and to and Mayo have presumably any the asserted patents were that the decisions, litigation Patent Office the issuance consequent presumption of of when it filed and began after the Supreme Court's and as i t was reasonable to assume was aware of such Supreme Court it was not unreasonable for CertusView to begin its analysis with the presumption initially attached to such patents. V. objectively The Court finds that, as each of issued decisions in Bilski and Mayo, was on relied validity attaching to their issuance, prosecuting this suit in 2013. it Wegmans Food Mkts., 2015) (observing that Inc., the 126 F. first 13 of validity DietGoal Innovations, Supp.Sd 680, step in an 685 (E.D. exceptional that LLC Va. case finding analysis validity which for the § patent enforce); DietGoal Inc., No. 2:12-cv-764, Tex. Mar. 20, 101 is recognizing holder Innovations has LLC v. a the presumption of right Chipotle to vigorously Mexican Grill, 2015 U.S. Dist. LEXIS 34782 at *8-9 2015) (holding that the (E.D. issuance of patent after Supreme Court's § 101 decisions constitutes prima facie evidence against argument patent was obviously invalid with reference to such decisions); No. 14-5919, 16, Garfum.com Corp. 2016 U.S. 2016)(discussing Office). Moreover, counterclaims, Dist. the v. LEXIS level of Reflections by Ruth, 174134 at *11 deference Civ. (D.N.J. owed to Dec. Patent S&N's decision to answer the complaint, and engage file in discovery and claim construction before filing its motion for judgment of patent-ineligibility five months strength of for after CertusView its argument CertusView to assert that the filed its suit - undercuts the it was objectively unreasonable patents from the time suit was filed up to the issuance of Alice. Finally, Holdings, the Federal Circuit's recent decision in Inventor LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 1379 (Fed. Cir. 2017), sheds additional light on S&N's assertion that CertusView's infringement claims were objectively unreasonable from the outset of the litigation in light of Bilski and Mayo. In explaining its suit post-Alice, exceptional case finding for maintaining the Federal Circuit in Inventor Holdings, 14 a noted that the claims but that were "dubious " [p] rior to Alice, even before the Alice decision," the state of the law for computer- implemented business transaction inventions was less than clear, given this court's divided en banc opinion in CLS Bank Int'1 v. Alice Corp. Pty, 717 F.3d 1269, 1273 (Fed. Cir. 2013)." If the state of the law pre-Alice was less than clear for computer- implemented financial seems true for business transaction inventions, CertusView's patents organizing human addressing activity a the same computer- implemented method of traditionally performed by hand. As CertusView pointed out in its brief when it analyzed the district court's holding in Inventor Holdings, "unlike in Inventor Holdings, 'objectively ineligible' the financial business where the court found the claims because they were nearly identical method rejected in Bilski and Alice, claims that the Supreme to Court there were no governing precedents to guide CertusView that found nearly identical claims invalid," and in its § 101 Opinion, identical ECF No. at to 576, *2-3). claims at 14 in this Court did not "find the claims any of the previously (citing Inventor Holdings, Moreover, S&N's delay in judgment of patent ineligibility until also militates against a finding that filing decided cases." 2016 WL 3090633, its motion for four months after Alice CertusView's continued assertion pre-Alice of the claims-in-suit in the face of Bilski and Mayo was objectively unreasonable. 15 2, Post-Alice Assertion and Issuance of Similar Claims After Alice S&N argues prosecution that, of this Alice, "at least notice that the that the alter suit of of 2016 U.S. 'covered this a continued ECF No. Dist. LEXIS abstract the truly at of on and did not exceptional at 5-9 70345, before idea claims assertion 574, and CertusView was an into filing reasonable decision, computer making baseless patent claims. Holdings, Alice a CertusView's CertusView's objectively claims of analysis,'" if was the asserted introduction the because as even case objectively (quoting Inventor *6-7). CertusView responds that the issuance of Alice did not significantly change the pre-Alice presumption of validity attaching to the patents, particularly since the USPTO issued the '646 e-Sketch continuation patent over a year after Alice issued and after the examiner was provided with this Court's § 101 opinion. 576, ECF No. at 8-9. While it is true that, under the totality of the circumstances, this Court must consider CertusView's continuing obligation reevaluate v. to Chrysler Corp., not undermine evaluation of attaches to 726 F.3d 1306, CertusView's its a its case patent. with case, 1328 Taurus (Fed. argument the Cir. that LLC 2013), it presumption of Notwithstanding 16 IP, its Damler that does begins its validity that obligation to continually evaluate its litigation position, this presumption remained even after the Supreme Court's Alice opinion; though, from Alice's issuance up to the time that the '646 continuation patent issued, issuance of the presumption was the '646 less continuation compelling than after patent. Moreover, with respect to any weakening of the presumption during this period between the June continuation months patent after the after suit was eligibility. S&N's part CertusView 2014 in filed, about opinion November Alice This to Alice and 2015, opinion whether maintain some it its was suit S&N issued, before seeking a suggests issuance of waited and the '646 until four seventeen months determination of patent initial lack objectively post-Alice of clarity unreasonable and the on for degree to which Alice changed the patent eligibility landscape. Once the Patent Office continuation e-Sketch patent, further changed. of CertusView's issued claims in the '646 the patent eligibility landscape This change created the need for re-evaluation patents-in-suit, breathing new life into the presumption of validity attaching to such patents and providing objective evidence unreasonable. The that CertusView's '646 patent, asserted '341 patent-in-suit, a year after Alice, § 101 patent positions which is a were not continuation of the issued on November 10, 2015, over and after CertusView submitted this Court's ineligibility opinion 17 to the examiner. ECF No. 576, at 9. claims The the '646 patent is a continuation application that same invention Notwithstanding the scope subject of the claimed between variation in the matter the two claimed, '341 patent. patents the Patent in the Office's issuance of the '646 patent, after being aware of Alice and this Court's § 101 opinion, is objective evidence that CertusView was not unreasonable in believing that its e-Sketch patents-in-suit claimed patent-eligible subject issued by the Supreme Court. 174134, nearly at *9 ("Plaintiff identical claims Court's determination i t that there Court was no agrees. repeated allowance Application, arguments to this of more after that the '615 application concept PTO's nearly the '618 '[g]iven identical believed than in the explains, Alice was 2016 U.S. Dist. LEXIS 'should have been obvious' Plaintiff Plaintiff be in even Garfum.com, argues inventive As matter claims strength sufficient, and allowance belies of the to Plaintiff patent. the in of put The USPTO's the its '615 § those 101 same arguments in its Response to Defendant's Motion to Dismiss.'"); see also 2:16cv535, 19, My 2017 Health, U.S. 2017) (noting the Inc. Dist. v. LEXIS ALR Techs., 209273 *15 (E.D. Case Tex. "reluctance to find exceptionality, in part on the presumption of validity, the at Inc., examiner considered whether the Dec. based is not unreasonable when patent was eligible current §101 law, as the court in Garfum.com emphasized"). 18 No. under 3. Evolution of § 101 Jurisprudence S&N asserts that, "[t]hroughout this case, it was undisputed that what CertusView claimed in the asserted patents was using a computer, a generic computer, operation (recording a locate operation) by hand," claims and did that not the alter introduction the fact to carry out an that had been long done of that a computer the abstract idea that was patent ineligible. claims into covered ECF No. 577, the an at 6. S&N argues that the claims in the patents-in-suit were therefore objectively without merit both before and after Alice, such 574, lack at of merit 4. was even more obvious responds reconstruction, hindsight CertusView Alice's immediately recognized." ECF No. that after Alice. " [c] ontrary ultimate 576, and that to impact at 11. ECF No. was S&N's not In support of this response, CertusView states that Alice was initially viewed as a case where the Supreme saved software patents, citing numerous articles for such proposition. See ECF Nos. 555-10, 555-11, 555-12. The uncertain state Court implicitly CertusView also argues that: of the law in the Alice is confirmed by S&N's own actions. months after S&:N did not move to dismiss this suit based on the eligibility of the claims under Bilski or even the two-part test in Mayo, Contrary to S&N's revisionist history, its delay shows that it was not obvious even to S&N that the patents were ineligible under § 101. Rather than immediately filing a motion for judgment on the pleadings when Alice was decided, S&N waited four months to file its judgment under § § 101 motion, only moving for 101 after subsequent cases 19 illustrated that Alice had turned the tide on the eligibility of many software patents. S&N's delay in filing its motion after CertusView initiated this lawsuit further demonstrates that the ineligibility of the patents-in-suit was not "obvious" at all. ECF No. 576, at 12. Emphasizing this point, CertusView notes that existing Federal Circuit opinions were not sufficiently on point to be dispositive regarding the application of Alice to the claims courts had against of the denied software citations). patents-in-suit, similar § patents. 101 that other district ineligibility motions Id. Acknowledging and brought {citing brief some that containing courts district case had made exceptional case findings where patent claims were deteinnined to be ineligible both pre- and post-Alice, CertusView then distinguishes such cases. It is decision in certainly true the months Intellectual Ventures 2:13cv04160, 2017 II U.S. that courts were parsing immediately LLC Dist. v. after Commerce LEXIS its the Alice issuance. Bancshares, 160700 at See Inc., No. (W.D. Mo. *23-24 Sept. 29, 2017){collecting cases observing § 101 law was in flux even after Alice) . And the delay of S&N in filing motion that grips does suggest with the it was trying to § 101 come impact of Alice on the patents-in-suit. viewing this Court's January 21, this backdrop, similarly its to When 2015 Opinion and Order against it lends support to CertusView's assertion that 20 reasonable minds could (and did) application of the Mayo/Alice test. In deciding CertusView to whether continue it differ Alice was objectively prosecuting test: directed to . abstract idea, . 1) . and [the] 2) if this "whether suit do proper the the reasonable even for after the the Court looks to the claims patent-ineligible so, the ECF No. 576, at 8. Supreme Court issued its Alice decision, two-step over at issue concept []" claims are of limitations, an both individually and as an ordered combination, transform each claim into a patent-eligible application of the abstract idea to which each claim CertusView original pleadings, is did directed. not opposition by the With respect specifically to S&N's time it make to one, although such argument in its for judgment on the motion filed step its motion for reconsideration of judgment of patent ineligibility, partial it clearly argued that it was objectively reasonable for it to conclude, based on the state of the law at the time, that the claims were directed to a specific technological solution as they improved the pre-existing technological process for documenting a locate operation. Pl.'s Opp'n Def.'s Mot. J. at 1, 20-21, ECF No. 207 {«S&N's motion should be denied because CertusView's patents are not directed to ^abstract ideas.' The patents do not improperly preempt 'recording location operations,' they are firmly grounded in the 21 as S&N vaguely claims, real world, and they provide specific advantages over prior art methods and systems."); Id. at and 4 (the inventors "appreciated the need for new methods systems to increase the accuracy and reliability of sketches"); Id. at 20-21 systems (claims for Partial locate Recons. observation[s] where the eligible in Court of a 14-15, Diamond noted because they dig The technological Supreme Court's records as ECF v. that area," "methods that 534 Diehr the not include were claims 'solve[d] a or to Supp. Supreme reiterated in Diehr technological Court's in were Mot. Alice, patent- problem in and 'because they improved an process.' Alice, rationales images Br. ("The and directed just S&N claims); No. "conventional industry practice"' existing to locate marks applied to operations" at tailored" electronic" of physical representations "recording '^narrowly generating representations other are for 134 S. finding Ct. at claims 2358. patent- eligible in Diehr are equally applicable to Claim 1."); see also Enfish LLC v. 2016) ("The 'purport[ing] itself,' might not or Microsoft Corp., Supreme to Court improve 'improv[ing] succumb to an the respect recited limitations, to step F.3d 1327, has the Alice, 134 S. Ct. at 2358-59) With 822 suggested functioning existing abstract 1335 that Cir. claims the computer technological process' idea of (Fed. exception." (quoting (alteration in original)). two, CertusView argued both individually and as a 22 that whole, the contain inventive concepts sufficient Pl.'s Opp'n Def.'s Mot. for the sake directed of simply 'recording a J. at 22, argument to to establish patent eligibility. only, 'recording a locate operation' ECF No. that all locate ("Assuming, of the they include inventive concepts again claims operation,' is an abstract idea, are nonetheless patent eligible because, prong, 207 and are that the claims under the second Mayo that would transform an otherwise abstract idea into something concrete and patentable. In fact, case the Patent Office expressly determined this to be the when it allowed the claims over the recording of 'conventional' locate operations, of which the Patent Office was well aware"). trial, see ECF No. limitations with Relying on evidence from the inequitable conduct 545, recite conventional CertusView ultimately contended that the specific locate solutions that documentation resolution manifest to document to scale, reducing error, and 2) searchable electronic 1) it was novel to 7, using a high- improving accuracy and record, and geographical ECF No. combine a 534 coordinate thereby solving industry problems with paper-based locate manifests. at by problems by reciting the high-resolution manifest, limitations not previously disclosed, Partial Recons. overcame See Br. Supp. Mot. ("Trial evidence showed that high-resolution aerial image with geographical coordinates corresponding to physical locate marks, and that it was unheard-of to include 23 geographical coordinate data for locate marks generally that, in a paper manifest."). S&N responded with respect to step one of Alice, methods of organizing human activity are generally considered drawn to an abstract idea, and, merely generic with respect to step two, computer components does not the addition of turn the abstract idea into something patent-eligible. In considering CertusView Court to whether continue it was objectively prosecuting looks primarily to the the suit reasonable after Alice, for the second step of Alice because it seems that is where the issue is joined with greatest force on S&N's & Order motion. (''While the limitations is See Federal into directed,' should be claims Recons. its Circuit articulation of their to the specific at 'sometimes consideration of deferred and Op. the Alice the idea two limitations ECF No. incorporates specific step 17, claim limitations analysis do claim to which a claim 545 'the readily not when lend themselves to a step [ ] one finding that they are directed to a nonabstract idea.' Mobility LLC, 827 [Bascom Glob. F.3d 1341 (Fed. Internet Servs., Cir. 2016)] Inc. v. AT&T (citing Enfish, 822 F.3d at 1339, as an example of a case that did not present a 'close call[] about directed to'"). how to claim directed what the claims are In much of its ineligibility analysis of this point in its § 101 Opinion, a characterize to an this Court focused on the fact that abstract 24 idea is not transformed into patent-eligible computer subject matter implementation. 70,73-75, 81-89, F.3d at 1379 support ECF 91-95; see by No. merely 250, also at requiring 43 Inventor n.9, generic 43-60, 63- LLC, 876 Holdings, (noting use of generic computer technology does not eligibility). In other words, after Alice, when determining transformation into patent eligible subject matter, the Court must ask whether the insufficiency of generic computer implementation in litigation CertusView course, by the this Court context was was so obvious objectively declined to that continued unreasonable. revisit this Of issue, and CertusView's refined and targeted arguments on this issue based on Enfish, in its reconsideration, Alice framework Opinion on CertusView's motion for partial because "Enfish did not discuss step two of the . . . ECF No. 545 at 21, n.7. However, the Court notes that several of the cases discussing and clarifying inventive briefing concept was jurisprudence completed on were S&N's motion pleadings. See DDR Holdings LLC v. 1245, 1259 1248, (Fed. Cir. Inc. V. AT&T Mobility LLC, Amdocs 1300-01 (Israel) (Fed. Ltd. Cir. v. 2016) 2014), not for BASCOM Glob. Telecom, 1350 Inc., until judgment Hotels.com, 827 F.3d 1341, Openet decided L.P., after on the 773 F.3d Internet Servs., (Fed. Cir. 841 F.3d 2016); 1288, (discussing inventive concept grounded in providing technological solution to technological problem). 25 The Court is also mindful, Circuit recently observed, business transaction as noted above, with respect to computer-implemented inventions, that less than clear prior to Alice. 1379. In finding that business that the Federal transaction claims state of the Inventor Holdings, the at the ineligible issue in law was 876 F.3d at computer-implemented that case were directed to a fundamental economic practice, the Federal Circuit observed that while Alice made clear outside the patent system, sometimes difficult to framework prescribed by CertusView noted in opinion Holdings, where the ineligible' patent Supreme brief Inventor the claims are, without more, it also observed that "it was and is analyze in its court's such court eligibility Court under in Mayo." the Id. As when commenting on the district Holdings, Inventor found "unlike the in claims ^objectively because they were nearly identical to the financial business method claims that the Supreme Court rejected in Bilski and Alice, there were no governing precedents to CertusView that found nearly identical claims invalid." 576, at 14. precedent guide ECF No. Though S&N acknowledges this absence of governing addressing identical claims, CertusView's claims did not need to be it identical argues that to the abstract idea in Bilski in order for i t to serve as a governing precedent to guide CertusView. absence of similar ECF No. 574 at 5. precedents While this is true, the certainly 26 militates against a finding that manner in Moreover, CertusView continuing acted to in an litigate as explained above, objectively its claims unreasonable after Alice. the fact that CertusView lost on this § 101 motion does not make its argument unreasonable. With the benefit of hindsight, and bearing in mind the evolution in CertusView's argument from its original opposition to S&N's motion for judgment on the pleadings to its motion for partial reconsideration, one can envision CertusView trying to navigate the complexities of innovative concept jurisprudence as it existed after Alice. order to survive the It was understood post-Alice innovative must do more than employ a concept does patent-eligible not computer implementation.'" 137 F.Supp.3d 17, However, claims 'transform invention' 48 by claim that 'merely Veracode, (D. Mass. "[d]espite this in claims task This was the thrust of Alice, in which the Supreme Court stated that a idea' the generic computer to perform a that has been long-recognized. abstract "inquiry, that 2015) 'directed to abstract idea requir[ing] [an] into a generic Inc. v. Appthority, Inc., (alteration in original). limitation on patent eligibility for involving computer implementation of abstract ideas or known mathematical algorithms, Alice left open the possibility that a method that 'purport[s] to improve the functioning of the computer itself or 'effect technology or technical field' an improvement in any other could be patent-eligible." Id. at 27 48. Therefore, invention more transform[] the a claimed method complex than what can "render[] could be the claimed done by humans claimed invention from an abstract and idea simply- automated by a computer into an inventive concept." Id. at 51. CertusView's efforts to argue that its invention contained such an innovative concept do not strike this Court as objectively unreasonable at the time it was prosecuting this suit. is true that ^^the addition of steps for While it implementing the abstract idea will not render the claim patent-eligible if the additional steps are routine and conventional, and therefore add nothing of practical significance to the underlying abstract idea or serve to limit it in some meaningful fashion," Id. at 49 (internal quotation understandable, that marks and citation omitted) , notwithstanding the use of a it generic is also computer, CertusView struggled to determine whether its additional steps effected an improvement in technology or a technical field sufficient to satisfy the Alice test. While it may have been more clear post-Alice that no innovative concept existed because the claims addresses clear that do a not unique the involve a computing claimed ''unique computing problem," methods did it not was render solution that arguably less the claimed invention more complex than what could be done by humans and simply automated by a computer. Id. at 50-51. 28 The Court acknowledges that patent eligibility law of the type involved here was evolving after Alice and while the § 101 issues in this case were being litigated. described these issues as "substantial In fact, and novel" this Court when denying without prejudice S&N's prior exceptional case motions on June 1, 2015 and November 21, 2016. ECF Nos. 329, 560. While it is tempting in hindsight, and with the benefit of three and a half years of further case law from the Federal Circuit, to say that CertusView acted unreasonably in continuing to litigate this suit after Alice, an examination of post-Alice opinions from the Federal Circuit reflect continued development in this nuanced area of patent law, and this Court, like other district courts, recognizes such evolution. Auto Ass'n, 38-39 Civ. No. (E.D. perhaps invalid, Va. See Asghari-Kamrani v. United Servs. 2:15cv478, July should have 27, 2017 U.S. Dist. 2017)(noting known after Alice LEXIS 168065, "although that * Plaintiffs their patent was Plaintiffs also point to case law following Alice in which computer-related patents were still being litigated and resolved" and the "Court cannot conclude, evolving jurisprudence stemming from Alice, LLC, in light of the see, e.g., Enfish, 822 F.3d 1327, 2016 WL 2756255, that Plaintiffs' litigating position was so baseless as to render this case exceptional"); Garfum.com, 2016 U.S. Dist. LEXIS 29 174134, at *13-16 (listing post-Alice computer-based patent eligibility cases). Therefore, the continued evolution in the governing case law with respect to these type of claims, when considered in conjunction with the Patent Office's issuance of a similar continuation patent post- Aid^, militates against an exceptional case finding. 4. Inventor Holdings When arguing that the legal standards in this area of the law were relies clear pre-Alice, heavily Holdings as a on the case and even District on point clearer Court's for this opinion distinguishable ''case falls ultimate from within merits the were litigation process the facts usual of this category determined in argument. argues that the District Court's opinion in is post-Alice, of and considered in light CertusView and that our cases the 13. because Because the district both parties Federal Circuit court after the look issued to its conclusion of where rigors of the of evolving standards that are highly conceptual and nuanced." at Inventor Inventor Holdings case, through S&N the legal ECF No. 576, Inventor Holdings, opinion and affirming briefing in this the case, the Court will carefully address such arguments here. The patent holder in Inventor Holdings filed its lawsuit in April 2014, 2016 U.S. Inventor after Bilski and before Alice. Dist. LEXIS Holdings 70345 covered a at *2-5. method 30 and The Inventor Holdings, asserted patent system for in processing payments for remotely purchased goods, and sought to 1) offer customers more payment options in connection with remote orders, and 2) process those payments without having to provide credit card information over the internet, phone, or mail. Id. at *3. Finding that those two problems related to conventional business practices, the district court concluded that "the core invention embodied by the conventional idea." '582 patent business is a practice[] 'fundamental and economic [or] therefore an abstract law post-Alice, the Inventor Id. Assessing the state of the Holdings district court noted that the claims in Alice covered ''a method for exchanging financial obligations using a computer system as medium a third-party intermediary and a containing program exchanging obligations." court noted, "directed settlement" code Id. for computer readable performing at *2. the Therefore, method of the district the Supreme Court concluded that the claims were to and a patent-ineligible that "the method concept claims, of intermediary which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention." S. Ct. at 2350). Id. (citing Alice, 134 Comparing the state of the law post-Alice with the claims at issue, the Inventor Holdings district court held that "by the time of the Alice decision, IH was on notice that its claims, much like the claims in Bilski and Alice, covered an 31 abstract idea and that the introduction of a computer into these claims did not method claims alter were time of Alice. the analysis," objectively Id. at *6-7. meaning ineligible under the case to be affirming exceptional the § 101 by and district awarded court, the claims the district court from the time that the Alice decision issued. In the business Since Inventor Holding's were objectively ineligible following Alice, found that attorneys' Id. the fees at *9-12. Federal Circuit concluded that the district court "acted within the scope of its discretion in finding [the] case to be exceptional based on the weakness of IH's § 101 arguments and the need to deter similarly weak arguments in the future." 1377. After concluding Inventor Holdings, that the claims "manifestly directed to an abstract idea," 876 F.3d at at issue were the Federal Circuit went on to conclude that the "only components disclosed in the specification for unambiguously Addressing finding was implementing the asserted method claims are described the as plaintiff's 'conventional'". argument unwarranted because the that § Id. an 101 at 1378. exceptional issue case involved an evolving area of the law, the Federal Circuit disagreed, finding that the patents were dubious even before Alice. Id. at 1379. Although the Federal Circuit recognized that the "state of the law for computer-implemented business transaction inventions was less than clear" prior to Alice, 32 it noted that Alice "was a significant change in the law," when considering claims directed to an economic technology. we agree arrangement Id. generic computer Finally, the Federal Circuit noted that "while with sometimes implemented using IH as difficult a to general analyze matter patent that it was eligibility framework prescribed by the Supreme Court in Mayo, and under is the there is no uncertainty or difficulty in applying the principles set out in Alice to reach the conclusion that the '582 patent's claims are ineligible," because the "patent claims here are directed to a fundamental economic practice, which Alice without more, outside the patent system." CertusView's brief addressing the made clear is, Id. at 1379. district court opinion first argues that, unlike in Inventor Holdings where the patent issued before Bilski Bilski and Mayo, of validity eligibility." that "unlike claims Supreme under the ECF No. in to Court governing the Mayo, the claims here issued after "and were therefore entitled to a presumption current 576, Inventor ^objectively identical and at 14. Holdings, ineligible' financial rejected precedents legal to identical claims invalid." in Second, where because business Bilski guide Id. 33 standard the court they that found were claims Alice, CertusView patent CertusView argues method and for nearly that there found the were the no nearly The Court significantly finds that both distinguish of these Inventor Holdings strength of S&N's reliance on such case. additional significant Inventor Holdings, distinction CertusView in and undercut Moreover, this this Court's § 101 case. decision, the there is an Unlike in this case the Patent Office, been provided with arguments in after having issued post- Aid^ continuation claims that were similar to the patents-insuit. As district courts have observed, "the reluctance to find exceptionality, based in part on the presumption of validity, is not unreasonable when the examiner considered whether the patent was eligible under current Dist. LEXIS support 209273 at CertusView's § *15 101 law." My Health, (citing cases). claim that its 2017 U.S. These distinctions actions in continuing to prosecute this suit after Alice were objectively reasonable. B. Conduct of Litigation in Unreasonable Manner S&N argues reconsideration Enfish LLC, year after 822 this that as to CertusView's Claim F.3d 1327 Court's baseless § 101 position. 1 of (Fed. § 101 motion the Cir. '359 ECF No. Patent, 2016), opinion, 574, for was at 9. and partial based upon filed over a evidence of its S&N points out that CertusView "could not support an argument that its asserted claims were analogous to those at issue in Enfish because its own expert had already made clear that 'I don't think that the direction of the patents is towards an invention of a 34 computer technology.'" Id. at 10. significant because that clarified it was Mayo/Alice CertusView asserts position, CertusView responds that Enfish "was the first Step appellate court decision One." ECF No. 576, at 16. that although this Court disagreed with its it agreed with CertusView that Enfish clarified the § 101 analysis. Id. (citing ECF No. 545, at 16-17) . CertusView further asserts that its motion for reconsideration was not only based upon Enfish, it was also based upon "new evidence from the trial on S&N's inequitable conduct claims." S&N responds that CertusView's argument ECF No. 576, at 17. regarding Enfish "was baseless because this argument sought an application of Enfish that this Court (and numerous others) acknowledged stretched to support Certusview's suggestion.'" 8. *cannot be ECF No. 577, at S&N further responds that because this Court had previously stated in its § 101 opinion that there were no factual disputes that could unreasonable that This '646 March 8, its § 101 evidence was was "objectively the Court to later find necessary or issued its § continuation patent 2016, inequitable it somehow could change Id. Court declaratory analysis, for CertusView to expect extrinsic the r e s u l t . " The affect 101 issued on November 10, the Court began a judgment conduct. opinion on January the 35 2015. 2015. On five day bench trial on S&N's counterclaim After 21, against Court took CertusView the matter for under advisement pending submission of post-trial briefs, Circuit issued the Enfish decision on May 12, 2016. the Federal CertusView filed a motion for partial reconsideration of the Court's § 101 opinion on June 15, 2016, and the Court denied such motion for reconsideration on August 10, 2016. In the denial of the motion for reconsideration, carefully explained why its prior finding '359 patent, creating a applied which in conducting "directed towards computer-readable a decisions." that is the particular locate ECF No. CertusView file failed to the was Claim 1 abstract store the idea of as environment of "unchanged by at 18-21. of information, technological operation," 545, to that this Court the Enfish This Court also explained demonstrate that new evidence heard during the bench trial of S&N's inequitable conduct counterclaim was relevant to reconsideration, or that such trial produced evidence that was substantially different from the evidence that was available at the time Judgment on the Pleadings. the Court resolved Therefore, S&N's Motion for the Court concluded that reconsideration of the Court's judgment of patent ineligibility regarding Claim 1 of the '359 patent was unwarranted. Id. at 28-29. While it might be argued that, absent the issuance of the '646 continuation patent, CertusView conducted the litigation in an unreasonable manner by filing the motion for reconsideration, 36 the issuance of the '646 continuation patent sufficiently breathed new life into the presumption of validity attached to the '359 patent that the motion for evolving cannot be said CertusView's reconsideration was unreasonable. nature discussed it of § above, 101 jurisprudence militates against in filing of Moreover, this a area, finding the as of unreasonableness. C. Filing of Appeal S&N argues further evidence respect to argument, of CertusView's the weakness § 101. S&N ineligible that ECF No. contends claims on of 574, that, on appeal are CertusView's position with at ''in appeal, arguments 11. an In support of attempt CertusView to such salvage made new its claim construction arguments before the Federal Circuit based on this Court's trial order." to acknowledge that Id. the appeal were not its own, Court's application of judgment." CertusView responds that S&N ''fails constructions crafted anew, the CertusView on but were based on the asserted claims ECF No. 576, at 19. argued in the post-trial S&N replies that CertusView, in arguing that the constructions it argued on appeal were based on the Court's application of the asserted claims in the post-trial judgment, does arguments on not appeal dispute were construction positions below. that such inconsistent ECF No. 37 claim with 577, at 9. construction its claim Moreover, S6iN posits, "neither of the authorities that CertusView points to - Markman or Cordis - allow a party to advance inconsistent claim construction positions on appeal as party's own," and even if they did, re-construe any contends." claims in its long as they are not the "the district court did not trial order as CertusView Id. Even if there were merit to S&N's argument that CertusView made new Circuit, the claim construction arguments as CertusView points out, case and would carry more addressed earlier) ECF No. 576, before the Federal its argument comes late in weight (and possibly have been had i t been made before the Federal Circuit. at 19. Such late argument militates against this Court finding that CertusView's argument was one that stands out from others with respect to the substantive strength of CertusView's litigating position or that the case was litigated in 793 an unreasonable F.3d 1344, 134 S. Ct. manner. 1348-49 at 1756). (Fed. See SFA Sys., Cir. LLC v. NEWEGG Inc., 2015)(citing Octane Fitness, " [T] he Federal Circuit did not sua sponte find CertusView filed a frivolous appeal, and S&N neither argued the issue in its appeal brief nor filed a Rule 38 motion the Federal Court finds Circuit]." S&N's ECF argument, No. that 576, at 19. CertusView Therefore, took [with the inconsistent claim construction positions before this Court and the Federal Circuit, does not merit further 38 consideration as its lateness suggests that CertusView's litigation position did not stand out from others with respect to its substantive strength or such argument was asserted in an unreasonable manner. 793 F.3d at 1348-50 (affirming district court's that SFA Sys., refusal to conduct a mini-trial on frivolity for attorneys' fees purposes). D. Unreasonable Litigation Misconduct S&N argues that CertusView's unreasonable litigation discovery misconduct merit an exceptional case finding. 574, and ECF No. at 13. 1. Privilege and Discovery Misrepresentation S&N argues over relevant assessments that CertusView's documents of prior making material and Court process the (including relevant discoverable, in improper claim of privilege of corporate art) asserting Id. that were such at 13-14. privilege and clearly misrepresentations particularly egregious and stands out are properly litigated. documents to claim, from other matters the is that CertusView essentially responds that the facts relied upon by S&N amount to, at most, an aggressive litigation strategy that was not egregious. ECF No. the 576, at 21. CertusView first asserts that none of extenuating circumstances that courts have found in other cases, such as manufacturing evidence, obfuscations or bad faith, next responds that perjury, exists here. allegations 39 of witness tampering, at 20. CertusView Id. concealed documents do not support a finding previously exceptionality: that found of CertusView's privilege was supported by a and 2) where allegedly S&N fails concealed, where initial this Court assertion of reasonable basis in law and fact, to or 1) identify instead a particular inferentially document relies on assertions of concealment outlined in a prior motion that do not amount to relying motion exceptional on five for pages attorneys' behavior. at 22-25. explanation of Id. in a fees in this case, Summarily previously-filed S&N replies CertusView's knowingly unfounded privilege assertions, misrepresentations to the Court under oath, numerous important documents and witnesses, from others. ECF No. 577, that multiple and concealment of set this case apart at 10. This Court does not intend to relitigate in detail here the merits of each of the grounds asserted by S&N. say that, Suffice it to for the reasons cited by CertusView in its responsive brief, ECF No. 576, at 20-22, the Court finds such grounds to be examples of an aggressive litigation strategy by a patent holder against a competitor, and condemnation and sanctions, of its discretion that in some respects conduct worthy of but the Court finds in the exercise on these 40 facts this is not the type of egregious behavior justifying an award of attorneys' fees. See Intellectual Ventures I, 2015 U.S. Dist. LEXIS 155525 at *20."* 2. Number of Claims Asserted S&N argues that CertusView "asserted an inordinate amount of claims initially, and importantly, refused to reasonably limit the number of asserted claims despite representing to the Court that i t would do so." ECF No. 574, at 14. CertusView responds that "there is nothing exceptional about a plaintiff initially asserting fewer patents," and reducing clams commensurate references as than "there half is [sic] reductions of the nothing during in CertusView did exceptional the the claims suit number here." CertusView asserts that its "position - or of ECF in its about in a patentee asking asserted No. asserted prior 576, at for art 22. that it was willing to narrow its claims of infringement after obtaining the requisite discovery from S6^, so long as S&N proportionally narrowed its counterclaims of invalidity - reflected a standard practice in patent litigation, not an unreasonable litigation tactic." CertusView says that "[t]ellingly, Id. the Court ultimately agreed ''This is not to say that the Court does not view some of CertusView's conduct with a particularly negative eye. In fact, as a part of the inequitable conduct counterclaim trial, when SSJST asked the Court to infer that misconduct during discovery supports a strong inference of deceptive intent before the PTO, the Court recognized the seriousness of such conduct, stating: "Thus, while CertusView's conduct during discovery is worthy of condemnation and sanction, such misconduct does not evidence the specific intent to deceive the PTO." at 75. ECF No. 542-1, The Court addressed that litigation misconduct with sanctions. ECF No. 364. 41 with CertusView's position that parallel reductions in the number of asserted claims and the number of prior art references was appropriate and ordered a No. 576, at 23 (citing CertusView argues, parallel-reduction process," ECF No. 159, at 11, 14). ECF Later, ''the Court denied S&N's request for sanctions based on this process" after observing that the parties had been negotiating an agreement. Id. Finally, CertusView "that S&N offers no evidence to substantiate CertusView number asserted a large of its patent responds argument claims in that bad faith," and further responds that the unrelated blog post by one of CertusView's former encouraging such behavior provides "no basis for attributing Mr. Rodrigues' blog post to CertusView." attorneys Id. at 23. seemingly S&N replies that "CertusView's strategy of waiting over eight months to assert a of 'largely redundant' 'drastically increase the claims costs from of large number multiple litigation' patents to and subsequent refusal to timely limit the number of claims was in bad faith and sets this case apart Moreover, S&N replies, from others." ECF No. 577, at 10. "contrary to CertusView's assertions, S&N was willing to limit its invalidity arguments after CertusView identified its reduced number of claims, which that is both logical and common in patent cases." This issue was discussed at length Opinion and Order filed on October 1, 42 by 2014. the is an approach Id. Court ECF No. in its 159. As reflected there, the Court had previously expected CertusView to take the lead in reducing the initial number of claims asserted after receiving necessairy correspondingly references. reduce the See ECF No. 86, discovery, number at 4, and of 6. for asserted S&N prior Of course, as to art indicated in the cases cited by the Court in its original order, upon a showing of good cause, CertusView could seek authorization from the the Court to reduction. increase Id. at 3. number of claims after such initial Although CertusView believed it needed additional discovery before making its initial reduction in the number of claims i t asserted, it was nonetheless in the process of negotiating a resolution to the impasse at the time that S&N filed its motion to limit the number of claims CertusView could assert. For sanctions. matter, that reason, However, the Court contrary to denied Sfi^'s CertusView's the Court also concluded that request view of for the CertusView had received sufficient discovery to allow it to make an initial reduction in the number of claims asserted. failed to appreciate initial reduction 86, 5-6, at it the Court's prior admonition to make an in the was While it appears that CertusView in number the of claims process of it asserted, trying to ECF No. negotiate a corresponding limitation on the number of prior art references S&N asserted. agreement, the The problem was that, Court's prior 43 in the absence of such an order essentially envisioned CertusView, dispute, as ECF reduction in the No. party 159, the S&N on at number relevant discovery, in 8, of even if corresponding the best position proceeding claims to narrow make asserted its after the initial receiving it could not reach agreement with reductions in prior art CertusView failed to make its initial reduction, fact to references. in spite of the that the Court concluded CertusView had received sufficient discovery to be able to do so. However, for the same reason that the Court denied S&N's sanctions request at the time, Court also finds that CertusView's actions, though the reflecting poor litigation judgment and an aggressive litigation strategy, were not egregious. E. Totality of Circumstances S&N asserts circumstances, that this "[c]onsidering case was not only unreasonable manner from the beginning, the totality litigated in of a the wholly but it also stands out from the others with respect to CertusView's exceptionally weak litigation position." that "none of S&N's ECF No. 574, at 16. CertusView responds individual arguments warrant a fee award, and, when considered in the context of the entire litigation - a hard-fought competitor litigation where both sides won and lost discovery battles and claims and counterclaims - there is no showing that the sum of the parts is sufficient to support the 'rare' finding that this case 'stands out' 44 from others." ECF No. 576, at 26. CertusView goes on to argue that "the sort of discovery conduct S&N complains of occurred on both sides," and therefore " [c]onsidering the litigation strategy by both parties was similar, a the totality of the circumstances does not support finding that it should be deemed an 'exceptional case.'" Finally, Id. CertusView argues that after ''winning its judgment on the pleadings that the asserted claims were patent ineligible, S&N filed inequitable garnering a prove a fee award," and conduct claims, the matter - Id. . . . therefore counterclaims "[y]et, single element of any of allegations," hide conduct such its in at trial, five "pursuit hopes of S&N failed to inequitable conduct of its inequitable and its resort to exaggeration of the record to weakness of its arguments, shows - as an equitable that S&N is not entitled to its requested fee award." at 26-27. S&N replies that, with respect to the argument that both parties had the same aggressive litigation strategy, "the circumstances surrounding S&Ns sanctions were significantly different from the circumstances surrounding CertusView's." No. 577, authority at 13. that S&N further precludes an replies that attorneys' it fees party lost on its inequitable conduct claims," attorneys' ECF "is aware of no award because a and "[a]1though fees can be awarded on the basis of an inequitable conduct finding, this is certainly not the only basis for a fee award under Octane Fitness, which specifically provides for an 45 exceptional case finding based on and/or substantive strength of a Id. the manner of litigation party's litigating position." a t 14. The parties' sanctioned conduct involved here was different is scope and degree, in the Court's view; with the misconduct of CertusView exceeding that of S&N. both sides behavior aggressively has already However, it does reflect that litigated been the the subject case. of a Each parties' sanctions That is not to say that it cannot be considered here, fact does affect this Court's view about award. but such the manner in which i t should exercise i t discretion, for deterrence. With respect to the argument that S&N's loss on the inequitable conduct and diminishes counterclaims the overall need should somehow equitably preclude it from pursuing and prevailing on its exceptional case motion, the Court agrees that such outcome does not preclude S&N from pursuing such a consider all of motion, the and finds conduct that associated it with is proper to such trial in exercising its discretion. Finally, the Court with the looks back totality of to the the circumstances nonexclusive list of in mind, factors that the Supreme Court said trial courts could consider in deciding whether a observations. with respect case is exceptional, Octane Fitness, to and 134 S. frivolousness, 46 the Ct. makes the following at 1756 n.6. Court has made First, detailed findings above as to why it concludes that specific actions of CertusView were not frivolous. The Court now concludes that the totality of all of these circumstances do not support a finding of frivolousness on the respect to motivation, part of CertusView. Second, with the Court has made findings above as to why it concludes that specific actions of CertusView were not driven by an improper motive. While it is true that CertusView has aggressively argued for patent eligibility in an evolving area of the law, the Court was not presented with any persuasive evidence that Moreover, such there is infringement of a Medtronic arguments a were ^^presumption improperly that an motivated. assertion of duly granted patent is made in good faith," Navigation, Computersysteme Gmbh, Inc. 603 v^ BrainLAB F.3d 943, 954 (Fed. Medizinische Cir. 2010), and "motivation to implement the statutory patent right by bringing suit based improper claims of on a reasonable motive," as infringement belief Prods., 107997, at *21 (D. infringement an is the mechanism whereby patent systems reasonable Hopkins Mfg. Corp. v. Cequent 14-CV-2208, Kan. July 5, of not "patentee's Case No. assertion is a provide an innovation incentive." Performance in 2017) . 2017 U.S. Therefore, Dist. LEXIS the Court now concludes that the totality of the circumstances do not support a finding of improper motive on the part of CertusView. with respect to objective unreasonableness, 47 Third, both in the factual and legal components of the case, the Court has made findings above as to why it concludes that specific actions of CertusView were not objectively unreasonable. upon a totality of the The Court now finds, circumstances, that S&N has based failed to show objective unreasonableness by CertusView in the factual and legal components of the case. Alternatively, objective unreasonableness exists, to the extent that the Court finds such conduct is not so exceptional as to justify an award of fees. of these of the reasons, the Court circumstances, preponderance of the concludes, that S&N evidence based upon the has that failed this is to "the For all totality show rare by case a in which a party's unreasonable conduct" is "so 'exceptional' as to justify an award of fees." Octane Fitness, 134 S. Ct, at 1757. IV. For the reasons CONCLUSION stated above, the Court DENIES Defendants' Renewed Motion for Exceptional Case Finding and Attorneys' ECF No. 573. The Clerk is REQUESTED to send a copy of Fees, this Opinion and Order to all counsel of record. IT IS SO ORDERED, /s/lTlikB" Mark S. UNITED Norfolk, Virginia February ^ , 2018 48 STATES Davis DISTRICT JUDGE

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