Genetic Veterinary Sciences, Inc. v. LABOklin GmbH & Co. KG et al

Filing 181

OPINION & ORDER denying 176 Motion for Attorney Fees. Signed by District Judge Henry C. Morgan, Jr on 02/20/2020. (bboy, )

FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

FEB zoaeo
CLtHK, U.S. DISTRICT COURT
MORFni ur x/A

GENETIC VETERINARY SCIENCES,INC.,
d/b/a Paw Prints Genetics,
Plaintiff,
V.

Civil Action No. 2:17cvl08

LABOKLIN GMBH & CO.KG &

THE UNIVERSITY OF BERN,
Defendants.
OPINION & ORDER

This matter comes to the Court on Genetic. Veterinary Sciences, Inc.'s ("Plaintiffs")
renewed motion for attorney's fees. Doc. 176. This motion comes after the United States Court
of Appeals for the Federal Circuit affirmed this Court's judgment as a matter of law, finding a
patent held by LABOklin GmbH & Co. KG and The University of Bern (collectively,

"Defendants") to be invalid. The parties have waived oral argument and the record fully details
the legal and factual issues before the Court; accordingly, the Court will decide Plaintiffs motion
for attorney's fees on the papers without oral argument. As described herein, the Court DENIES
Plaintiffs motion.
L BACKGROUND

On May 17,2018,the third day ofthis case'sjury trial, this Court granted Plaintiffs motion
forjudgment as a matter oflaw,finding that United States Patent No.9,157,114("the'114 Patent")
is invalid for unpatentable subject matter. Doc. 140. Plaintiff moved for attorney's fees on May

29,2018, which this Court denied without prejudice pending appeal. Doc. 173.

After the Court denied the motions for summaryjudgment,the Court held ajury trial. This
case was resolved at trial on a Rule 50 motion for judgment as a matter of law. Doc. 145. The

Court found that claims 1 through 3 of the *144 Patent were directed at ineligible subject matter,
that is, the discovery ofa genetic mutation and commonly known scientific methods. Doc. 145 at
6-11. On July 29, 2019, the United States Court of Appeals for the Federal Circuit affirmed this
Court's judgment. Plaintiff renews its motions for attorney's fees. Plaintiff seeks fees according
to the following accounting:
Fee or Cost Category

Amount

$333,733.25
Venable LLP Fees
$81,255.65
Non-taxable costs
$13,760.59
Consulting Fees(Bloom Strategic Consulting, Inc.) $69317.30
Total: $498,066.79
Lowe Graham Jones PLLC Fees

IL DISCUSSION

Plaintiff argues that this case is "exceptional," because (1) Plaintiffs case was much
stronger than Defendants' case and(2) Defendants unreasonably litigated this matter.
A.

LEGAL STANDARD

Federal Rule of Civil Procedure 54(d) requires a party seeking attorney's fees and other
taxable costs to do so by filing a motion after the entry ofjudgment. Fed. R. Civ. P. 54(d). The
Patent Act provides that "[t]he court in exceptional cases may award reasonable attorney's fees to
the prevailing party." 35 U.S.C. § 285. An "exceptional case is simply one that stands out from

others with respect to the substantive strength of a party's litigating position (considering both the
governing law and the facts of the case) or the unreasonable manner in which the case was
litigated." Octane Fitness. LLC v. ICON Health & Fitness. Inc.. 572 U.S. 545,554(2014). "Under

the standard announced [by the Supreme Court in Octane Fitnessl. a district court may award fees
in the rare case in which a party's unreasonable conduct—while not necessarily independently
2

sanctionable—is nonetheless so 'exceptional' as to justify an award of fees." Id at 555. There is
no rigid formula for making this determination and the Court should assess the totality of the
circumstances and use its equitable discretion in deciding whether a case is so exceptional as to
warrant an award of attorney's fees. Id at 554. Indeed, even where a case is "exceptional," the
court has discretion to deny an award of attorney's fees. Icon Health & Fitness. Inc. v. Octane

Fitness. LLC.576 F. App'x 1002,1005(Fed. Cir. 2014); see also Altair Loeix LLC v. Caterpillar
Inc., C.A. No. 18-2057, 2019 WL 3219485, at *4(D. Del. July 17, 2019).

When weighing the circumstances and equities ofthe case, the court may consider factors,

such as "frivolousness, motivation, objective unreasonableness (both in the factual and legal
components of the case) and the need in particular circumstances to advance considerations of
compensation and deterrence." Id at 554 n.6.
B.

ANALYSIS

Plaintiff argues that its invalidity case was so strong that Defendants "could have and
should have understood from the outset of the case" that the asserted patent was invalid. Doc.

176-1 at 5. Plaintiff primarily cites that this case was resolved under a rule 50(a) motion, an
outcome which Plaintiff submits occurs in only one-percent (1%) of patent cases litigated to

judgment. Id at 6. Plaintiff further argues that the "unreasonable manner" in which Defendant
litigated this case,such as violating rule 408 and allegedly making misrepresentations to the Court,
justifies fees. Id at 7-11. Plaintiff concludes by arguing that the Federal Circuit's decision
affirming this Courtjustifies an award offees. Id. at 13-14

Defendants respond that their patents were presumed valid, and that they were entitled to
rely on the findings ofthe United States Patent and Trademark Office("USPTO")in defending its
patents. Doc. 177 at 7-8. Defendants further argues that the fact that the Court denied Plaintiffs

motion for summary judgment as evidence that its claims were not objectively baseless, given the

complex nature of section 101 jurisprudence. Id. at 9-10, 11-12. Defendant also argues that
Plaintiffis responsible, in part, for the protracted litigation due to Plaintiffs failure to comply with
procedural rules and litigation strategy. Id. at 10.
While Plaintiffs case was strong. Defendant's position was not "objectively baseless" or

frivolous. The technology and law in this case is complicated. Indeed, Defendant survived
Plaintiff's motion for summary judgment. Although Plaintiff accuses Defendant of being at best
grossly negligent or at worst intentionally misleading at the summary judgment hearing,id at 8,

there is insufficient evidence to support such a conclusion as to the motivations of counsel.
Additionally, after Defendant issued a cease and desist letter. Plaintifffiled this declaratory

judgment action seeking to invalidate Defendant's lawfully issued patent. It is reasonable for
Defendant to defend the validity of its patent. Indeed, the record shows that, after filing suit.

Plaintiff sought to leverage a $30,000 payment from Defendant to drop the lawsuit.' If Defendant
did not pay, it would have to defend its patent. That is what happened in this case. There is no
evidence that Plaintiffsought to resolve this matter without court intervention,thereby minimizing
the need for attorney's fees, or continued to try to resolve this matter once the case began.

Finally, Plaintiff itself contributed to the protraction ofthis case because of its own failure
to comply with rules of procedure. Opinion and Order on Summary Judgment, Doc. 99, at 7

("Having given the Plaintiff three (3) opportunities to comply with the Federal Rules of Civil

'Generally, evidence of settlements or offers to settle a case are not admissible "to prove or disprove the validity or
amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction." Fed. R. Evid. 408(a).
However, such evidence is admissible "for another purpose." Id at 408(b). Here, by citing compromise offers,
Defendant is not trying to impeach, or disprove or prove the validity or amount of a claim. Defendant is offering
evidence of Plaintiffs conduct, which is not expressly forbidden by Rule 408. Indeed, other courts have permitted
rule 408 evidence under circumstances such as these. Lohman v. Durvea Boroudi. 574 F.3d 163 (3d Cir. 2009);

Master-Halco Inc v. Scilla. Dowling & Natarellis LLC.739 F. Supp. 2d 125(D. Conn. 2010). Accordingly, the Court
may consider this evidence here.

Procedure and the Local Rules ofthe Eastern District of Virginia, the Court will not grant Plaintiff
further relief in regard to the Order of which it complains.").

Plaintiff had a strong case, perhaps even a "very" strong case, and pursued an aggressive
litigation strategy in which it won the invalidity ofa United States patent. However,this case does
not seem to be "so exceptional" as to warrant attorney's fees. Octane Fitness. 572 U.S. at 555.
Under the circumstances ofthis case. The Court DENIES the motion for attorney's fees. See,e.g.,

Altai Loeix, 2019 WL 3219482 (denying patent attorney fees where the prevailing party
contributed to the length of the litigation).

The Clerk is REQUESTED to deliver a copy of this Order to counsel of record.
It is SO ORDERED.

hi

Henry Coke Morgan, Jr.
Senior Uniied

Ti|

Henry Coke Morgan,Jr.

Norfolk, Virginia

20,2020

Senior United States District JOdge