VocalTag Ltd. v. Agis Automatisering B.V.

Filing 337

ORDER denying 304 Motion for Attorney Fees Under 35 U.S.C. Section 285 by Defendant Agis Automatisering B.V. Signed by District Judge James D. Peterson on 9/27/2016. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

VOCALTAG LTD. and SCR ENGINEERS LTD.,

v.

Plaintiffs,

OPINION & ORDER
13-cv-612-jdp

AGIS AUTOMATISERING B.V.,
Defendant.

This is a patent infringement case involving electronic cattle monitoring systems. The
court granted summary judgment of non-infringement of both patents-in-suit to defendant
Agis Automatisering B.V. Dkt. 289, at 1. The court also granted summary judgment against
plaintiffs on their allegation of willful infringement. Id. On September 1, 2016, the Federal
Circuit affirmed. Dkt. 336-1.
Before the case went up on appeal, defendant moved for attorney fees pursuant to 35
U.S.C. § 285. Dkt. 304. Defendant contends that plaintiffs’ infringement claims relied on
baseless claim constructions, and that the suit was motivated by plaintiffs’ desire to impede
competition rather than a sincere interest in its intellectual property rights. The question is a
close one, but the court is not convinced the case is “exceptional” under Octane Fitness, LLC v.
ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), or that fee shifting is warranted. The
court will deny the motion.

ANALYSIS
Under § 285 of the Patent Act, “[t]he court in exceptional cases may award reasonable
attorney fees to the prevailing party.” 35 U.S.C. § 285. For nearly a decade, under Brooks

Furniture Manufacturing, Inc. v. Dutailier International, Inc., 393 F.3d 1378 (Fed. Cir. 2005), an
“exceptional” case was one that involved some actionable misconduct. But now, under
Octane, 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,
134 S. Ct. at 1756; see also Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744,
1748 (2014). District courts determine whether a case is exceptional on a case-by-case basis,
considering the totality of the circumstances. Octane, 134 S. Ct. at 1756. The moving party
must demonstrate that the case is exceptional by a preponderance of the evidence. Id. at
1758. The determination is a discretionary one for the court.
The question is not governed by clear-cut rules, but the court’s discretion is guided by
the purpose of fee-shifting under § 285, which is to dissuade unreasonable lawsuits and
litigation tactics by compensating the prevailing party for enduring them. See, e.g., Commil
USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1930-31 (2015). The court should not award
fees to punish a patent holder simply for failing to prove infringement. Gaymar Indus., Inc. v.
Cincinnati Sub-Zero Products, Inc., 790 F.3d 1369, 1373 (Fed. Cir. 2015) (citing Octane, 134 S.
Ct. at 1753). A litigation position that seems obviously wrong after a decision on the merits
might have seemed reasonable when judged without the benefit of hindsight. And fee-shifting
in routine cases would deter legitimate efforts to enforce patent rights. So the court will
award fees only if there has been some unreasonable conduct that warrants imposing on the
losing party the additional burden of paying the other side’s attorney fees. See Intellect
Wireless, Inc. v. Sharp Corp., 45 F. Supp. 3d 839, 848 (N.D. Ill. 2014). The court need not
find that the losing case was frivolous, or that it was brought in bad faith for an illegitimate

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purpose (although that would clearly warrant fee-shifting). See Lumen View Tech., LLC v.
Findthebest.com, Inc., 24 F. Supp. 3d 329, 335 (S.D.N.Y. 2014), aff'd, 811 F.3d 479 (Fed. Cir.
2016). Such clearly inappropriate cases and tactics would be sanctionable pursuant to Rule
11 or the court’s inherent powers even without § 285.
Because the purpose of § 285 is to compensate parties forced to defend against
unreasonable litigation and to deter improper conduct, a good way to think of the question is
this: was the losing party’s case so unusually weak on the merits that it suggests an improper
purpose or demonstrates irresponsible conduct that should be deterred? Or, is there other
evidence, besides substantive weakness on the merits, that suggests an improper purpose?
With these questions in mind, the court turns to the parties’ arguments.
A. Evidence of copying by defendant
The court begins with plaintiffs’ contention that they received important evidence of
copying by defendant only after the parties had briefed the motion for summary judgment.
The purported evidence of copying and its allegedly late disclosure are immaterial. At best,
the information would have informed the parties’ validity positions, not their infringement
positions. See Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1351 (Fed. Cir. 2002)
(“[C]opying may have relevance not on infringement but on validity as one of a number of
‘indicia of obviousness or nonobviousness.’” (citations and internal quotation marks
omitted)). The court did not reach the issue of validity in its summary judgment decision.
Plaintiffs do not adequately explain how the “late” discovery would have had any
bearing on claim construction, plaintiffs’ knowledge of the accused system, or plaintiffs’
infringement positions. As defendant aptly phrases it, “plaintiffs’ scattershot allegations of

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copying cannot be used as a proxy for establishing infringement.” Dkt. 330, at 28. The court
concludes that the copying evidence has no bearing on whether this case is exceptional.
B. Bad faith by plaintiffs
Defendant contends that plaintiffs litigated this case in bad faith to prevent
competition. In support, defendant cites two actions by plaintiffs: a press release that
plaintiffs circulated a few months after filing suit; and a meeting that plaintiffs had with one
of SCR’s U.S. distributors, who had indicated that it would begin distributing defendant’s
products. Defendant’s showing is not persuasive.
Plaintiffs’ press release was a simple announcement that they had sued defendant for
infringing their patents and that they were committed to vigorously protecting their
intellectual property rights. See Dkt. 305-6. The statements about the litigation were
accurate, and plaintiffs were within their rights to publicly proclaim their intent to enforce
their patents. Defendant surmises that the press release was calculated to discourage
customers from dealing with defendant. But any proclamation by a patent owner that it will
enforce its patent rights, or that it has sued a competitor, carries that implication. Factually
accurate press releases about litigation, such as the one issued by plaintiffs here, do not
suggest any bad faith or illegitimate anti-competitive motive on the patent owner’s part.
The distributor meeting does not demonstrate bad faith on plaintiffs’ part either.
Based on the record before the court, sometime during the litigation, defendant reached an
exclusive marketing agreement with Select Sires, a major U.S. distributor. But Select Sires
was already distributing plaintiffs’ products, and under its agreement with plaintiffs, Select
Sires was required to inform plaintiffs before dealing in competitive products. After being so
notified, plaintiffs requested a meeting with Select Sires, at which plaintiffs asked Select Sires

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to forestall distributing defendant’s products until the patent litigation was resolved.
Defendant does not address the issue in its reply brief, so maybe it has conceded the point.
But nothing about this situation suggests that plaintiffs were using the litigation in a badfaith attempt to interfere with competition.
C. Substantive strength of plaintiffs’ case
That leaves the substantive strength of plaintiffs’ litigation position. “In Octane Fitness,
the Supreme Court made clear that it is the substantive strength of the party’s litigating
position that is relevant to an exceptional case determination, not the correctness or eventual
success of that position.” SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015)
(citation and internal quotation marks omitted). Defendant contends that plaintiffs’
proposed claim constructions and related infringement positions were totally baseless. The
court considers plaintiffs’ case for each patent-in-suit.
1. ’481 patent (the rumination patent)
At summary judgment, the court construed two terms with respect to the ’481 patent:
“sensor for sensing chewing actions” and “data processor.” Dkt. 289, at 7. The court
determined that both terms were means-plus-function limitations because the inventor had
expressly acknowledged that they were during prosecution, and that under the court’s
construction of the terms, defendant was entitled to summary judgment of non-infringement
of the ’481 patent.
Plaintiffs contend that they were entitled to argue that the terms were not meansplus-function limitations. Plaintiffs are correct that, under the applicable law at the time the
court issued its summary judgment opinion, the absence of “means for” phrasing created a
strong presumption that the terms were not means-plus-function limitations. See id. at 8. But

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plaintiffs were not entitled to rely on the presumption. During prosecution, the inventor
expressly stated that amendments to the relevant claim created means-plus-function
limitations. See Dkt. 41-1, at 261 (“Thus, the recitation in Claim 18 of a ‘sensor for sensing’
means exactly the same as ‘means for sensing,’ and therefore is clearly a recitation of
structure to be given patentable weight . . . Similarly, the recitation in Claim 18 of a data
processor accumulating both the time of each of said sensed chewing actions and the number
of such chewing actions per unit time interval, for determining the chewing rhythm of the
animal, is also a recitation of ‘means plus function’ expressly permitted under 35 U.S.C.
[§] 112[.]”). These statements barred plaintiffs from reversing course during litigation: the
statements should have stopped plaintiffs from arguing that “sensor for sensing chewing
actions” and “data processor” are not means-plus-function limitations. But, to be fair,
plaintiffs did not stake their whole infringement case on this point. To the contrary, plaintiffs
appeared to recognize that this was not a winning point, and they argued in the alternative
that even if the terms were means-plus-function limitations, the patent disclosed a structure
that would read on defendant’s product. The fact that plaintiffs maintained a feeble
secondary argument does not make this case exceptional.
The decisive issue at summary judgment was whether structures disclosed in the ’481
patent read on defendant’s product. In short, plaintiffs relied on overly broad constructions
that the court rejected. 1 The court construed “sensor for sensing chewing actions” to require
the corresponding structure of a “sound sensor.” Plaintiffs argued that the accelerometer in
the accused product was the equivalent of a microphone, relying on their infringement expert,
1

The Federal Circuit agreed with plaintiffs that the Figure 6 algorithm was a corresponding
structure. Dkt. 336-1, at 8. But the additional corresponding structure did not save plaintiffs’
case: the accused system still did not infringe the asserted claims.

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Daniel J. Aneshansley, PhD. The doctrine of equivalents would have been available to
plaintiffs, because the scope of a means-plus-function limitation includes the corresponding
structure plus equivalents. 35 U.S.C. § 112(f); see also Noah Sys., Inc. v. Intuit Inc., 675 F.3d
1302, 1318 (Fed. Cir. 2012). But the court rejected plaintiffs’ equivalents argument as
“implausible, undeveloped, and supported only by inadmissible evidence.” Dkt. 289, at 15.
The court continues to view this argument as particularly weak.
But that was not plaintiffs’ only argument about the construction of “sensor for
sensing.” The patent states that “[t]he sensors for sensing chewing actions are preferably
sound sensors . . . However, other types of sensors could be used.” ’481 patent, at 2:43-46.
The court determined that only sound sensors had been adequately disclosed as
corresponding structures, but that point is not beyond reasonable debate. The court rejected
plaintiffs’ arguments about the scope of the claim, and the related infringement arguments,
but the court concludes that plaintiffs’ arguments were not so weak as to make the case
exceptional.
In connection with the analysis of the “data processor” element, the court determined
that defendant’s system does not detect rumination using any of the algorithms disclosed as
corresponding structures. The critical issue was whether defendant’s system measured the
time of each chew or counted individual chews. As the court explained in its summary
judgment opinion, plaintiffs misunderstood Paul Rump’s testimony: Rump explicitly testified
that the accused system is “never capable of detecting a frequency.” Dkt. 289, at 16 (citing
Dkt. 101 (Rump Dep. 131:13-14)). Plaintiffs’ expert, Dr. Aneshansley, had strong
credentials, but the court was not persuaded by his analysis of the operation of defendant’s
system under the terms of the ’481 patent. The court continues to regard plaintiffs’

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arguments about the “data processor” element as weak ones, but they are not so unusually
weak as to make this case exceptional.
In sum, for the ’481 patent, plaintiffs put up a weak infringement case, predicated on
marginal claim constructions. The court would hope that a patent owner would think twice
about pressing a case like this. But the court must balance the concern for discouraging
unreasonable conduct against the concern that the court not discourage good-faith, even if
ultimately unsuccessful, enforcement efforts. Accordingly, the court concludes that the case
for the ’481 patent was not so beyond the pale that the case is exceptional or that fee-shifting
is warranted.
2. ’149 patent (the estrus patent)
On claim construction of the ’149 patent, the court rejected aspects of both sides’
claim constructions of three terms. The decisive issue was the meaning of the “attenuation”
step. Plaintiffs advocated for a broad definition that would have applied if the accused device
discounted evidence of animal motion whenever there was an indication of eating behavior.
Defendant advocated for a narrower construction. The court did not completely adopt either
side’s construction, but the court concluded that plaintiffs’ construction was foreclosed by
the prosecution history, ultimately adopting a construction closer to defendant’s. Plaintiffs’
infringement case was predicated on Dr. Aneshansley’s catalog of all the ways in which
defendant’s system could be said to “attenuate” data. The court was not persuaded because
Dr. Aneshansley did not show how defendant’s system attenuated the acceleration signal in
response to an increase in the indication of eating, as the claims required. 2

2

The Federal Circuit deemed the court’s claim construction to be partly erroneous because it
included the requirement that the attenuation be in proportion to the strength of the eating
indication. Dkt. 336-1, at 9-10. But the Federal Circuit nevertheless confirmed that the

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Plaintiffs’ infringement case was weak on the critical “attenuating” element. But
plaintiffs’ arguments based on Dr. Aneshansley’s opinions about the various forms of
attenuation that he found were at least arguable. These positions were not so weak that they
demonstrated the kind of irresponsible litigation that should be deterred by fee-shifting.

CONCLUSION
Summary judgment was not a close call. Whether plaintiffs’ case was so weak on the
merits that it was “exceptional” under § 285 is a closer question. But plaintiffs’ case was not
so far outside the norms of patent litigation that it demonstrated irresponsible litigation or
suggested that plaintiffs maintained the suit for some improper purpose. Plaintiffs presented
arguable positions supported by qualified experts. Even if some of plaintiffs’ positions were
weak ones, fee-shifting under the circumstances of this case would discourage aggressive but
good-faith patent enforcement.

ORDER
IT IS ORDERED that defendant Agis Automatisering B.V.’s motion for attorney fees
under 35 U.S.C. § 285, Dkt. 304, is DENIED.
Entered September 27, 2016.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

attenuation must occur when the indication of eating increases.

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