Checkpoint Systems, Inc. v. All-Tag Security S.A., 858 F.3d 1371

Background

Checkpoint sued All-Tag for infringement of U.S. Patent No. 4,876,555 (anti-theft tags); jury found the patent not infringed, invalid, and unenforceable.
The district court declared the case "exceptional" under 35 U.S.C. § 285 and awarded All-Tag about $6.6 million in fees, primarily because Checkpoint’s expert had tested tags made in Switzerland rather than the accused Belgian-made tags and because of alleged inadequate pre-suit investigation and improper motive.
On first appeal, this court affirmed the verdict but reversed the fee award, finding the infringement charge not shown to be in bad faith or objectively baseless; the Supreme Court granted certiorari, vacated, and remanded in light of Octane Fitness and Highmark.
On remand, the district court again awarded fees for the same reasons (expert tested Swiss tags, pre-suit opinions were old, and alleged competitive motivation), rejecting Checkpoint’s defenses that the tested tags were made on the same machines transferred to Belgium and that the case was reasonable.
The Federal Circuit on this appeal held the district court abused its discretion: Checkpoint’s claim was objectively reasonable, there was no evidentiary showing of bad faith or abusive litigation, and reliance on prior opinions, a European verdict, and denied Daubert/JMOL motions supported reasonableness.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether case is "exceptional" under § 285	Checkpoint: suit was brought in good faith on reasonable factual and legal grounds; expert reasonably relied on available information	All-Tag: inadequate pre-suit investigation, expert tested wrong product, suit motivated to harm competitor	Reversed: district court abused discretion; record shows reasonable claim and no bad faith
Whether testing Swiss tags (vs Belgian) made suit objectively baseless	Checkpoint: tags were made on same machines; All-Tag revealed origin pretrial; no fraud or misrepresentation	All-Tag: expert’s tests on non-accused products shows inadequate investigation	Held: testing issue did not make claim unreasonable; district court misapplied law
Whether plaintiff’s motivation (competitive/harassing) supports fees	Checkpoint: enforcing patent rights is proper and presumed in good faith; had counsel opinions and foreign verdict	All-Tag: Checkpoint sued repeatedly, acquired competitors — motive was to preserve market position	Held: motivation to enforce patent not improper; no pattern of harassment shown
Whether denied pretrial motions (Daubert/JMOL) and prior opinions bear on reasonableness	Checkpoint: denials indicate claims were suitable for trial; prior counsel opinions and foreign judgment support reasonableness	All-Tag: timing and age of opinions showed inadequate investigation	Held: denials and prior evidence support objective reasonableness; insufficient to find "exceptional" case

Key Cases Cited

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (clarifies § 285 standard: "exceptional" is totality-of-the-circumstances, less rigid than prior test)
Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014) (appellate review of § 285 is abuse of discretion standard)
Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943 (2010) (presumption that assertion of a duly granted patent is made in good faith; reliance on court denials supports reasonableness)
ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (2010) (denial of summary judgment noninfringement indicates reasonableness to litigate)
SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344 (2015) (repeated filing to force settlements can support exceptional-case finding)
Checkpoint Sys., Inc. v. All-Tag Security S.A., 711 F.3d 1341 (2013) (earlier Federal Circuit opinion reversing initial fee award)
Park-In-Theatres, Inc. v. Perkins, 190 F.2d 137 (9th Cir. 1951) (historical statement of § 285’s purpose to shift fees in cases of unfairness or bad faith)