963 F.3d 1371
Fed. Cir.2020Background
- ECT sued ShoppersChoice for infringing independent claim 11 of U.S. Patent No. 9,373,261, which concerns advance delivery/pickup notifications to personal communication devices.
- The district court granted judgment on the pleadings, holding claim 11 patent-ineligible under the Alice two-step test; this judgment was later affirmed on appeal.
- ShoppersChoice moved for attorney fees under 35 U.S.C. § 285, submitting evidence that ECT (formerly Eclipse) used standardized demand letters and repeatedly filed many low-value suits to extract nuisance settlements.
- A separate California district court (True Grit) had awarded fees against ECT and described a pattern of serial nuisance litigation by ECT and related entities.
- The Florida district court denied ShoppersChoice’s fee motion, citing an exceptional-case standard (it referenced the Lanham Act) and finding ECT’s position not obviously weak and its litigation conduct not sufficiently unreasonable.
- The Federal Circuit vacated and remanded, holding the district court abused its discretion by failing adequately to consider ECT’s litigation pattern and the objective weakness of the asserted claim, and instructing the court to apply § 285 on remand.
Issues
| Issue | ShoppersChoice's Argument | ECT's Argument | Held |
|---|---|---|---|
| Whether denial of fees under § 285 was an abuse of discretion | District court ignored evidence of serial nuisance litigation and objective claim weakness; applied wrong statute | Case was not exceptional; ECT’s position not obviously weak; no unreasonable conduct warranting fees | Vacated and remanded — district court abused discretion and must reassess under § 285 |
| Whether the district court failed to consider ECT’s litigation pattern (serial demand letters, many suits) | Pattern shows in terrorem, nuisance-value litigation intended to force settlements | Denied pattern establishes exceptional conduct in this case; district court found no such unreasonable behavior | Court held failure to address pattern was clear error; district court must consider it on remand |
| Whether prior rulings rendered the infringement claim objectively unreasonable | Prior California decisions (McKinley, True Grit) found related claims invalid, showing claim 11 was objectively weak | Those decisions were not controlling; claim viability not “obviously” weak at filing | Court found district court erred by not reconciling these decisions and must evaluate objective unreasonableness on remand |
| Whether the district court applied the correct statutory standard for fees | Fees should be awarded under 35 U.S.C. § 285 (patent cases) | District court cited equitable exceptional-case language and related authority, but invoked 15 U.S.C. § 1117 | Court held § 285 governs; remand should apply § 285 and relevant precedent |
Key Cases Cited
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (clarified exceptional-case §285 standard; totality-of-circumstances inquiry)
- Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208 (established two-step patent-eligibility framework)
- Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559 (fee decisions reviewed for abuse of discretion)
- SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344 (pattern of repeated nuisance suits bears on exceptional-case analysis)
- Rothschild Connected Devices Innovations, LLC v. Guardian Prot. Servs., Inc., 858 F.3d 1383 (failure to consider a party’s litigation conduct can constitute abuse of discretion)
- In re Rembrandt Techs. LP Patent Litig., 899 F.3d 1254 (district court must give a concise, clear explanation for fee rulings)
- AdjustaCam, LLC v. Newegg, Inc., 861 F.3d 1353 (district court must assess totality of circumstances, including patterns of conduct)
- Hensley v. Eckerhart, 461 U.S. 424 (district court must provide clear explanation supporting fee determinations)