Large Audience Display Systems, LLC v. Tennman Productions, LLC
660 F. App'x 966
| Fed. Cir. | 2016

Background

  • LADS (Large Audience Display Systems), owner of U.S. Patent No. 6,669,346, sued Justin Timberlake, Tennman Productions, Britney Spears, and Spears King Pole for alleged infringement based on large-audience cylindrical display systems used on concert tours.
  • The PTO instituted inter partes reexamination after defendants submitted prior art (including printed Olympics materials); the PTO ultimately canceled all claims asserted in the district court.
  • The district court stayed litigation during reexamination, later lifted the stay and dismissed the case with prejudice after the PTO canceled the asserted claims.
  • Appellees moved for attorneys’ fees under 35 U.S.C. § 285 seeking ~$755,000; the district court found the case "exceptional" and awarded the full amount.
  • The district court’s exceptional-case finding relied on several factual conclusions (e.g., LADS was a Texas "shell" to create jurisdiction, claims were frivolous, Olympics prior art was dispositive, LADS acted in bad faith, and LADS disclosed privileged email).
  • The Federal Circuit vacated the fee award and remanded, holding several district-court factual findings were erroneous or unsupported and instructing proper standards for exceptionality and lodestar fee calculation on remand.

Issues

Issue Plaintiff's Argument (LADS) Defendant's Argument (Appellees) Held
Whether the case was "exceptional" under 35 U.S.C. § 285 LADS contended its infringement case was non-frivolous and based on reasonable claim constructions; reexamination cancellation alone doesn’t show exceptionality Appellees argued LADS filed a meritless suit, acted to manufacture venue, prolonged reexamination, and used privileged communications improperly Vacated district court finding: many factual premises (shell corporation, frivolous suit, Olympics art dispositive) were erroneous or unsupported; remand required to reassess totality of circumstances accurately
Whether PTO reexamination result proves frivolousness LADS: PTAB rejections in reexamination do not automatically render a district-court infringement suit frivolous because reexamination uses broadest reasonable construction and lower burden Appellees: cancellation of asserted claims in reexamination shows suit lacked merit Court: Reexamination outcome alone insufficient to demonstrate frivolousness; context and differing standards matter
Whether district court appropriately relied on Olympics prior art and other record facts LADS: Olympics prior art was not the dispositive basis for claim cancellations; record does not show examiner/PTAB relied on it Appellees: prior art submissions were central to invalidating claims Court: Record does not support that the Olympics prior art was dispositive; district court gave undue weight to some inaccurate factual inferences
Proper method for calculating attorneys’ fees if case is exceptional LADS: fee award should be justified by lodestar and reasonable in light of work performed Appellees: their requested amount was reasonable and below typical averages Court: If exceptional, district court must perform lodestar calculation using forum (California) rates absent special justification, scrutinize staffing and specific billing entries, and explain calculations rather than rely on survey averages

Key Cases Cited

  • Octane Fitness v. ICON Health & Fitness, 134 S. Ct. 1749 (2014) (sets the flexible totality-of-circumstances standard for § 285 exceptionality)
  • Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d 479 (Fed. Cir. 2016) (lodestar is the usual method for § 285 fee calculation)
  • Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010) (principles for calculating reasonable attorney’s fees)
  • Highmark Inc. v. AllCare Health Mgmt. Sys., Inc., 572 U.S. 559 (2014) (abuse-of-discretion standard; district court abuses discretion when based on legal error or clearly erroneous factual findings)
  • Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (principle cited on review standard)
  • Blum v. Stenson, 465 U.S. 886 (1984) (lodestar components: reasonable hours × prevailing market rate; consider skill and reputation)
  • Avera v. Sec’y of Health & Human Servs., 515 F.3d 1343 (Fed. Cir. 2008) (use of forum rates for fee calculation)
  • Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340 (Fed. Cir. 2001) (fees may relate to extent of misconduct)
  • Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992) (assessment of relation between misconduct and fee award)
  • J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (2011) (personal jurisdiction principles cited for relevance of plaintiff incorporation location)
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