Site Update Solutions LLC v. Accor North America Inc, 5:11-cv-03306

Background

Site Update Solutions (SUS) sued multiple defendants in the E.D. Texas alleging infringement of RE 40,683 (a reissue of U.S. Patent No. 6,253,198) and repeatedly dismissed many defendants via settlements; Newegg remained and pursued declaratory relief.
The case was transferred to the Northern District of California; the court held a tutorial and Markman hearing and declined to construe several means‑plus‑function terms for lack of definitive disclosed structure, inviting summary judgment motions on indefiniteness.
SUS sought broad constructions for several MPF claim terms, arguing that combinations of a web server, CGI scripts, forms and related elements provided the required structure and (in some positions) constituted a "special purpose computer" obviating the need for an algorithm.
The district court adopted constructions that (1) construed some terms (website database; means for creating/identifying) with linked structures and algorithms, and (2) declined to construe three other MPF terms because of indefiniteness concerns.
Newegg moved for a finding that the case was "exceptional" under 35 U.S.C. § 285 and sought fees; the district court denied under the pre‑Octane standard; the Federal Circuit vacated and remanded after Octane; on remand the district court again denied Newegg’s fee motion under the Octane totality‑of‑circumstances standard.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the case is "exceptional" under 35 U.S.C. § 285 after Octane	SUS argued its claim constructions had legal support and it amended positions after transfer; not objectively baseless	Newegg argued SUS’s claim constructions and litigation conduct were objectively unreasonable and extortionate (settlements for nuisance value)	Not exceptional: under Octane the court found SUS’s positions flawed but not sufficiently frivolous or rare to “stand out”
Whether SUS’s MPF constructions satisfied the requirement to disclose corresponding structure/algorithm	SUS argued CGI/webserver+components were special‑purpose and did not require an algorithm	Newegg argued an algorithm was required (or the claims are indefinite) because general webserver/CGI tools need special programming to perform claimed functions	Court: SUS’s structures lacked necessary disclosed algorithms; SUS misapplied caselaw but the error was not a brazen disregard of law
Whether the Table of Files/Table of Search Engines must be part of the corresponding structure for the "means for creating" claim	SUS contended the Table of Files could be excluded as a user‑configured embodiment and not a necessary corresponding structure	Newegg argued the specification links creation/ modification to the Table of Files and the server algorithm, making them required structure	Court adopted Newegg’s construction including Table of Files and server algorithm, but found SUS’s exclusion argument not so unreasonable as to render the case exceptional
Whether SUS’s settlement pattern and post‑Markman dismissal demonstrate bad faith/extortion warranting fees	SUS said settlements and changing positions reflect litigation dynamics and reasonable settlement conduct	Newegg compared conduct to extortionate patterns (Eon‑Net) and argued settlements at amounts below defense costs show weak claims	Court: settlements raised eyebrows but are common and not enough here to show exceptionality or warrant deterrence via fees

Key Cases Cited

Octane Fitness v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (abandons rigid two‑prong test; exceptionality is a totality‑of‑circumstances, discretionary inquiry)
Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005) (pre‑Octane two‑part test for exceptionality discussed and superseded)
Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (claim construction methodology: intrinsic record foremost)
Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) (claim construction is a question of law for the court)
In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir. 2011) (narrow exception when general‑purpose processors need no additional programming)
Aristocrat Techs. Austl. Pty Ltd. v. Int’l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008) (general‑purpose computer disclosure alone insufficient for MPF structure)
Eon‑Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) (pre‑Octane guidance on using claim‑construction positions in fee analyses; extortionate settlement behavior considered)
Ergo Licensing, LLC v. CareFusion 303, Inc., 673 F.3d 1361 (Fed. Cir. 2012) (MPF/algorithm disclosure principles and indefiniteness)

Disposition: Newegg’s supplemental motion for a declaration of exceptionality and an award of attorney’s fees is denied.