Stone Basket Innovations, LLC v. Cook Medical LLC
892 F.3d 1175
Fed. Cir.2018Background
- Stone Basket Innovations sued Cook Medical for infringement of U.S. Patent No. 6,551,327 (a basket-type stone extraction device). Cook moved to transfer venue and later served invalidity contentions and deposed the inventor.
- Inventor testified at deposition that the added claim element (a sheath movement element in the handle) was "nothing novel." Cook petitioned for inter partes review (IPR); the PTAB instituted review and later cancelled all claims after Stone requested adverse judgment.
- While the IPR was pending, the district litigation was stayed; Stone eventually dismissed the district suit with prejudice. Cook then moved for attorneys’ fees under 35 U.S.C. § 285 and also sought fees under 28 U.S.C. § 1927.
- The district court denied Cook’s § 285 motion, finding the case was not "exceptional" under Octane Fitness and declined to award fees under § 1927; Cook appealed to the Federal Circuit.
- The Federal Circuit affirmed, concluding the district court did not abuse its discretion in (1) finding Stone’s litigating position—though ultimately unsuccessful—was not so weak or unreasonable as to be exceptional, and (2) rejecting Cook’s contention of a pattern of vexatious litigation by Stone.
Issues
| Issue | Plaintiff's Argument (Stone) | Defendant's Argument (Cook) | Held |
|---|---|---|---|
| Whether this case is "exceptional" under 35 U.S.C. § 285 based on substantive weakness of Stone’s claims | Stone: its asserted patent was duly issued and entitled to presumption of validity; its reliance on the patent and prosecution history was reasonable | Cook: Stone’s claims were objectively baseless given inventor admissions and Cook’s prior-art contentions; fees warranted | Court: Affirmed denial of fees—district court did not abuse discretion; Stone’s position not so weak or unreasonable to be exceptional |
| Whether Cook’s invalidity contentions and inventor testimony put Stone on "clear notice" that its claims were meritless | Stone: Cook’s contentions were insufficiently specific; prior art cited had been considered by the PTO; presumption of validity remained reasonable | Cook: Service of invalidity contentions and inventor admissions put Stone on notice and required dismissal or prompt action | Court: Held Cook’s contentions lacked the specific, focused notice required; inventor’s post-issuance statements about one element did not establish invalidity of the claims as a whole |
| Whether Stone’s broader litigation conduct (many cases by entities tied to Stone’s principals) demonstrated a pattern of nuisance suits justifying fees | Stone: it litigated this case on the merits for nearly two years and tested claims before court and PTAB | Cook: pointed to hundreds of related filings and settlement practices to show a pattern of nuisance litigation | Court: Found record insufficient to show the type of systematic settlement-for-nuisance pattern required for an exceptional-case finding; affirmed denial |
| Whether district court abused discretion in denying fees under 28 U.S.C. § 1927 and other relief (e.g., joinder, discovery) | Stone: No unreasonable or dilatory conduct warranting § 1927 fees or additional discovery/joinder | Cook: Attorneys pursued unnecessary litigation and sought discovery/joinder to support fee claims | Court: Affirmed denials—§ 1927 relief depends on same discretionary findings and no abuse of discretion was shown |
Key Cases Cited
- Octane Fitness v. ICON Health & Fitness, 134 S. Ct. 1749 (2014) (sets flexible totality-of-the-circumstances test for § 285 exceptional-case awards)
- Highmark v. Allcare Health Mgmt., 134 S. Ct. 1744 (2014) (standard of review for appellate review of § 285 determinations)
- PowerOasis, Inc. v. T-Mobile USA, 522 F.3d 1299 (Fed. Cir. 2008) (deference to PTO consideration of prior art in litigation contexts)
- Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91 (2011) (presumption of patent validity)
- Newegg Inc. v. SFA Sys., 793 F.3d 1344 (Fed. Cir. 2015) (pattern-of-litigation abuses relevant to § 285 analysis)
- Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306 (Fed. Cir. 2013) (duty to reassess merit of pending infringement claims)
- Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) (example of exceptional-case finding based on systematic settlement demands)