Highmark, Inc. v. Allcare Health Management Systems, Inc.

(4) one or more communica- creates tion sessions between remote com-

puter personal computer. and the computer may comprise

locator server and the computers,

one or more location

facility may among be distributed one or computers.

more locator server

V. LogMeln’s

The district court found that products multiple

accused use server com-

puters, and that single no one of those

computers performs all of the functions of facility.

the location Order at *6-7. It LogMeln’s

therefore concluded that prod-

ucts could not infringe the '479 construction,

under its claim which re-

quired facility the location be con- single

tained on a computer. Because the ruling

district court’s upon was based construction,

erroneous claim we vacate summary judgment of noninfringe-

ment.

VACATED REMANDED. party

Each shall bear its own costs.

HIGHMARK, INC., Plaintiff-Appellee,

ALLCARE HEALTH MANAGEMENT

SYSTEMS, INC., Defendant-

Appellant.

No. 2011-1219.

United States Court of Appeals,

Federal Circuit.

Aug. Kernick,

Cynthia Smith, E. LLP, Reed PA, Pittsburgh, argued for plaintiff-ap- pellee. With her on the brief were James Martin, C. Kevin S. Katona and Thomas M. Pohl. Dunner,

Donald R. Finnegan, Henderson, Farabow, Dunnerr, Garrett & LLP, DC, Washington, argued for de- fendant-appellant. himWith on the brief Alto, were Erik R. Puknys, of Palo CA. Of counsel on the brief Dan Boyd, S. The Firm, P.C., Dallas, Boyd Law TX. NEWMAN, MAYER, Before DYK, and Judges. Circuit Opinion by for the court filed Circuit Judge DYK. Dissenting part opinion by filed Circuit Judge MAYER.

DYK, Judge. Circuit Management Systems, Allcare Health (“Allcare”) appeals Inc. from order of the United District States Court for the finding Northern District of Texas this exceptional § under 35 U.S.C. awarding attorneys’ fees and costs (a) entering processor into data High said (“Highmark”). Inc. See Highmark, identifying predeter- data each of Mgmt. Sys. Health mark, Allcare Inc. v. Order”), plurality persons; mined Case (“Exceptional Inc. (N.D.Tex.2010). F.Supp.2d (b) entering into one of said data the case court found district memories an identification bank pur Allcare had concluded that because it procedures requiring predetermined claims, assert sued frivolous review; utilization during the legal positions meritless ed (c) entering through input said means its claim litigation, shifted course of symbolic processor into said data data misrepre and made positions, construction tentatively patient symptoms in connection with a motion sentations mode of treat- identifying proposed part, affirm in reverse transfer venue. We and, proposed ment said mode when remand. part, and pre- of treatment includes one of said procedures requiring

determined uti- Background review, in- indicia producing lization thereof; dicative

I (d) therefor preventing payment payment means until said utiliza- said 5,301,105 Patent No. Allcare owns U.S. tion review has been obtained (“the directed to patent”), '105 which is data indicative thereof has been en- “managed systems” health care used to system. tered into said integrate physicians, interconnect facilities, insurance patients, medical care '105 col. 21 11.22-41. Claim 53 institutions, '105 companies, and financial from claim 52 and claims the ad- depends 4-11, particularly Patent col. 1 11. step of some sort of producing ditional In health to utilization review. proposed indicia when the mode of treat- care, “utilization process review” is the services, ancillary ment includes such as determining whether a health insurer by pharmacists, prosthesis providers, den- particular a treatment for approve should tists, patent and the like. '105 col. 2111.43- patent’s In claims patient. general, a Independent col. 14 11. 35-38. determining whether cover a method of 102 recites: necessary partic- utilization review is a managing integrated A method of instance, ular and a recom- whether management system having health care appropriate. treatment is If uti- mended means, and memo- input payment means required, the method lization review ry storage comprising: payment and until prevents authorization (a) storing through input said means the treatment has appropriateness of memory storage personal into said been determined and the treatment has a profile prede- health data for each of approved. been plurality persons; termined of 52, 53, At issue this case are claims (b) storing memory storage into said claim 52 recites: Independent and 102. symptoms and treatment data for predetermined plurality each of a managing comprehensive A method of profiles problems; health system utilizing management health care (c) memories, storing memory storage in said processor, a data data bank re- input identifying means com- criteria for treatments payment means review; utilization prising: quiring (d) memory storage in said storing Highmark summary moved for judg- ment of identifying noninfringement. criteria for treatments re- While Allcare opposed opinions; Highmark’s second motion with quiring respect to claims 52 and it did not oppose the (e) entering system into said informa- regard motion with to claim 102 and for- medical identifying proposed tion mally infringement withdrew the allega- plurality treatment for one of said tions with to that claim. The dis- persons; master, trict court reappointed special (f) identifying whether or not said who recommended that summary judg- proposed requires medical treatment noninfringement ment of of claims 52 and review; utilization granted. 53 be Special Report Master’s (g) preventing system said from ap- and Recommended Decisions on Summary proving payment proposed said Judgment (“Summary Motions Judgment if proposed medical treatment said ”), Report Highmark, Inc. v. Allcare requires medical treatment utilization Inc., Mgmt. Sys., Health No. 4:03-CV- until review such utilization review 1384-Y, (N.D.Tex. slip op. Apr. has been conducted. 2008). The district adopted court the spe- recommendations, cial master’s Amended '105 col: 28 11.8-30. Adopting Order Findings and Recommen- Master, dations of Special Highmark, Inc. II Inc., v. Allcare Mgmt. Sys., Health No. Highmark, Pennsylvania insurance 4:03-CV-1384-Y, 2008 WL 4137959 company, against filed suit Allcare (N.D.Tex. 2, 2008), Sept. and entered final Pennsylvania District of seeking Western judgment of noninfringement in favor of a declaratory judgment noninfringe- Highmark, Amended Final Judgment, ment, invalidity, unenforceability of all Highmark, Inc. v. Allcare Mgmt. Health patent. claims of the '105 After the case (N.D.Tex. Sys., No. 4:03-CV-1384-Y was transferred to the Northern District 2008). Oct. appealed. July Allcare On Texas, Allcare in- counterclaimed for 13, 2009, this court affirmed the district fringement, asserting judgment court’s under Federal Circuit 52, 53, During claims and 102. the course Rule 36 without a written opinion. High case, appointed the district court mark, Inc. v. Allcare Mgmt. Sys., Health special master to resolve issues of claim Inc., (Fed.Cir.2009). 329 Fed.Appx. 280 construction, including various limitations previous the appeal pending While in claims 52 and 102. These claim con- court, Highmark before this moved for an disputes struction are described below. exceptional finding case to special The master issued a claim con- Allcare attorneys’ and an award of fees report, struction Special Report Master’s and expenses under section 285 and for and Recommended Decisions on Claim sanctions against attorneys Allcare’s under (“Claim Construction Construction Re 11 Rule of the Federal Rules of Civil Pro- ”), port Highmark, Inc. v. Allcare Health cedure. Inc., Mgmt. Sys., No. 4:03-CV-1384-Y (N.D.Tex. 20, 2006), record, Dec. reviewing which the district After the the district adopted, Highmark, court Inc. v. exceptional Allcare court found the case and Mgmt. Sys., attorneys Health No. 4:03-CV- Allcare’s had violated Rule 11. (N.D.Tex. 1384-Y, Order, 2007 Exceptional WL 6457158 Mar. Case 706 F.Supp.2d at 2007). 738-39. The court both excep- based its prevailing party.” attorney fees to 11 sanc- finding and the Rule tional case party The court it is that the seek conduct. Once determined tions on the same infringe- party, determining claims for ing prevailing Allcare’s fees is a found frivolous. and 102 were attorneys’ fees under 35 ment of claims whether to award engaged that Allcare found two-step process. § The court also Forest 285 is U.S.C. friv- by asserting a litigation Labs., in misconduct Labs., F.3d Inc. v. Abbott and judicata res based on position (Fed.Cir.2003). First, olous prevail 1327-28 con- shifting its claim estoppel, collateral con by clear and ing party must establish throughout the course position struction “excep that the case is vincing evidence court, the district before proceedings An at 1327. award of fees tional.” Id. to the misrepresentations making and for a against patentee can be made frivo Pennsylvania in con- District of Western claim, inequitable lous conduct before to venue. a motion transfer nection with Office, Patent and Trademark or miscon exceptional under the case finding After during litigation. Beckman Instru duct court entered the district section AB, ments, Inc. v. LKB Produkter awarding Highmark judgment (Fed.Cir.1989). Second, if $4,694,727.40 attorneys’ in fees exceptional, a court the case is deemed $209,626.56 and it also in- expenses, of at must determine whether award power impose sanc- inherent voked its and, so, if torneys’ appropriate fees is $375,400.05 expert tions and awarded Labs., Forest amount of the award. court did expenses. fees and district amount of the attor “[T]he F.3d at 1328. monetary much of the how not determine depends on the extent ney fees [awarded] to each issue. attributable awards were exceptional.” Special is to which the case excep- the district court’s Shortly after OEA, Inc., Devices, Inc. v. judgment awarding finding and tional case (Fed.Cir.2001). attorneys Allcare’s expenses, fees dispute Highmark There is no conflicts the case based on

withdrew from litigation. in this prevailing party We for re- separately moved of interest grounds the various relied on consider To of the Rule sanctions. consideration finding the district court for this case ex- reconsideration, motions for support ceptional. attorneys additional evidence provided representation of Allcare. concerning their filings, the district court Based on these I against the the Rule 11 sanctions

vacated is whether All- The central issue After the court vacated attorneys. against care’s counterclaims sanctions, Allcare moved to re- attorney It is estab Highmark were frivolous. finding consider the 285 that lished law under section absent fees, awarding attorneys’ or judgment litigation in the course of the misconduct trial grant a new the alternative sanctions be securing patent, or in hearing. This motion evidentiary hold an only if patentee the two imposed against timely appealed. We was denied. Allcare (1) are satisfied: the liti separate criteria to 28 jurisdiction pursuant have U.S.C. faith, subjective 1295(a). brought in bad gation is § (2) objectively is base litigation and Discussion Mfg., Inc. v. Dutailier less. Brooks Furniture (Fed. Inc., 1378, 1381 'l, F.3d 285, Int 393 § a “court in Under 35 U.S.C. Cir.2005). that the liti- requirement The reasonable exceptional cases award

1309 subjective objectively prong inqui- baseless “does not known as the gation be objective/subjective [party] ry. of mind of the This same stan- depend on the state commenced, applies patentees asserting action was dard for both at the time the but objective infringement alleged assessment of claims of requires infring- rather an objec- defending against at “To be ers claims of infringe- the merits.” Id. 1382. baseless, iLOR, allega- tively ment. See 631 F.3d at 1377.

tions must be such that no reasonable recently We have clarified that reasonably litigant expect could success on objective prong “the threshold ... is a the merits.” Dominant Semiconductors question underlying of law based on mixed GmbH, Sdn. Bhd. v. OSRAM questions subject of law and fact and is (Fed.Cir.2008) (internal 1254, quota- 1260 de novo review.” Peripheral Bard Vascu omitted). tion marks lar, Assocs., Inc., Inc. v. W.L. Gore &

Furthermore, 1003, (Fed.Cir.2012); even if the claim is F.3d 1004-06 see baseless, U.S.A., Inc., it must be shown that also Powell v. Home Depot (Fed.Cir.2011). 1221, objective lack of foundation for the claim 663 F.3d That either known or obvious that it by “was so determination must be made the court by party by should have been known” as a matter of than jury. law rather Tech., asserting the claim. In re Seagate We review the court’s determination of LLC, 1360, (Fed.Cir.2007); objective F.3d reasonableness without deference iLOR, Google, Bard, also question see LLC 631 since is a of law. (Fed.Cir.2011). 1372, This at is F.3d 1004-06.1 With to the sub- First, Pierce, urges wrongly Supreme 1. The that Bard recog- dissent was in Court holding decided potential that de novo review was nized that where there is for a "sub- Bard, objective required. explained As [monetary] liability pro- stantial amount of objec decision,” reasonableness test was based on the by Judge's duced the District more prong litigation tive of the standard sham by appellate "intensive[ ]" review the court is explained 563, Real Estate Inves necessary. 487 U.S. at 108 S.Ct. 2541. Professional tors, Industries, Inc., Inc. v. Columbia Pictures Because the median award in EAJAcases was 49, 1920, 508 U.S. 113 S.Ct. 123 L.Ed.2d 611 $3,000, ap- less than deferential review was (1993). Supreme Court in 285, however, propriate. Under Professional section objective Real Estate held that reasonableness routinely award of fees is in the millions in this context is an issue decided the court here, supporting dollars as it is thus de novo 63, as a matter of law. 508 U.S. at 113 S.Ct. Pierce, review. Also in the Court noted that language "sug- of the EAJA statute itself gests some deference to the district court urges treating The dissent nonetheless upon appeal,” recognizes deferential re- objective question reasonableness as a of law agency view where awards fees. Id. at is inconsistent with Cooter & Gell v. Hartmarx 559, 108 S.Ct. 2541. Corp., 496 U.S. 110 S.Ct. Second, both (1990), Underwood, while Rule 11 section 285 L.Ed.2d 359 and Pierce v. subjective objective have compo- both 487 U.S. 108 S.Ct. 101 L.Ed.2d nents, easily separated (1988). Rule 11 review is not appeals These cases held that components separate into these as is the stan- apply courts must deferential standards of Cooter, dard under section 285. See 496 U.S. review to district court Rule 11 sanctions and 401-02, 110 S.Ct. 2447. Because Equal deferen- determinations under the Access to Jus- ("EAJA”) particularly appropriate tial review is litigation position tice Act as to determination, id., subjective "substantially justified.” see a defer- Rule 11 and materially ential standard for the whole of Rule EAJA are different from section 11 is Supreme required. and the Court in Cooter and Under Brooks Furniture stan- dard, distinguishing inquiry easily Pierce identified relevant fac- where the section 285 objective subjective compo- tors. divided into 1310 Rather, Br. 41. That is not correct. the a presumption “there is prong,

jective duly- objective requires retrospective a infringement prong of a of an assertion good faith.” merits of the entire is made assessment the granted Inc. v. BrainLAB “based on the record Navigation, litigation determined Medtronic GmbH, Computersysteme ultimately infringement pro Medizinische made in the (Fed.Cir.2010). Thus, 943, (direct Bard, F.3d 954 603 682 F.3d at 1008 ceedings.” Furniture subjective prong of Brooks the in the ing the district court to determine clear and con established with must be instance, on the record ulti first “based iLOR, 1377; F.3d at evidence.2 631 vincing infringement proceed in the mately made Medtronic, 603 F.3d at 954. We also see litigant a could ings, whether reasonable subjective findings as to bad review factual realistically expect to suc positions] [its Labs., Forest faith for clear error. See (internal omitted)); quotation marks ceed” Powell, at 1328; see 663 F.3d F.3d at also iLOR, 1378; Seagate, 631 F.3d at objective is (stating prong at 1371 the by developed the record “determined II The infringement proceeding”). ques the whether, record, in light tion is of that “no contends Highmark litigant realistically reasonable could ex objective reasonable Brooks Furniture pect success on the merits.” Real only to applies ness standard Prof'l Investors, Inc. v. Pic Estate Columbia infringement coun filing the initial Indus., Inc., 49, 60, determining tures U.S. apply and does not terclaim (1993). S.Ct. 123 L.Ed.2d 611 The litigation continued whether Allcare’s objective single Appellee’s prong claims was frivolous. is backwards-look- baseless nents, only subjective prong is reviewed court because it is best situated to achieve goals) under a deferential standard. present these are not here. See Fed. Third, inquiries under Rule 11 advisory R.Civ.P. 11 committee’s note to 1993 existing EAJAlook to the at the time situation ("[T]he purpose amendments of Rule sanc- particular representation claim or was compen- to deter than to tions is rather made, analyzing only pres- the facts and law ...”). purpose sate. The of section un- ent at that time determine whether the claim like that of Rule is not to control the local representation justified. inqui- or Such litigation practices' bar's district —which necessarily ries are fact intensive. On the positioned to observe—but is court is better hand, below, explained inquiry other as purpose compensating remedial and for the objective prong under of BroolcsFurniture party prevailing for the costs it incurred retrospective of the merits of assessment prosecution in the or defense of a case where litigation rely the entire and does not on the unjust, grossly on the it would be based base- present particular facts at a time and is litigation lessness of the suit or because of ultimately on the "based record made in the misconduct, require it to bear Patent Office Bard, infringement proceedings.” 682 F.3d Dunham’s, its own costs. See Badalamenti 1008; Seagate, see also 497 F.3d at 1371 (Fed.Cir.1990); 896 F.2d (stating objective prong that the is "deter- Co., Co., Soya & Cent. Inc. v. Geo. A. Hormel by developed mined the record in- in the (Fed.Cir.1983). words, fringement proceeding”). In other objective reasonableness determination does noted, subjective Seagate 2. As under require finding. question not fact is sim- prong, infringement, "to establish willful ply pro- whether the record established in the convincing patentee must show clear argument ceeding supports a reasonable as to infringer despite evidence that the acted the facts and law. high likelihood that its actions Finally, policy goals sanctioning patent.” a valid constituted deterring poor litigation practices present in added). (which (emphasis suggest F.3d at 1371 Cooter deference to the district

13H ing inquiry into the reasonableness of the separately treat the finding infringe- that in full light claims record. See ment claim based on claim 102 rendered iLOR, (citing F.3d at 1377-78 Brooks the case and the finding that 1382). Furniture, 393 F.3d at infringement claim based on claim 52 rendered the case exceptional. See Carter Similarly, in considering party’s Inc., v. ALK Holdings, 1319, 605 F.3d subjective mind, state of we “to are take (Fed.Cir.2010) 1323-26 (addressing sepa- totality into account the of circumstances.” rately whether each of three counts assert- AB, Corp. Mach. Am. v. Gullfiber frivolous). by plaintiff ed (Fed.Cir.1985); Labs., F.2d Forest 339 F.3d at (considering the record as A determining

a whole in paten whether the infringement tee maintained its counter The district court that All- found faith). claim in objective bad Unlike the care’s claim litigation prong, single retrospective which is a look warranted an exceptional case finding. litigation, subjective entire agree. We may prong suggest initially that a case Claim 102

brought good in faith is directed to be continued in meth “[a] od of managing faith depending developments integrated bad on dur health care ing discovery management system.” Comput otherwise. See '105 col. 28 Dell, Inc., Docking Corp. key er 8-9. The question Station (Fed.Cir.2008). 1366, 1380 claim 102 was preamble whether the term “integrated health care management sys However, apply objec we and, so, tem” was a claim limitation if tive/subjective standard on a claim required whether it patient and employer Med., claim basis. ICU Inc. v. Alaris interaction. appeal, On Allcare contends Sys., Med. 558 F.3d 1379-81 that it was not unreasonable argue (Fed.Cir.2009) (affirming the district preamble or, limiting was not if limit patentee’s court’s determination that ing, that require patient did not only assertion of one claim was employer interaction. faith); brought baseless and in bad see Spears, also Mathis v. preamble 857 F.2d clearly of claim 102 falls (Fed.Cir.1988). Because the rationale for within those preamble cases where the awarding against patentee fees for the limiting held to be because the “limita- filing of frivolous claims is “to body reimburse tions rely of the claim upon alleged infringer for defending an ac and derive antecedent basis from the tion improperly brought,” Corp., Mach. preamble.” Corp. Eaton v. Rockwell Int’l 774 F.2d at Corp., (Fed.Cir.2003). these situations attor neys’ Here, only fees can be shifted insofar as sys- 102’s recitation of “said Mathis, frivolous, (e) each claim is found see tem” in elements (g) only can (awarding attorneys’ 857 F.2d at 761 fees derive its antecedent basis from the “inte- only claims); for the frivolous grated see also health management system” care Beckman, (holding 892 F.2d at 1554 preamble. from the It is also clear from party prevails when “one on some claims specification an “integrated party prevails issue while the other management system” on health care required claims, other this fact should be taken into patient employer interaction in addi- determining account when the amount of tion to the participation of the health care 285”). Thus, § fees under here we will provider patent specifi- and insurer. The (i.e., system “integrates that the specified that stating by explicitly begins cation includes) medical care facil- managed physicians, to health ... relates invention “[t]his integrate physi- ities, companies patients, ... which insurance systems care and/or facilities, in- patients, cians, payers, employers care care and medical other health other health companies surance other financial institutions.” banks and/or and/or and bank employers payers, care at 43- Report, slip op. and/or Claim Construction patent '105 institutions.” added). other financial thus con- (emphases Allcare goes on specification 1-11. The col. 11. care integrated that an health templated embodi- preferred explain to that “[t]he in- system required somehow management includes the present invention ment of the patients employers. with teraction interac- integrated interconnection now, ar- plausible Allcare offers no Even provider, care patient, the health tion of not guments preamble that the should institution, financial utiliza- or other bank that it did not re- limiting have been manager employ- tion reviewer/case employer interaction. quire patient and (emphasis col. 1 11.54-58 patent er.” '105 plausible argument There was also no added). in prior art distinguishing In the in- Highmark’s that method involved invention, speci- of the background patients terconnection and interaction pay- explains previous that fication also by claim employers required as was “included inte- systems have not ment expert 102. Allcare’s even conceded as by participation gration the active All- during deposition. J.A. 22885.3 much pa- or inclusion of a patient’s employer argued Highmark’s not even that care has cash balances.” '105 tient’s own available Thus, interaction. method included such added). (emphasis 1 11.44^17 patent col. infringement respect Allcare’s claims with “pro- to was thus intended The invention to claim 102 were unreason- of each of the afore- integration full vide[ ] able. col. 1 patent activities.” '105 mentioned Moreover, objects one of the 11.50-51. argues on its appeal Allcare also provide integrated “to the invention is infringement allegations with system including management health care claim 102 do not warrant an patients’ participation interactive they not finding case because were col. 2 employers and banks.” '105 subjective faith. A claim is brought bad 11-14. 11. objec- subjective faith if the brought bad tive unreasonableness “was early in the ease in a agreed

Allcare known or so obvious that it should either statement Joint Claim Construction patentee. have been known” See limiting. claim 102 preamble clearly at That is (“The Seagate, 497 F.3d 1371. parties agree also See J.A. 5665 have so here. Allcare knew or should preamble ‘integrated term health care allegation known that its system’ as a management is construed ”). unreasonable, Indeed, 102 was and this is Allcare’s of claim claim limitation.... acted in not a situation in which Allcare proposed preamble own construction of the Q. Q. [i.e., any between the employee/member Is there interaction How does the employer employee/member and the High- patient] the bank in the interact with system? Highmark's system? mark employer between A. —interaction employee the information A. The —from High- employer in the employee and the read, employee appear that I does not opinion system, my my mark based on — with the to interact bank.... my report no. without (“A litigation, good inception faith at be deemed developments later acted in exceptional but because of when there has been some ma- continuing litigation. faith in the inappropriate bad terial conduct related to the litigation, matter in ... such as conduct sure, To be even where in ”). that violates Fed.R.Civ.P. 11.... But fringement allegations objectively are un the absence of Rule 11 sanctions does not reasonable, patentee may have reason to opposite mandate the conclusion. Allcare allegations supportable that its are believe also contends that brought new evidence negate finding so as to of bad faith.4 up during the reconsideration of Rule 11 here, But Allcare has made no such show sanctions mandates reversal of the excep- in ing any point litigation. the Allcare However, tional finding. case the addi- only survey points to of health care tional evidence relied on the district management organizations insurance vacating court in the Rule sanctions had their medical regarding authorization and no bearing interpretation on the of claim systems payment performed by claims 102 or Allcare’s knowledge of whether Surveys, Inc. Seaport (“Seaport”) to dem Highmark’s systems were infringing. The that it onstrate had reason to believe its district court thus clearly did not err in infringement allegations respect with concluding that allegations Allcare’s of in- Allcare, claim 102 supportable. were how fringement of claim 102 warranted an ex- ever, survey never demonstrated how ceptional finding. case (or record) anything supported else position respect its claim construction with B survey

to claim 102. The also did not Highmark infringing show that was under reach We a different conclusion correct construction. The dis infringement the claim 52 clearly trict court did not err in concluding claims because we conclude that Allcare’s allegations Allcare’s claim 102 were position was not unreasonable. brought subjective bad faith. Highmark’s theory is that it did not in (c) fringe because it did not satisfy element argues Allcare also (c) of claim 52. Element requires “enter vacating against district court’s sanctions ing symbolic ... patient symptoms data attorneys Allcare’s is inconsistent with the tentatively for identifying a finding proposed district court’s mode of treatment....” against patent Allcare. This is incorrect. A lack '105 col. 21 11. of sanctions 31-34. It not against attorneys disputed is not in was that this limi ground itself a barring patent’s for sanctions tation covered the preferred em against against a client. Rule 11 sanctions parties bodiment —what the refer to as a an attorney may form a for an excep “diagnostic system” basis smart auto —which Furniture, finding. tional case See Brooks matically generates a list of recommended Thus, 4. example, adequate pre-filing inquiry, the section 285 failure to conduct an investigation may negate a claim of bad faith. adequate pre-filing investigation, in some cir The district court here found that Allcare did cumstances, independently supports an award adequate prefiling investiga- not conduct an attorneys' fees under Rule 11. See Hoff tion. Since we have concluded that Allcare mann-La Roche Inc. v. Invamed engaged inception— bad faith from the (Fed.Cir.2000). Here, because it knew or should have known that district court did not sanction Allcare under allegation of claim 102 adequate Rule 11 for its failure to conduct an pre- was frivolous—we need not examine the pre-filing investigation. Furthermore, filing investigation. apart from appropriate treatment as “the most symptoms as well patient on the based

treatments 11. 61-65. patent '105 col. 9 protocols.” J.A. providers. healthcare by the reported system this lim- states specification whether The question 11584. a list of the most physician only “prepare[] met where will also itation was pro- gen- ... likely [and] medical condition symptoms enters both done in treatment as recommended erally approved posed diagnosis and/or “request- to as a tradi- it is system, protocols” referred when treatment Highmark’s system,” system. smart '105 col. 6 “utilization review ed” from the tional automatically not referred to i.e., does This is what has been system a which 64-67. The district options. “diagnostic system.” smart treatment as the generate not, and we af- it did found court also discloses an specification But the firmed. where, entering in addition to embodiment exceptional case court’s data, The district diagnosis physi- symptom “[t]he claim 52 centered respect to finding with Sys- enters into the cian or staff member for its claim lack of basis Allcare’s on pattern identifying proposed tem data position Allcare’s position. construction '105 col. 10 11.3-5. patent of treatment.” systems where covered that claim 52 Thereafter, was compares the System “the sym- both the “data entered physician ... pattern of treatment with proposed “pro- symptoms” and patient of bolic protocols and recommended treatment treatment,” system and the of posed mode any problem an of dif- provides indication automatically propose a treatment. not did patent '105 col. 10 5-8. ferences.” ... language “entering the claim While Thus, a recognized, master special as the for symptoms ten- symbolic patient of data can made “with or without diagnosis be mode of identifying proposed a tatively sys- diagnostic assistance of the smart construction ulti- favors the treatment” tem,” can be the one to physician and the court, it the district mately adopted by system identifying into the data “enter[] construction. Allcare’s does not foreclose proposed treatment.” Claim Con- slip op. at 3. Report, struction Corp., 415 Phillips v. AWH Under (en (Fed.Cir.2005) banc), 1303, ultimately agreed with district We F.3d 52, language court that the of specification. to the must also look we (c) ... (“entering element specification particularly in the support There was for ten- symbolic patient symptoms to the data respect position. Allcare’s With treatments, tatively identifying proposed a mode of entry symptoms and treatment”), not cover the embodiment essentially two em did discloses specification embodiment, physician symptoms entered the where preferred bodiments. In the But it entry proposed and the treatment. facilitates “the physician first argue for Allcare to can assist in not unreasonable or other data which symptoms language encompassed ... of the claim identifying making diagnosis Allcare not '105 both embodiments. While protocols.” treatment recommended pointed specification to the as an system then have col. 9 11.58-60. theory, support of its this patient symp argument the observed “correlates] of claim 52 was identify theory scope as to the so as to toms and test results held repeatedly by Allcare.5 As we problem,” argued likely most causes of the health 519, Escondido, prop- (holding has been that where issue City 503 U.S. 5. See Yeev. (1992) appeal “parties are not erly presented, on 112 S.Ct. 118 L.Ed.2d iLOR, (“When “simply being wrong about claim 547 n. 4 making a section 285 subject award, subjective fee party construction should not considerations of bad faith are irrelevant if the challenged sanctions where the construction is not claims objectively baseless.”); defenses are not objectively baseless.” 631 F.3d at 1380. Investors, see also This is not case where the claim lan- Real Estate Prof'l U.S. at (“Only 113 S.Ct. 1920 if chal subject guage was not to an alternate con- lenged litigation, meritless specification struction or where “the may a court litigant’s subjec examine the prosecution history clearly pat- refute [the motivation.”). tive We therefore reverse proposed claim entee’s] construction.” the district court’s conclusion that Allcare’s MarcTec, Johnson, LLC Johnson & allegations sup of claim 52 (Fed.Cir.2012). Allcare’s ar- port an finding.6 gument to this element was not unreasonable that “so no reasonable Ill litigant could believe would succeed.” Quite apart from frivolity iLOR, See 631 F.3d at 1378. alleged claims, of the infringement an ex party The burden was on the ceptional finding case can sup also be seeking (Highmark) sanctions to establish ported by litigation MarcTec, misconduct. that under this alternative claim construc (“[I]t 664 F.3d at 919 is well-established tion, allegations infringement were litigation that ‘unprofes misconduct and objectively unreasonable. There was no may suffice, sional by themselves, behavior showing by Highmark that it would not ” to exceptional § make a case under 285.’ infringe under an alternate construction of (quoting Rambus Inc. v. Techs. Infineon system claim 52 covering where the AG, (Fed.Cir.2003))); 318 F.3d 1106 physician proposed enters the treatment. Furniture, (“A Brooks 393 F.3d at 1381 Because we conclude Allcare’s alle- case exceptional be deemed when gations of claim 52 were there ... has been misconduct during liti- baseless, objectively not we need not reach ... gation, conduct that violates Fed. question infractions.”). of whether Allcare acted in R.Civ.P. or like “Litiga- subjective bad faith. See Old Reliable tion misconduct generally involves unethi- Wholesale, Corp., Inc. v. Cornell 635 cal unprofessional F.3d conduct a party or precise arguments they limited to the infringe- made be a most unusual case in which the below”); Express, Interactive Inc. v. objectively ment case was reasonable but the Gift Inc., (Fed. Compuserve pre-filing investigation was unreasonable. Cir.2001) (holding although party a can finding We need not decide whether such change scope not of its claim construc respect prefiling investigation to the appeal, precluded tion on it is not “from support exceptional could ever an case find- proffering supporting argu additional or new ing finding because the district court made no ments, record, based on evidence of for its of a Rule respect 11 violation with to Allcare construction”). opposed attorneys, as to its and the Rule 11 violation found with to the Allcare Highmark appears argue excep- to that an attorneys was vacated. As we read the dis- finding justified tional case here because opinion, trict court sanctions here were based adequate pre-filing Allcare failed to make an finding on a that Allcare’s claim construction investigation required by as Rule 11. Our frivolous, any was and were not based on always cases have not been clear as to wheth- finding investigate that Allcare adequate pre-filing failed er failure to make an investigation support proposed under whether Rule 11 can under its claim construc- finding Highmark infringed. when the Brooks Fur- tion satisfied, niture test has not been and it would party cannot be sanc- adjudi- section 285 the course of der during attorneys

his making arguments frivolous tioned for and includes advanc- proceedings,” cative litigation if the during the course of the course during arguments ing frivolous objectively not themselves were arguments prolonging or otherwise litigation Reliable, they the time were made. unreasonable at faith. Old in bad See litigation Spine, Inc. v. Medtronic DePuy 549; Docking Sta- Computer F.3d Sofamor (Fed.Cir. Danek, Inc., F.3d finding A at 1379. Corp., 519 F.3d tion 2009) ulti- (“Although the district court litigation miscon- on exceptionality based underlying that the sub- mately concluded however, support not duct, usually does merit,’ defense ‘lacks stance. of Medtronic’s See Beck attorneys’ fees. full award of indication, finding, much less a Instead, there is no the fee man, at 1553-54. F.2d baseless, arguments were that Medtronic’s to the some relation “must bear award Devices, frivolous, primarily or intended to mislead misconduct,” Special extent ultimately defense jury. Although Corp. v. (quoting Read 269 F.3d at 1344 (Fed.Cir. failed, should not have been Medtronic Portee, it....”). merely raising sanctioned 1992)), party for the compensate particular argu- whether a mis We determine the[ ] to counteract legal' effort “extra Beckman, unreasonable without conduct,” ment 892 F.2d at 1553. to the district court’s determina- deference Here, determining in addition Bard, 682 F.3d at 1004-06.7 tion. See infringement allegations Allcare’s overall frivolous, the district court found the were This issue arises from the follow primary on three exceptional based case initiating Before suit ing circumstances. misconduct: alleged litigation of instances Allcare against Highmark, filed suit (1) on asserting position a frivolous based Blue against Trigon, a Blue Cross Shield (2) estoppel; and collateral judicata res Highmark, in the provider insurance like position construction shifting the claim Virginia, asserting District of also Eastern proceedings of the throughout the course patent. part '105 As various claims of the (3) court; making and before the district action, Trigon the court issued rul to the Western District misrepresentations ings construing disputed some of the claim with a mo- Pennsylvania of in connection limitations, 52, in a man primarily claim of tion to transfer venue. None these answering In ner favorable to Allcare. this case ex- actions is sufficient to make complaint, Allcare contended Highmark’s section ceptional under 285. on the Blue Blue Shield that based Cross Tri relationship Highmark between

A Highmark’s knowledge and based on gon, action, participation Trigon All- in the first whether of and We consider by principles was bound under of engaged litigation Highmark care misconduct judicata estoppel In and collateral making arguments. frivolous evaluat res rulings in that action. All- frivolity particular arguments of district court’s ing the theory represen “virtual litigation, care’s was one of during made the course of the However, Allcare met-and- to be at tation.” after arguments must be shown Thus, and learned that Highmark un- conferred with objectively unreasonable. least Cooter, 496 U.S. at relying dard of review from instead of on section 285 If S.Ct. 2447. But here the district court imposed sanctions for frivolous district court Rule 11 standards apply we vacated sanctions under arguments under Rule would only imposed under section 285. stan- them Rule 11 standards and the deferential B only relationship a limited be- there was Trigon, Allcare Highmark tween Highmark argues also that All- argument. promptly withdrew “shifting care’s claim construction” with 52(c) respect to element was improper and Although Supreme Court later “dis warrants an preclusion by finding. All- approve[d] the doctrine of ” originally proposed care following v. representation,’ Taylor Stur ‘virtual (under 880, 885, key construction for the two gell, 128 S.Ct. 558 U.S. scored) 52(c): (2008), elements of element L.Ed.2d 155 at the time Allcare wholly asserted the defense was not symbolic symptoms Data tenta- rep merit. The doctrine of virtual without tively identifying: “any information, “equitable resentation was and fact-inten otherwise, coded or reflecting patient’s nature, sive” in with “no clear test for health, condition, reason for visit or e.g., determining applicability the doc- symptoms, data, test results other Schoemehl, Tyus trine.” v. diagnosis that is relevant to and treat- (8th Cir.1996). Indeed, the doctrine provider, ment a care including but widely applica- was unsettled and varied not limited to ICD disease codes.” circuit. Compare tion from circuit to id. at Tentatively identifying proposed mode (describing 455-56 a seven-factor test for process treatment: “the act or finding representation), Klugh virtual determining the treatment appro- that is (4th States, United priate, subject to later amendment or Cir.1987) (holding party that a is “a virtual confirmation.” representative” only party if the ac- J.A. 11953-54. Allcare later combined the nonparties countable to the who file subse- key two proposed elements and that ele- quent approval suit and has “the tacit 52(c) ment be construed as behalf). nonparties’ the court” act on the relationship Due to the and similarities one or more items of repre- information Highmark Trigon, High- between and and of a sign sentative of disorder or disease knowledge participation mark’s of and in toward, awith view as concerns or cor- action, Trigon Allcare had at least to, responding provisionally putting support some for its initial contention that forth a suggested method of applica- Trigon representative was virtual of tion of remedies or therapies patient to a Thus, Highmark. it was not injury. for a disease or initially unreasonable for Allcare to assert again adjusted J.A. 11954. Allcare pro- its legal argument. this When Allcare re- posed claim construction to Highmark regard- ceived information from expressed symbolic information in a ing relationship High- the limited between representative manner pertaining to the Trigon mark Highmark’s and limited evidence of disease or changes in the action, in Trigon involvement thus physical patient, condition of a awith it leading Allcare to believe would be un- toward, view as concerns or correspond- in preclusion argument, successful its it to, ing provisionally putting sug- forth promptly it. prop- withdrew This is not a gested application method of the of rem- finding exceptional er basis for the case therapies edies or a patient to for a under section 285. The district court injury. disease or clearly by finding erred that Allcare’s brief added). position assertion of this warrants an ex- (emphasis Finally, J.A. 11954 All- ceptional finding. case care redrafted its construction of “tenta- in Pennsylvania con- mode of Western District proposed identifying

tively (ie., non- a motion to transfer venue “provisionally to nection be treatment” recognizing suggested naming or Af- finally) finding. an supported (empha- treatment.” J.A. method of in the Highmark ter initiated suit Western added). sis Pennsylvania, sought Allcare District of the Northern District transfer the case to proposed in the linguistic shifts

These personal jurisdic- insufficient to con- are of Texas. The issue was claim construction excep- an misconduct and litigation that Allcare Highmark stitute tion. contended finding. The constructions tional case Pennsylvania contacts with had sufficient in Allcare do not differ sub- proffered jurisdiction part based in on a personal it was Each stance. demonstrated survey potential it commissioned to locate not that the claims were position Allcare’s survey calls to infringers, which led to systems and diagnostic smart limited to ar- companies Pennsylvania. in Allcare “cause-and-effect” rela- that there was no gued that this was not a sufficient “con- entering symptoms tionship between jurisdiction. purposes personal tact” for the automatic identification survey not Allcare contended that the position point Allcare’s on this treatment. a contact Allcare “did not such because cite Highmark does not changed. never in Seaport control the manner which Sur- position that authority support its any contractor, veys, independent went in claim construc- word variations minor surveys.” Excep- completing about the substance of the positions, tion where Order, F.Supp.2d at 734 tional Case are change, does not claim construction (internal omitted). All- quotation marks also note that some of sanctionable. We care also contended that it “did not control claim construc- Allcare’s resubmissions Surveys Seaport how carried out its sur- arguments to the district positions tion veys, companies nor what did dictate en were the result of this court’s court finding In Seaport opted upon.” to call Id. Phillips, which issued banc decision exceptional, this case the district court issues were while the construction misrep- found that these statements were Indeed, court. pending before district because, although no Allcare resentations that new claim Highmark itself conceded participated in the actual sur- employees Phillips were light construction briefs and, calls, in- vey participated “Allcare benefit the district desirable would deed, every aspect controlled other Striking court. See Order Claim-Con- survey.” designing Id. This included Filings, Related Di- struction Motion and questionnaire, providing supple- initial a recting an Amended Claim-Construction effectively con- questionnaire, mental Motion, Related Fil- Rendering Moot trolling companies which were to be inter- Motions, Inc. v. All ings Highmark, Thus, court found viewed. the district Inc., Mgmt. Sys., No. 4:03- care Health representations to the West- (N.D.Tex. 12, 2005), Allcare’s Aug. ECF CV-1384-Y to its Pennsylvania ern District of related clearly Again, No. 282. the district court to transfer were “at best obfuscato- that Allcare’s minor motion finding erred an of zealous support ry in claim construction bounds changes [ ] strain[ed] finding advocacy.” under section 285. at exceptional case Id.

C in finding The court erred district exceptional repre based on these the case Finally, court found the district by the recognized As district before the sentations. misrepresentations made

1319 vacating against Rule sanctions court PART, AFFIRMED IN REVERSED attorneys, any “if court were to issue PART, IN AND REMANDED motion, it based on the [transfer] sanctions Costs appropriate for the

would be most West Pennsylvania District of to do so.” ern No costs. Reconsidering and

Opinion and Order Va Sanctions, MAYER, cating Highmark, Judge, dissenting-in- Inc. v. All Circuit Inc., part. Mgmt. Sys., care Health (N.D.Tex.2010).

F.Supp.2d 671-72 says The court errs when it that no Indeed, a generally court should sanction deference is owed to a district court’s find- beyond occurring “conduct in trial ing that the claims asserted [only] party engages when bad-faith litigant at trial were un- conduct which is in direct defiance (‘We reasonable. See Ante review Maxxam, sanctioning court.” FDIC v. court’s determination of [district] ob- (5th (in Cir.2008) jective reasonableness without deference omitted); quotation ternal marks see also law.”). a question since When NASCO, Inc., 32, 57, Chambers U.S. reviewing exceptional an case determina- (1991). 115 L.Ed.2d 27 S.Ct. § tion under 35 U.S.C. reasonableness justification district court offered no finding is a of fact which be set aside sanctioning for conduct before different only for clear error. See Eon-Net LP v. appeal, Highmark tribunal. On likewise Flagstar Bancorp, 653 F.3d authority offered no for the issuance of (Fed.Cir.2011) (“When reviewing excep- an solely sanctions for conduct that occurs finding error, tional case for clear we are Thus, another sup before tribunal. these mindful that the district court has lived posed misrepresentations support do not with the lawyers case and the for an ex- finding. case period. tended Having only the briefs and record, cold appear- and with counsel

ing only before period us short time, position we are not in the to second- We therefore affirm the district court’s guess judgment.”). the trial court’s Ap- finding allegations that Allcare’s of in- plying highly this deferential standard of fringement of claim 102 rendered the case review, there is no basis for overturning exceptional under section 285 and reverse the trial court’s determination that in- finding the district court’s that Allcare’s fringement brought by counterclaims All- supported other claims and actions an ex- Management Systems, care Health Inc. ceptional finding. Because the dis- (“Allcare”) against Highmark, (“High- Inc. trict court did not determine the amount of mark”) were frivolous. I would affirm the attorneys’ apportionable fees to each of the attorney district court’s award of fees and issues, necessary. a remand is above See expenses entirety. in its Inc., Textron, 1172, v. Molins PLC 48 F.3d (Fed.Cir.1995) (remanding 1186 for a cal- I. attorneys’ culation of fees based on the partial underpin- court’s reversal of the Congress this court in created 1982with nings exceptional finding). goal promoting greater uniformity of the case We of interpretation remand this case to the district court for a in the application of the attorneys’ calculation of on patent fees based nation’s laws. See Markman v. Instruments, Inc., frivolity allegations only. 370, of the claim 102 Westview 517 U.S. 1320 (1996) 1384, 134

390, requiring L.Ed.2d 577 them to three more persuade 116 S.Ct. of Appeals appellate created the Court at the (“Congress judges requiring level is much.”). for the Federal Circuit as exclusive too cases, observing for patent court appellate during litigation Absent misconduct uniformity strength would that increased securing patent, a when sanctions under system in States such en the United only section 285 be awarded if a two- technological growth way a as to foster (1) test is prong litigation satisfied: is (citations industrial innovation.” (2) subjective faith; brought bad omitted)). quotation internal marks The is Reliable baseless. Old have vested exclu fact that we been Wholesale, Inc. Corp., v. 635 F.3d Cornell jurisdiction in patent cases appellate sive (Fed.Cir.2011). 539, objective 543 not, however, license to in- grant does us baselessness 285 standard under section fact-finding province of the trial vade the objective “is identical to the recklessness infatuation increasing courts. Our with de standard for in the damages” enhanced of factual determinations be- novo review iLOR, willful context. LLC v. construction, Cybor see gan with Inc., (Fed.Cir. 1372, Google, 631 F.3d 1377 Inc., Techs., 1448, 138 F.3d Corp. v. FAS 2011). Bard, 1004-06, Until 682 F.3d at (en (Fed.Cir.1998) banc), and 1455-56 has court had correctly applied highly this now infected review of both willful in- deferential “clear of error” standard re Vascular, fringement, Peripheral see Bard underpinnings view to the factual of an Assocs., Inc., Gore 682 Inc. v. W.L. & F.3d exceptional case determination. Nils See (Fed.Cir.2012), 1003, 1004-06 and section Sylvania, sen v. Osram F.3d 528 As case determinations. (Fed.Cir.2008) (“We 1352, 1357 review a appellate litiga- overreaching, result of this finding that a case ‘exceptional’ is within tion before district court has become a meaning § of 35 U.S.C. 285 for clear for the mere dress rehearsal command error.”); Q-Pharma, Inc. v. Andrew Jer performance v. Phillips here. See AWH Co., (Fed.Cir. gens 360 F.3d (Fed.Cir.2005) Corp., 415 F.3d 2004) (“We attorney review a denial fees (en banc) (“If (Mayer J., dissenting) we § under 35 U.S.C. 285 for an abuse of subsidiary persist deciding the factual discretion; however, we review the factual components claim construction without exception- determination whether a case is deference, why litigants there no reason is error.”); § al under 285 for clear Forest required their parade should be to evi- Labs., Labs., Inc. v. Abbott or for dence before district courts dis- (Fed.Cir.2003) (emphasizing that this trict courts waste time and resources court reviews a trial “court’s factual find evidence.”). evaluating such Encouraging ings, including excep whether the case is relitigation disputes appeal factual on is tional, error”); Brasseler, for clear U.S.A. litigants’ an enormous waste re- I., L.P. Stryker Corp., Sales critically sources impor- and vitiates (Fed.Cir.2001) (“Whether 1370, 1378 a case fact-finding tant role of the district courts. ‘exceptional,’ in accordance with 35 City, v. City See Anderson Bessemer fact.”). § 564, 575, question U.S.C. is a U.S. S.Ct. Bard, however, (1985) (“[T]he rejected parties approach, L.Ed.2d 518 this already concluding con appeal litigant’s have been forced to whether on objectively energies ques concentrate their duct was reasonable is a resources persuading judge subject on trial of the their tion law to de novo review. See one; account of the usurps facts is the correct F.3d at Bard 682 1004-06. Because

1321 fact-finding jury question”). appellate role of the trial courts and ness’ is a As an the court, our precedent weigh inconsistent with we are ill-suited to the plainly is evi- precedential and of no value. required is an outlier dence to make an the of cases, are bound to follow standard In many We case determination. a trial articulated earlier decisions. See review court will declare a exceptional only 1574, Corp., v. 885 F.2d Johnston IVAC spending after months—and sometimes (Fed.Cir.1989) (“Where conflicting 1579 evidence, years reviewing even the hear- — ... in our appear precedent, statements ing testimony, and evaluating the conduct panel obligated the is to review the cases litigants. of the Its familiarity intimate statements, explain the if and reconcile or case, with the facts of the and the parties If not and if not possible. reconcilable involved, it in place superior position a far dicta, merely conflicting panel the is obli- judge whether or litigant’s not a claims gated to follow the earlier case law which of were objectively baseless: binding The law of precedent.”). is the judge The district is a firsthand observ- by only superseded this circuit can be of proceedings er below. His is the Dep’t court en banc. See v. Jus- Sacco of view from the trenches: he sees the (Fed.Cir.2003). tice, 1384, 317 F.3d 1386 by shots fired one party against other, knowledge and he has full simply wrong Bard is when it concludes prompting circumstances that a determination of whether conduct is cross- fire .... question imposition reasonable is law Since of sanc- subject usually require to de novo See 682 F.3d at tions will review. intensive [an] contrary, question To the inquiry 1006-07. into the factual circumstances violation, surrounding alleged what constitutes reasonable conduct under the tri- quintessentially circumstances is a al varying judge position is the best to review Indeed, inquiry. Supreme factual [those] circumstances and render an in- acknowledged has that reasonable judgment. Court formed by question recognizing ness is a of fact Co., 746, Kale v. Combined Ins. 861 F.2d jury’s unique competence applying “the (1st Cir.1988) (citations and internal the ‘reasonable man’ standard.” TSC In omitted). quotation marks 438, Northway, v. dus. U.S. (1976). objective Bard’s assertion that 2126, reason- n. 48 L.Ed.2d 757 S.Ct. question ableness is a of law is anomalous court, too, recognized This has given exceptional nature of the of a litigant’s reasonableness conduct is by case must be established clear and Indus., con- question. factual See Nat’l Presto vincing Wedgetail, evidence. See v. Co., Ltd. Inc. v. W. Bend 76 F.3d Deluxe, Inc., (Fed.Cir.1996) (“Whether Huddleston 576 F.3d infringer had (Fed.Cir.2009). clear con- a reasonable belief that the accused activi vincing evidence standard applies ques- ty question did not violate the law is a fact, See, not to questions tions law. fact, questions as are other relevant to the (citations e.g., Scientific, Reynolds Star Inc. v. R.J. omitted)); issue of willfulness.” Co., (Fed.Cir. Tobacco 537 F.3d Lloyd’s, see also Rand Underwriters 2008) (“The (2nd Cir.1961) predicate proven facts must be (empha (cita- convincing clear and evidence.” sizing that “when dissimilar inferences facts, quotation from tions and internal marks omit- undisputed be drawn ted)). Furthermore, in dispute, approach when the facts are ‘reasonable- the Bard court because “the district appropriate undoubt- was complex1 and will unnecessarily than the court of situated better [was] which litigation over unneeded edly spawn facts and pertinent to marshal the appeals are determination in a section issues standard fact-dependent legal the apply law, of and fact, are issues which issues of 402, 11.” at by mandated Rule Id. of law and fact. questions are mixed which reject- the Significantly, 2447. Court S.Ct. Corp., 496 v. Hartmarx & Cell See Cooter as to the view that a determination ed L.Ed.2d 384, 401, 110 S.Ct. U.S. reason- litigant’s a conduct was whether no (1990) there is (explaining appellate an must be reviewed able unerringly dis- that will principle or “rule at 110 S.Ct. 2447 court de novo. Id. legal from a con- finding a factual tinguish (“An of whether a appellate court’s review clusion,” “[m]aking such distinc- and that plausible legal position was reasonable difficult” in the context particularly tions is unlikely enough under the circumstances (citations and inter- awards attorney fee guidelines for lower to establish clear omitted)). marks quotation nal courts; clarify underlying the nor will yet has not Supreme Court Although (citations internal of law.” principles of re standard appropriate on the spoken omitted)). Similarly, in marks quotation exceptional to section 285 applicable view Equal context of fee awards under the determinations, it has made clear that (“EAJA”), Access to Justice Act 28 U.S.C. standard of review deferential highly 2412(d), Supreme § Court has deter- brought analogous proceedings applies of discre- mined that a deferential abuse Rules of 11 of the Federal under Rule applies, though even tion standard Cooter, at 496 U.S. Procedure. See Civil question on the EAJA award turns Cooter, 399-405, 2447. Prior to 110 S.Ct. government’s litigation posi- whether the appeals courts of had divided circuit some had a “reasonable basis both law tion sep into three Underwood, of Rule sanctions review fact.” 487 U.S. Pierce reviewing fact-findings un analyses, 552, 565, arate 101 L.Ed.2d 490 S.Ct. standard, (1988). legal clearly der a erroneous standard, and a de novo questions under persuasive explanation no as Bard offers decision for abuse

the actual sanction why highly deferential standard of to at 110 S.Ct. 2447. discretion. Id. adopted in and Pierce review Cooter rejected ap this Supreme Court apply should not to section 285 although Rule 11 concluding that proach, Simply because the case determinations. factual and le involve both determinations analysis on issues of section 285 can touch issues, of such a determina gal aspects all validity infringement does not patent highly reviewed under def tion must be can shirk our obli mean that this court standard. Id. erential abuse of discretion to afford due deference to bet gation In the Court’s of the trial court on judgment 110 S.Ct. ter-informed Pullman-Standard view, standard factual matters. See application of deferential instance, matter, approach in the first for exam- practical the Bard the defense 1. As a anticipation time-consuming apply. ple, questions or obvi- will be difficult legal ques- ... the ultimate Bard instructs: ousness. But person would tion of whether a reasonable objective prong considering [In In high there to be a likeli- LLC, have considered Tech., (Fed. Seagate re 497 F.3d 1360 of a valid Cir.2007) (en banc) ], hood of judge when always decided as a matter of law should be question of fact or a mixed defense is judge. jury by the question of law and fact allow Bard, 682 F.3d at 1008. underlying facts relevant to determine the

1323 however, Swint, system, physician a or other 456 U.S. 102 S.Ct. v. (Rule 52(a) (1982) professional the medical enters both the symp- of 72 L.Ed.2d proposed diagnosis and the of Procedure “does not toms Federal Rules Civil Thus, options. symptom to exclude cer- treatment data is exceptions purport make findings purpose “identify- from the not entered “for” the of categories of factual tain accept ing proposed mode of treatment” as re- appeals of a court of obligation 52(c). Indeed, clearly by claim findings quired unless erro- Allcare’s district court’s neous.”). in expert acknowledged own that

Highmark system symptom data was en- II. identify tered condition for which patient already receiving was treat- Here, court, thorough trial in a identify- ment and “for” the of purpose not that All- opinion, well-reasoned concluded ing proposed mode of treatment. See and, times, engaged care “vexatious 11586-88; App’x Highmark, Joint in- conduct” and “maintained deceitful (“Allcare’s F.Supp.2d allegations at 731 claims well after such claims fringement support by were shown to be without its by experts its own to be had been shown expert’s report own and deposition testi- Inc. Allcare Highmark, without merit.” mony. persisted Yet Allcare in its in- Mgmt. Sys., F.Supp.2d Health fringement allegations.”). that All- (N.D.Tex.2010). Given The court found persisted advancing infringement care of any that Allcare failed to conduct sort conflict allegations that were both in direct investigation before pre-filing reasonable claim plain language unsup- with the asserting its counterclaims ported by testimony expert, of its own Id. at 723-27. Robert against Highmark. ample grounds the district court had for Shelton, vice-president, ignored Allcare’s concluding allegations that Allcare’s of in- publically-available evidence2 persuasive, 52(c) fringement were frivolous.3 clearly High- which demonstrated that no clear error in the Because there was system key mark’s accused failed to meet trial court’s case determina- 52(c) No. elements of claim of U.S. Patent tion, af- (the 52(c) its section 285 award must be 5,301,105 patent”). “'105 Claim firmed. requires “entering ... data specifically symptoms tenta- symbolic patient for III.

tively identifying proposed mode of Finally, that the in- noting treatment.” '105 11.31-34 is worth patent col. added). (emphasis Highmark’s fringement prior In accused trial this case occurred "[B]y large purpose 2. all accounts a amount of infor- tom data is entered "for” regarding Highmark’s system mation was "identifying proposed of treatment.” mode publicly. even discovered a available Allcare '105 col. 21 11.31-34. Highmark’s system demonstration version of representative complete with a user interface. court when it concludes that an errs displayed This interface what code was used specification in the embodiment disclosed system Highmark’s ... and what the code support provided reasonable for Allcare's alle- (to symptoms indicate rather used gation Highmark system met the limi- that the treatment).” proposed than to determine a 52(c). tations of claim That embodiment (citations Highmark, F.Supp.2d at plainly system did not describe a in which the omitted). conducted an even Had Allcare purposes physician symptoms enters “for” investigation publically minimal available treatment, identifying '150 a method of see Highmark system, regarding information 5-8, patent col. 10 11. and was therefore not system did it would have discovered 52(c). by claim covered 52(c)’srequirement symp- not meet claim generates a a computer in Bilski toms and list Court’s decisions Supreme to the — 3218, might diseases or conditions that U.S. -, possible 130 S.Ct. Kappos,

v. Any causing symptoms. such health- (2010), be Mayo Collaborative L.Ed.2d 792 177 provider patient care or who has ever con- Labs., Inc., Prometheus v. Ser vs. — a medical treatise or home medical sulted U.S. -, 182 L.Ed.2d 132 S.Ct. reference book to determine what disease (2012). trial court had the Had the might causing particular or condition be decisions, it could have of these benefit symptoms practiced non-computer- has a § All- invalidate applied 35 U.S.C. ized version of the claimed method. Be- summary judg at the patent care’s 105 patent simply cause the '105 describes the Bilski, proceedings. See stage ment symptoms abstract idea that certain are (noting that whether at 3225 130 S.Ct. correlated with certain diseases and then statutory subject claims are directed applies using that idea conventional com- test”). a “threshold matter is technology, it to meet section puter fails represents a care patent system “[T]he subject eligibility require- 101’s matter encourages fully bargain crafted both MySpace, Graphon Inc. ments. See v. public and the disclosure of the creation (Fed.Cir.2012) Corp., 672 F.3d in technology, and useful advances new (“While J., (Mayer, dissenting) running a monopoly for a return for an exclusive on a particular process computer undeni- time.” period limited Wells Pfaff ably improves efficiency accuracy, Elecs., Inc., 55, 63, 525 U.S. S.Ct. cloaking an otherwise abstract idea in the (1998). patentee A 142 L.Ed.2d 261 does guise computer-implemented of a claim is “bargain” his end of this if he uphold not bring insufficient to it within section 101.” a monopoly rights over basic seeks broad (footnote omitted)); Dealertrack, see also principle, fundamental or natural concept, Huber, (Fed. Inc. v. a concomitant contribution to law without Cir.2012) (concluding that claims drawn to existing body of scientific and techno “computer-aided” processing a method of Bilski, In logical knowledge. applica through a clearinghouse information fell rejected patent ineligible be tion was as 101); Cyber outside the ambit of section anything cause it did not “add” to the basic Decisions, Inc., Corp. v. Retail Source concept hedging against economic risk. (Fed.Cir.2011) 1366, 1375 (emphasiz (emphasizing at 3231 S.Ct. ing process “that the basic character of a application applied concept hedging claim drawn to an abstract idea is not using analysis “well-known random tech changed by claiming only performance its likewise, niques”). Mayo, process In by computers, by claiming process or claims were invalidated under section 101 program on a embodied instructions a they simply because described law of medium”). Where, computer readable as applied using nature and “well-under here, idea, describes an abstract “ stood, routine, conventional” means. [and] technology but discloses no new ‘in- ” at 1294. S.Ct. concept,’ Mayo, at ventive 132 S.Ct. idea, applying application robust A All- analysis applies similar here. summary judgment of section 101 diagnostic system out- care’s claimed falls stage litigants will save both courts and side the of section 101 because it is ambit years litigation. of needless partic- directed to the “abstract idea” that symptoms likely by partic- ular are caused pat-

ular conditions. '105 diseases or system

ent describes a which user patient’s symp- regarding

enters data

Case Details

Case Name: Highmark, Inc. v. Allcare Health Management Systems, Inc.

Court Name: Court of Appeals for the Federal Circuit

Date Published: Aug 7, 2012

Citation: 687 F.3d 1300

Docket Number: 2011-1219

Court Abbreviation: Fed. Cir.