We've been talking about the importance of fee shifting
in deterring bogus patent trolling suits for a while now. And while the trial lawyers
fear of fee-shifting stupidly led them to kill the patent reform bill that included them, thankfully, the Supreme Court made fee shifting
in patent cases more reasonable after smacking down the Federal Circuit (CAFC) once again.
The impact of the Supreme Court's ruling in the Octane Fitness case around fee shifting is already being felt. We already noted that NewEgg was able to pursue fees
against a troll, but in another high profile case, a court has already ordered a patent troll to pay up for the bogus lawsuit it brought
You may recall this case: After patent troll Lumen View went after startup FindTheBest, FTB's CEO Kevin O'Connor announced that he'd spend $1 million fighting the troll rather than settling for the $50,000 offered. In response, Lumen View accused O'Connor of "hate crimes"
for calling Lumen View a patent troll. Later, Lumen View sought (and thankfully failed) to get a gag order
on FTB for revealing information that was perfectly fine to reveal. In fact, Lumen View demanded that FTB try to remove prior disclosures from the internet.
Of course it was all just posturing. While this was going on, Lumen View kept making more and more desperate attempts to get FTB to settle. But FTB knew it didn't need to settle because it wasn't violating the patent -- something it made clear to Lumen View right at the beginning. In the end, the court not only found that FTB didn't infringe, it invalidated the patent itself
(US Patent 8,069,073
, in case you were wondering).
And, now, Judge Denise Cote has also
told Lumen View that, in light of the Octane Fitness ruling, it has to pay FTB's legal fees as well. The ruling notes that it was clear from the outset that FTB didn't infringe (whether or not the patent was valid), and Lumen's continued pursuit of FTB was clearly abusive.
Lumen’s lawsuit against FTB was “frivolous” and “objectively
unreasonable.” “To be objectively baseless, the infringement
allegations must be such that no reasonable litigant could
reasonably expect success on the merits.” .... No reasonable litigant
could have expected success on the merits in Lumen’s patent
infringement lawsuit against FTB because the ‘073 Patent claimed
a bilateral matchmaking process requiring multiple parties to
input preference information, while FTB’s “AssistMe” feature
utilizes the preference data of only one party. Lumen’s own
claim construction brief construed the independent claim of the
‘073 Patent as requiring two or more parties to input preference
data. That submission urged the term “preference data” to be
construed “in conjunction with its plain and ordinary meaning.”
And Lumen’s Complaint alleged that FTB’s infringement was
predicated on the alleged use of bilateral preference matching.
But FTB does not employ bilateral preference matching.
And the most basic pre-suit investigation would have
revealed this fact.... And if there were any confusion on this score -- and Lumen has provided no basis to find it was confused by the website -- Lumen was certainly on notice of this fact from the outset of the litigation. FTB’s Seigle and O’Connor informed Lumen that
FTB’s AssistMe feature did not use the bilateral or multilateral
preference matching process in a telephone conversation of June
19. And FTB’s attorney again informed Lumen by telephone and by
letter of June 26. Yet Lumen proceeded with an obviously
baseless lawsuit, failing to point to any specific way in which
FTB infringed the patent.
The Judge makes it clear she knows that this was purely about trolling for settlement money all along:
motivation in this litigation was to extract a nuisance
settlement from FTB on the theory that FTB would rather pay an
unjustified license fee than bear the costs of the threatened
expensive litigation. Lumen never sought to enjoin FTB from the
allegedly infringing conduct in its prayer for relief. Lumen’s
threats of “full-scale litigation,” “protracted discovery,” and
a settlement demand escalator should FTB file responsive papers,
were aimed at convincing FTB that a pay-off was the lesser
Furthermore, the judge notes that since Lumen filed a bunch of very similar complaints, fees are certainly justified since the company seems to be using patent lawsuits as "part of a predatory strategy aimed at reaping financial advantage from the inability or unwillingness of defendants to engage in litigation against even frivolous patent lawsuits."
This is a great win for a company that was willing to stand up against a bogus patent troll lawsuit, and it's great to see that the troll will now have to pay up (how much will be determined later). Once again, we see how badly CAFC had screwed things up (for years!) with its ridiculously high standard for patent fees. Thanks to the Supreme Court fixing things in the Octane ruling, hopefully, we'll see more companies willing to stand up to trolls and
not having to worry so much about how much it will cost to defend themselves against obviously bogus claims.