Opinion
98 Civ. 1058 (JGK)
May 17, 2000
Joseph Diamante, Esq., Eliot S. Gerber, Esq., for the Plaintiff.
Daniel Johnson, Jr., Esq., for the Defendant.
OPINION AND ORDER
The plaintiffs, Imatec, Ltd. ("Imatec") and Hanoch Shalit ("Dr. Shalit"), brought this action alleging that the defendant, Apple Computer, Inc. ("Apple"), had infringed a series of patents owned by Dr. Shalit and, for a period, exclusively licensed or assigned to Imatec. The Court dismissed the action, holding that the plaintiffs lacked standing, and, in the alternative, holding that the defendant had in any event not infringed the patents-in-suit. See Imatec, Ltd. v. Apple Computer, Inc., 81 F. Supp.2d 471 (S.D.N.Y. 2000). Apple now moves for attorney fees under 35 U.S.C. § 285.
I.
Under 35 U.S.C. § 285, "[tlhe court in exceptional cases may award reasonable attorney fees to the prevailing party." When considering a request for an award of attorney fees under 35 U.S.C. § 285, "the trial judge undertakes a two-step inquiry: he or she must determine whether there is clear and convincing evidence that the case is exceptional,' and if so, whether an award of attorney fees to the prevailing party is warranted." Interspiro USA, Inc. v. Figgie Intern. Inc., 18 F.3d 927, 933 (Fed. Cir. 1994). The determination that a case is "exceptional" is a factual one. See id. If a case is found to be exceptional, the decision of whether to award attorney lies within the district court's discretion. See id.
A prevailing party seeking an award of attorney fees has the burden of establishing the exceptional character of the case by clear and convincing evidence. See B. Braun Medical, Inc. v. Abbott Laboratories, 124 F.3d 1419, 1429 (Fed. Cir. 1997); Carroll Touch, Inc. v. Electro Mechanical Systems, Inc., 15 F.3d 1573, 1584 (Fed. Cir. 1993). "Among the types of conduct which can form a basis for finding a case exceptional are willful infringement, inequitable conduct before the P.T.O., misconduct during litigation, vexatious or unjustified litigation, and frivolous suit." Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989). "Determining whether a case is exceptional involves consideration of factors such as the closeness of the case' and the parties' conduct and their counsel's trial tactics, including evidence of bad faith.'" C.R. Bard, Inc. v. Medtronic, Inc., No. C.A. 96-589-SLR, 1999 WL 458305, at *14 (D. Del. June 15, 1999). In order to obtain attorney fees under § 285, "the successful patent defendant must demonstrate evidence of either wrongful intent or of gross negligence on the part of the plaintiff in bringing the action." Victus. Ltd. v. Collezione Europa U.S.A., Inc., 26 F. Supp.2d 772, 787 (M.D.N.C. 1998) (citing Machinery Corp. v. Gullfiber AB, 774 F.2d 467, 473 (Fed. Cir. 1985)).
II.
Although the Court is convinced that the plaintiffs lacked standing and that the defendant in any event did not infringe the patents-in-suit, see Imatec, 81 F. Supp.2d 471, the Court cannot say that there is clear and convincing evidence that the plaintiff knew or should have known that the lawsuit was baseless, either at the time the lawsuit was brought or during its subsequent maintenance.
Dr. Shalit states under penalty of perjury that prior to commencing suit he obtained legal opinions both as to the ownership of the patents-in-suit and as to Apple's infringement of those patents. Dr. Shalit states that two attorneys advised him that he held title to the patents-in-suit. See Declaration of Hanoch Shalit, dated March 1, 2000, ¶ 12. Dr. Shalit further states that attorneys from a respected intellectual property firm, conducting due diligence on behalf of an underwriter for Imatec, examined title to the patents-in-suit and found no problem with Dr. Shalit's claim to the patents. See id., ¶ 13 Finally, Dr. Shalit states that he was advised by three different firms, each with considerable intellectual property experience, that the accused product infringed the patents-in-suit. See id., ¶ 14.
Counsel for the plaintiffs, who wrote and prosectued the patents-in-suit and who represented the plaintiffs during the course of this litigation, confirms that he advised Dr. Shalit that Dr. Shalit owned the patents-in-suit and that Apple was infringing those patents.See Declaration of Eliot S. Gerber, dated March 1, 2000, ¶ 2. Counsel for the plaintiffs states that he reached his conclusions after reviewing the patents-in-suit, the prior art cited in those patents, and literature pertaining to the accused technology. See id., ¶ 3. Counsel further states that "[n]othing occurred during discovery or after discovery, and prior to the Court's Opinion and Order of January 25, 2000, to alter [his] opinion that Dr. Shalit owned the patents-in-suit and that the patents-in-suit are infringed by Apple." Id.
While Apple questions the various opinions Dr. Shalit says he received, the declarations of Dr. Shalit and Mr. Gerber show that this litigation was not frivolous, and that it was not brought or pursued in a vexatious or unjustified manner. The defendant has failed to provide clear and convincing evidence that the lawsuit was brought or maintained in bad faith. Thus, the defendant has failed to establish that this is an "exceptional" case within the meaning of 35 U.S.C. § 285. Moreover, even if this were an exceptional case, this Court would not exercise its discretion to impose attorney fees. Given the legal opinions obtained by the plaintiffs and the fact that the case was disposed of short of trial, the awarding of attorney fees would not be warranted, especially in view of the hardship that such an award would impose upon the plaintiffs.
CONCLUSION
For the foregoing reasons, the defendant's motion for attorney fees is denied.
SO ORDERED.