Supreme Court Reinstates $6.6 Million Attorney Fee Award

Kobe Properties v. Checkpoint Systems (Supreme Court 2014)

Today the Supreme Court issued a GVR decision in this case:

The petition for a writ of certiorari is granted. The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Federal Circuit for further consideration in light of Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U. S. ___ (2014) and Highmark Inc. v. Allcare Health Management System, Inc., 572 U. S. ___ (2014).

In that case, a jury found the asserted patent infringed, invalid, and unenforceable and the district court judge had awarded $6.6 million in attorney fees to the defendants. On appeal, however, the Federal Circuit reversed based upon a finding that “the requirements of § 285 were not met” because the patentee’s lawsuit was not ‘objectively baseless.’ [See Rantanen, Failing the Objectively Baseless Standard]. In Octane Fitness, however, the Supreme Court recently held that the objectively baseless standard is improper and too strict.

Following the Supreme Court GVR, the fee award is now reinstated. On remand, the panel will likely be asked now to determine whether the district court’s findings were an abuse of discretion – which they likely were not.

16 thoughts on “Supreme Court Reinstates $6.6 Million Attorney Fee Award

  1. The suit went to trial in 2007 in ED PA based on patents on, apparently, RFID tags. The case was originally known as Checkpoint v. All-Tag with Kobe and Sensormatic included as partners or subsidiaries or branch offices of All-Tag whose headquarters seems to be in Europe. The CAFC panel was Newman, Lourie, and Schall.

    link to patently.wpengine.com

    1. For a rare defendant willing to fight all the way through extensive discovery, a jury trial on numerous issues of non-infringement, invalidity and unenforceability, then post-trial motions and a Fed. Cir. appeal, as here, $6.6 million is not that unusually high these days for total cumulative defendant attorney fees.
      Which is a key reason why more than 97% of defendants settle before trial and typically pay the patent owner less than that to avoid these and other litigation costs and risks, even when they think they may have a winning case. Many PAE business models depend on that.
      This and the other two new Sup. Ct. decisions on attorney fee awards will thus only get large attorney fee sanctions like this in the relatively few cases like this in which both parties had decided to fight all the way to a final decision, one party doing so objectively ill-advisedly.

      1. Perhaps part of the problem is that some may not view such fees as unusually high. Frankly, I can think of precious few circumstances where litigation could generate such fees. Obviously, in the realm of patents this is not one of them (particularly given the remarkably un-esoteric subject matter).

        1. Patent infringement defense is expensive. There’s usually no shortage of discovery. The numbers of products and technologies at issue is usually large, especially when the claim for infringement is to a core product line. Invalidity arguments are super expensive to pursue and maintain.

          This is the reason so few companies actually take on patent trolls.

          Most estimates for patent cases I’ve received put the summary judgment at around a million, a couple million through trial, and don’t even attempt appeals. These estimates usually exclude ediscovery costs.

          1. Recognizing that Pro Se is most likely, well, pro se, and may lack an appreciation of actual costs, one cannot have both views (costs are not that high and costs are that high) at the same time.

            But even regardless of this dichotomy, if we for argument’s sake take the view of mmm, there are still problems here.

            One – this is not a patent problem per se, but a court problem. The problem may surface to a different degree with patents, but not different in kind from any other type of law that involves the courts. Thus, the proper forum of correction is outside of patent law band-aids.

            Two – even assuming a fix is enacted, the consequence is not what many may expect. If you lower the cost of actually pursuing matters in court, you will NOT lower the overall amount of money spent in court. Quite the opposite. Given the fact that far under 2% of all active patents actually see the court path, one should expect that lowering the barrier to that path will increase (and arguably greatly increase) the number of instances that mechanism will be sought.

            You may very well see an explosion of court cases. While each case in itself may be less costly, the sum total cost may well sky rocket – and that is not even considering the judicial resources of time and court infrastructure that will be further taxed.

            1. Actually, former in-house counsel for aerospace corporation, and well familiar with litigation expenses. Did not tolerate, as is much too often the case, outside counsel who sought to procure a blank check for time and expenses.

            2. We certainly don’t write blank checks. Such legal services procurement practices make little sense other than perhaps in bet the company type litigation or high stakes patent litigation between massive competitors (see the cool billion spent in Apple v. Samsung) when no cost is too high.

              But the idea that $3-6 million in an unreasonable in some cases ignores the fact that the cost may still lower than the exposure for damages, injunction, and attorney’s fees not to mention the cost it might take to roll out, develop, or implement workarounds. The problem with patent infringement is the strict liability nature and the fact that (at least historically) injunctions were likely. Add to that the fact that on-going acts that occur after notice can turn even innocent infringement into willful (again, at least historically), then a defendant wanting to fight it out might very well put that value in the reasonable bucket.

              Other areas that you end up seeing similar costs for defense occur in certain regulatory actions (again strict liability cases), recall or major tort claims, etc.

              When I see some comments on here that look at litigation statistics for evidence there isn’t a “troll” problem, they are necessarily ignoring vast numbers of the cases that companies just make go away quietly fore something substantially less than the nuisance value.

  2. Wow – timing is everything, isn’t it?

    On remand, the panel will likely be asked now to determine whether the district court’s findings were an abuse of discretion – which they likely were not.

    Interesting. I’m not so sure, since the Federal Circuit expressly held that the plaintiff’s reliance on certain “admissions” by the defendant was reasonable, which contradicts the district court’s primary reason for finding the case exceptional.

    I think the Federal Circuit was absolutely correct (IMO) that the case was not “objectively baseless,” but it’s a tougher call under the “abuse of discretion” standard. That said, if the district court judge was using the “objectively baseless” standard, I wonder whether there is an adequate record for the Federal Circuit to review, or whether the Federal Circuit needs to remand the case.

    1. Along with the fact that the Fed. Cir. doesn’t get to re-review the facts and circumstances, the abuse of discretion is a huge barrier to a reversal. And if the Fed. Cir. decides that abuse of discretion means something less than what most courts do in other areas of law (e.g., apply something akin to “no reasonable person” standard), I’d think it was heading down the path of yet another reversal at the SCOTUS.

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