Site Update v. CBS Corp and NewEgg (Fed Cir. 2016)
Back in 2010, Site Update sued a broad set of companies for infringing its Reissued Patent No. RE40,683. The patent claims appear to broadly cover a method of using an XML Sitemap to update search engine data. As is its policy, NewEgg refused to settle the case and, following a claim construction decision favoring the defendant, the district court entered a stipulated dismissal with prejudice. At that point, however, NewEgg requested that the case be deemed “exceptional” and that it be compensated its reasonable attorney fees under 35 U.S.C. § 285.
The district court originally rejected the fee request. However, that decision was prior to Octane Fitness and, on appeal, the Federal Circuit previously remanded and asked for reconsideration under the Supreme Court’s new precedent. On remand, N.D. California Magistrate Judge Grewal* again denied a fee award — listing eight reasons:
(1) Site Update’s proposed claim constructions were not “so weak that this case stands out from others because [Site Update] abandoned its reliance on these constructions when it was given the opportunity to do so”;
(2) Site Update’s argument that its means-plus-function terms should be given a broad construction did not make the case exceptional;
(3) Site Update’s positions on necessary structures were “unartful,” but not so frivolous to be exceptional;
(4) Site Update’s position on structures “strains credibility,” but was not so unreasonable as to warrant fees;
(5) an incorrect proposed claim construction is not exceptional;
(6) Site Update’s infringement theories had flaws, but losing does not compel fees;
(7) Site Update’s willingness to settle does not make the case exceptional; and
(8) deterrent policy considerations are inapposite in this case
On appeal, the Federal Circuit directly followed Supreme Court precedent giving a district court discretional authority to determine fee awards and requiring deference on appeal.
Although reasonable minds may differ, the district court ruled from a position of great familiarity with the case and the conduct of the parties, and it determined that Site Update’s tactical blunders and mistakes do not warrant fees under 35 U.S.C. § 285. The district court noted that Site Update tried and failed, but losing a case does not make it exceptional. . . . [U]nder the circumstances of this case, our review authority is limited to whether a district court’s findings are supported by evidence and sound reasoning. . . . In this case, because we do not believe that the district court based its ruling on an erroneous view of the law and we are not left with a definite and firm conviction that the district court erred in its assessment of the evidence or otherwise abused its discretion, we cannot say that the district court erred. For these reasons, we affirm.
In the appeal, the Federal Circuit noted that – this time, NewEgg was the one with an unreasonable position — demanding a “de novo review of the district court’s findings” despite recent Supreme Court precedent to the contrary. However, the Federal Circuit followed its usual practice of requiring each party to bear its own costs of the appeal.
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* I assume that the parties agreed that these issued could be properly decided by the Magistrate Judge.