By David Hricik
Thermolife Int’l LLC v. GNC Corp. (Fed. Cir. May 1, 2019) (here) is pretty interesting. Plaintiffs (Stanford University was one of them) filed about 80 lawsuits, settling many for nuisance value. Among the 80 defendants were Hi-Tech Pharmaceuticals, Inc. and Vital Pharmaceuticals, Inc. (“Hi-Tech”). The defendants moved for and lost summary judgment on invalidity, but then the parties agreed to bifurcate further proceedings, with invalidity being determined first.
The trial court held after a bench trial that the asserted claims were invalid under 102 and 103. A month after that, Hi-Tech moved for an exceptional case finding, but based upon lack of adequate pre-suit investigation into (wait for it) infringement. The accused products had been publicly available and their labels indicated no infringement (insufficient amounts of one ingredient).
The court allowed plaintiff’s counsel to explain what pre-suit investigation had been done, but the trial court struck the declaration as belated. Beyond that, the response did not fully address the claims and issues Hi-Tech had raised. The court then found the case exceptional, essentially reasoning that because the labels indicated no infringement and the products were publicly available, the lawyers should have tested them, but did not.
The panel affirmed (Taranto, Bryson, Stoll). Calling the determination unusual, the court nonetheless found no abuse of discretion. It noted that Hi-Tech had not “give early notice of the defects in plaintiffs’ infringement assertions that later became he basis for the fee award,” but concluded that because of the numerous suits and need to consolidate this “reasonably led not only to coordination among numerous defendants but to the agreement of all parties, for efficiency, to give priority to the common issue fo validity so that even discovery as to party-specific issues like infringement could be postponed.” In addition, the court found no abuse of discretion that the pre-suit investigation had been inadequate given the labels and publicly-available products.
I suppose in the narrow sense of mass consolidated suits, the award of fees makes sense, but if the concept is taken out of context, one could imagine defense firms racking up hours hoping for a win on a hard issue while then using an easy issue to establish an exceptional case. Further, if the invalidity case was close, presumably the amount of fees (not mentioned in the appeal and not challenged) would reflect some discount or adjustment since invalidity was, presumably, not “out of the ordinary.”
Interesting case, not for the merits of finding no adequate pre-suit investigation, but for the rest.