Federal Circuit Affirms $4.6 million award for litigation misconduct

ICU Medical v. Alaris Medical System pic-14.jpg (Fed. Cir. 2009)

ICU’s patents covers technology for using syringes to add drugs to an IV. The district court granted summary judgment of invalidity and also awarded attorney fees and found a violation of Rule 11 of the Federal Rules of Civil Procedure. Alaris was awarded $4.6 million in attorney fees and sanctions. On appeal, the Federal Circuit affirmed.

Section 285 of the Patent Act provides for the award of attorney fees to the winning party in “exceptional cases.” In Brooks Furniture, the Federal Circuit discussed a two-part test for whether attorneys fees may be awarded due to litigation conduct. The test requires that “both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” A district court fee award will be affirmed absent clear error.

The problem – ICU argued that the claim term “spike” could be a non-pointed structure such as a tube even though the specification “repeatedly and uniformly describes the spike as a pointed instrument.” The claim construction was not ICU’s only problem:

For example, the district court found that ICU made “multiple, repeated misrepresentations . . . to the Court regarding its own patents in an effort to conceal what are now characterized as errors in order to rescue the TRO/PI from denial.” These misrepresentations related to (1) ICU’s assertion of claims in the ’509 patent that were identical to claims in the ’592 patent (i.e., assertion of double-patented claims); (2) ICU’s assertion of more double-patented claims from the ’509 patent even after Alaris and the district court warned ICU of the double-patenting issue; (3) ICU’s misrepresentation of Federal Circuit authority; (4) ICU’s representation that figures 13 and 20–22 of the common specification “clearly” disclosed a spikeless embodiment, only to later acknowledge that these figures do not disclose such an embodiment and state that its representation was an “honest mistake.”

Although the Brooks Furniture rule discusses objectively baseless “litigation,” that rule is not construed to focus on the litigation as a whole. Rather, attorney fees may be assessed if any portion of the litigation is brought in bad faith and in an objectively baseless manner. Here, the Federal Circuit found that the lower court had “appropriately exercised its discretion in awarding attorney fees only for [a] portion of the litigation.”


  • Federal Circuit Decision 08-1077.pdf
  • District Court award of Fees: 232495.pdf. Bottom line: “The Court finds that Alaris is due $4,587,622.44 in attorney fees and $164,721.19 in costs for the reasons set forth below. . . . This represents a reasonable lodestar calculation for Alaris’ work . . . , and it constitutes a reasonable pro rata amount of Alaris’ total expenditure of $11,000,000 in attorney fees and $2,000,000 in costs overall in this case.”
  • District Court decision to find a Section 285 exceptional case and Rule 11 sanctions. 232494.pdf. Money Quote: “[The submitted declarations] do not substantively justify or excuse ICU’s litigation tactics or show its good faith. These declarations were prepared by ICU’s litigation counsel for the purpose ofopposing the Rule 11 and Fees Motions, and comprise mostly self-serving assertions of good faith by interested witnesses, such as ICU’s CEO (Dr. George Lopez), trial counsel (Fulwider, Patton, Lee & Utecht; Paul Hastings; or Pooley & Oliver), patent counsel (Knobbe Martens) and its paid experts (Dr. Maureen Reitman and Bob Rogers). These materials lack the indicia of credibility provided by declarations or opinions from outside, independent counsel or experts, particularly outside patent, as opposed to litigation, counsel. Most of the materials appear to have been “memorialized” in retrospect, providing marginal support compared to, for example, an ex ante documented and vetted analysis that preceded the litigation or that, al minimum, preceded the TRO/PI request and the inclusion of the “spike” claims in the amended complaint.”
  • Although the district court decision appears to identify the Fulwider firm as “trial counsel,” that appears to have been a mistake made by the court. A Fulwider attorney has indicated that their firm “was never one of ICU’s trial counsel in that matter, and thus made no representations to the court on ICU’s behalf.” In fact, ICU appears to be somewhat of a toxic client. According to the court documents, Fulwider represented ICU in the 1990’s. At some point ICU dropped the firm as a client and sued for malpractice based on Fulwider’s representation of alleged ICU competitors. Fulwider did not admit wrongdoing, but a 2007 press release by ICU claims that ICU “will be paid $8 million in settlement of its claims against Fulwider.”