Notice before Attorney Fee Request

By Dennis Crouch

Stone Basket Innovations, LLC v. Cook Med. LLC, 17-2330, 2018 U.S. App. LEXIS 15670 (Fed. Cir. 2018)

Typical initial setup of a patent infringement lawsuit: the patentee (Stone’) sued Cook for infringement; Cook then requested an inter partes of the asserted patent.  What happened next was odd — after Cook refused a $150k settlement, Stone conceded the IPR (all claims then cancelled) as well as the lawsuit (dismissed with prejudice).

Note here that the invention looks pretty cool – an endoscope with a basket-type device for extracting stones from a human body — such as ureteral, kidney, or gall stones. U.S. Patent No. 6,551,327.  The problem apparently is the invention’s lack of novelty. 

The Patent Act provides that a “court in exceptional cases may award
reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285.  In Octane
Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court defined an “exceptional Case” as one that “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”  That particular determination is made by a district court judge on a case-by-case basis after considering the “totality of the circumstances” and then given deference on appeal.  See Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014).

While the Federal Circuit agreed that Cook had the better litigation position and may have been wronged, the court noted that Cook had “fail[ed] to provide early, focused, and supported notice of its belief that it was being subjected to exceptional litigation behavior further.” Quoting a recent informal opinion from Judge Guilford (C.D.Cal.), the appellate court wrote that a “party cannot simply hide under a rock, quietly documenting all the ways it’s been wronged, so that it can march out its ‘parade of horribles’ after all is said and done.” See Aten Int’l Co. v. Uniclass Tech., No. CV 15-04424-AG (AJWx), slip op. at 5 (C.D. Cal. Mar. 30, 2018) [AJWX Decision].  While neither Judge Guilford nor the Federal Circuit cited any precedent or statutory analysis for this implicit notice requirement, the court concluded that the reasoning of the approach is “both persuasive and applicable to this case.”

Notice Prior to Attorney Fee Request: A key requirement for sanctions under FRCP R. 11 (Rule 11) is to provide advance notice to the offending party.  While Section 285 does not expressly require notice, this line of cases suggests that such interim notice to both the opposing party and the court will serve as important aspects of the exceptional case determination.

I’ll note here that the notice is important for several reasons: (1) notice of bad-behavior or exceptionally weak arguments provides the opposing party with a chance to correct its approach in order to avoid undue expenses and hardships; (2) notice to the court will then give the court the ability to take immediate corrective actions in order (admonish the party) in order to avoid compounding the problem; (3) going through the steps of providing notice provides some modicum of evidence that the noticing party is actually being harmed by the bad behavior.

25 thoughts on “Notice before Attorney Fee Request

  1. 7

    This is really a bad idea. The statute itself is the notice.

    Not to mention that on the “totality of the circumstances” test of Octane Fitness, there may not be a single act for which one has to give notice. There might be weak claims, weak arguments, discovery misconduct and other factors to consider. And one may not discover these problems until late in the litigation — some document is discovered that undermines a claim or contention, for example.

    Rule 11 is not, in my view, a good analogy. Rule 11 governs specific acts — filing a complaint, bringing a motion, etc. If you think that is frivolous, then you have to say so and give the other side 21 days to withdraw it.

    Fees for a case, OTOH, deal with the total case.

    1. 7.1

      Yes, Rule 11 motion sanctions seem to be rarely successful at preventing baseless patent suits (up front and at low cost). Reportedly many judges do not like to have to deal with Rule 11 motions, and discovery is usually needed to even try to prove, for example, that the attorneys signing the complaint had made no pre-suit investigation for actual infringement, or already know of clearly invalidating bars or prior art. Attorney fee sanctions seem to have become much more effective, and apply to either party for persisting in running up legal expenses for the other party with baseless suits or baseless defenses. But that is not likely to occur up front and at low cost. But litigation stays for an IPR are reportedly increasing now that the Sup. Ct. has forced the PTO to consider all of the claims in an IPR petition.

    2. 7.2

      BL, the kind of “notice” the Court is concerned about here is different from other legal notice sufficiencies. To imposed attorney fee sanctions the Court wants the suit party to be clearly informed as to why continuing with the suit is unfounded or baseless, not merely thrown a big pile of potential prior art to have to dig through.

  2. 4

    Well it wasn’t exceptional, but the fact that it becomes even a close call shows what a joke our entire judiciary has become. There are no laws. There kings/queens you go before and decide your fate based on their private little thoughts.

    I strongly favor abolishing the CAFC.

    1. 4.1

      With great regret, there is merit to your argument. But also a great lesson – in who, what, where, why and how long – it takes for a reformer institution to be captured by the regulated (here the serial infringers), #SoSad.

    1. 3.1

      That is pretty bad. And you thought Kagen would go along with a holding that Oil States was unconstitutional. Kagen is like Obama. Just do whatever you think is right and the rules don’t matter ’cause you are the righteous one.

      1. 3.1.1

        Kagan also bumbled the Spider-Man web-shooters case, as I recall.

        I should have known better…

    2. 3.2

      LOL. The Supreme Court figured out in 1830 that Gorsuch’s hypertechnical reading of the Contracts Clause wouldn’t work in the real world. If he couldn’t even get Thomas to go along, you know he’s out there…

      1. 3.2.1

        you know he’s out there…

        It’s a bit late now for some people to begin figuring this out (not referring to you personally). But of course Gorsuch is “out there.”

    3. 3.3

      Thanks for your post/alert about the Royal Nine.

      Either my previous post had gone too far OffT, or something about freedom being better that Statism is somehow offputting.

      Anyway anon, glad you got a chance to see it.

      1. 3.3.1

        I wonder if the Deadpool item impinged on some avenue of copyright protection (albeit, I would say that a more than colorable case for Fair Use was plainly evident)



            Sorry that my previous post overstepped the content rules and guidelines you have set for your site, such that it had to be removed.

            Sometimes I forget that this forum is your private property, and rightly so (not the forgetting …rightly so that you have the right to this as the private property).

            I had a lapse in judgment as to what you determine acceptable for posting here. I’ll try to stay more on side than off side in future.


            PS: thank you for providing such an informative and lively site!


              the content rules and guidelines you have set for your site

              Please elucidate precisely which content rules and guidelines are you talking about.

              THEN compare the rather NON-objective manner in which those “content rules and guidelines” are applied**.

              One should not “feel” compelled to apologize when application of rules is not uniform, and repeatedly over time shades towards specific narratives.

              ** There is ZERO chance that the post you lost was even close to what routinely passes from the longstanding (13 years now) number one blight on these boards.

  3. 2

    The IPR was, of course, later, so it did not provide advance notice. The decision notes that Cook did not file any FRCP Rule 11 motion or S.J. motion, and that there was not “clear notice” of the ’327 patent’s invalidity by service of Cook’s invalidity contentions. “Although Cook focuses on the obviousness of the ’327 patent over U.S. Patent No. 6,168,603 (“Leslie”) on appeal, that reference was not the focus of Cook’s invalidity contentions, which listed Leslie along with thirty-one other pieces of prior art as anticipatory references. J.A. 1601– 02; see also J.A. 1602 (singling out only other prior art references Gilson and Greenhalgh—not Leslie—from that list of thirty-two).”
    This shows another important advantage in having frank and specific settlement discussions with invalidity contentions before or soon after litigation commences.

    Note that this decision is distinguishable from more typical attorney fee award cases of infringement asserted without investigation and non-infringement isbeen clearly shown and explained in detail up front but the patent owner persists with the lawsuit.

    1. 2.1

      [Settlement discussions expressly under Federal Rules of Evidence Rule 408 of course.]

  4. 1

    Does not the following adage fit:

    Those seeking equity, must come to the table with clean hands.

    1. 1.1


      But it seems more like an instance of “If you don’t like the food, let your waiter know at the beginning of the meal, not after.”

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