by Dennis Crouch
In law school, we talk about decisions that are binding as precedent and others that are not binding but that may be considered as persuasive authority. There is very little precedent on when persuasive authority must be considered, and usually we say something flippant about ignoring the other decisions. The case below is one that comes out the other way — the court abused its discretion by failing to consider persuasive authority.
Electronic Communication Techs., LLC v. ShoppersChoice.Com, LLC (Fed. Cir. 2020)
ECT sued ShoppersChoice on its US9373261, but the district court (S.D.Fla.) dismissed the case on the pleadings–holding that the claims were ineligible under 35 U.S.C. § 101. That decision was affirmed by the Federal Circuit in May 2020. See Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC, 958 F.3d 1178 (Fed. Cir. 2020).
Because of the oddities of the final-judgment rule, the patentee was able to appeal the eligibility question before the district court reached the issue of attorney fees under 35 U.S.C. § 285. The district court did eventually deny the attorney fee award as described by the Federal Circuit here:
[T]he District Court denied ShoppersChoice’s motion for the award of attorney fees. In
doing so, the District Court explained that “[u]nder the Lanham Act, ‘[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.’” . . .
ShoppersChoice contends that the District Court abused its discretion in weighing relevant factors, and by applying the incorrect attorney fee statute. We agree with ShoppersChoice.
Slip Op. (denial of attorney fees vacated and remanded).
Obviously it was a mistake to cite the Lanham Act provision instead of the Patent Act, but it is not a big deal because the statutes have identical provisions:
- Patent Act: The court in exceptional cases may award reasonable attorney fees to the prevailing party.
- Lanham Act: The court in exceptional cases may award reasonable attorney fees to the prevailing party.
I don’t think that the Federal Circuit would have vacated simply because of the erroneous citation — especially because interpretation of the two provisions have been harmonized by the Supreme Court in recent years. Rather, the main focus of the was the court’s failure to consider two important points.
- ECT’s manner of litigation; and
- The objective weakness of the asserted patent claim
Manner of Litigation: ECT’s case against ShoppersChoice was one of a larger number of infringement lawsuits filed by ECT. Those lawsuits apparently included the type of behavior now associated with classing-patent-trolling: standardized demand letters; low-value settlement offers; failure to proceed in cases. And, ECT had already been sanction by a different court for this type of conduct. The district court did not consider these issues in its opinions other than a conclusory statement that ECT had not “exhibited the kind of unreasonable behavior that would make
this case stand apart from others.”
On appeal, the Federal Circuit held that the court must go back and “actually assess the totality of the circumstances.” (quoting AdjustaCam).
Objective Weakness: By the time the district court ruled on its attorney fee determination, there were two additional relevant cases out of California federal court.
- McKinley (C.D.Cal. 2014): finding other claims of the patent invalid under 101.
- True Grit (C.D. Cal. 2019): holding that “no reasonable patent litigant would have believed” that claim 11 was “viable” after the McKinley decision.
Although these two district court were not binding on the Florida court, the appellate panel concluded that the district court should have expressly wrestled with their holdings before reaching an alternative outcome.
[T]he absence in the Attorney Fee Order of any reference to either relevant case, or any allusion to their opposing conclusions, is problematic.
So, on remand the district court will again consider whether the prevailing defendant – ShoppersChoice.Com gets its attorney fees.