Updated below to correct an error in my original analysis. -DC
WPEM LLC v. SOTI Inc. (Fed. Cir. 2021)
WPEM sued SOTI for patent infringement based upon its mobile-device software management “Speed Lockdown” tool. The complaint cites MobiControl Version 11 as infringing. In its answer, SOTI responded with information from its Version 10, which predates the asserted patent as well as other prior art references. Settlement discussions ensued:
- Offer 1: P offers to settle for $429k; D says “no, the patent is invalid.”
- Offer 2: P offers to settle for $150k; D says “no, the patent is invalid” and also sent P a R.11 notification (alleging that the complaint was filed without sufficient investigation and thus in violation of R. 11).
- Offer 3: P offers to settle for $75k; D says “no, the patent is invalid.”
- Offer 4: P offers to dismiss the case with prejudice and grant a license if D agrees to dismiss its counterclaims and abandon its request for attorney fees; D says “no.”
P (WPEM) subsequently asked that its case be dismissed with prejudice. The district court dismissed the case, but also found it exceptional under 35 U.S.C. 285 and awarded attorney fees of $180k. The primary basis of the district court’s award was WPEM’s failure to conduct sufficient pre-filing investigation and also continuing the case after learning of its frivolous case. The court wrote:
WPEM conducted no pre-filing investigation into the validity and enforceability of the Asserted Patent.
WPEM, LLC v. SOTI Inc., 2020 WL 555545 (E.D. Tex. Feb. 4, 2020).
UPDATE – I read through the district court case again and found that I had erred in my statement above (now with strikethrough). Rather, the district court particularly concluded that it “finds nothing exceptional about WPEM’s post-filing conduct.” The district court considered the progressive settlement offers, but did not find them improper in any way. Id.
On appeal, the Federal Circuit affirmed — giving deference to the district court’s judgment on exceptional case awards and finding no abuse of discretion. WPEM, LLC v. SOTI Inc., 2020-1483, 2020 WL 7238458, at *1 (Fed. Cir. Dec. 9, 2020)
WPEM’s argument on appeal was that a patentee need not conduct any investigation regarding the validity of its patents prior to filing a lawsuit because a patent is presumed valid and enforceable. Any invalidity defense is for the defendant. On appeal, the Federal Circuit did not disagree, but appears to have twisted the district court opinion somewhat.
Contrary to WPEM’s assertion, we do not read the district court’s opinion as failing to account for the presumptions of validity and enforceability. Instead, the court based its award of attorneys’ fees, in part, on the frivolous nature of WPEM’s infringement position (i.e., the substantive strength of WPEM’s litigation position)—an issue that could have easily been foreseen with an adequate pre-suit investigation (i.e., the unreasonable manner in which the case was litigated). As the court reasoned, because the Accused Technology is prior art to the ’762 patent, “if WPEM prevailed on its assertion that the Accused Technology is covered by the Asserted Patent, it would have had the effect of invalidating, rather than infringing, the Asserted Patent.” Because it is undisputed that the Accused Technology is prior art to the ’762 patent, see id., WPEM could not bring a successful infringement suit.
Id. The appellate decision makes logical sense but for the recognition that infringement analysis is a separate and distinct doctrine from anticipation and that the complaint (apparently) does a reasonable job of showing how the accused product actually practices the invention.
The patentee has now petitioned for en banc rehearing with the following two questions:
- When a plaintiff is not aware of any reason to question the validity of an issued United States Patent, is that plaintiff allowed to rely on the statutory presumption of validity when filing a patent infringement lawsuit?
- While invalidating the claims of a validly issued United States Patent requires clear and convincing evidence, is a District Court allowed to base a finding of exceptionality under §285 for an inadequate pre-suit investigation of patent validity using the lesser standard that the patent is likely invalid when the plaintiff is not aware of any reason to question validity?
[WPEM Petition for Rehearing].
= = =
Fees on Fees: The defendant had asked for $267k in attorney fees, but the district court only knocked-off about $87k of that — but awarding $180k. That $90k portion was the amount SOTI’s attorneys racked-up in drafting and arguing its motion for fees. The district court refused to award fees-on-fees in this case.
The Court understands that, in pursuing a § 285 recovery, parties will inevitably incur additional attorneys’ fees. However, in this case a near doubling of the amount already incurred in fees is simply unreasonable. At some point, a party must be mindful of the use and conservation of judicial and party resources and cannot (after it realizes it will prevail) continue to incur fees far in excess of any proportional relationship to the fees incurred in the merits portion of the case.
WPEM, LLC v. SOTI Inc., 2020 U.S.P.Q.2d 38024 (E.D. Tex. 2020).
= = = =
Bill Ramey is representing the patentee in the appeal; Robert Greeson for the defense. SOTI has not yet responded to the petition.
One more comment about trade secrets that I think is worth discussing.
I once listened to a lecture by one of the founders of Intel way back in the early 1980s.
Guess what he said? He said the biggest threat to his business was people he had trained leaving and starting up a company that competes with Intel. He even said that he was loath to teach new people all the tricks of the trade because so many had left and started up companies that compete with Intel.
Way back in the early 1980’s…?
The view you reference — known as guild mentality — predates the 1980’s by a considerable time period.
It surely does anon.
What it tells you is why SV via Chien is pushing so hard for trade secrets.
I think that the question of, “Must a Plaintiff Investigate a Patent’s Validity Prior to Suing for Infringement?” is not the right question.
Rather, the better question is, “What are the bare minimum steps that a Plaintiff take to Investigate a Patent’s Validity Prior to Suing for Infringement?”
I propose these steps:
Do you have a patent?
Have you paid any necessary maintenance fees?
Has there been any transaction that would invoke penalities under a non-statutory double patenting terminal disclaimer path?
Has this patent been adjudicated in an Article III forum, and by a clear and convincing level, removed the statutory presumption of validity?
Has this patent been subject to a taking of that stick in the bundle of property rights and placed back in a non-Article III forum, to which (regardless of any final decision) that statutory presumption of validity been removed as a part of the initiation decision?
These are the ONLY questions that need be asked in ANY investigation into validity.
Nothing more.
Good starting checklist, but there are others. Like inequitable conduct, or incorrect inventorship, or 102 prior art cited against foreign equivalents, that is apparent from the client or inventor files on the patent or application which the litigation attorney needs to read and have preserved before suing, or otherwise known to the patent suit attorneys.
Thanks Paul, worthy additions — although I can see some quibbling about the “102 art against foreign equivalents.” I am not aware that any such item has been found to de facto remove the statutory presumption for US items in the US.
The ‘reliance’ on equivalence (for anticipation as opposed to “102,” given that ANY foreign equivalent would NOT have been judged under 35 USC 102) may or may not be dispositive — and likely is a case by case thing, worthy of asking in a Best Practices mode, but not necessarily being a thing in a minimum practices mode.
Art cited as fully anticipatory against foreign equivalents can become an IC issue if it was not cited in the parent U.S. application, per a case noted earlier on this blog [even though that is now easily publicly searchable information].
But there could also be a possible legal ethics issue if an attorney for a client is actively urging a patent suit by that client on a patent that the attorney has good reason to know is not going to survive an IPR or validity trial.
Ah, thanks – yes, the IC issue did not make my cut as I presumed that the investigation was being done solely on an engagement outside of prosecution.
I do not think that dragging through the prosecution history for any such ‘hiccups’ is (or should be) a part of the minimal effort list. Best Practices list – sure.
As to the possible legal ethics issue for ‘urging patent suit’ – I think that you miss the point of the list here. The list is to CHECK to see if a condition exists. If – as you are positing – a condition is KNOWN to exist, that’s a different topic than what I am talking about.
anon — could you expound on this step / risk / penalty / path:
“Has there been any transaction that would invoke penalities under a non-statutory double patenting terminal disclaimer path?”
Thanks.
In the prosecution of non-statutory double patenting, a child of a first patent may have had a terminal disclaimer made which ‘chains’ the second patent to the first patent. If one then ones to enforce the second patent, the chain (same ownership of both patents) need be in place. If another party bought only a second patent, they would not be able to enforce that second patent.
“If one then ones” ==> “If one then goes”
Nobody is packing the court. The court behaved responsibly in re: staying out of the election. The danger has passed.
Breyer may decide the time is right, or he may not. Nothing anyone can do about it.
Court packing is far less a function of what the Court did and far more a function of what the parties WANT the Court to look like (prior to a next case coming through).
The number of Democrat senators on the record against increasing the number of justices on SCOTUS pretty much guarantees that it will remain at 9.
Whether the Democrats can pass term limits on justices is another issue though.
The context of those past ‘on record’ needs to be recognized.
There is a vast difference between “we are in the minority, so let’s not draw attention,” and “we are now in the majority and can implement what we (the Royal We being the “D” party) want.
Sorry for that little pesky fact.
What a good little thrall you are; repeating the talking point even after the election is over.
Your masters have got you all stirred up over what the left edge of the DNC babbles about, when it’s what Joe Manchin will accept that really matters.
How much were paint chips a part of your diet as a toddler?
Not enough to believe that that Manchin will vote to expand the Supreme Court, so apparently less than yours.
How odd if you to think that all of this rests with Manchin.
So no, your paint chip ingestion far exceeds the zero paint chips that I have ingested.
“Sorry for that little pesky fact.”
Sorry that’s not a fact at all. But you do you.
lol – sorry that you are sorry, but yes, that is a fact.
Please do not pull out your Neoliberal view with its malleability of facts. Thanks. (that would be you doing you).
I will take a moment to note here that “you being you” actually provided a link below that supports my position.
Pretty sure that fact escaped your notice.
Whether the Democrats can pass term limits on justices is another issue though.
I know the answer to this question: no Congressional majority, no matter how large, can enact Supreme Court term limits. Art. III provides that “[t]he judges… of the supreme… court… shall hold their offices during good behaviour… .”
If Congress passed a term limit, the first justice forced out by the new law would have standing to challenge the law’s constitutional supportability. The other justices would be the last word on whether the term limits are constitutional.
“no Congressional majority, no matter how large, can enact Supreme Court term limits.”
Not quite — at a certain majority level, there is this thing called Constitutional amendment…
Article III judges have life tenure, but no guarantee of life tenure at any particular court. They can serve a limited term, say 12 or 18 years, at SCOTUS and then be reassigned to another Article III court.
That’s a creative resolution.
I didn’t come up with it. It’s been around awhile.
I appreciate the flexibility of interpretation that you are bringing to the text to solve this problem. Nevertheless—as noted above—whether your reading of Art. III is a legally sound reading is a question that—in the final resort—would be resolved by 8 of the same 9 justices whom you mean to displace from office by this proposed legislation. Consider me skeptical that they are going to endorse your textual interpretation.
The AEI’s resident scholar disagrees with you. Take it up with him.
link to thehill.com
From that article:
“
“We don’t need to be promised a nice report about reform delivered to the White House,” said Yvette Simpson, who heads the progressive group Democracy for America.
“We need Vice President Biden to assure Americans that he will take bold action to ensure our courts don’t remain dominated by a right-wing fringe installed by Mitch McConnell to attack abortion rights, destroy health care reform, and dismantle our democracy,” she added, referring to Senate Majority Leader Mitch McConnell (R-Ky.), a key ally in President Trump’s conservative transformation of the federal judiciary”
This directly supports my view on these pages — and refutes the musings of ‘paint chip’ Ben.
I hope that you & they are right. I agree that term limits for the Court would be a salutary change, so I would be delighted to be wrong in my thinking about Art. III.
And if you can point to any authority whatsoever that found/held/decided that Article III’s “during good behavior” provision means that a justice of the supreme court is guaranteed to serve on that court for such term feel free to bring it to our attention. Thanks.
Just to be clear, the direct words of Article III being discussed at this point are:
“The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.”
The textualist in me looks at the purpose of the clause of (emphasis added) “hold their office” and note that the threat of loss of office being protected (even if pay were maintained, clearly prestige would not be) evokes the position that a judge may not be threatened with loss of the office that they currently hold.
Term limits though may not be viewed as “threat,” and may not invoke the protection with which this clause was provided for.
anon n bros, it needs to be an old age provision, not term limits.
6, sorry but the age limit would likely run afoul, as you would be removing someone entirely (not just shifting from one Article III position to another).
Let’s not entertain the ISM of ageism, eh?
Greg, I am shocked that you would actually dare to challenge the views of commentators here who regularly consider their personal interpretations of the Constitution and federal statutes to be superior to, and more important than, that of the Supreme Court? After all, a U.S. Senator said on the Senate Floor last night that the Senate [not any court] should decide if the decision of the Pennsylvania legislature and courts to allow unrestricted mail-in voting violated the Pennsylvania Constitution.
I certainly hope that my rebuttal is released from the filter — especially now that Greg has ‘politely’ walked back his position.
Spineless sniping from the sidelines deserves a full John Maynard Keynes treatment.
They’re not my “personal interpretations of the Constitution and federal statutes,” Paul. They’re the interpretations of fairly well known legal scholars and law professors.
AAA JJJ: Do you realize how many of the many pet theories of legal academics* get regularly shot down or ignored by the Sup. Ct. ? Watch what the Supremes do with the pending one about APJ appointments swallowed by a CAFC panel.
*and are so often trashed by those same commentators here, e.g., Prof. Lemley’s.
It’s not a “pet legal theory” of some academics, Paul. And the your attempt to analogize Arthrex to the proposal of term limits for SCOTUS justices is weak AF.
AAA JJ, I was not referring to any particular bit of proposed legislation, and my opinions on constitutionality are irrelevant. I will simply note the the Constitution says that Supreme Court Justices “shall hold their Offices during good Behaviour.” PERIOD. [This has always been held to mean that Justices hold office as long as they choose and can only be removed from office by impeachment.] Not by Congress getting rid of them by sending them off to the Waco division of W.D.TX after 18 years. And Greg’s irrefutable point is that only THEY get to finally decide if such legislation is Constitutional or not.
“and my opinions on constitutionality are irrelevant.”
What is irrelevant is your whin ing and sniping while refusing to engage on the merits.
You should look into STFU or engage on the merits – this particular path is the absolute worse combination.
“This has always been held to mean that Justices hold office as long as they choose and can only be removed from office by impeachment.] Not by Congress getting rid of them by sending them off to the Waco division of W.D.TX after 18 years.”
You haven’t pointed to anything that “held” that once appointed to SCOTUS a justice is entitled to remain there “during good behavior” and can not be moved to another Article III court.
Because you cannot.
As for Greg’s “irrefutable point,” yes SCOTUS would ultimately review any such legislation. I won’t speculate on the odds of 9 judges telling the legislature that passed such legislation and the president who signed it to go pound sand.
AAA JJ:
“because you can’t”
Ok – so what?
Your statement only indicates that the matter would be one of first impression. It does not indicate that your view or Paul’s view is the better view.
AAA JJ, on reflection, I have a question about the proposal to “shuffle off to Buffalo [D.C.]” Supreme Court justices after 18 years. Would that require the Sup. Ct. to continue deciding cases with a shrinking number of justices, or would it require a statutory change for Constitutional [but proven politically disastrous] “court packing”? What other alternatives are there?
BTW, if getting justices off the court was this easy, do you really think that FDR [one of the smartest and cleverest politicians ever], and the Congress he controlled in the 1930s, would not have tried it instead of proposing court packing?
The proposals I’ve seen 1) do not apply to the current justices and 2) provide that justices reassigned to other courts result in the president being able to appoint a replacement. I’ve seen proposals that include term limits and that result in each president getting at least two appointments every term.
I have no idea why FDR did not propose term limits. Maybe nobody thought of it. Maybe he felt time was of the essence and it would have been more expedient to simply increase the number of justices to the point where he had a majority of favorable votes.
“If Congress passed a term limit, the first justice forced out by the new law would have standing to challenge…”
An easy side-step here would be to apply term limits NOT to pre-existing appointments.
All one has to do is to take the context of the provision into account. That provision is a “can’t punish” one. If a priori the length of service at one station of the larger role of being an Article III judge were known and uniformly applied (going forward), then any aspect of “punishment” would be off the table.
I’m not aware of any proposal to have any new term limit legislation apply to sitting SCOTUS justices.
SCOTUS justices were required to “ride circuit” (i.e. serve on lower courts) when the court system was just starting out. There is no precedent that supports a conclusion that appointment to SCOTUS entitles a justice to serve on SCOTUS, and only SCOTUS, “during good behavior.” In fact, the historical precedent says otherwise.
Definitely worthy of discussion (and nice add of the point of riding circuit).
My point on distinguishing any application of new law on term limits was to provide an avenue that simply side-stepped ANY type of invocation of Constitutional protection.
If one avoids the issue, then one need not depend on how the Supreme Court happens to feel about that issue.
UPDATE – I read through the district court case again and found that I had erred in my statement above (now with strikethrough). Rather, the district court particularly concluded that it “finds nothing exceptional about WPEM’s post-filing conduct.” The district court considered the progressive settlement offers, but did not find them improper in any way. — Dennis
I think at this point we all know that the CAFC just says whatever they want to get the result they want on a case-by-case basis.
I don’t know a single person that has done litigation that has any respect for the judges on the CAFC.
Note that this is in contrast to when I started doing IP law when probably 80 percent of the people respected the judges on the CAFC by and large. There was general respect with a couple of people seen as classless judicial activists. Now, generally, they are all seen as classless judicial activists with one or two that have integrity.
… that’s what happens to Simians in a cage when firehosed.
Is everyone rooting for Warnock and Ossoff, as to induce a Breyer retirement?
No need for any retirement, as “stack the Court” will be in play.
You’ve got kool-aid on your upper lip.
Says the guy drowning in the stuff…
?? So, the most inconsequential thing you could think of is what is at stake, Ben?
The fact is that we can expect draconian trade secret law if Warnock and Ossoff are elected.
I used to think politics was about issues, but now I think it is all about corruption and money and the leaders of the D party care about pretty much nothing about their own power and money.
Just look at how magically so many members of Congress and presidential appointees become worth $30+ million.
What I think is happening is that social media has become so powerful that they flip any US election and that SV wants the Ds in for their continued monopolistic powers and for things like trade secret laws.
But, then that is just reality.
Plus, you know, the reason the South is turning D is the immigrants. Georgia has 400K new Hispanic voters since 2008, who vote something like 80 percent D. I know the news doesn’t talk about it but there isn’t some change in attitude among the current people. It is new people that are voting D that has changed things. And even writing this is scary as it is the truth but the cancel culture and charges of racism make it difficult to even discuss the reality of what is happening.
The whole USA has turned into a giant Alice decision.
I am not certain that the capture of the senate by the “D” party is inconsequential.
I AM certain that many ABT “D” sheeple are going to have a rude awakening due to the repercussions of Power Politics.
“… the leaders of the D party care about pretty much nothing about their own power and money.”
And the leaders of the Republikkkan party care about…?
Pretty much the same thing.
In other news, water is still wet.
>>Republikkkan party
About as bad as the D party maybe worse.
I honestly do not think this is the most inconsequential thing because whether the senate ends up 51-50 or 52-48, I expect very little legislation to happen 2021-2022. Appointments and Chairpersonships were basically the prize to be won on Tuesday.
Also, the DTSA passed 87-0 in the senate and 410-2 in the house. It seems unlikely that two extra Democrat senators will make a difference in this matter.
“Also, the DTSA passed 87-0 in the senate and 410-2 in the house. It seems unlikely that two extra Democrat senators will make a difference in this matter.”
You leftists and your pesky facts.
Lulz
I see (or rather don’t see) my reply — has not escaped the filter….
My bet Ben is that you are wrong. I think some major legislation will get passed. Probably health care and immigration reform and probably repealing Trump’s tax breaks.
My guess is that the Ds will see this as an opportunity to get a lot done and not make the same mistake they did the first two years after Obama was elected 2008-2010.
Do you see the Dems getting 10 Repubs to sign on to immigration reform, health care reform, and raising taxes? Or do you think they can get Manchin to vote against the filibuster and each of these items?
I rather hope you’re right about their productivity, I just expect otherwise.
For what it’s worth, I’ll admit that this type of impotent majority is fertile ground for bipartisan legislation regarding issues that most Americans do not care about… for example, trade secrets.
P.S. The 111th congress had between 57 and 60 Democratic caucusing senators. If they get nothing done this congress, with a razor thin 51-50 margin, it will be a different mistake.
Fair enough Ben. We’ll see. I would be stunned if they did anything like expand the Scotus.
“Probably health care and immigration reform and probably repealing Trump’s tax breaks.”
Very little on the healthcare, repealed tax breaks is all I see. Immigration reform won’t happen, there’s too much internal debate in both of the parties.