United States District Court, E.D. Virginia, Norfolk Division
OPINION AND ORDER
S. DAVIS, UNITED STATES DISTRICT JUDGE
matter is before the Court on "Defendants' Renewed
Motion for Exceptional Case Finding and Attorneys' Fees,
" filed by S&N Locating Services, LLC and S&N
Communications, Inc. (collectively "Defendants" or
"S&N"). ECF No. 573. In their motion,
Defendants request that the Court award them attorneys'
fees because this is an "exceptional case" within
the meaning of 35 U.S.C. § 285. The motion has been
fully briefed. Because the Court finds that oral argument is
not necessary, the matter is now ripe for decision.
FACTUAL AND PROCEDURAL BACKGROUND
CertusView Technologies, LLC ("Plaintiff" or
"Certusview") holds the five related patents,
involving technology for prevention of damage to underground
infrastructure, at issue in this matter: United States Patent
No. 8, 340, 359 (w/359 Patent"), United
States Patent No. 8, 265, 344 (w/344
Patent"), United States Patent No. 8, 290, 204
("'204 Patent"), United States Patent No. 8,
532, 341 ("'341 Patent"), and United States
Patent No. 8, 407, 001 ("'001 Patent")
(collectively, the "Patents-in-Suit"). August 2,
2016 Op. & Order, 17-18, ECF No. 542. The Patents-in-Suit
issued in 2012 and 2013.
products were developed as a means to improve record-keeping
and documentation of "locate operations, "
id. at 23, that is, "the application of paint,
flags, or some other marking object or material to indicate
the presence of an underground facility, " Joint Claim
Construction Chart 2, ECF No. 101-2. Specifically, the
Patents-in-Suit claim inventions related to CertusView's
e-Sketch technology. ECF No. 542, at 24. Stated broadly, the
e-Sketch technology allows locators to document a locate
operation more accurately and to create a searchable
electronic record that includes such documentation and
additional specific data regarding the locate operation.
29, 2013, CertusView filed a patent infringement action in
this Court against S&N. Compl., ECF No. 1. On December 6,
2013, CertusView filed an amended complaint, alleging
infringement of the five Patents-in-Suit. See Am.
Compl., ECF No. 55. On December 23, 2013, S&N filed an
Answer denying CertusView's allegations of infringement
and asserting counterclaims against CertusView, seeking
declaratory judgments of non-infringement and invalidity
regarding all five Patents-in-Suit. S&N's Answer,
Affirmative Defenses, Countercls., ECF No. 61. After the Supreme
Court issued its June 2014 Alice decision, on
October 28, 2014 -- following a Markman hearing,
issuance of a claim construction order, and a limitation on
the number of asserted patent claims -- S&N filed a
Motion for Judgment on the Pleadings, pursuant to Federal
Rule of Civil Procedure 12(c), contending that the
Patents-in-Suit were invalid as they did not claim patentable
subject matter under 35 U.S.C. § 101. Mot. J., ECF No.
197. On January 21, 2015, the Court granted S&N's
Motion for Judgment on the Pleadings and found that all of
the asserted claims of the Patents-in-Suit were invalid for
failure to claim patentable subject matter under 35 U.S.C.
§ 101. Sec. 101 Op. & Order, ECF No. 250.
November 10, 2015, U.S. Patent 9, 183, 646 ("the
'646 patent") issued. Id. at 1, ECF No.
576-3. "On the face of the '646 patent, under
'Related U.S. Application Date, ' it shows that the
'646 patent is [a] ' [c] ontinuation of application
No. 13/950, 655, filed on Jul. 25, 2013, which is a
continuation of application No. 13/796, 487, filed on Mar.
12, 2013, now Pat. No. 8, 532, 341 . . . .'" Teja
Aff. at 2, ECF No. 576-1. "U.S. Patent No. 8, 532, 341
('the '341 patent') is the *parent patent' to
the 646 patent and was asserted in this litigation."
Id. "The '646 patent is titled Apparatus,
Systems and methods to Generate Electronic Records of
Underground Facility Marking Operations Performed with
GPS-Enabled Marking Devices.'' Id. at 1. The
'341 patent is titled Electronically Documenting Locate
Operations for Underground Utilities. Id. at 14, ECF
No. 250. Because the '646 patent is a continuation of the
'341 patent, "they share the same specification and
are directed to the same invention, though there may be some
variation in the scope of the subject matter claimed in the
two patents." ECF No. 576-1, at 2; Transco Products
Inc. v. Performance Contracting, Inc., 38 F.3d 551,
555-56 (Fed. Cir. 1994) ("A' continuation'
application claims the same invention claimed in an earlier
application, although there may be some variation in the
scope of the subject matter claimed. See MPEP §
201.07."). The '341 patent issued September 10,
2013, over three months after this suit was filed, but before
the Alice decision of June 19, 2014. The '646
patent issued November 10, 2015, "over a year after
Alice and after CertusView submitted this
Court's § 101 [Opinion and] Order to the
examiner." Pl's Resp. Opp'n at 9, ECF No. 576;
ECF No. 576-1, at 2 (attaching exhibit showing Information
Disclosure Statement signed by Examiner Bhatnagar disclosing
§ 101 Order at entry C488).
March 8, 2016, the matter proceeded to a five-day bench trial
on S&N's declaratory judgment counterclaim against
CertusView for inequitable conduct. The Court then took the
matter under advisement pending submission of post-trial
briefs. On June 15, 2016, after the conclusion of the bench
trial, CertusView filed its Motion for Partial
Reconsideration of Judgment of Patent Ineligibility under 35
U.S.C. § 101. Mot. Partial Recons., ECF No. 533. On
August 2, 2016, the Court denied S&N's declaratory
judgment counterclaim for inequitable conduct on each of the
five grounds alleged. August 2, 2016 Op. & Order, ECF No.
542. On August 10, 2016, the Court denied CertusView's
motion for partial reconsideration. Reconsid. Op. Sc
Order, ECF No. 545. Final judgment was entered on August 10,
2016. Final Judg., ECF No. 547. On August 24, 2016,
Defendants filed their second Motion for Exceptional Case
Finding and Attorneys' Fees. ECF No. 549. By Order of
November 21, 2016, the Court denied Defendants' second
motion without prejudice to Defendants' right to refile
their motion within fourteen (14) days after the United
States Court of Appeals for the Federal Circuit issued a
mandate finalizing judgment on the merits of the
Plaintiff's pending appeal. Mem. Order, ECF No. 560. The
Federal Circuit affirmed this Court's § 101
invalidity ruling on August 11, 2017, ECF No. 570, and issued
a mandate finalizing the judgment on September 18, 2017, ECF
No. 571. S&N filed this renewed motion for exceptional
case finding and attorneys' fees on October 2, 2017.
Certusview opposes such motion. ECF No. 573.
to Section 285 of the Patent Act, 35 U.S.C. § 285,
w[t]he court in exceptional cases may award
reasonable attorney fees to the prevailing
party." Construing the word "exceptional . .
. in accordance with [its] ordinary meaning, " the
Supreme Court recently explained that an exceptional case:
is simply 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. District courts may determine whether a case is
"exceptional" in the case-by-case exercise of their
discretion, considering the totality of the circumstances.
Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 134 S.Ct. 1749, 1756 (2014).
the standard adopted in Octane Fitness, "a
district court may award fees in the rare case in which a
party's unreasonable conduct - while not necessarily
independently sanctionable - is nonetheless so
'exceptional' as to justify an award of fees."
Id. at 1757. When weighing the evidence to determine
whether a case is exceptional, the court may "consider a
'nonexclusive' list of 'factors, ' including
'frivolousness, motivation, objective unreasonableness
(both in the factual and legal components of the case) and
the need in particular circumstances to advance
considerations of compensation and deterrence."
Id. at 1756 n.6 (quoting Fogerty v. Fantasy,
Inc., 510 U.S. 517, 534 n. 19 (1994)) (noting a
nonexclusive list of factors district courts may utilize in
determining whether to award fees under similar provision in
Copyright Act). Any such exceptional case determination must
find support in a "preponderance of the evidence."
Octane Fitness, 134 S.Ct. at 1758.
S&N move for an exceptional case finding on the grounds
that Plaintiff CertusView 1) asserted objectively
unreasonable patent claims, and 2) conducted the litigation
in an unreasonable manner. Defs.' Br. Support 1, ECF No.
Assertion of Objectively Unreasonable Patent Claims
alleges that Plaintiff Certusview asserted objectively
unreasonable patent claims when it "knowingly filed and
maintained this action for infringement of patent claims
drawn to the abstract idea of documenting a locate operation
- a process that has long been performed by hand - even
though its claims were facially ineligible from the
outset." Id. S&N claims that, w[a]s a
result, CertusView7s continued assertion of the
claims-in-suit in the face of such authority was
objectively-unreasonable." Id. at 2. S&N
argues that this case is also exceptional because CertusView
knowingly asserted facially ineligible patent claims for more
than a year and half. Id. at 3. S&N relies on
Inventor Holdings, LLC v. Bed Bath & Beyond,
Inc., No. 14-448-GMS, 2016 U.S. Dist. LEXIS 70345 at
*6-7 (D. Del. May 31, 2016) as a case on point, noting that
the patent holder there filed suit after Bilski v.
Kappos, 561 U.S. 593 (2010) and before Alice Corp.
Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347 (2014),
and the court found that especially after Alice, the
patent owner "was on notice that its claims, much like
the claims in Bilski and Alice, . . . were
objectively ineligible under § 101" so as to
support an exceptional case finding. ECF No. 574 at 4.
S&N concludes that, because CertusView has knowingly
asserted claims that describe a manual process simply being
implemented electronically using computing components, and
because Supreme Court precedent before this suit and many
opinions after filing have squarely rejected such claims as
unpatentable, CertusView has asserted objectively baseless
patent claims rendering this case truly exceptional.
Id. at 9.
responds that its patent eligibility positions were
sufficiently strong to overcome an exceptional case finding
because it acted reasonably in bringing and maintaining this
suit as ' [i] t was not unreasonable for CertusView to
conclude, based on the fact that its patents were examined
and issued under [Mayo Collaborative Servs. v. Prometheus
Labs, Inc., 566 U.S. 66 (2012)], that they claimed
patent-eligible subject matter", and were entitled to a
presumption of validity. ECF No. 576, p. 1, 4-5. CertusView
asserts that the two-part test for patent eligibility
established in 2012 in Mayo (prior to the filing of
this suit), applied to the "law of nature"
exception, and that such test was extended to the
"abstract idea" exception to patentability in 2014
(after this suit was filed) by Alice, 134 S.Ct.
2347. ECF No. 576 at 1, 11. Certusview goes on to note that
even after the Supreme Court's Alice decision,
"the Patent Office allowed issuance of a closely related
continuation patent of the e-Sketch patents-in-suit -
underscoring that reasonable minds could differ regarding
eligibility." Id. at 1. Certusview further
argues that it was not unreasonable "to conclude, based
on the Patent Office's repeated allowances of e-Sketch
patents after Mayo, and the allowance of another
continuation patent after Alice was decided, that
its patents claimed patent-eligible subject matter."
support for this position, CertusView points to the evolving
state of § 101 jurisprudence after Alice, and
this Court having twice observed that the eligibility issues
in this case were "substantial and novel" as
evidenced by S&N's delay of seventeen months in
raising a § 101 defense. Id. at 5. Certusview
further posits that, notwithstanding the fact that its
"patents were later invalidated after Alice was
decided [and] while this suit was pending . . . that does not
make CertusView7s lawsuit ' exceptional, ' even if
CertusView's position was ultimately incorrect."
Id. at 1.
reply, S&N argues that "CertusView7s infringement
claims were objectively unreasonable from the outset in light
of the Supreme Court's clear guidance in Bilski v.
Kappos, 561 U.S. 593 (2010) and Mayo . . .,
both of which issued well before CertusView filed this action
on May 29, 2013." Defs'. Reply Br. at 3, ECF No.
577. Moreover, S&N argues, "[w]hile CertusView may
claim some arguable uncertainty in the law under
Bilski, by the time of Alice, CertusView
was on ample notice that its claims covered an abstract idea
and that the introduction of a computer did not alter the
result that they were ineligible." Id. at 5-6.
Presumption Coupled with Post-Mayo Issuance
282(a) of the Patent Act provides that "[a] patent shall
be presumed valid, " and that "[t]he burden of
establishing invalidity of a patent or any claim thereof
shall rest on the party asserting such invalidity." 35
U.S.C. § 282(a). CertusView argues that '[w]hen [it]
filed this case, [it] was entitled to rely on the presumption
that the Patent Office did its job, and that patent claims
issued under the current legal standards are valid when
issued." ECF No. 576, at 5. CertusView concludes that,
since each asserted patent issued after the Supreme
Court's decisions in Bilski and Mayo,
it was not unreasonable for it to conclude that patents
issued by the Patent Office under the prevailing
Mayo standard for patent eligibility were in fact
eligible for patenting. Id. at 5-6. S&N does not
question whether there is a presumption of validity in this
context, instead responding that 'the mere fact that the
Patent Office issued its claims after Bilski and
Mayo does not mean that it was objectively
reasonable to conclude that those claims were eligible,
particularly after Alice" and in light of