08/02/2014

Cartner v. Alamo Group: Frivolous Arguments and Bad Faith Conduct Render Case 'Exceptional' in Awarding Attorney's Fees


Category: Damages   
 
 
 
By: Karthik Subramanian, Contributor 
 
TitleCartner v. Alamo Group, Inc., No. 2013-1293, 1314 (Fed. Cir. April 11, 2014) (non-precedential).
Issues"[1] Cartner argues its infringement contentions were objectively reasonable and that the district court clearly erred in finding the case exceptional. [2] Alamo cross appeals the attorney fees award, contending Cartner’s infringement arguments became frivolous long before this court’s invalidity decision, and arguing the fee award should be calculated from an earlier date.”
Cartner, at *8 (text added).
Holdings"[1] Because the district court properly found this case exceptional [in light of Cartner’s frivolous infringement arguments and his bad faith conduct regarding equivalents], and [2] because it did not abuse its discretion in determining the fee award [by selecting one date applicable to all accused products], this court affirms.”
Id. at *2 (text added).
 
 
 

Procedural History
“Plaintiff-Appellant Motrim sells industrial mowing and trimming equipment and is the exclusive licensee of the ’284 patent. Cartner is Motrim’s president and the named inventor of the ’284 patent. Alamo also supplies mowing and trimming equipment, including the two different brands of mowers accused in this case: (1) the Tiger mowers and (2) the Alamo mowers. On May 30, 2007, Cartner filed a patent infringement complaint against Alamo, asserting, inter alia, claims 5 and 12 of the ’284 patent. In particular, Cartner asserted claim 12 against the Alamo mowers, and claims 5 and 12 against the Tiger mowers. On May 21, 2008, the district court issued an order construing the disputed claim terms. [...] The parties then filed a joint stipulation that the court’s construction of one phrase in claims 5 and 12—“said flow control orifice being constantly operative”—rendered the claims invalid for lack of written description under 35 U.S.C. § 112, and the district court entered final judgment of patent invalidity."
Cartner, at *6 (internal citations omitted).
“Cartner appealed, and this court modified the construction of the “control orifice” limitation and vacated and remanded the judgment of invalidity on June 17,
2009. [...] On remand, the parties resumed discovery in the district court with respect to
infringement. [...] “On March 16, 2010, Alamo filed a motion to declare the case exceptional pursuant to 35 U.S.C. § 285. Alamo contended Cartner’s infringement claims were frivolous because they ignored multiple limitations in claims 5 and 12, including: (1) claim 12’s limitation that the “motor is disconnected from a hydraulic pump” (the “disconnected" limitation), (2) claim 12’s requirement that there is no loss of fluid between the first and second fluid lines during deceleration (the “loss of fluid” limitation), and (3) claim 5 and 12’s limitation that the relief valve in the third fluid line regulates the flow of fluid between the second and first fluid lines (the “relief valve” limitation).
Id. at *6-7 (internal citations omitted).
“The motion was referred to the magistrate judge, who found, by clear and convincing evidence, that the case was exceptional. Over Cartner’s objection, the district court
adopted the magistrate judge’s recommendation that Alamo had proved the case was exceptional under 35 U.S.C. § 285. [...] The district court referred the matter back to the magistrate judge to determine the amount of the attorney fee award. Alamo requested attorney fees and costs in the amount of $608,899.55, calculated from August 10, 2007, the date when Alamo provided Cartner with a copy of the Tiger mower schematics. The magistrate judge granted-in- part and denied-in-part, awarding $358,516.44 in attorney fees and costs calculated from June 17, 2009. [...] Cartner filed a timely appeal, and Alamo noted across-appeal. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (2012).”
Id. at *7-8 (internal citations omitted).
 
 
 
Legal Reasoning (Dyk, Moore, Wallach)
[1] Exceptional Case Analysis
Standard for finding a case exceptional
“A “court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. For an award of attorney fees under § 285, the prevailing party must “establish by clear and convincing evidence that the case is ‘exceptional,’” and “a court must determine whether an award of attorneys’ fees is appropriate and, if so, the amount of the award.” Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1308 (Fed. Cir. 2012). “One way to show a case is exceptional is to prove litigation misconduct, which “includes advancing frivolous arguments during the course of the litigation or otherwise prolonging litigation in bad faith.” Id. at 1315–16; [...] An argument is frivolous when it is “at least objectively unreasonable” at the time it was made. Highmark, 687 F.3d at 1316. This court reviews de novo whether an argument was objectively unreasonable. Id.
Cartner, at *8 (some internal citations omitted).
“An attorney fees award under § 285 “‘must bear some relation to the extent of the misconduct,’” so an argument that was frivolous for only part of the litigation must be
limited accordingly. Id. (quoting Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1344 (Fed. Cir. 2001)). A fee award under § 285 may only “compensate a party for the ‘extra legal effort to counteract the [ ] misconduct.’” Id. (quoting Beckman Instr., Inc. v. LKB Produkter AB, 892 F.2d 1547, 1553 (Fed. Cir. 1989)) (alteration in original).
The district court’s award of attorney fees is reviewed for an abuse of discretion. MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 916 (Fed. Cir. 2012).”
Id. at *9.
The three ignored Limitations
A. The “Without a Loss of Fluid” Limitation“The district court correctly concluded it was objectively unreasonable for Cartner to argue the Tiger mower could meet the “without a loss of fluid” limitation when that limitation was added to distinguish a system that was, in relevant part, the same as the Tiger mower.”
Id. at *13.
B. The “Regulated by a Relief Valve” Limitation“The district court properly determined this argument was frivolous and contradicted by Cartner’s own arguments on the “without a loss of fluid” limitation. . . Although the brake relief valve must be open for the fluid to follow this path, there is no reasonable argument that the brake relief valve “controls whether and how much fluid may flow.”
Id. at *14.
C. The “Disconnected” Limitation“While Cartner claims he had a good faith belief that disclosure was not required, this court must defer to the district court’s resolution of that factual question.”
Id. at *17.
Totality of Circumstances“This court need not determine whether this instance of bad faith, standing alone, would adequately support an exceptional case finding. It is sufficient to conclude that the district court did not clearly err in finding this case exceptional under the “totality of the circumstances.” See Yamanouchi Pharm. Co. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1347 (Fed. Cir. 2000) (“In assessing whether a case qualifies as exceptional, the district court must look at the totality of the circumstances.”)”
Id. at *18.
[2] Attorney's Fees Analysis
Determining reasonable attorney’s fees
“A district court abuses its discretion when its “decision is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary[,] or fanciful.” Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1328 (Fed. Cir. 2003) (internal quotation marks and citation omitted).“
Cartner, at *19.
“It was reasonable for the district court to start calculating the attorney fee award as of this court’s prior decision in Cartner II, which resolved invalidity and rendered all claim constructions final. The district court’s exceptional case finding was closely tied to constructions of the relevant claim limitations. At least two of Cartner’s arguments were found unreasonable in view of the relevant claim constructions: (1) the “relief valve” limitation was found frivolous in light of the parties’ agreed-upon construction, and (2) the “disconnected” limitation was found frivolous in light of the district court’s claim construction. Although the “without a loss of fluid” limitation arguably became frivolous as of August 10, 2007, when Cartner received the Tiger schematic, this limitation applies only to the Tiger mowers, not the Alamo mowers. To the extent Alamo contends the district court should have calculated different start dates for the Alamo mowers and the Tiger mowers, the district court did not abuse its discretion in selecting one date applicable to all accused products.”
Id. at *20.
“This court’s decision in Cartner II vacated the invalidity judgment and left Cartner free to pursue infringement, at which point Cartner was plainly unjustified in prolonging the litigation. See MarcTec, 664 F.3d at 919–21 (holding it was litigation misconduct for a plaintiff to “persist[ ] in advancing unfounded arguments that unnecessarily extended [the] litigation,” and that plaintiff’s “decision to continue the litigation after claim construction” supported the exceptional case finding). The district court’s award of $358,516.44 properly reflects the “extra legal effort” Alamo had to expend to “counteract [Cartner’s] misconduct.” See Highmark, 687 F.3d at 1316 (quoting Beckman, 892 F.2d at 1553). The attorney fees award is affirmed.”
Id. at *21.
Conclusion
“For the foregoing reasons, and because this court finds Cartner’s remaining arguments unpersuasive, the district court’s exceptional case finding and attorney fees award under 35 U.S.C. § 285 are affirmed.”
Cartner at *21.
 
 
 
 
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