**4 On October 28, 2010, the Plaintiffs filed their Complaint for Declaratory and Injunctive Relief.
See Doc. 1 (“Complaint”). They assert ten Counts against Leviton Manufacturing: (i) Count I is a claim for declaratory judgment and injunctive relief, requesting a ruling from the Court that Leviton Manufacturing violated the CSA's exclusive forum-selection provision; (ii) Count II is a claim for declaratory judgment of non-infringement based on license or estoppel; (iii) Count III is a claim for declaratory judgment of non-infringement of the ′124 patent; (iv) Count IV is a claim for declaratory judgment of non-infringement of the ′151 patent; (v) Count V is a claim for declaratory judgment of invalidity of the ′124 patent; (vi) Count VI is a claim for declaratory judgment of invalidity of the ′151 patent; (vii) Count VII is a claim for declaratory judgment of invalidity of the ′124 and ′151 patents because of prosecution laches; (viii) Count VIII is a claim for declaratory judgment of inequitable conduct with respect to the ′124 and ′151 patents; (ix) Count IX is a claim for attorneys' fees on the ground that this case is an “exceptional case” under 28 U.S.C. § 285; and (x) Count X is a claim for breach of contract. Complaint ¶¶ 40–116, at 9–23. Leviton Manufacturing asserts three counterclaims against the Plaintiffs: (i) Counterclaim I is for infringement *1121 of the ′124 patent; (ii) Counterclaim II is for infringement of the ′151 patent; and (iii) Counterclaim III is a claim for trade-secret misappropriation under Georgia Code §§ 10–1–763 through 64.
See Defendant Leviton Manufacturing Co. Inc.'s Answer, Defenses, and Counterclaims to Complaint for Declaratory and Injunctive Relief at 19–25, filed December 15, 2010 (Doc. 59)(“Answer”). Leviton Manufacturing asserts Counterclaim III against GPG only.
See Answer ¶¶ 162–73, at 22–24.
The Court issued a Memorandum Opinion and Order, 2010 WL 5559750 (Doc. 41) (“Nov. 30, 2010 MOO”) on the Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction, filed November 2, 2010 (Doc. 5), granting the Plaintiffs' request for a preliminary injunction. The Court enjoined Leviton Manufacturing to take all actions necessary to secure dismissal of all claims of patent infringement asserted against the Plaintiffs in the ITC action and the action in the Northern District of California.
See Nov. 30, 2010 MOO at 46. The Plaintiffs also requested a temporary restraining order compelling Leviton Manufacturing to stay the ITC action, but the Court denied that requested ruling, finding it unnecessary in light of the Court's granting of the preliminary injunction.
See Nov. 30, 2010 MOO at 46. On December 8, 2010, Leviton Manufacturing filed a Notice of Appeal, appealing the Court's grant of the preliminary injunction to the United States Court of Appeals for the Federal Circuit.
See Notice of Appeal at 1, filed December 8, 2010 (Doc. 53). On July 8, 2011, the Federal Circuit issued a Judgment affirming the Court's grant of the preliminary injunction.
See Judgment at 1, filed October 5, 2011 (Doc. 146).
**5 In early 2011, General Protecht moved to dismiss Leviton Manufacturing's trade-secret claim for lack of subject-matter jurisdiction.
See GPG's Motion to Dismiss Leviton's Trade Secret Misappropriation Counterclaim for Lack of Jurisdiction at 1, filed January 10, 2011 (Doc. 73)(“GPG's MTD”). General Protecht asserts that there is no common nucleus of fact between the federal causes of action relating to patent infringement, over which the Court has original subject-matter jurisdiction under 28 U.S.C. § 1331, and the trade-secret counterclaim Leviton Manufacturing asserts against General Protecht.
See Memorandum in Support of GPG's Motion to Dismiss Leviton's Trade Secret Misappropriation Counterclaim for Lack of Subject Matter Jurisdiction at 1–3, filed January 10, 2011 (Doc. 74)(“GPG's MTD Memo.”). It notes that the Court has only supplemental jurisdiction over the trade-secret claim.
See GPG's MTD Memo. at 3. General Protecht asserts that diversity jurisdiction does not exist in this case, because some Plaintiffs and the Defendant share citizenship, thus destroying complete diversity.
See GPG's MTD Memo. at 3. General Protecht asserts that the dispute underlying the trade-secret claim is not so related as to be part of the same case or controversy as the dispute underlying the patent claims.
See GPG's MTD Memo. at 3–4. General Protecht argues that, even if supplemental jurisdiction exists over the trade-secret claim, the Court should decline to exercise supplemental jurisdiction over that claim.
See GPG's MTD Memo. at 4–6.
On November 3, 2011, Leviton Manufacturing filed its response to General Protecht's motion to dismiss.
See Leviton's Memorandum of Law in Opposition to GPG's Motion to Dismiss Leviton's Trade Secret Counterclaim for Lack of Subject Matter Jurisdiction (Doc. 150) (“Response to GPG's MTD”). It asserts that its trade-secret counterclaim arises out of the same common nucleus of operative fact as the patent dispute.
See Response to GPG's *1122 MTD at 1. It contends that “[t]he trade secret counterclaim involves GPG's efforts to misappropriate Leviton's trade secrets, including those related to ground fault circuit interrupters (‘GFCIs'), the same type of products at issue in the patent claims and counterclaims.” Response to GPG's MTD at 1. Leviton Manufacturing notes that “[t]he trade secret misappropriation occurred in 2008, before the ink was dry on the October 2007 Settlement Agreement that forms the basis of the of [sic] GPG's breach of contract claim.” Response to GPG's MTD at 1–2. Leviton Manufacturing argues that there will be “substantial factual overlap” between the trade-secret claim and the patent claims. Response to GPG's MTD at 1. Leviton Manufacturing contends that exercising supplemental jurisdiction over the trade-secret claim is appropriate.
See Response to GPG's MTD at 5–8. Leviton does not, however, raise any argument that diversity jurisdiction is present over its trade-secret claim.
See Response to GPG's MTD at 1–8; Answer ¶¶ 132–33, at 15. General Protecht filed its reply brief on November 21, 2011.
See Reply Brief in Support of GPG's Motion to Dismiss Leviton's Trade Secret Misappropriation Counterclaim for Lack of Subject Matter Jurisdiction (Doc. 151).
**6 In October of 2011, Leviton Manufacturing filed a motion to dismiss.
See Defendant Leviton Manufacturing Co., Inc.'s Motion to Dismiss Patent Claims and Counterclaims at 1, filed October 11, 2011 (Doc. 144)(“Leviton's MTD”). Leviton Manufacturing asks the Court to enter “an order dismissing its First and Second Counterclaims” for patent infringement with prejudice. Leviton Manufacturing Co., Inc.'s Memorandum of Law in Support of Its Motion to Dismiss Patent Claims and Counterclaims at 1, filed October 11, 2011 (Doc. 145) (“Leviton's MTD Memo.”). It argues that “[t]he dismissal of its Patent Counterclaims with prejudice by Leviton coupled with the this [sic] Court's decision, as affirmed by the” Federal Circuit's decision, that the “Plaintiffs have an implied license to the ′124 and ′151 patents for the products currently at issue, render moot both the Patent Counterclaims and Patent Claims.” Leviton's MTD Memo. at 1–2 (footnote omitted). It contends that the Court should dismiss Counts II through VIII as moot.
See Leviton's MTD Memo. at 2–5. Leviton Manufacturing asserts that, once it dismisses its patent counterclaims, there will “no longer [be] a ‘substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’ ” Leviton's MTD Memo. at 3–4 (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007)). It contends that the Federal Circuit has recognized that “a covenant not to sue already exists” in the parties' earlier settlement agreement and that, thus, the case is now moot. Leviton's MTD Memo. at 4.
On November 3, 2011, the Plaintiffs responded to Leviton's MTD.
See Plaintiffs' Response to Leviton's Motion to Dismiss Patent Claims and Counterclaims (Doc. 149) (“Response to Leviton's MTD”). The “Plaintiffs agree that Leviton's infringement counterclaims should be dismissed with prejudice,” and they also consent to dismissal of Counts III and IV without prejudice. Response to Leviton's MTD at 1. They oppose dismissal of the remaining Counts that they have asserted against Leviton Manufacturing.
See Response to Leviton's MTD at 1. They assert that, rather than dismiss Count II as moot, the Court should enter judgment in favor of the Plaintiffs on Count II based on the Federal Circuit's finding that the Plaintiffs have an implied license to the ′ 124 and ′151 patents for the products described in the parties' settlement agreement.
See *1123 Response to Leviton's MTD at 3. The Plaintiffs recognize, however, that “the Federal Circuit's opinion was technically only affirming this Court's grant of a preliminary injunction.” Response to Leviton's MTD at 3. They also assert that, even if Leviton Manufacturing dismisses its patent-infringement claims with prejudice, their claims asserting that Leviton Manufacturing's patents are unenforceable and/or invalid are not moot.
See Response to Leviton's MTD at 4–5, 9–13. The Plaintiffs contend that Leviton's argument that a covenant not to sue makes this dispute moot is not persuasive given that “Leviton did not offer a covenant not to sue during the litigation.” Response to Leviton's MTD at 6. They argue that, “[i]nstead [,] there has been an adjudication of non-infringement based on implied license, and it is only the adjudicated finding of non-infringement—
not any voluntary change of position prior to adjudication—that prevents Leviton from pursuing its infringement claims against Plaintiffs.” Response to Leviton's MTD at 6 (emphasis in original). The Plaintiffs also argue that, “[e]ven if the Court were to agree with Leviton that Plaintiffs' invalidity and unenforceability claims are moot, the Court retains subject matter jurisdiction to decide Plaintiffs' unenforceability claims based on Plaintiffs' claim for attorneys' fees under § 285.” Response to Leviton's MTD at 13.
**7 On November 21, 2011, Leviton Manufacturing filed its reply brief to the Response to Leviton's MTD.
See Leviton's Reply to Plaintiffs' Opposition to Leviton's Motion to Dismiss Patent Claims and Counterclaims (Doc. 154)(“Reply to Response to Leviton's MTD”). It asserts that, even if the Court can exercise jurisdiction over the remaining patent claims in the Plaintiffs' declaratory judgment action, it should decline to do so.
See Reply to Response to Leviton's MTD at 7–10. On November 30, 2011, the Plaintiffs filed a surreply brief.
See Plaintiffs' Surreply Brief in Opposition to Leviton's Motion to Dismiss Patent Claims and Counterclaims (Doc. 158–1)(“Surreply”). The Plaintiffs argue that the Federal Circuit's “finding of implied license renders the infringement issue fully litigated.” Surreply at 2.
On January 18, 2012, Harbor Freight and Central Purchasing informed the Court that, in contradiction to their earlier position, they now consent “to the dismissal of Counts III–VIII as they apply to” them, “so long as the dismissal is” without prejudice. Letter to the Court from Mark J. Rosenberg at 1 (dated Jan. 18, 2012), filed January 17, 2012 (Doc. 165). On February 14, 2012, the remaining Plaintiffs, besides Harbor Freight and Central Purchasing, informed the Court that they are “willing to consent to dismissal of Counts III through VIII” if dismissal is without prejudice. Letter to the Court from William F. Long at 1 (dated February 14, 2012), filed February 14, 2012 (Doc. 168).
At the hearing on February 16, 2012, the Court inquired whether considerations of fairness and efficiency have any bearing on its determination whether it has supplemental jurisdiction over the trade-secret claim.
See Transcript of Hearing at 13:11–15 (taken Feb. 16, 2012)(Court)(“Feb. 16, 2012 Tr.”).
[6] Leviton Manufacturing acknowledged that the Court must first decide whether it has supplemental jurisdiction over the claim and then it can decide whether it will choose to exercise supplemental jurisdiction over that claim.
See Feb. 16, 2012 Tr. at 13:16–19 (Shatzer). Leviton Manufacturing *1124 asserted that its trade-secret claim shares the most facts in common with the patent-infringement claims it has asserted against the Plaintiffs and with the Plaintiffs' claims of non-infringement.
See Feb. 16, 2012 Tr. at 14:19–15:2 (Court, Shatzer). The Plaintiffs acknowledged that the Court is competent to handle the trade-secret claim, but emphasized that the Court has no jurisdiction to hear that claim.
See Feb. 16, 2012 Tr. at 15:25–16:7 (Long). The Plaintiffs asserted that the alleged misappropriation of the trade secrets took place at least in part in Georgia and that the alleged injury occurred in New York.
See Feb. 16, 2012 Tr. at 16:9–18 (Court, Long). Leviton Manufacturing noted that it would have the same expert testify regarding damages for each of its counterclaims.
See Feb. 16, 2012 Tr. at 21:9–22:16 (Shatzer).
**8 During a discussion of Leviton's MTD Memo., Leviton asserted that the Court should not state whether the dismissal of the claims to which the parties have agreed to dismissal is with or without prejudice, but should state instead that it will dismiss the claims for lack of subject-matter jurisdiction based on the lack of a case or controversy.
See Feb. 16, 2012 Tr. at 26:10–22 (Shatzer). The Plaintiffs argued that, rather than agreeing with Leviton that the claims they have asserted in Counts III through VIII are moot, they have chosen not to oppose Leviton's MTD Memo. seeking dismissal of those claims as long as dismissal is without prejudice.
See Feb. 16, 2012 Tr. at 28:8–10 (Long). The Plaintiffs argued that, because a dismissal for lack of subject-matter jurisdiction is, under rule 41(b) of the Federal Rules of Civil Procedure, without prejudice, the Court does not need to specify whether the dismissal is with or without prejudice.
See Feb. 16, 2012 Tr. at 28:16–20 (Long). The Court inquired whether the parties would find it acceptable for the Court to dismiss the claims asserted in Counts III through VIII for lack of subject-matter jurisdiction without mentioning whether the dismissal is with or without prejudice.
See Feb. 16, 2012 Tr. at 30:3–5 (Court). Leviton Manufacturing asserted that it was amenable to this proposal.
See Feb. 16, 2012 Tr. at 30:6–7 (Shatzer). The Plaintiffs stated that this proposal was acceptable given that the dismissal would ultimately be without prejudice, but noted that they are having trouble understanding why Leviton Manufacturing would not agree to the order stating the dismissal is without prejudice.
See Feb. 16, 2012 Tr. at 30:8–12 (Long); id. at 31:20–32:3 (Long).
Leviton Manufacturing asserted that entering judgment in favor of the Plaintiffs on Count II is not appropriate given that the Federal Circuit's decision was a ruling on an appeal of a preliminary junction as opposed to a dispositive motion.
See Feb. 16, 2012 Tr. at 32:13–33:18 (Shatzer). Leviton Manufacturing argued that, instead, dismissal of Count II as moot is appropriate in light of its agreement to dismiss its patent counterclaims with prejudice.
See Feb. 16, 2012 Tr. at 32:13–33:18 (Shatzer). The Plaintiffs explained that they had previously believed, based on Leviton Manufacturing's briefing, that it had conceded that entry of judgment in the Plaintiffs' favor was appropriate for Count II.
See Feb. 16, 2012 Tr. at 35:9–20 (Long). The Plaintiffs related that, in light of Leviton Manufacturing's clarification of its position at the hearing, they planned to file a motion for summary judgment if the Court denies Leviton's MTD Memo.
See Feb. 16, 2012 Tr. at 35:9–20 (Long). The Plaintiffs asserted that they read certain statements in Leviton Manufacturing's briefing as admissions that the Plaintiffs have an implied license regarding the ′124 and ′151 patents, but noted that those statements may not have been intended as admissions.
See Feb. 16, 2012 Tr. at 36:6–25 (Long).
*1125 **9 Leviton Manufacturing argued that Count II, a claim seeking a declaration of non-infringement, is now moot, given that Leviton Manufacturing has agreed to dismiss with prejudice its infringement claims based on those same patents.
See Feb. 16, 2012 Tr. at 37:9–38:7 (Shatzer). Leviton Manufacturing contended that, to the extent that the question whether the Plaintiffs have an implied license regarding the ′124 and ′151 patents is a question of law, it does not intend to contest that the Plaintiffs have an implied license in light of the Federal Circuit's opinion ruling on the preliminary injunction.
See Feb. 16, 2012 Tr. at 41:20–42:4 (Shatzer). It argued that any dispute regarding the scope of that license is now moot in light of its agreement to dismiss its patent-infringement claims with prejudice.
See Feb. 16, 2012 Tr. at 42:1–4 (Shatzer). Leviton Manufacturing reiterated that entering judgment based on holdings in the Federal Circuit's decision affirming the grant of a preliminary injunction would not be appropriate.
See Feb. 16, 2012 Tr. at 42:9–12 (Shatzer). The Plaintiffs responded that Leviton Manufacturing is trying to avoid an adverse judgment against it and that there is still an ongoing dispute.
See Feb. 16, 2012 Tr. at 43:11–16 (Long). Leviton Manufacturing argued that the Plaintiffs are seeking to litigate the implied license's scope in case they intend to bring other products to the market in the future and that any decision the Court renders would be an advisory opinion.
See Feb. 16, 2012 Tr. at 43:17–44:3 (Shatzer). The Plaintiffs asserted that they want as much clarity as possible on the resolution of the current dispute before the Court to avoid future litigation and to avoid Leviton Manufacturing in the future saying that the Plaintiffs do not have an implied license because that issue has not been decided.
See Feb. 16, 2012 Tr. at 44:4–45:5 (Long).
Following the February 16, 2012 hearing, the Plaintiffs filed a separate motion for summary judgment in which they sought summary judgment in their favor on Counts I and II.
See Plaintiffs' Motion for Summary Judgment that Leviton Breached its Implied License at 1, filed March 8, 2012 (Doc. 171) (“Plaintiffs' MSJ”). Later that month, Leviton Manufacturing filed a cross-motion for summary judgment on Counts I and II.
See Leviton's Memorandum of Law in Opposition to Plaintiffs' Motion for Summary Judgment that Leviton Breached its Implied License, filed March 26, 2012 (Doc. 182)(“Leviton's MSJ”).
On May 12, 2012, 2012 WL 1684573, the Court issued a Memorandum Opinion and Order (Doc. 193)(“May 12, 2012 MOO”) on several motions: (i) GPG's MTD; (ii) Leviton's MTD; (iii) the Plaintiffs' MSJ; and (iv) Leviton's MSJ. The Court granted GPG's MTD, dismissing Leviton's Counterclaim III.
See May 12, 2012 MOO at 2. The Court also partially granted Leviton's MTD, dismissing Counterclaims I and II with prejudice.
See May 12, 2012 MOO at 2. With Counterclaims I and II dismissed, the Court dismissed Count II as moot.
See May 12, 2012 MOO at 2. The Court declined to exercise supplemental jurisdiction over the remaining state-law claims—Counts I and X.
See May 12, 2012 MOO at 2. With Count II moot and the Court declining supplemental jurisdiction over Count I, the Court denied both parties' MSJs as moot.
See May 12, 2012 MOO at 2. The Court retained jurisdiction, however, over the question of attorneys' fees under 35 U.S.C. § 285.
See May 12, 2012 MOO at 2. The Court entered a final judgment on May 14, 2012.
See Final Judgment at 2, filed May 14, 2012 (Doc. 194).
**10 On June 22, 2012, the Plaintiffs filed a Brief in Support of Motion for Finding of Exceptional Case Under 35 U.S.C. § 285 and Award of Attorneys' Fees, filed June 22, 2012 (Doc. 203)(“Plaintiffs' Exceptional *1126 Case Brief”). It asserts that this case is exceptional under § 285, because Leviton Manufacturing “failed to abide by the express and implied terms of the Settlement Agreement and ... filed baseless infringement claims in improper forums and asserted baseless counter claims before this Court.” Plaintiffs' Exceptional Case Brief at 2.
The Plaintiffs argue this case is an exceptional one, because Leviton Manufacturing acted in “[b]ad [f]aith” by: (i) filing suits against the Plaintiffs in forums other than the District of New Mexico, in breach of the CSA; and (ii) asserting patent infringement counterclaim for licensed patents. Plaintiffs' Exceptional Case Brief at 8–9. The Plaintiffs contend that “Leviton's bad faith disregard of the terms of the [CSA] effectively forced the Plaintiffs to commence this action for declaratory judgment and move for preliminary injunction.” Plaintiffs' Exceptional Case Brief at 9.
The Plaintiffs argue that courts can infer bad faith “[w]hen the patentee is manifestly unreasonable in assessing the infringement, while continuing to assert infringement in court, whether grounded in or denominated wrongful intent, recklessness, or gross negligence.” Plaintiffs' Exceptional Case Brief at 10 (quoting Phonometrics, Inc. v. Westin Hotel Co., 350 F.3d 1242, 1246 (Fed.Cir.2003))(internal quotations omitted). Similarly, according to the Plaintiffs, Leviton Manufacturing “was grossly negligent in asserting its infringement claims and counterclaims,” because, “[g]iven the well-established law regarding implied licenses, had Leviton conducted any research on the issue before commencing its litigation strategy, it would have known that the Settlement Agreement granted GPG and Habor Freight an implied license.” Plaintiffs' Exceptional Case Brief at 11. The Plaintiffs contend that “the question of infringement was not close because, as this court and the Federal Circuit affirmed, the patents-in-suit were covered by an implied license that Leviton granted to the Plaintiffs through the Settlement Agreement.” Plaintiffs' Exceptional Case Brief at 10.
The Plaintiffs assert they are the “prevailing party” under 35 U.S.C. § 285 because: (i) the Court granted their requested injunction against Leviton; and (ii) Leviton ultimately dismissed its patent infringement counterclaims against the Plaintiffs “with prejudice and without any agreement that the parties would bear their respective attorneys' fees.” Plaintiffs' Exceptional Case Brief at 7.
The Plaintiffs argue that they are entitled to the attorneys' fees they accrued defending Leviton Manufacturing's appeal of the Court's preliminary injunction.
See Plaintiffs' Exceptional Case Brief at 12. The Plaintiffs argue that Leviton Manufacturing “conducted a ‘scorched earth’ strategy for [its] appeal, when it should have simply complied with the injunction.” Plaintiffs' Exceptional Case Brief at 12. They contend that, instead, Leviton Manufacturing appealed to the Federal Circuit “despite the clear contract provisions and the clear law establishing the implied license,” moved both the Court and the Federal Circuit to stay the injunction pending appeal, sought amicus support, and requested en banc rehearing after the Federal Circuit affirmed the injunction. Plaintiffs' Exceptional Case Brief at 12. They further argue that “[e]ach of Leviton's actions required a response from the Plaintiffs; indeed the Federal Circuit ordered the Plaintiffs to respond to Leviton's petition for rehearing en banc.” Plaintiffs' Exceptional Case Brief at 12.
**11 General Protecht seeks $1,047,155.95 in attorneys' fees and related expenses.
See *1127 Plaintiffs' Exceptional Case Brief at 12. Harbor Freight seeks $131,568.82.
See Plaintiffs' Exceptional Case Brief at 13. Both General Protecht and Harbor Freight submitted invoices detailing attorneys' fees, billing rates, time expended, and descriptions of work performed.
See Plaintiffs' Exceptional Case Brief at 13. GPG and Harbor Freight also submitted “documentation supporting the reasonableness” of each attorney's hourly rate. Plaintiffs' Exceptional Case Brief at 13. The requested amounts include fees that the attorneys have incurred but the clients have not yet paid, costs non-lawyer personnel accrued, and out-of-pocket disbursements, all of which the Plaintiffs contend are recoverable under 35 U.S.C. § 285.
See Plaintiffs' Exceptional Case Brief at 14–15. The Plaintiffs assert that “these rates and times should be used by the Court as the lodestar amount to calculate reasonable attorney's fees.” Plaintiffs' Exceptional Case Brief at 15.
Less than a month later, Leviton Manufacturing filed its Memorandum of Law in Opposition to Plaintiffs' Motion for Finding of Exceptional Case Under 35 U.S.C. § 285 and Award of Attorneys' Fees and Motion to Tax Costs, filed July 16, 2012 (Doc. 213)(“ECB Response”). It contends that “[n]othing about this case was exceptional ... [,][and] every objective factor indicates that this case involved a non-frivolous dispute and that Leviton acted reasonably and with the aim of resolving the dispute as efficiently as possible.” ECB Response at 1. Should the Court choose to award attorneys' fees, Leviton Manufacturing contends that the Plaintiffs have requested payment of fees “to which they are not entitled ... [,] includ[ing] fees and costs for time spent on paralegals performing tasks secretarial in nature and for claims not within the scope of 35 U.S.C. § 285.” ECB Response at 1.
Leviton Manufacturing asserts that it did not act in bad faith to avoid the Court's jurisdiction.
See ECB Response at 3. Leviton Manufacturing represents that it chose the ITC “for the unique relief available from that venue” and filed in the Northern District of California because “it provided the only venue where there was [personal] jurisdiction over all twenty-nine named parties.” ECB Response at 3. Moreover, “[i]t was also Leviton's belief at the time that since the patents in issue were excluded from the Settlement Agreement the forum selection clause was not an issue.” ECB Response at 3.
Leviton Manufacturing contends that it did not engage in any misconduct or vexatious litigation; rather, it “advanced [only] non-frivolous arguments and acted professionally and ethically at every step.” ECB Response at 9. Leviton Manufacturing notes that “[s]imply losing ... does not mean that engaging in the litigation was unreasonable.” ECB Response at 10. Contrary to the Plaintiffs' assertion that the law regarding implied licenses is so well-established that Leviton should have anticipated the case's outcome, Leviton Manufacturing contends that “judicially implied licenses are rare under any doctrine.” ECB Response at 10 (quoting Wang Labs., Inc. v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571,1581 (Fed.Cir.1997)). Furthermore, Leviton Manufacturing asserts that “[i]nfringement is often difficult to determine, and a patentee's ultimately incorrect view of how a court will find does not of itself establish bad faith.” ECB Response at 10 (quoting Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1381 (Fed.Cir.2005)) (internal quotation marks omitted). Leviton Manufacturing contends that “the question of infringement was close because there was substantial and reasonable disagreement as to whether an implied license existed.” ECB Response at 12. Leviton *1128 Manufacturing argues that “this Court's lengthy opinion and the precedential Federal Circuit Opinion that came as a result of Leviton's appeal” demonstrate that “this case was subject to reasonable dispute.” ECB Response at 10. Additionally, Leviton Manufacturing disputes the Plaintiffs' argument that TransCore LP v. Elec. Transaction Consultants, Corp., 563 F.3d 1271 (Fed.Cir.2009) (“TransCore”), set clear precedent, describing it as “a recently decided case that has not been explained or clarified in subsequent precedent.” ECB Response at 12.
**12 Leviton Manufacturing also contends that it “acted carefully and with a goal of resolving this dispute as efficiently as possible,” promptly complying with the preliminary injunction and dismissing its patent counterclaims once the Federal Circuit's decision was final. ECB Response at 11. Leviton Manufacturing contends it also cooperated with the Plaintiffs to create a Joint Status Report and Provisional Discovery Plan, and “[t]he only discovery dispute that needed to be brought to the Court's attention ... was resolved in Leviton's favor.” ECB Response at 11. Leviton Manufacturing asserts that “[n]othing suggests [it] tried to impose unnecessary cost or burdens on Plaintiffs [or] engage in fraud or material misrepresentations.” ECB Response at 11.
Leviton Manufacturing notes that not all Plaintiffs could assert a defense based on an implied license.
See ECB Response at 11. Leviton Manufacturing argues that “the fact that the crux of Plaintiffs' arguments, the existence of an implied license, did not extend to all [of Leviton's] infringement allegations before this Court further undermines any suggestion that Leviton's position was objectively baseless.” ECB Response at 12.
Leviton argues that the Court has already indicated it does not consider the litigation baseless.
See ECB Response at 14. For instance, Leviton Manufacturing notes that the Court wrote that “[n]o New Mexico Court or Tenth Circuit court has addressed whether a forum selection clause applies to actions where the contract containing the forum selection clause is raised only as a defense.” ECB Response at 14 (quoting Nov. 30, 2010 MOO at 34)(internal quotation marks omitted). Additionally, Leviton Manufacturing argues that, when the Court found that “the best construction” of the Settlement Agreement is that it establishes an implied license to the ′124 and ′151 patents, the Court implicitly acknowledged that the Settlement Agreement may allow for other constructions. ECB Response at 14 (quoting Nov. 30, 2010 MOO)(internal quotation marks omitted). Finally, Leviton Manufacturing argues that the “Court's lengthy opinion[,] followed by oral argument and a precedential opinion at the Federal Circuit[,] suggest that this case is far from frivolous,
i.e., objectively baseless.” ECB Response at 14.
Leviton Manufacturing argues that it did not act with subjective bad faith, because “Leviton understood [the] [Settlement Agreement's] language to apply only to the ′558 and ′766 patents [and not] to any other patents existing at the time or that might issue in the future.” ECB Response at 15 (quoting Declaration of Meir Y. Blonder in Support of Defendant Leviton Manufacturing Co., Inc.'s Opposition to Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction (executed Nov. 5, 2010), filed on Nov. 12, 2012 (Doc. 20)(“Blonder Decl.”)).
Leviton Manufacturing contends that, even if the Court rules that this case is exceptional, an award of attorneys' fees is not warranted, because “none of the relevant factors, such as ‘the closeness of the case, the tactics of counsel, the flagrant or *1129 good faith character of the parties' conduct, and any other factors contributing to imposition of punitive sanctions or to fair allocation of the burdens of litigation,’ warrants a fees award.” ECB Response at 15 (quoting Delta–X Corp. v. Baker Hughes Prod. Tools, Inc., 984 F.2d 410, 414 (Fed.Cir.1993)). Leviton Manufacturing contends that, in any case, the prevailing party has an obligation to “make a good faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary,” ECB Response at 16 (quoting Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (“Hensley”)), and that the “Plaintiffs have made little, if any, effort to comply with these obligations,” ECB Response at 16. Leviton Manufacturing identifies several fees and costs
[7] that it contends are not within the scope of recovery under 35 U.S.C. § 285.
See ECB Response at 16. These excessive fees and costs include: (i) fees relating to the trade secret claim, which “this Court expressly found ... w[ere] not related to the patent claim,” ECB Response at 16; (ii) fees related to the ITC action, “which is outside the jurisdiction of this Court,” ECB Response at 16; (iii) fees accrued during the appeal to the Federal Circuit, because the Plaintiffs have not established that the appeal itself was exceptional,
see ECB Response at 18–19; (iv) paralegal fees, because those are recoverable only to the extent that the paralegal is performing work that an attorney would traditionally do, and, according to Leviton Manufacturing, the Plaintiffs' invoices fail to demonstrate that the work satisfies this standard,
see ECB Response at 20–21; and (v) other excessive expenses, including fees for three attorneys at single depositions, excessive discussions about hiring an interpreter, and travel expenses “for their lead counsel to travel to China and participate in a press conference,” ECB Response at 21. Leviton Manufacturing also notes that its litigation fees were less than half of the Plaintiffs' fees.
See ECB Response at 21. Leviton Manufacturing argues that, because the Plaintiffs have “failed to comply with [their] obligation to eliminate unrecoverable and unreasonable fees and expenses,” the Court should deny the Plaintiffs' fee requests entirely. ECB Response at 17. Should the Court award attorneys' fees anyway, however, Leviton Manufacturing argues that the Court should exclude the improperly requested fees and expenses, which Leviton Manufacturing calculates to a total of $243,975.73.
See ECB Response at 17–18.
**13 The Plaintiffs replied to the ECB Response two weeks later.
See Reply in Support of Motion for Finding of Exceptional Case Under 35 U.S.C. § 285 and Award of Attorneys' Fees and Motion to Tax Costs, filed August 2, 2012 (Doc. 220)(“Plaintiffs' Reply ECB”). The Plaintiffs argue that “[t]his case is exceptional for two reasons: (1) Leviton's frivolous assertion that this Court did not have jurisdiction over its patent infringement claims, and (2) Leviton's insistence on continuing the litigation once it had lost at both the District Court and Federal Circuit.” Plaintiffs' Reply ECB at 1. The Plaintiffs argue that, “[e]ven if Leviton had a good faith belief that the Settlement Agreement did not cover the ′124 and ′151 patents, it knew, or should have known, that Plaintiffs would assert the Settlement Agreement as a defense, thereby necessitating that Leviton's action be filed in this *1130 Court.” Plaintiffs' Reply ECB at 2. Furthermore, the Plaintiffs argue that Leviton Manufacturing's stated reasons for filing in the ITC and Northern District of California are unpersuasive, because: (i) “[a]ny remedy available from the ITC is available from this Court;” and (ii) “Leviton's desire to sue additional parties does not justify ignoring the exclusive venue provision to which it had already agreed.” Plaintiffs' Reply EBG at 2–3. The Plaintiffs argue that the Court “should take into account Leviton's improper forum shopping when determining whether this case is exceptional, as Leviton's efforts to avoid this Court's jurisdiction is ‘an important predicate to understanding and evaluating [Leviton Manufacturing's] litigation misconduct.’ ” Plaintiffs' Reply ECB at 3 (quoting Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1027 (Fed.Cir.2008)).
Additionally, the Plaintiffs argue that “Leviton prolonged these proceedings unnecessarily at every stage, thereby increasing Plaintiff's [sic] fees and expenses” by seeking a stay in the injunction, appealing to the Federal Circuit, seeking another stay, and attempting to recruit several amici. Plaintiffs' Reply ECB at 3. The Plaintiffs assert that “[e]very effort by Leviton to prolong these proceedings necessitated a response from Plaintiffs, thereby increasing Plaintiffs' fees and costs.” Plaintiffs' Reply ECB at 3.
The Plaintiffs contend that, “although Leviton's counterclaims may not have been frivolous when originally asserted, [they] became frivolous, at the very least, after the Federal Circuit affirmed this Court's decision.... Leviton should have dropped its appeal and its counterclaims at that point rather than seeking an en banc review.” Plaintiffs' Reply ECB at 3. The Plaintiffs contend that, “[w]hen viewed in isolation, it might appear that Leviton was merely exercising the options available to it under the governing rules[,] ... [b]ut this court should ... evaluate the overall pattern of Leviton's conduct in which it failed to heed the numerous road signs warning it to ‘STOP.’ ” Plaintiffs' Reply ECB at 4.
**14 The Plaintiffs argue that an award of attorneys' fees is necessary to avoid gross injustice, because Leviton Manufacturing acted in bad faith.
See Plaintiffs' Reply ECB at 5. The Plaintiffs contend that “[t]here can be no real dispute about the fact [that Leviton Manufacturing] was in possession of objective evidence—the Settlement Agreement—at the outset of the case establishing that its infringement claims ... had to be brought in this District.” Plaintiffs' Reply ECB at 6. Additionally, the Plaintiffs contend that Leviton Manufacturing was “aware of the legal basis for the Plaintiffs' implied license argument,” not only because of
TransCore, but because “Plaintiffs' counsel certainly notified Leviton of their implied license position.” Plaintiffs' Reply ECB at 6. The Plaintiffs conclude: “That is proof enough of both objective baselessness,
and subjective bad faith.” Plaintiffs' Reply ECB at 6 (emphasis in original).
The Plaintiffs contend that their fee requests are appropriate and reasonable.
See Plaintiffs Reply ECB at 7. They explain that they requested expenses relating to the ITC proceedings, because “such legal time was incurred in order to obtain information necessary to proceed with their motion for a preliminary injunction, to ensure Leviton's compliance with the Court's order granting that injunction and to obtain information requested by the Court....” Plaintiffs' Reply ECB at 7. The Plaintiffs also assert that their requested legal fees are reasonable, because the “Plaintiffs achieved an excellent result from the litigation, defeating Leviton at every stage, despite Leviton's scorched earth tactics.” Plaintiffs' Reply ECB at 7.
*1131 The Plaintiffs argue that, if the Court finds that Leviton Manufacturing's preliminary injunction appeal was not initially frivolous, “the evidence establishes that Leviton conducted its appeal in a vexatious manner, including an excessively aggressive strategy of seeking amici and culminating in seeking en banc review of the Federal Circuit's opinion.” Plaintiffs' Reply ECB at 8. Alternatively, the Plaintiffs contend that, “at the very least, Leviton's appeal became frivolous after ... the Federal Circuit affirmed the preliminary injunction.” Plaintiffs' Reply ECB at 8.
The Plaintiffs contend that the Federal Circuit allows parties to collect paralegal fees, even for work that attorneys do not traditionally do.
See Plaintiffs' Reply ECB at 9. The Plaintiffs contend that Leviton Manufacturing's arguments to the contrary rely on “uncontrolling and inapposite case law from the Fifth and Eleventh Circuits.” Plaintiffs' Reply ECB at 9. The Plaintiffs further argue that they seek to recover costs for work that is “not merely clerical in nature[, such as] charges relating to the creation and maintenance of sophisticated computer databases by highly skilled information technology specialists.” Plaintiffs' Reply ECB at 10.
At the hearing on March 6, 2013, Leviton Manufacturing argued that the Federal Circuit, in publishing an opinion and requesting the Plaintiffs respond to Leviton Manufacturing's motion for en banc rehearing, demonstrated that Leviton Manufacturing's case had precedential value.
See Transcript of Hearing at 25:1–7 (taken March 6, 2013)(Shatzer)(“March 6, 2013 Tr.”). Leviton Manufacturing also noted that a law professor included the Federal Circuit's opinion in an intellectual property class syllabus.
[8] March. 6, 2013 Tr. at 21:19–22:2 (Shatzer). Leviton Manufacturing also stated that, following the Federal Circuit's decision, Leviton Manufacturing promptly moved to dismiss their claims, but the Plaintiffs “wanted this case to go forward because they wanted to get a judgment.” March 6, 2013 Tr. at 24:4–15 (Shatzer). Ann G. Fort, one of the Plaintiffs' attorneys, argued that the Federal Circuit could have chosen to publish its opinion for any number of reasons besides that it found the ruling precedential.
See March 6, 2013 Tr. at 28:17–19 (Fort). For instance:
**15 It could be because the clerk who worked on it is particularly proud of the reasoning, or because it presented an opportunity to apply existing precedent in a way that might be useful to judges ... and to parties[,] ... but that doesn't preclude a finding that the party who brought the appeal and lost ... did so recklessly and with subjective bad faith.
March 6, 2013 Tr. at 28:19–25 (Fort). Ms. Fort also stated that “the only place where I think it might be fair to say that ... Leviton's conduct was not exceptional was in opposing the preliminary injunction.” Mar. 6, 2013 Tr. at 36:15–18 (Fort). Mark J. Rosenberg, another Plaintiffs' counsel, disagreed, however, stating: “I believe that the preliminary injunction motion should not have ever had to be [sic] filed[,] ... [because,] before we filed this case [,] we put Leviton on notice of
TransCore[,] and they proceeded anyway.” March 6, 2013 Tr. at 37:14–19 (Rosenberg). Ms. Fort also questioned Leviton Manufacturing's evidence of its subjective *1132 good faith.
See March 6, 2013 Tr. at 46:13–22 (Fort). While Leviton Manufacturing's chief intellectual property counsel, Blonder, submitted a declaration that Leviton Manufacturing believed that the Settlement Agreement did not grant a license or covenant to anything other than the ′558 and ′766 patents, Ms. Fort argued that the Blonder Decl. merely describes Leviton Manufacturing's subjective intent at the time of the Settlement Agreement's formation and does not show that Leviton Manufacturing maintained that belief following the
TransCore ruling.
See March 6, 2013 Tr. at 46:13–22 (Fort). Ms. Fort concluded: “[E]ven if it did, it was objectively unreasonable for [Leviton Manufacturing] to persist in that belief.” March 6, 2013 Tr. at 46:22 (Fort).
Section 285 of Title 35 of the United States Code provides: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. The test for determining whether a case is exceptional under § 285 formerly came from Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., 393 F.3d 1378 (Fed.Cir.2005) (“Brooks”).
Brooks outlined two scenarios that can render a case “exceptional.” First, “[a] case may be deemed exceptional when there has been some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed.R.Civ.P. 11, or like infractions.” Brooks, 393 F.3d at 1381. Second, a case may be exceptional “if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” Brooks, 393 F.3d at 1381.
In 2014, however, the Supreme Court of the United States expressly rejected the
Brooks framework as being “overly rigid” and “superimpos[ing] an inflexible framework onto statutory text that is inherently flexible.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., ––– U.S. ––––, 134 S.Ct. 1749, 1756, 188 L.Ed.2d 816 (2014) (“
Octane”). The Supreme Court also took issue with
Brooks ' imposition of a “clear and convincing” standard, noting that patent-infringement cases typically require only a showing of a “preponderance of the evidence.” Octane, 134 S.Ct. at 1758.
**16 1
Octane overruled
Brooks and held that an “exceptional” case is merely one that “stands out from others with respect to the substantive strength of a party's litigating position ... or the unreasonable manner in which the case was litigated.” Octane, 134 S.Ct. at 1752. To determine whether a case is exceptional, district courts may “consider[ ] the totality of the circumstances” on a case-by-case basis. Octane, 134 S.Ct. at 1752. While not providing a precise rule to apply, the Supreme Court suggested that district courts 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.” 134 S.Ct. at 1756 n. 6 (2014) (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d 455(1994)) (internal quotation marks omitted). “Because § 285 commits the determination whether a case is ‘exceptional’ to the discretion of the district court, that decision is to be reviewed on appeal for abuse of discretion.”Highmark Inc. v. AllCare Health Mgmt. Sys. Inc., –––U.S. ––––, 134 S.Ct. 1744, 1748, 188 L.Ed.2d 829 (2014) (“
Highmark ”). “Although the award of fees is clearly within the discretion of the district court, when ... a court *1133 finds litigation misconduct and that a case is exceptional, the court must articulate the reasons for its fee decision.” Oplus Techs., Ltd. v. Vizio, Inc., 782 F.3d 1371, 1375–76 (Fed.Cir.2015). These new guidelines apply retroactively to cases being litigated when the Supreme Court issued
Octane.[9] See, e.g., Precision Links Inc. v. USA Prods. Grp., Inc., No. 3:08–CIV–00576–MR, 2014 WL 2861759, at *3 (W.D.N.C. June 24, 2014) (applying the
Octane standard that was issued while the case was pending);
[10] Apple Inc. v. Samsung Elecs. Co., No. 11–CIV–01846–LHK, 2014 WL 4145499, at *2 (N.D.Cal. Aug. 20, 2014) (“Following the Supreme Court's recent decisions [in
Octane and
Highmark ], the Court asked the parties to each submit a supplemental brief addressing the effect of the Supreme Court's decisions on [the plaintiff]'s motion for attorneys' fees.”).
2Section 285 also requires that a party must be the “prevailing party” in the litigation to receive attorneys' fees. 35 U.S.C. § 285. A party is the prevailing party so long as “ ‘they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.’ ” Hensley, 461 U.S. at 433, 103 S.Ct. 1933 (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278–79 (1st Cir.1978)). A party prevails “when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the [nonmovant's] behavior in a way that directly benefits the [movant].” Farrar v. Hobby, 506 U.S. 103, 111–12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992).
3“Allowance of fees only in exceptional cases is based on the premise that courts should attempt to strike a balance between the interest of the patentee in protecting his statutory rights and the interest of the public in confining such rights to their legal limits.” Mach. Corp. of Am. v. Gullfiber AB, 774 F.2d 467, 471 (Fed.Cir.1985). A court may award attorney's fees under this statute to either a plaintiff or a defendant.
See Phonometrics, Inc. v. ITT Sheraton Corp., 64 Fed.Appx. 219, 221 (Fed.Cir.2003) (unpublished)
[11](“When ‘the *1134 patentee is manifestly unreasonable in assessing infringement, while continuing to assert infringement in court, an inference is proper of bad faith, whether grounded in or denominated [by] wrongful intent, recklessness, or gross negligence.’ ” (quoting Eltech Sys., Corp. v. PPG Indus., 903 F.2d 805, 811 (Fed.Cir.1990))). The Federal Circuit applies its own law “to claims for attorneys' fees under section 285 of the Patent Act because section 285 relates to an area of substantive law within our exclusive jurisdiction” while also “afford[ing] district courts ‘considerable discretion’ in determining the amount of reasonable attorney fees under § 285.” Bywaters v. United States, 670 F.3d 1221, 1227–28 (Fed.Cir.2012). The Federal Circuit adopted this approach to “respect ‘the district court's superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.’ ” Bywaters v. United States, 670 F.3d at 1228 (quoting Hensley, 461 U.S. at 437, 103 S.Ct. 1933 (1983)).
**17 45“As a general matter, ... a claim for attorney's fees is not part of the merits of the action to which the fees pertain.” Budinich v. Becton Dickinson & Co., 486 U.S. 196, 200, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988). “Such an award does not remedy the injury giving rise to the action, and indeed is often available to the party defending against the action.” Budinich v. Becton Dickinson & Co., 486 U.S. at 200, 108 S.Ct. 1717. “At common law, attorney's fees were regarded as an element of ‘costs' awarded to the prevailing party.” Budinich v. Becton Dickinson & Co., 486 U.S. at 200, 108 S.Ct. 1717. Additionally, “[m]any federal statutes providing for attorney's fees continue to specify that they are to be taxed and collected as ‘costs.’ ” Budinich v. Becton Dickinson & Co., 486 U.S. at 201, 108 S.Ct. 1717. Even when a lower court has not yet decided the issue of attorneys' fees, and the attorneys' fees are “part of the merits of judgment,” the merits of a case are still final for appellate purposes:
This practical approach to the matter suggests that what is of importance here is not preservation of conceptual consistency in the status of a particular fee authorization as “merits” or “nonmerits,” but rather preservation of operational consistency and predictability in the overall application of § 1291. This requires, we think, a uniform rule that an unresolved issue of attorney's fees for the litigation in question does not prevent judgment on the merits from being final.
Budinich v. Becton Dickinson & Co., 486 U.S. at 202, 108 S.Ct. 1717. It is irrelevant for purposes of determining whether the merits of an action are final—and thus appealable—whether the plaintiff requested attorney's fees as part of the prayer in his or her complaint, or in a separate *1135 motion.
See Budinich v. Becton Dickinson & Co., 486 U.S. at 201, 108 S.Ct. 1717 (“[W]e conclude that the § 1291 effect of an unresolved issue of attorney's fees for the litigation at hand should not turn upon the characterization of those fees by the statute or decisional law that authorizes them.”).
To determine the amount of reasonable attorneys' fees, the Federal Circuit calls for district courts to calculate a “lodestar” amount, determined “by multiplying the number of hours reasonably expended by a reasonable hourly rate.” Bywaters v. United States, 670 F.3d at 1225–26. This lodestar figure “provides an objective basis on which to make an initial estimate of the value” of an attorney's services. Hensley, 461 U.S. at 433, 103 S.Ct. 1933. The party requesting attorneys' fees must submit evidence to support its representations of time spent and rates sought.
See Hensley, 461 U.S. at 434, 103 S.Ct. 1933. If the evidence is inadequate, the district court may reduce the fee award accordingly.
See Hensley, 461 U.S. at 434, 103 S.Ct. 1933.
A district court may also make adjustments to the lodestar figure to reflect a plaintiff's overall success level.
See Bywaters v. United States, 670 F.3d at 1229 (citing Hensley, 461 U.S. at 435–36, 103 S.Ct. 1933). “There is no precise rule or formula” for making such determinations. Hensley, 461 U.S. at 436, 103 S.Ct. 1933. In
Hensley, the Supreme Court explained the rationale behind this approach:
**18 Much of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours on a claim-by-claim basis. Such a lawsuit cannot be viewed as a series of discrete claims. Instead, the district court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.
461 U.S. at 435, 103 S.Ct. 1933.
6While discrete acts of litigation misconduct can, on their own, render an entire case exceptional, “the amount of the award must bear some relation to the extent of the misconduct.” Read Corp. v. Portec, Inc., 970 F.2d 816, 831 (Fed.Cir.1992). Thus, district courts may, in those cases, award attorneys' fees under § 285 relating only to the litigation misconduct.
See, e.g., Digital Reg of Tex., LLC v. Adobe Sys., Inc., No. CIV 12–1971 CW, 2015 WL 1026226, at *5 (N.D.Cal.2015) (“Adobe's motion for attorneys' fees ... is GRANTED to the extent that it is entitled to fees, in an amount to be determined, incurred in relation to Mr. Patterson's and Mr. Venters' deposition and testimony.”)
7Furthermore, when a plaintiff brings related claims, failure on some claims should not preclude full recovery if the plaintiff achieves success on a significant interrelated claim.
See Hensley, 461 U.S. at 440, 103 S.Ct. 1933 (“Where a lawsuit consists of related claims, a plaintiff who has won substantial relief should not have his attorney's fee reduced simply because the district court did not adopt each contention raised.”). Claims are interrelated when they are either based on “a common core of facts” or based on “related legal theories.” Hensley, 461 U.S. at 435, 103 S.Ct. 1933. The Supreme Court explained: “Litigants in good faith may raise alternative legal grounds for a desired outcome, and the court's rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee.” Hensley, 461 U.S. at 435, 103 S.Ct. 1933.
A. LEVITON MANUFACTURING'S POSITION WAS NOT OBJECTIVELY BASELESS.
910The Court finds Leviton Manufacturing's position regarding the CSA's *1139 applicability was not baseless—while Leviton Manufacturing did not prevail, its claims were not objectively baseless. A claim is objectively baseless when “no reasonable litigant could reasonably expect success on the merits.” Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1327 (Fed.Cir.2013). Even post-
Octane, “objective reasonableness remains a relevant factor” when considering the exceptionality of a case. Biax Corp. v. Nvidia Corp., No. 2013–1649, 626 Fed.Appx. 968, 973, 2015 WL 755940, at *4 (Fed.Cir. Feb. 24, 2015).
**22 The Plaintiffs make several arguments why Leviton Manufacturing's claims were objectively baseless. First, the Plaintiffs argue that this case is like Interspiro USA, Inc. v. Figgie International Inc., 18 F.3d 927 (Fed.Cir.1994) (“
Interspiro”), which upheld a district court's holding,
inter alia, that the case was “exceptional” and the prevailing party deserved attorneys' fees under 35 U.S.C. § 285, because “the question of infringement ‘was not close’ and ... [the Defendant] demonstrated bad faith.” 18 F.3d at 934. A closer look at that case reveals why this comparison is inapt. In
Interspiro, the plaintiff manufactured a Self Contained Breathing Apparatus (“SCBA”) designed to protect firefighters from inhaling toxic fumes.
See Interspiro USA, Inc. v. Figgie Int'l, Inc., 815 F.Supp. 1488, 1498 (D.Del.1993). The SCBAs relied on a patented regulator which automatically pressurizes the mask—preventing toxic fumes from entering—when the firefighter inhales. See 815 F.Supp. at 1495. When the firefighter exhales, the force pushes a diaphragm of rubber disks upward, closing a valve and cutting off oxygen inflow to the mask; once the firefighter inhales, the force pulls the disks back down, uncovering the valve and allowing oxygen to flow again. See 815 F.Supp. at 1496. When the SCBA is not in use, firefighters can manually set a “detent mechanism” to secure the diaphragm against the valve opening, blocking oxygen flow; when a user puts on the mask and inhales, the force automatically releases the detent mechanism. 815 F.Supp. at 1496–97. The plaintiffs discovered that the defendants were producing SCBA units that used a similar regulator device. See 815 F.Supp. at 1497. The parties eventually reached a settlement under which the defendant would pay royalties to the plaintiff for each SCBA unit sold. See 815 F.Supp. at 1497. The defendants soon began producing a new SCBA model, called the E–Z Flo, featuring an automatic regulator seemingly designed to circumvent the plaintiff's patent. See 815 F.Supp. at 1497–98. The plaintiff sued the defendant, arguing, among other things, that the defendants owed royalties on the E–Z Flo under the original settlement, because the E–Z Flo was not a “new product.” 815 F.Supp. at 1500. The court found that the E–Z Flo was not a new product, because the differences between the patented regulator and the E–Z Flo regulator were superficial. See 815 F.Supp. at 1521. The court concluded:
**23 815 F.Supp. at 1521 (emphasis added).
The Court does not find that
Interspiro proves the Plaintiffs' point. There is, of course, a fundamental difference complicating the comparison:
Interspiro concerns a question of engineering—should *1140 the defendants have known moving the detent where they did would fail to avoid infringement—while the case before the Court poses a question of law—should Leviton Manufacturing have known its interpretation of
TransCore and the CSA was baseless. One need not struggle through an apples-and-oranges analysis, however, because a comparison of the opinions from each court reveals a disparity in the perceived merits of the losing parties' arguments. In
Interspiro, the district court found that the defendant infringed “in a transparent, obvious way” and that “[i]t should have been abundantly clear” that the defendant's designed infringed on the plaintiff's patent. 815 F.Supp. at 1521. By contrast, neither the Court's MOO nor the Federal Circuit's opinion described the central legal question with any language in the ballpark of “obvious” or “abundantly clear.”
[12]The Plaintiffs also argue, more generally, that Leviton Manufacturing's position was objectively baseless in part because Leviton Manufacturing should have known its case was flawed given the “well-established law regarding implied licenses.” Plaintiffs' Exceptional Case Brief at 11. In response, Leviton Manufacturing contends that “judicially implied licenses are rare under any doctrine,” ECB Response at 10 (quoting Wang Labs., Inc. v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571, 1581 (Fed.Cir.1997)), and that “[i]nfringement is often difficult to determine, and a patentee's ultimately incorrect view of how a court will find does not of itself establish bad faith,” ECB Response at 10 (quoting Brooks, 393 F.3d at 1381).
The Court concludes that the question was not frivolous, and the Federal Circuit proceedings support this conclusion. Leviton Manufacturing argues that the “Court's lengthy opinion and the precedential Federal Circuit Opinion [demonstrate that] this case was subject to reasonable dispute.” ECB Response at 10. Leviton Manufacturing also argues that, when the Court concluded that “the best construction” of the Settlement Agreement is that it established an implied license to the ′124 and ′151 patents, the Court implicitly acknowledged that the Agreement may allow for other constructions. ECB Response at 14 (quoting Nov. 30, 2010 MOO at 34)(internal quotation marks omitted). While the Court ultimately agrees with Leviton Manufacturing's conclusion, it hastens to add that Leviton Manufacturing may have read too much into the Court's MOO. As a general matter, the Court cautions against presumptions that the lengths of its opinions are necessarily proportional to the closeness of the question at hand. Additionally, referring to the “best construction” does not necessarily signal that it regards other interpretations as completely unreasonable. The Court, however, as mentioned above, did not include language—and finds no reason to conjure any now—indicating it found the very premise of Leviton Manufacturing's argument to be frivolous or objectively baseless.
E.g., Intex Recreation Corp. v. Team Worldwide Corp., 2015 WL 135532, at *3 (finding a case exceptional in part because the defendant “filed a conclusory expert report and advanced flawed, nonsensical, and baseless arguments, which *1141 lacked factual support”); Cognex Corp. v. Microscan Sys., Inc., No. CIV 13–2027 JSR, 2014 WL 2989975, at *4 (S.D.N.Y. June 30, 2014) (finding a case exceptional in part because “the defenses that were offered at trial were particularly weak and lacked support”).
**24 Moreover, the Federal Circuit published its opinion.
See Gen. Protecht Grp., Inc. v. Leviton Mfg. Co., Inc., 651 F.3d 1355. While the Plaintiffs argued, in the hearing on March 6, 2013, that there may be a number of reasons besides that it found merit in the question why a Federal Circuit court may publish an opinion, it is sensible to infer that the court did so because it saw an interesting legal question whose resolution could provide precedential value. Indeed, subsequent jurisprudence demonstrates that the Federal Circuit's ruling in
General Protecht Group, Inc. v. Leviton Mfg. Co. Inc. has contributed to implied patent common law, helping to further define the doctrine beyond what can be gleaned from
TransCore. In
Universal Electronics, Inc. v. Universal Remote Control, Inc., for instance, published three years after
General Protecht Group, Inc. v. Leviton Manufacturing Co. Inc., the court not only details the doctrinal contributions of the case, but calls them into question:
“Legal estoppel refers to a narrow[ ] category of conduct encompassing scenarios where a patentee has licensed or assigned a right, received consideration, and then sought to derogate from the right granted.” TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271, 1279 (Fed.Cir.2009) (citing Wang Labs., Inc. v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571, 1581 (Fed.Cir.1997)). The development of the doctrine in the patent context has an interesting trajectory. In
AMP Inc. v. United States, the court held that:
[W]hen a person sells a patent which employs an invention which infringes a prior patent, the person selling is estopped from bringing an action against his grantee for that infringement, even though the earlier patent is acquired after the sale of the later patent. The same principle applies to the grant of a patent right by license as well as assignment.
389 F.2d 448, 451 (Ct.Cl.1968). Picking up that strain many years later, the Federal Circuit in
TransCore expanded the doctrine, holding that whether the later-acquired patent existed before the licensed patent was a distinction without a difference, and that an implied license arose when the asserted patent was broader than, and thus necessary to practice, the licensed patent. 563 F.3d at 1279. Because the non-licensed patent in
TransCore was “broader than, and necessary to practice” the licensed patent, the court concluded that the patentee was legally estopped from asserting it, and had granted an implied license.
Id. That was so even though the license stated that it did not apply to any other patents to be issued in the future, because while that language was generally operative, it did not permit the patentee to derogate from the rights it expressly granted.
Id.Two years later, the Federal Circuit expanded the doctrine again. Gen. Protecht Grp., Inc. v. Leviton Mfg. Co., Inc., 651 F.3d 1355 (Fed.Cir.2011). In
General Protecht, the patentee argued that the doctrine did not apply because at least some claims of its continuation patents were narrower than the previously asserted claims, so denying an implied license would not derogate from the right to practice the licensed claims. Id. at 1361. The patentee pointed to specific limitations in the asserted patents that did not appear in the licensed claims.
Id. The Federal Circuit rejected the patentee's argument, finding that *1142 the continuation patents were based on the same disclosure as the licensed patents, and by definition, could not claim any invention not already supported in the earlier issued patents.
Id. General Protecht
thus expanded TransCore
by holding that the relative breadth of the patents was not controlling, and that narrower claims could be subject to the implied license, at least where the patents share the same disclosure. 651 F.3d at 1362.
**25 General Protecht's
focus on the patents' disclosure, rather than their claims, is somewhat anomalous given the law, stated in the case upon which General Protecht
relies, that “the grant of a patent does not provide the patentee with an affirmative right to practice the patent but merely the right to exclude,” TransCore, 563 F.3d at 1275,
coupled with the “ ‘bedrock principle’ of patent law that ‘the claims of a patent define the invention to which the patentee is entitled the right to exclude.’ ” Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed.Cir.2005) (quoting Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1115 (Fed.Cir.2004)).
Also curious is General Protecht's
conclusion that it “reasonably follows” from TransCore
that where “continuations issue from parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well.” 651 F.3d at 1361.
TransCore specifically turned on the relative breadth of the claims, not the mere fact that the patents bore a specific familial relationship. So whether or not
General Protecht is sound policy, it is hard to say it “reasonably follows” from
TransCore.Universal Electronics, Inc. v. Universal Remote Control, Inc., 34 F.Supp.3d 1061, 1073–75 (C.D.Cal.2014) (Guilford, J.)(emphases added).
Additionally, several law journals have discussed the Federal Circuit's ruling in
General Protecht Group, Inc. v. Leviton Mfg. Co. Inc. The American University Law Review, for instance, wrote that the Federal Circuit, in its ruling, demonstrated how settlement agreements creating implied licenses represent “[a]nother potential pitfall for patentees seeking to enforce their rights.” Robert A. Pollock, et al.,
[13] 2011 Patent Law Decisions of the Federal Circuit, 61 Am. U.L.Rev. 785, 1006 (2012). The Berkeley Technology Law Journal, in its “annual review,” noted how the case showed that an implied license can cover patents even when “some of the asserted [infringement] claims ... [are] narrower than the claims of the patents *1143 named in the covenant not to sue.” Survey of Additional IP Developments, 27 Berkeley Tech. L.J. 981, 984 (2012). The intellectual property journal
Les Nouvelles, meanwhile, considered the ruling's significance on future patent litigation:
**26 This case appears to establish a new presumption in license drafting that continuation patents will be impliedly included in any license agreement at least with respect to products specifically licensed under that agreement. In addition, the court's decision appears to require an extremely clear expression of intent to exclude continuation patents in order to avoid this presumption. Based on this decision, it would be wise to always expressly state whether continuations are included or excluded in any license and make sure that the intent is clear from the language of the agreement. Based on this decision, a general disclaimer of rights will likely not be sufficient.
Brian Brunsvold & John C. Paul,
[14] Recent U.S. Decisions and Developments Affecting Licensing, 46 Les Nouvelles 346, 355 (2011). In sum, the Federal Circuit's actions and the apparent doctrinal contributions of the Federal Circuit's opinion buttress the Court's view that the infringement question in this case was not frivolous, and consequently not exceptional under 35 U.S.C. § 285.
The Plaintiffs argue in the alternative that, if the Court does not find Leviton Manufacturing's position to be frivolous from the start, “Leviton's appeal became frivolous after ... the Federal Circuit affirmed the preliminary injunction.” Plaintiffs' Reply ECB at 8. The Court disagrees as a matter of principle. In the Court's view, if a position is reasonable at the onset, it cannot simply transform into frivolity once asserted past some arbitrary junction along the path of rightful appeals.
B. LEVITON MANUFACTURING DID NOT LITIGATE IN AN UNREASONABLE MANNER, BECAUSE ITS CASE WAS BASED ON A NON–FRIVOLOUS ASSERTION OF AN ULTIMATELY INCORRECT INTERPRETATION OF LAW.
Octane holds that a case can be “exceptional” under § 285 if it “stands out from others with respect to ... the unreasonable manner in which the case was litigated.” Octane, 134 S.Ct. at 1752. District courts may consider a “nonexclusive list of factors, including frivolousness, motivation, objective unreasonableness ... and the need in particular circumstances to advance considerations of compensation and deterrence.” Octane, 134 S.Ct. at 1756 n. 6 (internal quotations omitted)(quoting Fogerty v. Fantasy, Inc., 510 U.S. at 534, 114 S.Ct. 1023). Since the
Octane ruling, “[a]mong the most commonly cited ways to establish exceptionality are ... showing the party proceeded in bad faith[,] and ... litigation misconduct.” Bayer CropScience AG v. Dow AgroSciences LLC, No. CIV 12–0256 RMB/JS, 2015 WL 108415, at *3 (D.Del. Jan. 5, 2015) (citations omitted)(noting that other common bases for exceptionality include failing to conduct adequate pre-filing investigation or exercise due diligence before filing suit, a party knowing that its position was meritless, and bringing suit only to extract a settlement),
report and recommendation adopted in part by 2015 WL 1197436 (D.Del. March 13, 2015).
**27 11The Plaintiffs argue Leviton Manufacturing acted in bad faith by: (i) filing suits against the plaintiffs in forums other *1144 than the District of New Mexico, in breach of the Settlement Agreement; and (ii) asserting patent infringement counterclaims for licensed patents.
See Plaintiffs' Exceptional Case Brief at 8–9. The Plaintiffs argue that “the fact [that Leviton Manufacturing] was in possession of objective evidence—the [CSA]—at the outset of the case establishing that its infringement claims ... had to be brought in this District” and that Leviton Manufacturing was “aware of the legal basis for the Plaintiffs' implied license argument,” not only because of
TransCore, but because “Plaintiffs' counsel certainly notified Leviton of their implied license position,” is proof that Leviton Manufacturing acted in bad faith. Plaintiffs' Reply ECB at 6. Additionally, the Plaintiffs argue that courts can infer bad faith “[w]hen the patentee is manifestly unreasonable in assessing the infringement, while continuing to assert infringement in court, whether grounded in or denominated wrongful intent, recklessness, or gross negligence.” Plaintiffs' Exceptional Case Brief at 10 (quoting Phonometrics, Inc. v. Westin Hotel Co., 350 F.3d 1242, 1246 (Fed.Cir.2003))(internal quotation marks omitted). As such, the Plaintiffs argue, Leviton Manufacturing “was grossly negligent in asserting its infringement claims and counterclaims” which Leviton Manufacturing should have known would fail, because the “well-established law regarding implied licenses” should have made that fact clear. Plaintiffs' Exceptional Case Brief at 11.
Leviton Manufacturing asserts that it did not act in bad faith, because “[i]nfringement is often difficult to determine, and a patentee's ultimately incorrect view of how a court will find does not of itself establish bad faith.” ECB Response at 10 (quoting Brooks, 393 F.3d at 1381). Consequently, Leviton Manufacturing asserts that it did not act in bad faith to avoid the Court's jurisdiction because it believed “that since the patents in issue were excluded from the Settlement Agreement[,] the forum selection clause was not an issue.” ECB Response at 3. Leviton Manufacturing asserts that it chose the Northern District of California, because it provided jurisdiction over all named parties, and filed in the ITC “for the unique relief available from that venue.” ECB Response at 3.
Leviton Manufacturing did not act in bad faith, because it merely asserted a position based on legal interpretations that proved to be incorrect. The Plaintiffs contend that Leviton Manufacturing proceeded with its litigation while possessing documents which contradicted its position—namely,
TransCore and the CSA.
See Plaintiffs' Reply ECB at 6. The Plaintiffs compare this case to MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907 (Fed.Cir.2012) (“
MarcTec ”), arguing that the Federal Circuit found the case to be exceptional, because there was “objective proof [showing] that the plaintiff was in possession of certain information that should have notified it that its case was baseless, but went forward with the case anyway.” Plaintiffs' Reply ECB at 5–6.
**28 This case is not that case. In
MarcTec, the plaintiff alleged that the defendant infringed on a patent for a “surgical device for implantation in a body” which relied on the application of heat to render the device's polymeric material “flowable, tacky, and adherent.” MarcTec, 664 F.3d at 911. The district court also found that the plaintiff's original patent application asserted that it was not a stent. See 664 F.3d at 912. The district court granted summary judgment in favor of the defendant, because, unlike the plaintiff's patent, the defendant's device was a stent and, moreover, did not require heat to bond its polymeric material—important differences that precluded infringement. See 664 F.3d at 913–14. The plaintiff appealed the summary *1145 judgment and lost, and the district court deemed the case exceptional and awarded the defendant attorneys' fees under § 285. See 664 F.3d at 914. The plaintiffs appealed the award of attorneys' fees, and the Federal Circuit affirmed the award, finding that the district court had sufficient evidence “that MarcTec subjectively knew that it had no basis for asserting infringement and therefore pursued [its] litigation in bad faith.” 664 F.3d at 918. The court noted that the district court
found that, even after [the plaintiff] had evidence that [the defendant's] stent's coating is applied at room temperature and does not bond using heat, MarcTec continued to pursue its frivolous case “by relying on mischaracterizations of the claim construction adopted by this Court and expert testimony that did not meet the requirements for scientific reliability or relevance....”
664 F.3d at 915 (quoting MarcTec, LLC v. Johnson & Johnson, No. CIV. 07–825 DRH, 2010 WL 680490, at *10 (S.D.Ill. Feb. 23, 2010)). The district court had excluded the plaintiff's expert testimony—which posited that the defendant's device actually relied on heat to bond—for being “unreliable and ... inadmissible,” MarcTec, 664 F.3d at 913, stating:
[The expert's] theory that spraying droplets at an unrealistic speed, approaching the speed of sound (and unrelated to anything that happens in the [defendant's device's] coating process) would increase the temperature of the droplets—in ways that cannot be measured—for 5 millionths of a second (0.000005 seconds) is an untested and untestable theory that is neither reliable nor relevant to the issues at hand.
MarcTec, LLC v. Johnson & Johnson, 638 F.Supp.2d 987, 1004 (S.D.Ill.2009). The district court also rejected the defendant's argument “that the use of heat at an earlier stage of the [defendant's] manufacturing process could satisfy the heat bonding limitations,” because “the court found that use of heat at other stages of the process has no ‘bearing on whether the polymers are bonded to the device by the application of heat.’ ” MarcTec, 664 F.3d at 913 (quoting MarcTec, LLC v. Johnson & Johnson, 638 F.Supp.2d at 1006). Moreover, the district court noted that, because the inventor “represented to the [Patent and Trademark Office] that the claims exclude stents in order to obtain allowance, [the plaintiff] cannot turn around in litigation and assert the patents-in-suit against the [defendant's] stent.” MarcTec, LLC v. Johnson & Johnson, 2010 WL 680490, at *9.
**29 The Plaintiffs' contention that, like the plaintiff in
MarcTec, Leviton Manufacturing possessed proof the argument it was furthering was baseless is unavailing. Leviton Manufacturing's fault was a matter of legal interpretation of the CSA and case precedent; the fact that Leviton Manufacturing possessed the documents that the Plaintiffs asserted, and the Court ultimately agreed, contradicted Leviton Manufacturing's position, is hardly a smoking gun that Leviton Manufacturing acted in bad faith by continuing to assert it. The question in
MarcTec, after all, is clearer than the question in this case. What the Court sees in
MarcTec is a plaintiff (i) insisting that a stent is not actually a stent, despite simple and clear proof to the contrary; and (ii) positing that the defendant's device employs heat to become bondable, either under improbable usage conditions or during the manufacturing stage, long before the device is actually used.
See MarcTec, 664 F.3d at 913–14. The Court finds the
MarcTec plaintiff's faulty arguments, which basic plain-language evidence and logistical common sense contradicted, to be far more baffling than Leviton Manufacturing's failure to *1146 properly apply the legal doctrine implicit in
TransCore to its reading of its CSA, particularly when, as discussed above, the eventual Federal Circuit ruling on this dispute may not have merely affirmed the principals in
TransCore, but saw fit to add some of its own.
The Plaintiffs also argue for Leviton Manufacturing's bad faith in their comparisons to
Interspiro, contending that “Leviton's assertion of infringement claims and counterclaims and its choice of forums were all unjustified and constituted the exercise of bad faith in implementing the Settlement Agreement. In
Interspiro, similar bad faith led to a finding of exceptional case under section 285....” Plaintiffs' Exceptional Case Brief at 10. This comparison does not, however, tell the whole story of
Interspiro. While it is true that, in
Interspiro, as the Federal Circuit observed, the district court found that “the question of infringement was not close and that [the defendant] demonstrated bad faith in implementing the [settlement] agreement,” Plaintiffs' Exceptional Case Brief at 10 (quoting Interspiro, 18 F.3d at 934) (internal quotation marks omitted), the Plaintiffs gloss over the additional facts that led the
Interspiro court to make a finding of bad faith—namely, in ways other than merely positing a deficient argument regarding infringement. The district court wrote:
The Court predicates its finding not only on the closeness of the case,
but also on Figgie's conduct in general and approach to the case. In this respect, the Court highlights Figgie's recalcitrance in implementing the settlement agreement, particularly with regard to Figgie's stonewalling of the audit, and its apparent intention to settle the original patent infringement case and then scuttle the settlement, as evidenced by its plans to develop the E–Z Flo while negotiations for the settlement agreement were underway, and its subsequent sale of the E–Z Flo without paying royalties. Even ignoring the E–Z Flo issue, Figgie scorned the settlement agreement from the first by failing to pay its full share of royalties based on sales of the Featherweight Cylinder and sales from SSA.
**30 Interspiro, 815 F.Supp. at 1521 (emphasis added). In other words, when the Plaintiffs argue that Leviton Manufacturing's claims, counterclaims, and choice of forums “constituted an exercise of bad faith in implementing the Settlement Agreement,” Exceptional Case Brief at 10, they attempt to draw a parallel with the Interspiro defendant's “bad faith in implementing the [settlement] agreement,” when in fact the Interspiro defendant, unlike Leviton Manufacturing, undertook a slew of actions to impede or ignore the agreement beyond simply asserting an unsuccessful legal position regarding its meaning.
The Plaintiffs also assert that Leviton Manufacturing acted unreasonably—if not with bad faith—by “conduct[ing] its appeal in a vexatious manner, including an excessively aggressive strategy of seeking amici and culminating in seeking en banc review of the Federal Circuit's opinion,” Plaintiffs' Reply ECB at 8, which “prolonged these proceedings unnecessarily at every stage, thereby increasing Plaintiff's fees and expenses,” Plaintiffs' Reply ECB at 5. The Plaintiffs assert that, “[e]ven if Leviton had a good faith belief that the [CSA] did not cover the ′124 and ′151 patents, it knew, or should have known, that Plaintiffs would assert the [CSA] as a defense, thereby necessitating that Leviton's action be filed in this Court.” Plaintiffs' Reply ECB at 2. The Plaintiffs argue that, “[w]hen viewed in isolation, it might appear that Leviton was merely exercising the options available to it under the governing rules ... [,][b]ut this court should ... evaluate the overall pattern of Leviton's conduct in which it failed to heed the *1147 numerous road signs warning it to ‘STOP.’ ” Plaintiffs' Reply ECB at 4. The Court disagrees, for the same reason that it cannot, as previously mentioned, deem Leviton Manufacturing's position to be frivolous for only part of the litigation process: if a position is colorable at the beginning of a case, then it is colorable throughout—absent some change in controlling law or discovery of facts not heretofore known—and, thus, any action legally and ethically available to a party to pursue that position cannot be done in bad faith.