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Google Loses Award of §285 Attorneys’ Fees Since Plaintiff’s Patent Infringement Was Not Frivolous or Objectively Baseless

January 11, 2011

The U.S. Court of Appeals for the Federal Circuit Jan. 11 vacated an award of attorneys’ fees to Google Inc. pursuant to Section 285 of the Patent Act because it found that the infringement plaintiff’s suit, while unsuccessful, was not frivolous or objectively baseless (iLOR LLC v. Google Inc., Fed. Cir., No. 2010-1117, 1/11/11).

Finding that the district court clearly erred in ruling that this was an “exceptional” case warranting an awarding of attorneys’ fees under Section 285, the Federal Circuit said that this suit was not objectively baseless because the plaintiff here “could reasonably argue that its broad claim construction position was correct and that Google infringed its claims.”

Google Prevails on Infringement Question, Is Awarded Attorneys’ Fees.

In this suit, iLOR LLC charged that Google Inc.’s Google Notebook  infringed its U.S. patent 7,206,839 relating to Internet functionality, which in Claim 26 requires “the toolbar being displayable based on a location of a cursor in relation to a hyperlink.”

At trial, Google argued that the “being displayable” limitation only covered methods where the toolbar was automatically displayed when a cursor was proximate to the hyperlink. However, iLOR read the claim to also cover an embodiment where a right-mouse click was required to display the toolbar.

The district court agreed with Google and construed the claim to mean that “the toolbar is ‘automatically displayed’ upon the placement of the cursor in proximity to a hyperlink with no further action on the part of a user.” It went on to grant a summary judgment of noninfringement and dismiss the suit with prejudice.

In an initial appeal, the Federal Circuit found no error in the district court’s denial of a preliminary injunction, agreeing that the language of the claim and the specification suggested that the toolbar display was automatic and “based on the location of the cursor” in relation to the hyperlink. iLOR LLC v. Google Inc., 550 F.3d 1067 (Fed. Cir. 2008).

Here, iLOR appealed the district court’s award to Google of $627,039 in attorneys’ fees and other costs for a total of $660,351.

Google Fails to Meet Brooks Furniture Test.

Under Patent Act Section 285, 35 U.S.C. § 285, a “court in exceptional cases may award reasonable attorney[s’] fees to the prevailing party.”

The Federal Circuit observed that Section 285 must be viewed in the context of Supreme Court authority recognizing that the right to bring and defend litigation implicates First Amendment rights and that bringing allegedly frivolous litigation can only be sanctioned if the lawsuit is “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.” Professional Real Estate Investors, Inc. v. Columbia Pictures Industries Inc., 508 U.S. 49 (1993). As to whether a case is “exceptional,” Judge Timothy B. Dyk said that the relevant standard under Brooks Furniture Manufacturing Inc. v. Dutailier International  Inc., 393 F.3d 1378 (Fed. Cir. 2005), asks whether “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.”

Dyk noted that Brooks Furniture relied on Professional Real Estate in holding that, absent misconduct during patent prosecution or litigation, sanctions may be imposed against a patent plaintiff “only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” Under the strict standard of Brooks Furniture, the plaintiff’s case must have no objective foundation, the plaintiff must actually know this, and both the objective and subjective prongs “must be established by clear and convincing evidence,” Dyk said, quoting Wedgetail Ltd. v. Huddleston Deluxe Inc., 576 F.3d 1302 (Fed. Cir. 2009).

Looking at whether the second prong was present here, Dyk explained that “[t]he objective baselessness standard for enhanced damages and attorneys’ fees against a non-prevailing plaintiff under Brooks Furniture is identical to the objective recklessness standard for enhanced damages and attorneys’ fees against an accused infringer for § 284 willful infringement actions under In re Seagate Technology LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).”

Even though iLOR was ultimately unsuccessful in its patent infringement suit, “Google has not met its high burden to show by clear and convincing evidence that this suit was brought frivolously or that iLOR’s position on claim construction was objectively baseless, the Federal Circuit wrote. It said that the claim terms, specification, and prosecution history supported iLOR’s broad claim interpretation, which was ultimately found incorrect. “But simply being wrong about claim construction should not subject a party to sanctions where the construction is not objectively baseless,” Dyk stressed. He acknowledged that claim construction issues are often complex and “not always predictable.” Having found that Google failed the objective element of the two Brooks Furniture requirements, he said there was no need to look at the issue of subjective bad faith.

While the appellate court vacated the award of attorneys’ fees under § 285, it did find that the awarding Google costs for copying, court reporting, and transcripts was proper under 28 U.S.C §1920. The court then set aside the award of expert fees to Google under § 285, pointing out that that this case was not brought in bad faith.

The “exceptional” case finding was reversed, and the suit was remanded.

The opinion was joined by Chief Judge Randall R. Rader and Judge Richard Linn.

iLOR was represented by David E. Schmit of Frost Brown Todd, Cincinnati. Google was represented by Frank E. Scherkenbach of Fish & Richardson, Boston.

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