Judge Alsup Partially Grants Section 285 Request For Attorneys’ Fees Due To Exceptional Nature Of Case, Lamenting “Standard Patent BS By Bought-And-Paid-For Experts”
On January 9, 2021, Judge Alsup of the U.S. District Court for the Northern District of California granted, in part, a request for attorneys’ fees to the prevailing defendant. Finjan, Inc. v. Juniper Network, Inc., case no. C 17-05659 (N.D. Cal. Jan. 9, 2021). Judge Alsup found that plaintiff’s case stood out as exceptional in certain respects and, accordingly, issued a limited award for attorneys’ fees under 35 U.S.C. § 285.
35 U.S.C. § 285 provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” As the Supreme Court has articulated, a case is exceptional when it “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). Such a decision is left to the sound discretion of the court after considering the totality of the circumstances.
Judge Alsup has unique mechanisms for resolving patent disputes, including “patent showdowns,” where plaintiff picks its strongest claim and defendant picks the weakest claim. Here, that meant that plaintiff Finjan selected what it considered its best claim for infringement, and defendant Juniper chose what it viewed as the weakest claim (i.e., the best claim for non-infringement or invalidity). The parties then cross-briefed summary judgment, where Juniper prevailed on its claim for non-infringement and Finjan largely prevailed on its claim for infringement (though disputed facts remained), meaning that the case proceeded to trial on that claim. However, before trial, Judge Alsup excluded the testimony of Finjan’s damages experts, leaving Finjan to present only a fact-based damages case at trial. After hearing the evidence at trial, Judge Alsup awarded judgment as a matter of law to Juniper on damages, and the jury returned a verdict of non-infringement.
The court then conducted a second patent showdown. This showdown also went in favor of Juniper. Juniper prevailed, unopposed, on non-infringement of most products for its second selected claim and succeeded on the remaining products because Finjan had failed to provide adequate notice, as required under 35 U.S.C. § 287, to recover pre-suit damages (the patent was expired). As to the second claim selected by Finjan, after claim construction, Judge Alsup ordered the parties to show cause why summary judgment of non-infringement should not be entered, and later, he entered summary judgment for Juniper.
Finjan then stipulated to dismissal with prejudice to the remaining patent claims.
On appeal, the Federal Circuit summarily affirmed the decisions from both rounds of the patent showdown.
In his determination to award certain attorneys’ fees, Judge Alsup found several aspects of Finjan’s case to be exceptional and stand out from others. For example, Finjan tried to “sneak” in a new damages theory on the eve of trial (which effort was “caught” by the Court and the “trick” was excluded). Despite this, Finjan “pressed ahead and tried to present to the jury a facts-only damages case,” which “utterly failed.” Per Judge Alsup, “Finjan’s facts-only damages case at trial evinced the same flaws that got its expert-damages report thrown out, artificially attempting to inflate revenue to which it would be entitled, assuming its infringement case succeeded before the jury.” As another example, Judge Alsup found that Finjan should have dropped one patent after the first showdown, given the substantial overlap among the claims that effectively mandated the same non-infringement finding in the second shutdown. And, further, as to the constructive notice issue for pre-suit damages, Finjan improperly attempted to relitigate concessions it had made to the court in previous hearings.
That said, Judge Alsup found that “it cannot be said that every aspect of th[e] case stood out,” noting that the court addressed only three of the nine patents initially asserted and that Finjan ultimately dismissed its case with prejudice the remaining six patents after the second showdown. Judge Alsup ultimately found that the case was exceptional as to two of the patents and left open to further development the actual award of fees for those two.
Judge Alsup foreshadowed his decision during oral argument, noting the “standard patent BS by bought-and-paid-for experts.”