“If such a notice letter were sufficient to trigger § 285, then every party would send such a letter setting forth its complaints at the early stages of litigation to ensure that—if it prevailed—it would be entitled to attorneys’ fees.” – CAFC opinion
In a precedential opinion authored by Judge Alan Albright, sitting by designation, the U.S. Court of Appeals for the Federal Circuit (CAFC) on Friday vacated and remanded a Colorado district court’s award of attorney’s fees to Sling T.V. and DISH Networks (DISH). The CAFC said the district court erred in finding the case exceptional and granting DISH’s motion for Realtime Adaptive Streaming, LLC to pay its attorney’s fees.
The underlying case relates to Realtime’s 2017 suit against DISH, alleging infringement of three of its digital data compression patents. Realtime has also sued Google and Netflix on in high-profile cases where the claims of some of the same patents were ultimately found patent ineligible. The district court found these cases, as well as the CAFC’s decision in Adaptive Streaming Inc. v. Netflix, Inc.(Fed. Cir. 2020); two inter partes review (IPR) decisions in which certain claims of one of the patents were found invalid as obvious; two non-final office actions during an ex parte reexamination of another of the patents finding certain claims of the patent obvious; a letter sent by DISH’s counsel to Realtime urging it to drop its infringement claims; and the opinions of DISH’s expert witness to be “red flags” warranting exceptionality and thus the award of attorneys’ fees to DISH. But the CAFC said the district court should not have given any weight to some of those red flags.
While the CAFC opinion agreed with DISH that the Google and Netflix decisions represented a “significant red flag” that should have caused Realtime to reconsider its patent eligibility position of one of the asserted patents, it said the Adaptive Streaming decision should not have been treated as a red flag because that case was about “a different technology entirely”. The CAFC also said the district court failed to explain why the two IPR decisions were relevant to the award of attorneys’ fees, finding that the Patent Trial and Appeal Board’s (PTAB’s) obviousness determinations were “not enough to establish conventionality at Alice Step Two.” The opinion continued:
“There simply was not enough in the Board decisions—which concerned different sections of the Patent Act and did not analyze whether anything in the prior art was well-understood, routine, or conventional—to put Realtime on notice that its arguments regarding the eligibility of its patent claims were entirely without merit.”
As to the office actions in the reexamination, the CAFC said it was first of all unclear whether the district court used them as red flags because it wrote that they “could have served as additional red flags regarding the viability of Realtime’s case.” And to the extent they were relied upon as red flags, the district court’s analysis was insufficient because it failed to explain how the office actions sufficed as red flags when the examiner was using the broadest reasonable interpretation standard of claim construction.
Turning to the letter sent by DISH’s lawyers to Realtime’s counsel, in which DISH “emphasized the similarities of the claims” of one of the patents to the Adaptive Streaming decision and “urged Realtime to drop its infringement claims and warned of the substantial litigation expense that would be incurred if the case continued,” the CAFC said “it is not clear what it is about the notice letter…that constitutes a red flag.” The opinion noted:
“If such a notice letter were sufficient to trigger § 285, then every party would send such a letter setting forth its complaints at the early stages of litigation to ensure that—if it prevailed—it would be entitled to attorneys’ fees.”
While the opinion went on to clarify that this does not mean such a notice letter could not be considered in assessing exceptionality, here, the letter did not explain at length why Realtime should consider its eligibility position completely meritless. “Simply being on notice of adverse case law and the possibility that opposing counsel would pursue § 285 fees does not amount to clear notice that the ’610 claims were invalid and is therefore not sufficient to support an exceptionality finding in this case,” wrote the CAFC.
Finally, the opinion addressed DISH’s expert’s opinions, which the district court said warranted “serious consideration” by Realtime in terms of its eligibility position and which it ultimately held up as another red flag warranting exceptionality. The CAFC said the district court erred here because Realtime’s expert offered critiques and counterarguments to DISH’s expert’s opinions, indicating Realtime did give it serious consideration and that these competing opinions, regardless of which the court found more persuasive, were “typical of the ordinary, unexceptional patent infringement case.”
The CAFC thus vacated the decision and remanded for consideration in light of its findings but offered “no opinion on the correct disposition of DISH’s attorneys’ fees motion on remand.”
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