Aten International Co., Ltd. v. Uniclass Technology Co., Ltd.
Opinion
Uniclass Technology Co., Ltd. ("Uniclass"), as well as Electronic Technology Co., Ltd.; Airlink 101; Phoebe Micro, Inc.; Broadtech International Co., Ltd., d/b/a Linkskey; Black Box Corporation; and Black Box Corporation of Pennsylvania (collectively the "customer defendants") (all collectively "Appellants") appeal the United States District Court for the Central District of California's order denying Appellants' motion for attorney fees. Because we hold the district court did not abuse its discretion in declining to find this an exceptional case under
BACKGROUND
Uniclass and ATEN International Co., Ltd. ("ATEN") are involved in making and selling keyboard-video-mouse switch systems that allow a user to control multiple computers from a single keyboard, video device, and mouse. In 2011, Uniclass stopped making payments on a license agreement it entered with ATEN in 2009. In 2014, ATEN sued Uniclass and the customer defendants alleging infringement, seeking damages and injunctive relief. Uniclass moved for summary judgment on ATEN's lost profits theory of damages, which the district court granted in April 2017. ATEN proceeded to trial based on a reasonable royalty theory of damages, under which its expert testified that the maximum recovery (not including its requested treble damages) was $678,337. At trial, a jury found that Uniclass did not infringe the asserted claims of
After trial, Uniclass moved to declare this case exceptional under
Uniclass timely appealed. We have jurisdiction under
DISCUSSION
Under § 285, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." "[A]n 'exceptional' case is simply one that 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."
*1373
Octane Fitness, LLC v. ICON Health & Fitness, Inc.
,
I
Appellants focus their arguments on appeal on a theory that the district court erred in not finding this case exceptional based on ATEN's disregard for the "foundational policy" of proportionate litigation. Appellants' Br. 15-16. Appellants summarize ATEN's expenses as including over $700,000 in expert witness fees alone, without considering other expenses including attorney fees. Appellants argue that ATEN could recover, at most, $678,337 in reasonable royalty damages. See J.A. 902 at 7:20-8:4; J.A. 870 at 23:8-11; J.A. 923 at 90:14-15. Accordingly, Appellants argue this case is exceptional because the cost of litigating the case exceeded ATEN's potential recovery at trial. See, e.g. , Appellants' Br. 15-20, 25-26. We reject this argument. We see no error in the court's legal analysis and no clear error in its fact findings.
There is no per se rule that a case is exceptional if litigation costs exceed the potential damages. The District of Delaware's post-
Octane
decision in
EON
is persuasive on this point: "[The court] is unaware of any
de minimis
exception for infringement. It cannot be the case that a plaintiff may be subjected to monetary sanctions for failing to drop a case against a defendant if the cost of litigation exceeds the potential recovery."
EON Corp. IP Holdings, LLC v. FLO TV Inc.
, No. 10-812-RGA,
Moreover, ATEN sought injunctive relief against Uniclass, its direct competitor. This alone undermines Appellants' argument. The case could have proceeded to trial requesting only an injunction, and there would be no potential damages to compare to ATEN's expenses. We cannot conclude that the district court's decision denying Appellants' motion for fees under these circumstances amounts to an abuse of discretion.
Appellants argue the district court should be bound by its statements during trial that the court was troubled by disproportionate aspects of the case. But Appellants admit that such comments were largely directed to the amount of public resources expended on the limited recovery at issue. Appellants' Br. 17-20 (citing J.A. 955 at 12:16-20 (regarding public resources); J.A. 1052 at 73:19-25 (regarding time spent with one witness); J.A. 1053 at 80:17-22 (regarding the length of trial *1374 compared to damages at issue); J.A. 1153 at 102:15-25 (regarding ATEN's attorney fees and the amount of time spent with the witness)). Appellants cite an exchange in which the court recognized a scenario in which expenditures might understandably exceed recovery: "I just don't understand [expert expenditures of] $400,000 in a $650,000 case. When I was a lawyer, if I did that, I would be fired, or frankly, I'd be working for a client who said: They are competitors. Spend every penny. " Appellants' Br. 18 (citing J.A. 956 at 13:2-6 (emphasis added)). We cannot conclude that the court's comments during trial regarding public resources render its subsequent decision denying fees an abuse of discretion. We see no abuse of discretion in the court's conclusion that under the totality of the circumstances this litigation was not exceptional.
II
Appellants also argue the district court erred by failing to weigh ATEN's frivolous damages methodology in its analysis. Specifically, Appellants argue the district court should have weighed the strength of ATEN's lost profits theory (rejected at the summary judgment stage), which Appellants allege was knowingly baseless and brought in bad faith. Appellants' Br. 22-25.
The district court did refer to Uniclass' argument that ATEN presented a weak case for lost profits that relied on guesswork, which it listed among the "whole slew" of Uniclass' arguments it considered. J.A. 3. The district court found there were "perhaps ... shortcomings" in ATEN's positions that did not "amount to a showing that [ATEN's] behavior was exceptional, amounting to the type of unreasonableness discussed in Octane ." J.A. 4.
Though ATEN's lost profits theory was not strong enough to withstand summary judgment, "[a] party's position ... ultimately need not be correct for them to not 'stand[ ] out.' "
SFA Sys., LLC v. Newegg Inc.
,
III
To the extent Appellants argue weakness in ATEN's other substantive positions justifies reversing the district court's determination that this case was not exceptional, we do not agree. Today in No. 18-1606, we reverse the district court's denial of JMOL because the jury's finding of anticipation was not supported by substantial evidence. Though we affirm as to noninfringement of the '141 and '289 patents, we note that ATEN's primary argument on appeal-that the court improperly gave claim construction disputes to the jury-was rejected because ATEN did not timely raise this issue with the court below. We find no abuse of discretion in the district court's determination that ATEN's positions were not so objectively unreasonable or exceptionally meritless as to stand out from other cases.
We have considered Appellants' other arguments and find them without merit.
CONCLUSION
We hold the district court did not abuse its discretion in declining to find this an exceptional case under
AFFIRMED
*1375 COSTS
Costs to ATEN.
Reference
- Full Case Name
- ATEN INTERNATIONAL CO., LTD., Plaintiff-Appellee v. UNICLASS TECHNOLOGY CO., LTD., Electronic Technology Co., Ltd., Airlink 101, Phoebe Micro, Inc., Broadtech International Co., Ltd., Dba Linkskey, Black Box Corporation, Black Box Corporation of Pennsylvania, Defendants-Appellants
- Cited By
- 7 cases
- Status
- Published