Eastern Texas District wrongly denied fees in patent clash, says Federal Circuit
The US District Court for the Eastern District of Texas wrongly denied a home security company’s request for attorneys’ fees, according to the US Court of Appeals for the Federal Circuit.
In a decision handed down yesterday, June 5, the Federal Circuit reversed a ruling that ADS Security wasn’t entitled to attorneys’ fees against US-based Rothschild Connected Devices Innovations.
Rothschild had claimed that ADS’s home security system infringed US patent number 8,788,090, which covers a “system and method for creating a personalised consumer product”.
According to the Federal Circuit, Rothschild has filed numerous lawsuits against various parties alleging infringement of the ‘090 patent.
During the proceedings, ADS sent Rothschild a safe harbour notice, which included copies of a proposed motion under Federal Rule of Civil Procedure 11(b) for sanctions and prior art that purportedly anticipated claim 1.
Rule 11(b) states that representations to the court must only be submitted after reasonable inquiries into their integrity have taken place.
In light of the notice, Rothschild voluntarily moved to dismiss its action.
After granting Rothschild’s motion to dismiss, the district court found that Rothschild hadn’t engaged in conduct sufficient to make the litigation “exceptional”, meaning that ADS didn’t merit attorneys’ fees.
It also found that Rothschild’s “decision to voluntarily withdraw its complaint within the safe harbour period is the type of reasonable conduct rule 11 is designed to encourage”.
ADS appealed, arguing that the district court had erred in its exceptionality determination on several grounds, including that the court failed to consider Rothschild’s wilful ignorance of the prior art and that Rothschild engaged in “vexatious litigation”.
“The district court clearly erred by failing to consider Rothschild’s wilful ignorance of the prior art,” said Circuit Judge Evan Wallach on behalf of the court.
On Rothschild’s past conduct, the court had based its analysis on a “clearly erroneous assessment of the evidence”, added the Federal Circuit.
Circuit Judge Haldane Mayer, in a concurring opinion, said the suit “never should have been filed” and ADS “deserves to be fully compensated for the significant attorneys’ fees it has incurred”.
The suit was reversed and remanded, with the Federal Circuitordering that the Eastern District of Texas conduct additional proceedings consistent with the opinion.
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