Fed Circ upholds ‘exceptional’ awards ruling
The US Court of Appeals for the Federal Circuit has upheld a North Dakota judge’s decision awarding $5 million in attorney’s fees to Marathon Oil and other companies in a long-running fracking patent suit.
The three-judge panel affirmed the district court judge’s decision to determine the case “exceptional” and upheld the award in a precedential opinion handed down on Thursday 14 October.
Fracking firm Heat-On-The-Fly argued that the court’s “exceptionality” determination was unjust, arguing that the Dakota court based its decision on “erroneous factual finding”. However, the circuit judges were unpersuaded by this argument.
This is the second time the case has appeared before the Circuit, with the first being in 2018 when the appellate court affirmed a ruling that Heat-On-The-Fly’s claims relied on a patent that was obtained by hiding crucial information concerning “substantial on-sale and public uses of the claimed invention” from the US Patent and Trademark Office.
The patent in question, US patent 8,171,993B2 is directed to a “Water heating apparatus for continuous heated water flow and method” used in fracking and has an expected expiration date in 2030.
The Circuit remanded the case to the US District Court for the District of North Dakota to reconsider Judge Ralph Erickson’s decision to not award fees. On remand, Erickson awarded Marathon more than $1.7 million in fees and costs, and two other companies, Energy Heating and Rocky Mountain, more than $3.3 million.
Case background
Heat-On-The-Fly first sued Energy Heating in 2013, claiming that its fracking services infringed the ‘993 patent.
Energy Heating sought a declaratory judgment that the patent was unenforceable due to inequitable conduct, was invalid as obvious and that it had not been infringed. Heat-On-The-Fly filed counterclaims, as well as a third-party complaint against Marathon Oil.
Before trial, the North Dakota court issued a summary judgment finding no direct infringement and holding that all claims of the patent were invalid.
In its summary judgment, the court held that the patent would not have been issued but for Heat-On-The-Fly’s deliberate decision to withhold information of the claimed invention in an “intent to deceive”.
Heat-On-The-Fly appealed against the judgment of inequitable conduct and tortious interference to the Federal Circuit. On Appeal, the Circuit vacated the district court’s denial of attorney’s fees, noting that it was “unsure as to whether the court’s basis for denying attorneys’ fees rests on a misunderstanding of the law or an erroneous fact-finding”. The decision was remanded back to the Virginia court.
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