Fed Circuit says NPE’s ‘abusive’ litigation warrants fees award

A panel of federal appeals judges has rebuked a Florida district court for its decision not to award ShoppersChoice its attorneys fees, incurred defending “abusive” patent litigation.

In a  precedential ruling issued yesterday, July 1, the US Court of Appeals for the Federal Circuit said the Florida court had abused its discretion when reviewing ShoppersChoice’s requests for fees.

ShoppersChoice, now known as BBQGuys, filed a motion for attorneys’ fees after fending off a patent infringement suit from non-practising entity Electronic Communication Technologies (ECT).

The US District Court for the Southern District of Florida granted summary judgment in favour of ShoppersChoice by finding the asserted ECT patent to be invalid, a finding which was upheld by the Federal Circuit.

But the district court then denied ShoppersChoice’s motion for an award of attorneys’ fees, finding that the case was not “exceptional”.

ShoppersChoice brought the case back to the Federal Circuit, highlighting that ECT, under its former guise of Eclipse IP, had filed more than 150 patent suits with the goal of reaching a cash settlement.

The Federal Circuit has now reversed the district court’s denial of attorneys’ fees and found that the Florida court “abused its discretion” in failing to weigh the relevant factors correctly.

Circuit Judge Evan Wallach, writing on behalf of a panel of three Federal Circuit judges, wrote yesterday that the district court had “clearly erred by failing to address ECT’s manner of litigation and the broader context of ECT’s lawsuit against ShoppersChoice”.

According to the Federal Circuit, the district court failed to take into account the context of ECT’s litigation strategy.

“ECT’s demand for a low-value settlement—ranging from $15,000 to $30,000—and subsequent steps—such as failure to proceed in litigation past claim construction hearings—indicates the use of litigation to achieve a quick settlement with no intention of testing the strength of the patent or its allegations of infringement,” Wallach wrote.

The district court should have also taken into account the “objective weakness” of the patent claims asserted by ECT, which the court itself invalidated.

The Federal Circuit cancelled the district court’s order denying attorneys’ fees, and sent the case back to Florida for further proceedings.

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