Stone Basket Innovations, LLC v. Cook Medical LLC ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
STONE BASKET INNOVATIONS, LLC,
Plaintiff-Appellee
v.
COOK MEDICAL LLC,
Defendant-Appellant
______________________
2017-2330
______________________
Appeal from the United States District Court for the
Southern District of Indiana in No. 1:16-cv-00858-LJM-
TAB, Judge Larry J. McKinney.
______________________
Decided: June 11, 2018
______________________
ROBERT E. FREITAS, Freitas Angell & Weinberg LLP,
Redwood City, CA, argued for plaintiff-appellee. Also
represented by DANIEL J. WEINBERG, JOSHUA YOUNG.
JAMES RICHARD FERGUSON, Mayer Brown, LLP,
Chicago, IL, argued for defendant-appellant.
______________________
Before PROST, Chief Judge, WALLACH and TARANTO,
Circuit Judges.
2 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
WALLACH, Circuit Judge.
Appellee Stone Basket Innovations, LLC (“Stone”)
sued Appellant Cook Medical LLC (“Cook”) in the U.S.
District Court for the Southern District of Indiana (“Dis-
trict Court”), alleging infringement of U.S. Patent
No. 6,551,327 (“the ’327 patent”). Following a dismissal
with prejudice, see Stone Basket Innovations, LLC v. Cook
Med. LLC (Stone Basket I), No. 1:16-cv-00858-LJM-TAB
(S.D. Ind. Jan. 11, 2017) (J.A. 1157), Cook filed, inter
alia, a motion for attorney fees pursuant to 35 U.S.C.
§ 285 (2012) (“the § 285 Motion”). The District Court
issued an order denying the § 285 Motion. Stone Basket
Innovations, LLC v. Cook Med. LLC (Stone Basket II), No.
1:16-cv-00858-LJM-TAB, 2017 WL 2655612, at *1 (S.D.
Ind. June 20, 2017).
Cook appeals. We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1) (2012). We affirm.
BACKGROUND
In April 2015, Stone filed its patent infringement suit
against Cook in the U.S. District Court for the Eastern
District of Texas (“Eastern District”), alleging infringe-
ment of the ’327 patent. J.A. 41–44. The ’327 patent
relates to a basket-type stone extraction medical device
used to remove stones from biological systems. See ’327
patent, Abstract, col. 1 ll. 9–12. The claimed extraction
basket includes a “support filament” such as a wire with a
slideable outer sheath, “a handle comprising a sheath
movement element,” and a “collapsible” wire basket used
to collect the stone. Id. col. 6 ll. 10, 16, 19; see id. col. 6
ll. 8–45 (claim 1); see also id. col. 5 ll. 1–17.
In May 2015, Cook filed a motion to transfer venue
from the Eastern District to the District Court. J.A. 59–
71. In October 2015, Cook served its invalidity conten-
tions. J.A. 1598–625. In January 2016, Cook deposed the
’327 patent’s inventor, during which he was asked ques-
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 3
tions about his contact with Stone’s managing members,
Daniel Mitry and Timothy Salmon, and the conception
and filing of the ’327 patent. J.A. 1504–05, 1510,
1526−27. Specifically, the ’327 patent’s inventor stated,
regarding the addition of the “sheath movement element”
in claim 1 to overcome an examiner’s rejection, “I realize
there is nothing novel about it.” J.A. 1510.
In March 2016, Cook petitioned the U.S. Patent and
Trademark Office’s (“USPTO”) for inter partes review
(“IPR”) of all claims of the ’327 patent. See J.A. 1628−75;
see also Stone Basket II, 2017 WL 2655612, at *3. Mean-
while, upon granting Cook’s Motion to Transfer Venue,
J.A. 832–34, the Eastern District transferred the case to
the District Court. Then, in April 2016, the parties filed a
joint motion to stay the case pending the Patent Trial and
Appeal Board (“PTAB”)’s consideration of Cook’s petition
for an IPR, which the District Court granted. J.A.
841−43.
In September 2016, the PTAB instituted an IPR on all
claims of the ’327 patent. Stone Basket II, 2017 WL
2655612, at *3. Following the PTAB’s institution, one of
Stone’s managing members offered to license the ’327
patent to Cook in exchange for $150,000.00. Id.; see
J.A. 1714 (confirming license offer in affidavit by Cook’s
attorney). However, negotiations broke down. See J.A.
1716–22 (providing an email exchange between counsel).
In December 2016, Stone filed a motion requesting ad-
verse judgment in the IPR proceeding, J.A. 1724–26, and
the PTAB granted the adverse judgment motion and
cancelled all of the ’327 patent’s claims, J.A. 1729–30.
That same month, Stone moved to dismiss the District
Court litigation with prejudice, see J.A. 885, which the
District Court granted, see Stone Basket II, 2017 WL
2655612, at *3. In March 2017, Cook filed its § 285 Mo-
tion, J.A. 1233−61; however, the District Court denied the
4 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
§ 285 Motion, because it determined the case was not
“exceptional,” Stone Basket II, 2017 WL 2655612, at *1.
DISCUSSION
I. Standard of Review and Legal Standard
By statute, a “court in exceptional cases may award
reasonable attorney fees to the prevailing party.” 35
U.S.C. § 285. “[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 unrea-
sonable manner in which the case was litigated.” Octane
Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct.
1749, 1756 (2014). The Supreme Court explained that
“[t]here is no precise rule or formula for making” that
determination. Id. (alteration in original) (internal quota-
tion marks and citation omitted). Instead, “[d]istrict
courts may determine whether a case is ‘exceptional’ in
the case-by-case exercise of their discretion, considering
the totality of the circumstances.” Id.
On appeal, we “review all aspects of a district court’s
§ 285 determination for abuse of discretion.” Highmark
Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744,
1747 (2014). “We apply Federal Circuit case[]law to the
§ 285 analysis, as it is unique to patent law.” Digeo, Inc.
v. Audible, Inc., 505 F.3d 1362, 1366 (Fed. Cir. 2007)
(citation omitted). A district court abuses its discretion
when it “base[s] its ruling on an erroneous view of the law
or on a clearly erroneous assessment of the evidence.”
Rothschild Connected Devices Innovations, LLC v. Guard-
ian Prot. Servs., Inc., 858 F.3d 1383, 1387 (Fed. Cir. 2017)
(quoting Highmark, 134 S. Ct. at 1748 n.2). “A factual
finding is clearly erroneous if, despite some supporting
evidence, we are left with the definite and firm conviction
that a mistake has been made.” Id. (internal quotation
marks and citation omitted).
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 5
II. The District Court Did Not Abuse Its Discretion in
Denying Cook’s § 285 Motion
This appeal involves two main issues, namely, wheth-
er the District Court erred in its assessment of: (1) the
substantive strength of Stone’s litigating position, and
(2) the alleged pattern of vexatious litigation by Stone.
We address these issues in turn.
A. The Substantive Strength of Stone’s Litigating Position
Under Octane, a district court may consider “the sub-
stantive strength of a party’s litigating position” when
determining if the case “stands out from others.” 134 S.
Ct. at 1756. The District Court analyzed the record—
including the ’327 patent’s prosecution history and prior
art, the inventor’s deposition testimony concerning the
sheath’s “novelty,” and Stone’s decision to cancel its
patent—yet ultimately found these factors did not demon-
strate that Stone had “willfully ignored the prior art or
failed to evaluate its case,” or that Stone’s “actions
were . . . objectively unreasonable in light of the circum-
stances.” Stone Basket II, 2017 WL 2655612, at *5 (inter-
nal quotation marks omitted). Cook argues that the
District Court “disregarded both the law and the facts
showing the weakness of [Stone’s] patent claims.” Appel-
lant’s Br. 24 (capitalization modified). We disagree with
Cook.
The District Court did not abuse its discretion in find-
ing that the substantive strength of Stone’s ultimately
non-prevailing litigating position did not warrant an
award of fees. Cook submitted two primary pieces of
evidence to support its arguments for exceptionality—
Cook’s invalidity contentions served in the Eastern Dis-
trict and the ’327 patent’s inventor testimony. The Dis-
trict Court did not abuse its discretion in finding that
neither piece of evidence, taken alone or together, war-
ranted a finding of exceptionality.
6 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
First, the District Court did not err in finding Stone
lacked any type of “clear notice” of the ’327 patent’s inva-
lidity by service of Cook’s invalidity contentions. Id. at
25; see Stone Basket II, 2017 WL 2655612, at *4. Alt-
hough Cook focuses on the obviousness of the ’327 patent
over U.S. Patent No. 6,168,603 (“Leslie”) on appeal, that
reference was not the focus of Cook’s invalidity conten-
tions, which listed Leslie along with thirty-one other
pieces of prior art as anticipatory references. J.A. 1601–
02; see also J.A. 1602 (singling out only other prior art
references Gilson and Greenhalgh—not Leslie—from that
list of thirty-two). After providing that list of thirty-two
references, Cook made the general statement that “[e]ach
prior art reference disclosed above [in the list of thirty-
two], either alone or in combination . . . , renders the
asserted claims invalid as obvious,” J.A. 1602, included a
legal standard section for motivation to combine,
J.A. 1603–05, and attached inconsistent and unilluminat-
ing claim charts, see, e.g., J.A. 1614–25 (attaching claim
charts lacking inclusion of Leslie), J.A. 1601, 1614, 1619
(referencing U.S. Patent No. 6,383,196 (“the ’196 patent”),
which is another patent issued to Leslie, in the claim
chart for only two of claim 1’s seven claim limitations
despite the fact that Cook includes the ’196 patent in its
list of anticipatory references). The Eastern District’s
Local Patent Rules governing invalidity contentions
require that “each such combination, and the motivation
to combine such items, must be identified,” and “[a] chart
identifying where specifically in each alleged item of prior
art each element of each asserted claim is found.” E.D.
Tex. P.R. 3-3(b), (c). 1 While compliance with local patent
rules is not always necessary to provide “clear notice” of
1 In a letter between counsel, Stone asserted its po-
sition that Cook’s invalidity contentions were not in
compliance with the Eastern District’s local patent rules.
J.A. 1942–43.
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 7
invalidity, Cook’s invalidity contentions, at minimum, fall
short of notifying Stone how Leslie renders the ’327
patent obvious—or even that Stone should conduct a
focused investigation on whether Leslie, in particular,
renders the ’327 patent obvious.
Moreover, Leslie is listed on the face of the ’327 pa-
tent, see ’327 patent, References Cited, and when prior art
“is listed on the face” of a patent, “the examiner is pre-
sumed to have considered it,” Shire LLC v. Amneal
Pharm., LLC, 802 F.3d 1301, 1307 (Fed. Cir. 2015). We
have explained that, where a party only relies on prior art
considered by an examiner in its invalidity contentions,
that party has the burden to “overcome[e] the deference
that is due to a qualified government agency presumed to
have properly done its job, which includes one or more
examiners who are assumed to have some expertise in
interpreting the references and . . . whose duty it is to
issue only valid patents.” PowerOasis, Inc. v. T-Mobile
USA, Inc., 522 F.3d 1299, 1304 (Fed. Cir. 2008) (internal
quotation marks and citation omitted). Having been
issued a valid patent, Stone was entitled to a presumption
of good faith in asserting its patent rights against Cook in
the form of a suit for infringement. See Checkpoint Sys.,
Inc. v. All-Tag Sec. S.A., 858 F.3d 1371, 1376 (Fed. Cir.
2017) (stating there is a “presumption that an assertion of
infringement of a duly granted patent is made in good
faith” (internal quotation marks and citation omitted)).
Cook’s invalidity contentions, based on prior art already
considered by the Examiner and with no further explana-
tion, do not make the substantive strength of Stone’s
position exceptional.
Second, while one might view Stone’s litigating posi-
tion as weak given the inventor’s deposition testimony
regarding the novelty and origin of claim 1’s sheath
handle element, see J.A. 1504–05, 1510, 1526−27, a strong
or even correct litigating position is not the standard by
which we assess exceptionality, see SFA Sys., LLC v.
8 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015). “A
party’s position on issues of law ultimately need not be
correct for them to not ‘stand[] out,’ or be found reasona-
ble.” Id. (quoting Octane, 134 S. Ct. at 1756). We decline
Cook’s invitation to take out of context the inventor’s
testimony, including that the ’327 patent’s hired illustra-
tor used the Cook basket handle as inspiration for a
portion of the ’327 patent’s Figure 1. See J.A. 1504–05,
1510 (stating by inventor that the ’327 patent’s represen-
tations were “based on” “the Cook handle”).
Moreover, contrary to Cook’s argument, an inventor’s
testimony that “there is nothing novel about [the sheath
movement],” J.A. 1510, taken alone, neither “establishe[s]
the invalidity of the patent on obviousness grounds” nor
constitutes a “material false statement[] to the [US]PTO,”
Appellant’s Br. 27, 28. A post-issuance statement regard-
ing a single element of a claimed invention does not
establish invalidity because “[w]e must consider the
subject matter sought to be patented taken as a whole.”
Graham v. John Deere Co., 383 U.S. 1, 32 (1966). During
prosecution, the USPTO found that the inventor’s
amendment adding the “handle portion comprising a
sheath movement element, . . . as proposed, would over-
come the rejection.” J.A. 1446. Indeed, duly issued
patents are presumed valid. See 35 U.S.C. § 282(a);
Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011).
It was not necessarily unreasonable for Stone to continue
to rely on the ’327 patent’s presumption of validity despite
the ’327 patent’s inventor testimony. See Q-Pharma, Inc.
v. Andrew Jergens Co., 360 F.3d 1295, 1303 (Fed. Cir.
2004) (concluding, in an appeal from a denial of a fee
award, that a party’s decision to proceed with a lawsuit
was not frivolous “in light of the statutory presumption of
validity”). As the trier of fact, the District Court had
discretion to weigh and find credible the evidence before
it. See Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844,
856 (1982) (“Determining the weight and credibility of the
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 9
evidence is the special province of the trier of fact.”). We
will not disturb its findings on appeal.
In response to Cook’s contention that Stone’s litigat-
ing position was “not tenable,” the District Court ex-
plained that:
perhaps most telling, was the fact that following
Cook’s service on [Stone] of its invalidity conten-
tions, it took no actions to ensure a rapid termina-
tion of the instant litigation . . . [including that it,
inter alia,] did not: (1) inform [Stone] that it be-
lieved the lawsuit to be frivolous or unfounded;
[or] (2) demand that [Stone] drop the lawsuit or
indicate that the asserted claims were ‘clearly in-
valid.’
Stone Basket II, 2017 WL 2655612, at *4 (emphasis
added). On appeal, Cook faults the District Court for
citing “no authority for the proposition that tactical
decisions made by the prevailing party are relevant to an
assessment of the strength of the non-prevailing party’s
litigating positions.” Appellant’s Br. 29. We disagree
with Cook.
The District Court was well within its discretion to
factor in Cook’s litigation conduct, because “the conduct of
the parties is a relevant factor under Octane’s totality-of-
the-circumstances inquiry, including the conduct of the
movant.” Gaymar Indus., Inc. v. Cincinnati Sub-Zero
Prods., Inc., 790 F.3d 1369, 1373 (Fed. Cir. 2015) (footnote
omitted) (considering conduct of the movant in assessing
exceptionality). Such conduct includes Cook’s failure to
send any communication to Stone that highlighted and
set out with precision the specific invalidity argument on
which Cook now relies for its assertion that Stone should
have known its conduct was “clearly unreasonable,”
Appellant’s Br. 17, or “objectively baseless,” id. at 25, so
as to merit an award of attorney fees.
10 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
Further, Cook’s failure to provide early, focused, and
supported notice of its belief that it was being subjected to
exceptional litigation behavior further supports the
District Court’s determination that Stone’s litigating
position did not “stand[] out” from others. Octane, 134 S.
Ct. at 1756. Absent any evidence that Stone’s litigating
position was frivolous when filed or at any point before it
filed for dismissal, we are not persuaded the District
Court abused its discretion in determining Stone’s case
did not meet the standard for an award of attorney fees.
Cf. Nat’l Oilwell Varco, L.P. v. Omron Oilfield & Marine,
Inc., 676 F. App’x 967, 973 (Fed. Cir. 2017) (affirming
award of attorney fees where a party was “on notice” of its
potentially frivolous litigating position based on infor-
mation provided by the opposing party, yet took no action
to remedy its position).
Here, litigation commenced in April 2015, J.A. 29, and
Cook served its invalidity contentions in October 2015,
Stone Basket II, 2017 WL 2655612, at *2. The ’327 patent
inventor’s testimony regarding the novelty of the sheath
was taken in January 2016. J.A. 1839. The USPTO
instituted the IPR in September 2016, J.A. 1690−91, at
which time the litigation was stayed pending the IPR’s
outcome, see Stone Basket II, 2017 WL 2655612, at *3. At
each of these points during the litigation, we find nothing
of record supporting Cook’s claim that Stone was “on clear
notice” of the ’327 patent’s invalidity, yet “persisted in
pressing . . . meritless claims.” Appellant’s Br. 25; see id.
(relying only upon evidence of service of invalidity conten-
tions and the inventor admissions as proof that Stone
knew at those points its claims were meritless).
Moreover, a “party cannot simply hide under a rock,
quietly documenting all the ways it’s been wronged, so
that it can march out its ‘parade of horribles’ after all is
said and done.” Aten Int’l Co. v. Uniclass Tech., No. CV
15-04424-AG (AJWx), slip op. at 5 (C.D. Cal. Mar. 30,
2018). We find this reasoning both persuasive and appli-
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 11
cable to this case. Cook waited until October 2016, nearly
a year after service of its invalidity contentions, and nine
months after the inventor’s statements regarding the
sheath’s novelty, before informing Stone that, if Stone
refused to drop its case, “Cook intend[ed] to file . . . a
motion for attorneys’ fees against [Stone], its principals
and its attorneys.” J.A. 1717. During oral argument,
counsel for Cook could not explain why it did not make its
assertion of frivolousness of the claims known to Stone
sooner. See Oral Arg. at 11:37–12:19, http://
oralarguments.cafc.uscourts.gov/default.aspx?fl=2017-
2330.mp3 (Q: “That [October 2016] email is . . . the kind
of communication I am talking about, that is, it
says . . . that if you don’t accept our settlement, then [we
will file for attorney fees].” A: “I recognize that . . . .”
Q: “It’s just that [the September 2016 letter] came very
late, . . . and the proceedings ended . . . six weeks later.”
A: “Yes . . . .” Q: “Why didn’t you send something like
that [September 2016 settlement email] before?” A: “I
didn’t think it would produce the result we were likely to
see . . . .” (emphasis added)).
Cook argues that the Motion to Transfer Venue meant
any possible notification to Stone while the case was
before the Eastern District would not have resulted in the
preferred result of dismissal. See id. at 5:51–6:05 (stat-
ing, by Cook’s counsel, that he felt “neither the [Federal]
Rule 11 [of Civil Procedure] nor the early summary judg-
ment [motion] was going to give us an early exit” because
of the “pending motion to transfer”). It does not matter
that a procedural motion was pending in the Eastern
District; nothing prevented counsel for Cook from notify-
ing Stone’s counsel that Cook regarded Stone’s litigating
actions as frivolous and explaining precisely why. Cook’s
counsel acknowledged as much. See id. at 11:30–33
(stating, by counsel for Cook, “maybe we could have
written a letter”). Nor did anything prevent Cook from
12 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
asking the Eastern District to expedite its ruling on the
Motion to Transfer Venue. See Fed. R. Civ. P. 16(a).
We are further unpersuaded by Cook’s counterargu-
ment that this case is similar to Rothschild, see Appel-
lant’s Br. 27 (citing 858 F.3d at 1388), in which we
reversed a district court’s denial of a § 285 motion because
the district court failed to consider plaintiff’s “willful
ignorance of the prior art” given counsel for plaintiff
admitted that counsel had “not conducted an analysis of
any of the prior art asserted in [the cross-motion] to form
a belief as to whether that prior art would invalidate” the
patent. Rothschild, 858 F.3d at 1388. In Rothschild, the
defendant also provided notice that the patent was invalid
under 35 U.S.C. §§ 101 and 102, and filed a motion for
judgment on the pleadings. See id. at 1385–86. The
defendant further served plaintiff with a Rule 11 letter
and appended both a draft Rule 11(b) motion and copies of
anticipatory prior art. Id. at 1386. Here, by contrast,
Cook failed to file any Rule 11 motion or motions for
summary judgment, and has not set forth any concrete
evidence that the District Court failed to consider Stone’s
evaluation of its case in light of the evidence of record.
Our holding with respect to this factor does not dis-
turb the rule that “a party cannot assert baseless in-
fringement claims and must continually assess the
soundness of pending infringement claims.” Taurus IP,
LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1328 (Fed.
Cir. 2013); see Medtronic Navigation, Inc. v. BrainLAB
Medizinische Computersysteme GmbH, 603 F.3d 943, 954
(Fed. Cir. 2010) (providing “[t]he salient inquiry is wheth-
er [plaintiff’s] claims were so lacking in merit that [the
plaintiff] was legally obligated either to abandon its case
altogether or to limit itself to challenging the district
court’s claim construction order on appeal”). Indeed, by
December 2016, Stone moved to dismiss this litigation,
and after a hearing on the same, the District Court dis-
missed with prejudice. See Stone Basket II, 2017 WL
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 13
2655612, at *3. On the particular facts of this case, where
there is no indication of willful ignorance or failure to
assess the soundness of pending claims by Stone, Cook’s
post-judgment notice of its assertion that the claims were
always baseless cannot mandate an award of fees under a
“totality of the circumstances” analysis. Octane, 134 S.
Ct. at 1756. Accordingly, the District Court did not abuse
its discretion in concluding that Stone’s litigating position
did not “stand[] out from others.” Id.
B. Stone’s Conduct in Other Litigation
In considering the “totality of the circumstances” in a
§ 285 motion, a party’s similar conduct in other litigation
is also relevant. See id. at 1757. The District Court found
a lack of evidence to support Cook’s assertion that Stone
sued Cook, like it had done other defendants, “for the sole
purpose of forcing settlements without any intention of
testing the merits of its claim.” Stone Basket II, 2017 WL
2655612, at *6 (internal quotation marks and citation
omitted). Further, the District Court noted that “[t]he
evidence of record reveals that [Stone] participated in
each stage of the litigation for nearly two years and tested
the merits of its claims.” Id. Cook alleges the District
Court improperly found that Cook made “conclusory
allegations” regarding Stone’s alleged pattern of “vexa-
tious litigation” solely “to extract a . . . nuisance pay-
ment.” Appellant’s Br. 38. Instead, Cook avers that its
evidence of more than 400 cases filed by entities managed
by Stone’s managing members, Messrs. Mitry and Salm-
on, demonstrates that Stone is part of a larger plan to
force nuisance settlements, constituting exceptional
litigation conduct. Id. at 38–41 (citing J.A. 1284–340).
We disagree with Cook.
A district court “may award fees in the rare case in
which a party’s unreasonable conduct—while not neces-
sarily independently sanctionable—is nonetheless so
‘exceptional’ as to justify an award of fees.” Octane, 134 S.
14 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
Ct. at 1757. The Supreme Court has characterized § 285
as a “safeguard[]” and has “stress[ed]” that “district courts
have the authority and responsibility to ensure frivolous
cases are dissuaded.” Commil USA, LLC v. Cisco Sys.,
Inc., 135 S. Ct. 1920, 1930−31 (2015) (citation omitted).
We have stated that “a pattern of litigation abuses char-
acterized by the repeated filing of patent infringement
actions for the sole purpose of forcing settlements, with no
intention of testing the merits of one’s claims, is relevant
to a district court’s exceptional case determination under
§ 285.” Newegg, 793 F.3d at 1350.
Here, despite Cook’s table summarizing the extent of
other Mitry-Salmon litigation, the District Court did not
abuse its discretion. 2 The record lacks evidence that the
number of settlements or type of settlement Stone pro-
posed rises to what we have previously considered excep-
tional. See Eon-Net LP v. Flagstar Bancorp, 653 F.3d
1314, 1326–27 (Fed. Cir. 2011) (affirming a finding of
exceptionality based on discovery misconduct and Eon-
Net’s filing of over 100 lawsuits against “diverse defend-
ants,” where Eon-Net “followed each filing by a demand
2 While we affirm the District Court’s ultimate ex-
ceptionality determination, which considered evidence
that Messrs. Mitry and Salmon are in the business of
forming shell entities to extract nuisance settlements, see
Stone Basket II, 2017 WL 2655612, at *6 & n.3, we note
that Messrs. Mitry and Salmon appear to be patent
attorneys who have been authorized to practice law, see
J.A. 60; see also Oral Arg. at 19:05–11 (confirming the
same by Stone’s counsel). Alternative means exist for
punishing activities by licensed attorneys that might
demonstrate unethical conduct. See Oral Arg. at 33:01–18
(agreeing, by counsel, that “there are plenty of remedies
that are available” if a party has been subject to improper
conduct).
STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC 15
for a quick settlement at a price far lower than the cost to
defend the litigation,” which was demonstrated by evi-
dence of pro-forma settlement offers based on a license fee
schedule of a defendant’s annual sales). Further, we find
no evidence of an immediate settlement demand in the
instant case. Instead, Stone litigated its position on the
merits for nearly two years, presenting claim construction
arguments before the District Court and responses to the
IPR petition before the PTAB. As the Supreme Court has
cautioned, fee awards are not to be used as a “penalty for
failure to win a patent infringement suit.” Octane, 134 S.
Ct. at 1753 (internal quotation marks and citation omit-
ted). The District Court analyzed but ultimately found
unpersuasive Cook’s arguments, and we see no reason to
upset the District Court’s findings here. Therefore, we
affirm the District Court’s determination that this case is
not exceptional under 35 U.S.C. § 285. 3
3 Because we uphold the District Court’s finding of
no exceptionality, we also affirm the District Court’s
denial of Cook’s motion for attorney fees pursuant to 28
U.S.C § 1927. See Stone Basket II, 2017 WL 2655612, at
*3, *7–8. Cook’s only additional argument for why it
merits fees under § 1927 is that Stone’s attorneys pursued
“unnecessary . . . litigation” by filing suit in the Eastern
District. Appellant’s Br. 41. We held the District Court
did not abuse its discretion in denying fees under § 1927
based upon its findings under the § 285 analysis as well
as the fact that “Cook’s own counsel stated on the record
that Cook sells the product in Texas and that there was
no question about venue.” Stone Basket II, 2017 WL
2655612, at *8 (internal quotation marks and citation
omitted); see Jolly Grp., Ltd. v. Medline Indus., Inc., 435
F.3d 717, 720 (7th Cir. 2006) (outlining the Seventh
Circuit’s test for attorney fees under § 1927 and reviewing
for abuse of discretion); Nystrom v. TREX Co., Inc., 424
16 STONE BASKET INNOVATIONS, LLC v. COOK MED. LLC
CONCLUSION
We have considered Cook’s remaining arguments and
find them unpersuasive. Accordingly, the Order of the
U.S. District Court for the Southern District of Indiana is
AFFIRMED
F.3d 1136, 1141 (Fed. Cir. 2005) (reviewing a § 1927
challenge under regional circuit law). We also affirm
(1) the District Court’s denial of Cook’s motion to join
Messrs. Mitry and Salmon, as that motion depends upon
their personal liability for Cook’s fees under § 285, and
(2) the District Court’s denial of Cook’s renewed motion
for leave to conduct targeted discovery related to the § 285
Motion.