Adjustacam, LLC v. Newegg, Inc. ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
ADJUSTACAM, LLC,
Plaintiff-Appellee
v.
NEWEGG, INC., NEWEGG.COM, INC.,
ROSEWILL, INC.,
Defendants-Appellants
SAKAR INTERNATIONAL, INC.,
Defendant
______________________
2016-1882
______________________
Appeal from the United States District Court for the
Eastern District of Texas in No. 6:10-cv-00329-JRG,
Judge J. Rodney Gilstrap.
______________________
Decided: July 5, 2017
______________________
JOHN J. EDMONDS, Collins, Edmonds, Pogorzelski,
Schlather & Tower PLLC, Houston, TX, argued for plain-
tiff-appellee. Also represented by SHEA NEAL PALAVAN,
STEPHEN F. SCHLATHER.
MARK A. LEMLEY, Durie Tangri LLP, San Francisco,
CA, argued for defendants-appellants. Also represented
by KENT E. BALDAUF, JR., DANIEL H. BREAN, BRYAN P.
2 ADJUSTACAM, LLC v. NEWEGG, INC.
CLARK, The Webb Law Firm, Pittsburgh, PA; RICHARD
GREGORY FRENKEL, Latham & Watkins LLP, Menlo Park,
CA.
______________________
Before REYNA, MAYER, and HUGHES, Circuit Judges.
REYNA, Circuit Judge.
AdjustaCam sued Newegg and dozens of other de-
fendants for patent infringement. Although AdjustaCam
voluntarily dismissed most defendants early in the litiga-
tion, it continued to litigate against Newegg, including
through a Markman order and extended expert discovery.
Just before summary judgment briefing, AdjustaCam
voluntarily dismissed its infringement claims against
Newegg with prejudice. Newegg then filed a motion for
attorneys’ fees. The district court denied Newegg’s mo-
tion, and Newegg appealed to this court. We remanded to
the district court in light of intervening Supreme Court
precedent. On remand, the district court again denied
Newegg’s motion for fees. Newegg then filed this appeal.
Because the district court erred in denying Newegg’s
motion, we reverse.
BACKGROUND
A. The ’343 Patent
AdjustaCam, LLC is the exclusive licensee of U.S. Pa-
tent No. 5,855,343 (“’343 patent”), which issued in 1999
and is entitled “Camera Clip.” The ’343 patent discloses a
camera clip that supports a camera both on a flat surface
and when attached to a computer monitor. The ’343
patent includes a figure of the camera clip:
ADJUSTACAM, LLC v. NEWEGG, INC. 3
J.A. 164. Claim 1 of the ’343 patent provides:
1. Apparatus for supporting a camera, having a
lens, on any generally horizontal, substantially
planar surface and on an object having a first sur-
face and a second surface and an edge intersecting
the first surface and the second surface, compris-
ing:
a. a hinge member adapted to be rotatably at-
tached to the camera, said camera, when the
hinge member is so attached, rotating, about a
first axis of rotation, relative to said hinge mem-
ber; and
b. a support frame rotatably attached to said
hinge member and configured to support said
hinge member on the surface and the object, said
hinge member rotating about a second axis of ro-
tation relative to said support frame, said first ax-
is of rotation being generally perpendicular to said
second axis of rotation, said second axis of rota-
tion being substantially parallel to the first sur-
face when said hinge member is supported on the
object, said support frame having a first disposi-
tion positioned on said generally horizontal, sub-
stantially planar surface, and said support frame
having a second disposition attached to the object
when said first surface and said second surface
are inclined from a generally horizontal orienta-
tion, the camera being maintained adjacent said
edge in said second disposition of said support
frame.
J.A. 169–170 (col. 6 l. 49–col. 7 l. 6) (relevant terms em-
phasized).
4 ADJUSTACAM, LLC v. NEWEGG, INC.
B. Newegg’s Accused Products
Unlike the invention disclosed in the ’343 patent,
Newegg’s accused products use a ball-and-socket joint,
which facilitates rotation about multiple axes. See J.A. 6.
In its original order denying Newegg’s motion for fees, the
district court noted that “the products do not have a pure
ball-and-socket joint but rather a modified ball-and-socket
joint with a channel that restricts movement.” Id. Thus,
although Newegg’s products are constrained in some
movements, they still allow rotation about more than one
axis. The district court never found that Newegg’s prod-
ucts rotate about a single axis.
C. District Court Litigation
In July 2010, AdjustaCam sued Newegg, Inc.,
Newegg.com, Inc., and Rosewill, Inc. (collectively,
“Newegg”) and dozens of other defendants for infringe-
ment of the ’343 patent. AdjustaCam moved to dismiss
most defendants from the litigation prior to claim con-
struction. Many defendants settled for far less than the
cost of litigation. See J.A. 6–7.
Almost two years later, in April 2012, the district
court held a Markman hearing followed by the issuance of
a Markman order. The court determined that “the ‘rotat-
ably attached’ terms do not require construction beyond
what is contained in the claims.” J.A. 22. Nonetheless,
it concluded the ’343 patent claims describe “rotatably
attached” objects as rotating over a single axis. J.A. 20.
The Markman order explained that “every reference to a
‘rotatably attached’ object in the specification and claims
describes the attachment as permitting motion over a
single axis of rotation,” and “[t]he claims plainly describe
each ‘rotatably attached’ object as rotating about a single
axis.” J.A. 21–22.
Shortly after the Markman order, AdjustaCam settled
with more defendants. However, AdjustaCam continued
ADJUSTACAM, LLC v. NEWEGG, INC. 5
to press its case against Newegg. The case proceeded into
expert discovery.
In September 2012, just prior to summary judgment
briefing, AdjustaCam moved to dismiss with prejudice its
claims against Newegg, contingent on Newegg’s right to
seek fees after dismissal. In October 2012, Newegg
moved for a declaration of exceptional case under 35
U.S.C. § 285 and an award of fees. Newegg argued that
this case is exceptional because AdjustaCam brought an
objectively baseless lawsuit in bad faith. J.A. 1779.
According to Newegg, AdjustaCam brought the case
simply to extract nuisance-value settlements unrelated to
the merits and far below the costs of defense. Id. Newegg
further contended that AdjustaCam had no reasonable
expectation of success on its infringement claims against
Newegg, particularly after the district court’s Markman
order. Id. Newegg argued that even after the Markman
order, AdjustaCam pressed its frivolous infringement
claims, continued to demand a nuisance settlement, and
prolonged the litigation in bad faith. Id.
Specifically, Newegg pointed out that its allegedly in-
fringing products use ball-and-socket joints. J.A. 1786.
Comparing Newegg’s ball-and-socket products to the ’343
patent claims demonstrates the spurious nature of Ad-
justaCam’s infringement allegations. Id. And, according
to Newegg, the district court’s Markman order makes
AdjustaCam’s position even more untenable. Ad-
justaCam’s infringement allegations against Newegg,
therefore, were objectively baseless. Id. Finally, Newegg
accused AdjustaCam of serving a substantively different
“supplemental” infringement report the day of its in-
6 ADJUSTACAM, LLC v. NEWEGG, INC.
fringement expert’s deposition, without explaining the
delay. J.A. 8; see also J.A. 1789. 1
The district court denied Newegg’s motion. The court
wrote that “[i]f the ball and socket joint truly restricts the
range of movement such that it cannot rotate about
multiple axes, the constrained ball and socket joint could
meet the claim limitation which requires the hinge mem-
ber being rotatably attached to the camera in a single axis
of rotation.” J.A. 6. “Since one could reasonably argue
[Newegg’s] products meet the ‘rotatably attached’ limita-
tion, AdjustaCam’s infringement theories are not objec-
tively baseless.” Id. Thus, the court found that
“AdjustaCam’s continued assertion of its infringement
claims post-Markman do not amount to litigation miscon-
duct.” J.A. 8.
The court further concluded that the action was not
brought in bad faith or for an improper purpose. Id. It
explained that although AdjustaCam asserted relatively
low damages against many defendants, patent infringe-
ment cases do not contain a “minimum damages require-
ment.” J.A. 7. The court discerned “no other evidence”
aside from low settlement amounts that AdjustaCam filed
the suit solely to collect nuisance-value settlements. Id.
The court also rejected Newegg’s argument that Ad-
justaCam’s per-unit settlement amounts were so varied
(between $0.10 per unit and $161.29 per unit) that “Ad-
justaCam’s royalty was simply ‘bogus.’” J.A. 9. Newegg
might disagree with AdjustaCam’s damages calculations,
but the district court found “no evidence” that Ad-
justaCam’s methodology “was so outrageous and unrelia-
ble to support an award of attorney fees.” Id.
1 Newegg spent over $350,000 in attorneys’ fees and
expert fees to defend the lawsuit and file its motion for
fees. J.A. 3808.
ADJUSTACAM, LLC v. NEWEGG, INC. 7
Finally, the court determined that Newegg “failed to
prove AdjustaCam acted inappropriately in this case.”
J.A. 8. It credited AdjustaCam’s explanation that it
inadvertently served a draft expert report to Newegg, and
that AdjustaCam served a last-minute supplemental
expert report because it did not realize its mistake until
the day of its expert’s deposition. J.A. 8–9. “In the ab-
sence of any other dubious behavior,” the court wrote,
“there is no reason to find AdjustaCam acted inappropri-
ately here.” J.A. 9.
D. First Appeal
In September 2013, Newegg appealed the district
court’s denial of its motion for fees. In April 2014, the
Supreme Court issued its decision in Octane Fitness, LLC
v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014)
(clarifying what constitutes an “exceptional” case under
§ 285). Soon thereafter, we remanded the case back to the
district court for reconsideration in light of Octane. See
AdjustaCam, LLC v. Newegg, Inc., 626 F. App’x 987, 991
(Fed. Cir. 2015) (“Remand Order”). In that order, we
noted that Octane “did not simply relax the standard
under § 285. It substantially changed the analysis.” Id.
at 990. We declined to substitute our judgment for that of
the district court in applying these new standards and
afforded the district court an opportunity to evaluate
whether this case is “exceptional” under the new Octane
standard. Id. at 991. We also noted that Newegg’s
“arguments appear to have significant merit, particularly
[its] argument that AdjustaCam’s continued pursuit of its
infringement claims after the district court construed the
claim term ‘rotatably attached’ was baseless.” Id. at 991
n.2.
E. Proceedings On Remand
Upon remand, the case was reassigned to a new dis-
trict court judge due to the original judge’s retirement.
The new judge allowed re-briefing on the § 285 issue
8 ADJUSTACAM, LLC v. NEWEGG, INC.
under Octane. In January 2016, AdjustaCam filed a
response to Newegg’s renewed motion for fees that con-
tained a supplemental report by AdjustaCam’s expert,
Dr. Muskivitch. J.A. 3937–75. AdjustaCam concedes that
the supplemental report contains infringement arguments
not raised before the original judge. At the January 26,
2016 oral argument, AdjustaCam explained that “after
the fact, Newegg . . . really attacked this issue [of single-
axis rotation], and so there really wasn’t that much of a
record for it in front of [the first district judge] and ulti-
mately the Federal Circuit. So we supplemented that
record with . . . declarations to try and provide some
additional explanation.” J.A. 4312; see also J.A. 4313
(AdjustaCam arguing that the supplemental Muskivitch
declaration provided “more reasoned explanations” and
“tried to sum things up”).
In a March 2016 order, the district court wrote that
“[a]lthough the standard for evaluating exceptionality
under § 285 has changed, . . . the facts of the case them-
selves remain the same” as when the previous judge
initially rejected Newegg’s fee request. J.A. 1_5. The
court went on to summarize 11 separate factual findings
from the original judge’s opinion. J.A. 1_5–1_6. One such
finding was that AdjustaCam’s methodology of calculating
damages was not “so outrageous and unreliable to support
an award of attorney fees.” J.A. 1_6. The court stated
that “[t]he determination of whether a case is ‘exceptional’
under § 285 necessarily involves intangible elements
uniquely available to the district court that has lived with
the case for a period of months or years.” Id. It acknowl-
edged that a Federal Circuit panel found “significant
merit” in Newegg’s argument. Id. n.6. The court, howev-
er, wrote that it “endeavored not to circumvent by hind-
sight the judgments and in-person evaluations that the
trial judge who dealt with this case in the courtroom
arena was best positioned to have made, considering both
the facts as well as the unavoidable human intangibles
ADJUSTACAM, LLC v. NEWEGG, INC. 9
that ‘a totality of the circumstances’ contemplates.” Id. It
concluded that AdjustaCam’s infringement and validity
arguments were not so weak, or its litigation conduct so
poor, to constitute an exceptional case. J.A. 1_7. On this
basis, the district court denied Newegg’s motion for fees.
Newegg timely appeals. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
DISCUSSION
A. Standard Of Review
“The court in exceptional cases may award reasonable
attorney fees to the prevailing party.” 35 U.S.C. § 285.
We review for abuse of discretion the denial of attorneys’
fees under § 285. Highmark Inc. v. Allcare Health Mgmt.
Sys., Inc., 134 S. Ct. 1744, 1747 (2014). We also review
for abuse of discretion a district court’s use of its inherent
authority to award or deny expert fees. MarcTec, LLC
v. Johnson & Johnson, 664 F.3d 907, 921 (Fed. Cir. 2012).
The Supreme Court has noted that § 285 “imposes one
and only one constraint on district courts’ discretion to
award attorney’s fees in patent litigation: [t]he power is
reserved for ‘exceptional’ cases.” Octane, 134 S. Ct. at
1755–56. “[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.” Id. at
1756.
Despite this considerable latitude in making fees de-
terminations, an appellate court may correct a district
court’s legal or factual error. Highmark, 134 S. Ct. at
1748 n.2. A district court abuses its discretion when its
ruling rests on an erroneous legal conclusion or on a
clearly erroneous assessment of the evidence. Id.; see also
Apple Inc. v. Samsung Elecs. Co., 809 F.3d 633, 639 (Fed.
Cir. 2015). The court also abuses its discretion when it
10 ADJUSTACAM, LLC v. NEWEGG, INC.
makes a “‘clear error of judgment in weighing relevant
factors.’” Bayer CropScience AG v. Dow AgroSciences
LLC, 851 F.3d 1302, 1306 (Fed. Cir. 2017) (quoting Men-
tor Graphics Corp. v. Quickturn Design Sys., Inc., 150
F.3d 1374, 1377 (Fed. Cir. 1998)).
B. The District Court Abused Its Discretion
We hold that the district court abused its discretion
by not awarding fees to Newegg for two independent
reasons: (1) it failed to follow our mandate on remand;
and (2) its decision was based on “a clearly erroneous
assessment of the evidence.” Highmark, 134 S. Ct. at
1748 n.2. We recognize the deference owed to district
courts in deciding fees motions. See Univ. of Utah v. Max-
Planck-Gesellschaft zur Foerderung der Wissenschaften
e.V., 851 F.3d 1317 (Fed. Cir. 2017) (affirming decision
not to award fees); Bayer, 851 F.3d at 1303 (affirming
decision to award fees). Deference, however, is not abso-
lute. Apple, 809 F.3d at 639; see also Highmark, 134 S.
Ct. at 1748 n.2; Checkpoint Sys., Inc. v. All-Tag Sec. S.A.,
__ F.3d __, 2017 WL 2407853 (Fed. Cir. June 5, 2017)
(reversing fee award); Rothschild Connected Devices
Innovations, LLC v. Guardian Prot. Servs., Inc., __ F.3d
__, 2017 WL 2407870 (Fed. Cir. June 5, 2017) (reversing
decision not to award fees). When a district court bases
its decision on a clearly erroneous view of the evidence, as
it did here, the court abuses its discretion in denying fees.
1. Failure To Follow Mandate
The district court erred by ignoring our mandate “to
evaluate whether this case is ‘exceptional’ under the
totality of the circumstances and a lower burden of proof”
in the first instance. Remand Order, 626 F. App’x at 991.
Instead of engaging in an independent analysis, the
district court adopted the previous judge’s factual findings
wholesale. See J.A. 1_5–1_6. The entirety of the court’s
analysis based on those adopted fact-findings consists of
three sentences:
ADJUSTACAM, LLC v. NEWEGG, INC. 11
Having considered the totality of the circumstanc-
es, as reflected in the record and affording due
weight to the previous in-person evaluations an-
nounced by [the previous judge] from his unique
posture of having lived with this case and these
parties, the Court concludes that this is not an
“exceptional” case under § 285. The determina-
tion of whether a case is “exceptional” under § 285
necessarily involves intangible elements uniquely
available to the district court that has lived with
the case for a period of months or years. After a
careful review of the entirety of the record, as well
as the parties’ arguments and additional briefing,
the Court, in an exercise of its statutory grant of
discretion, does not find that AdjustaCam’s in-
fringement and validity arguments were so weak,
or its litigation conduct so poor, as to make this
case stand out from others.
J.A. 1_6.
Based on the circumstances presented here, the
wholesale reliance on the previous judge’s factfinding was
an abuse of discretion. The court apparently felt con-
strained by its lack of “in-person evaluations that the trial
judge who dealt with this case in the courtroom arena was
best positioned to have made.” J.A. 1_6 n.6. But the
court allowed additional briefing and held an oral argu-
ment; therefore, it had first-hand knowledge and in-
person experience with the parties. Moreover, Ad-
justaCam filed a supplemental brief on remand filled with
new infringement arguments. Thus, contrary to the
district court’s conclusion, see J.A. 1_5, the facts had
changed since the case was before the original district
judge.
We specifically instructed the judge on remand to
“evaluate” the merits of Newegg’s motion in the first
instance based on the new Octane standard, which did not
12 ADJUSTACAM, LLC v. NEWEGG, INC.
occur. We also expressed this court’s view that Newegg’s
argument had “significant merit.” While the district court
need not reveal its assessment of every consideration of
§ 285 motions, it must actually assess the totality of the
circumstances. The district court did not do this. In
particular, there is no analysis of AdjustaCam’s continued
“dubious” press of litigation in the totality of the circum-
stances under the new standard set in Octane.
Our recent decision in University of Utah does not
compel a different result. In Utah, we were “wary to wade
in[to] [the] circumstantial waters” of weighing competing
evidence related to the strength of a party’s litigating
position. 851 F.3d at 1323. We noted that the district
court is “in the best position to understand and weigh
these issues,” that the district court “ha[s] no obligation to
write an opinion that reveals her assessment of every
consideration,” and reaffirmed that we do not second-
guess such determinations. Id.
This case is different from Utah because here, there is
no evidence that the district court properly weighed the
issues. We reiterate today that the district court is in the
best position to weigh the evidence. When a district court
makes a § 285 ruling based on independent evaluation of
the evidence before it, we will continue to defer to that
ruling. We will not defer, however, to conclusions based
on a “clear error of judgment in weighing relevant fac-
tors.” Bayer, 851 F.3d at 1306. Here, the district court
did not independently evaluate the evidence in view of the
Supreme Court’s intervening precedent, which changed
the standard by which § 285 motions are to be evaluated.
For example, the district court failed to consider and
include in its analysis AdjustaCam’s supplemental report
that raised new infringement arguments for the first time
on remand. It is not clear from the district court’s opin-
ion whether it was aware that well after the merits phase
of the case had ended, AdjustaCam raised new merits
arguments in an attempt to rebut Newegg’s contention
ADJUSTACAM, LLC v. NEWEGG, INC. 13
that AdjustaCam pursued objectively baseless litigation.
Based on the foregoing, we find that the district court
abused its discretion by failing to follow our mandate.
2. Clearly Erroneous Factual Findings
The district court’s failure to follow our mandate is
sufficient reason to find an abuse of discretion. Separate
and apart from that issue, however, the district court’s
clearly erroneous findings about the substantive strength
of AdjustaCam’s case independently support reversal.
The record developed over the past five years points to
this case as standing out from others with respect to the
substantive strength of AdjustaCam’s litigating position.
Octane, 134 S. Ct. at 1756. Where AdjustaCam may have
filed a weak infringement lawsuit, accusing Newegg’s
products of infringing the ’343 patent, AdjustaCam’s suit
became baseless after the district court’s Markman order,
where the court found “that the claims of the ’343 patent
describe ‘rotatably attached’ objects as rotating over a
single axis.” J.A. 20. Indeed, the court found that
“[e]very reference to a ‘rotatably attached’ object in the
specification and claims describes the attachment as
permitting motion over a single axis of rotation.” J.A. 21.
Stated differently, the evidence proffered by AdjustaCam
showed that AdjustaCam’s lawsuit was baseless.
The district court found that the strength of Ad-
justaCam’s litigation position was not exceptional because
Newegg’s ball-and-socket products were constrained in
such a way that AdjustaCam could reasonably argue they
rotated on a single axis. J.A. 6. But AdjustaCam did not
advance that argument. Instead, AdjustaCam argued
that the constraint on Newegg’s ball-and-socket joint
limited the rotation to a single axis at a time. See J.A.
482–83; see also J.A. 484 (acknowledging “two axes” but
arguing “they are separate”). AdjustaCam did not intro-
duce any evidence that Newegg’s ball-and-socket products
were limited to a single axis of rotation. We find no
14 ADJUSTACAM, LLC v. NEWEGG, INC.
dispute that Newegg’s cameras rotate about at least two
axes. As such, there is no possible way for Newegg’s
products to infringe the ’343 patent. No reasonable
factfinder could conclude that Newegg’s products infringe;
therefore, AdjustaCam’s litigation position was baseless.
These are traits of an exceptional case. The district
court’s contrary conclusion was based on “a clearly erro-
neous assessment of the evidence.” Highmark, 134 S. Ct.
at 1748 n.2. Fees are warranted.
Octane disclosed another reason why this case is ex-
ceptional that was not considered by the district court:
AdjustaCam litigated the case in an “unreasonable man-
ner.” Octane, 134 S. Ct. at 1756. This measure of excep-
tionality is evident through AdjustaCam’s repeated use of
after-the-fact declarations. In 2012, AdjustaCam served a
new expert report on Newegg the day of that expert’s
deposition. J.A. 8. AdjustaCam claims it did not realize
that it had inadvertently served a draft report until the
day of the deposition. But as Newegg argued to the
district court, had AdjustaCam served an earlier draft of
Dr. Muskivitch’s report on June 25, AdjustaCam would
have been aware of this error when Newegg’s expert
served his rebuttal report on July 27, 2012. J.A. 1789.
AdjustaCam certainly would have known of its error well
before Newegg’s expert’s deposition in August 2012. Id.
The district court also failed to consider on remand
that AdjustaCam filed a supplemental declaration making
new infringement arguments. AdjustaCam cites its
supplemental declaration dozens of times in its briefing
before our court without ever disclosing the fact that the
supplemental declaration was executed more than two
years after the initial fees determination. Filing new
declarations, especially without disclosing them as new on
appeal, elongates the period of time that AdjustaCam has
ADJUSTACAM, LLC v. NEWEGG, INC. 15
continued to press frivolous arguments. 2 We agree with
the district court that “in the absence of any other dubious
behavior,” the late-served declaration might not warrant
awarding fees. J.A. 9. But as we recognize today, the
totality of the circumstances demonstrates other dubious
behavior that, when considered collectively, warrants fees
under § 285. The district court’s contrary finding—that
there was an absence of what it termed “dubious behav-
ior”—was clearly erroneous.
Finally, we take note of AdjustaCam’s damages mod-
el. We agree with the district court that there is no
minimum damages requirement to file a patent infringe-
ment case. J.A. 7. Asserting seemingly low damages
against multiple defendants—or settling with defendants
for less than the cost of litigation—does not necessarily
make a case “exceptional” under § 285. But here, Ad-
justaCam asserted nuisance-value damages against many
defendants, settled with them for widely varied royalty
rates, and continued to press baseless infringement
contentions well past an adverse Markman order and
expert discovery. The original judge stated that Ad-
justaCam’s damages theory was not “so outrageous and
unreliable to support an award of attorney fees,” J.A. 9,
which the subsequent judge repeated, J.A. 1_6. Under
the governing clearly erroneous standard of review, we
would be inclined to affirm if AdjustaCam’s damages
methodology were the only issue. In light of Ad-
justaCam’s frivolous infringement argument and unrea-
2 AdjustaCam’s failure to disclose its supplemental
declaration on appeal occurred after the district court
rendered its decision and thus is not dispositive of wheth-
er AdjustaCam unreasonably litigated the case before the
district court. AdjustaCam’s behavior on appeal, however,
strengthens our conclusion that its litigation misconduct
before the district court was not a one-off occurrence.
16 ADJUSTACAM, LLC v. NEWEGG, INC.
sonable manner of litigation, however, we conclude that
the district court clearly erred by failing to consider
AdjustaCam’s damages methodology as part of a totality-
of-the-circumstances analysis. The irregularities in
AdjustaCam’s damages model and the purported nuisance
value of many of its settlements should have played a role
in the evaluation of whether this is case exceptional.
CONCLUSION
The district court abused its discretion failing to fol-
low our mandate to evaluate the totality of the circum-
stances under Octane in the first instance. Moreover,
AdjustaCam filed a weak infringement case against
Newegg that became objectively baseless after the district
court’s Markman order. The district court’s determina-
tion that AdjustaCam could reasonably argue infringe-
ment post-Markman is based on clearly erroneous fact-
findings. AdjustaCam also unreasonably litigated the
case by repeatedly serving expert reports and declarations
at the last minute. The pattern of low and erratic settle-
ments, though not determinative, reinforces a conclusion
of unreasonableness. The district court’s conclusion that
AdjustaCam reasonably litigated this case was clearly
erroneous. Based on the totality of these case-specific
circumstances, we hold that the district court abused its
discretion in denying Newegg’s motion for fees.
We therefore reverse and remand for further proceed-
ings consistent with this opinion, including the calcula-
tion of attorneys’ fees.
REVERSED AND REMANDED
COSTS
Costs to Newegg.