Electronic Communication v. shopperschoice.com, LLC ( 2020 )


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  • Case: 19-2087   Document: 71     Page: 1   Filed: 07/01/2020
    United States Court of Appeals
    for the Federal Circuit
    ______________________
    ELECTRONIC COMMUNICATION
    TECHNOLOGIES, LLC,
    Plaintiff-Appellee
    v.
    SHOPPERSCHOICE.COM, LLC,
    Defendant-Appellant
    ______________________
    2019-2087
    ______________________
    Appeal from the United States District Court for the
    Southern District of Florida in Nos. 9:16-cv-81669-KAM,
    9:16-cv-81677-KAM, Senior Judge Kenneth A. Marra.
    ______________________
    Decided: July 1, 2020
    ______________________
    ARTOUSH OHANIAN, OhanianIP, Austin, TX, argued for
    plaintiff-appellee.
    DAVID K. FRIEDLAND, Friedland Vining, PA, Miami, FL,
    argued for defendant-appellant. Also represented by
    JAMES STEPAN, Law Offices of James A. Stepan, P.A., Hol-
    lywood, FL.
    ______________________
    Before PROST, Chief Judge, DYK and WALLACH, Circuit
    Judges.
    Case: 19-2087     Document: 71     Page: 2    Filed: 07/01/2020
    2   ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC
    WALLACH, Circuit Judge.
    Appellant      ShoppersChoice.com,       LLC      (“Shop-
    persChoice”) appeals the denial of attorney fees by the U.S.
    District Court for the Southern District of Florida (“District
    Court”) pursuant to 35 U.S.C. § 285, following a judgment
    invalidating independent claim 11 of Appellee Electronic
    Communication Technologies, LLC’s (“ECT”) U.S. Patent
    No. 9,373,261 (“the ’261 patent”) as patent ineligible under
    35 U.S.C. § 101. J.A. 1626–28 (Attorney Fee Order); see
    J.A. 1629 (Order Denying Motion for Reconsideration of
    Denial of Attorney Fees); see also J.A. 1–17 (Motion to Dis-
    miss Judgment), 18–34 (Judgment on the Pleadings). 1 We
    have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). We
    vacate and remand.
    BACKGROUND
    This case arises from ECT’s allegation that Shop-
    persChoice infringed claim 11 of the ’261 patent. J.A. 1049.
    Entitled “Secure Notification Messaging with User Option
    to Communicate with Delivery or Pickup Representative,”
    the ’261 patent is directed “to systems and methods that
    notify a party of travel status associated with one or more
    mobile things (MTs).” ’261 patent col. 1 ll. 50–51. Inde-
    pendent claim 11 recites a system that provides notifica-
    tion “involving advance notice of a delivery or pickup of a
    good or service” to a “personal communication device
    (PCD)[,]” by means of “one or more transceivers[,]” “one or
    more memories[,]” “one or more processors[,]” and a “com-
    puter program code[.]”
    Id. col. 93
    ll. 12–45; see
    id. col. 6
     ll. 31–33 (describing “a possible screen message that can
    1   We affirmed the District Court’s decision on the
    merits.   See Elec. Commc’n Techs., LLC v. Shop-
    persChoice.com, LLC, 
    958 F.3d 1178
    (Fed. Cir. 2020).
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    ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC     3
    be . . . shown on a notified PCD . . . during a notification
    communication”);
    id. Fig. 16A.
    2
    In September 2016, ECT filed a complaint in the Dis-
    trict Court against ShoppersChoice for, inter alia, infringe-
    ment of claim 11. J.A. 1399 (Amended Complaint); see J.A.
    1049 (Complaint). 3 In December 2016, ShoppersChoice
    filed a motion for judgment on the pleadings, challenging
    claim 11 as patent ineligible. J.A. 1513–14; see 35 U.S.C.
    § 101. In February 2017, following discovery, the parties
    filed a joint claim construction statement, in which ECT
    specified that each of the disputed terms in claim 11 should
    be given its “[o]rdinary and customary meaning.”
    J.A. 1582–88; see J.A. 1581–90 (Joint Claim Construction
    Statement). ShoppersChoice then moved to join a patent-
    eligibility hearing set in a parallel lawsuit, also before the
    District Court, in which ECT alleged claim 11 infringement
    against other companies. J.A. 1047–48. The District Court
    granted the motion and conducted a consolidated patent-
    eligibility hearing regarding claim 11. See Motion Hearing,
    Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC,
    No. 9:16-cv-81677-KAM (S.D. Fla. Apr. 7, 2017), ECF
    No. 59. 4
    2   ECT’s previous name was Eclipse IP, LLC; the en-
    tity changed names in 2015. J.A. 255. Eclipse IP was listed
    as the applicant for the ’261 patent, but the patent was as-
    signed to ECT following the name change. J.A. 35, 520.
    3  While ECT initially claimed that ShoppersChoice
    infringed claims from three patents, it subsequently
    amended its Complaint to assert infringement only of
    claim 11 of the ’261 patent. J.A. 1626.
    4  These parallel proceedings before the District
    Court include: Elec. Commc’n Techs., LLC v. Minted, LLC,
    No. 16-cv-81669-KAM; Elec. Commc’n Techs., LLC v.
    Lakeshore Equip. Co., No. 16-cv-81672-KAM; and Elec.
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    4   ELECTRONIC COMMUNICATION    v. SHOPPERSCHOICE.COM, LLC
    Following the hearing, the District Court granted
    ShoppersChoice’s motion for a judgment on the pleadings
    and invalidated independent claim 11 of the ’261 patent.
    J.A 33–34; see J.A. 1581–90. The District Court conducted
    the two-step analysis set forth in Alice Corp. Party Ltd. v.
    CLS Bank International, 
    573 U.S. 208
    (2014). J.A. 20–33.
    The District Court determined that, under Alice step one,
    “[independent] [c]laim 11 is directed to the abstract idea of
    providing advance notification of the pickup or delivery of
    a[n] [MT].” J.A. 23. Regarding Alice step two, the District
    Court concluded that “the elements of [independent]
    [c]laim 11 do not transform the abstract idea that they re-
    cite into . . . patent-eligible subject matter.” J.A. 27–28.
    Accordingly, the District Court concluded that independent
    claim 11 was directed to patent-ineligible subject matter
    and granted judgment on the pleadings to ShoppersChoice.
    J.A. 33–34. We recently affirmed the District Court, hold-
    ing that “the claim only entails applying longstanding com-
    mercial practices using generic computer components and
    technology.” 
    ShoppersChoice.com, 958 F.3d at 1183
    .
    Subsequently, ShoppersChoice filed a motion for attor-
    ney fees. See ShoppersChoice.com’s Local Rule 7.3 Motion
    for Attorneys’ Fees (“Motion for Attorney Fees”) at 5, Elec.
    Commc’n Techs., LLC v. ShoppersChoice.com, LLC,
    No. 9:16-cv-81677-KAM (S.D. Fla. Mar. 15, 2019), ECF
    No. 82. In it, ShoppersChoice cited evidence it presented
    to the District Court that ECT sent standardized demand
    letters and filed repeat patent infringement actions for the
    purpose of obtaining low-value “license fees” and forcing
    settlements.
    Id. at 4–5.
    Specifically, ShoppersChoice had
    provided the District Court with evidence that, be-
    tween 2011 and 2015, ECT, under its former name Eclipse,
    filed lawsuits against at least 150 defendants, alleging
    Commc’n Techs., LCC v. Pep Boys–Manny, Moe & Jack,
    d/b/a The Pep Boys, No. 16-cv-81676-KAM. See
    id. Case: 19-2087
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    ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC     5
    infringement of claims in the ’261 patent and in other pa-
    tents in the ’261 patent’s family.
    Id. at 4.
    Following attor-
    ney fee briefing, but before the District Court ruled, the
    U.S. District Court for the Central District of California
    (“California District Court”) entered an award of attorney
    fees against ECT in yet another case for conduct related to
    one of ECT’s numerous ’261 patent infringement lawsuits.
    See Kindred Studio Illustration & Design, LLC v. Elec.
    Commc’n Techs., LLC (“True Grit”), Case No. 2:18-cv-
    07661-GJS, 
    2019 WL 3064112
    , at *6–9 (C.D. Cal. May 23,
    2019). ShoppersChoice filed a letter of supplemental au-
    thority informing the District Court of the ruling.
    J.A. 2155–56. 5
    A week after the letter was filed, the District Court de-
    nied ShoppersChoice’s motion for the award of attorney
    fees. J.A. 1628; see J.A. 1626–28 (Attorney Fee Order). In
    doing so, the District Court explained that “[u]nder the
    Lanham Act, ‘[t]he court in exceptional cases may award
    reasonable attorney fees to the prevailing party.’”
    J.A. 1627 (quoting 15 U.S.C. § 1117). In “considering the
    totality of the circumstances,” the District Court deter-
    mined the case was not exceptional. J.A. 1627. First, the
    5   Prior to the instant action, ECT filed a lawsuit in
    the California District Court, alleging infringement of
    ECT’s U.S. Patent Nos. 7,064,681 (“the ’681 patent”),
    7,113,110 (“the ’110 patent”), and 7,119,716 (“the ’716 pa-
    tent”) against McKinley Equipment Corporation. See
    Eclipse IP LLC v. McKinley Equip. Corp. (“McKinley”), No.
    SAVC 14-154-GW(AJWx), 
    2014 WL 4407592
    , at *1 (C.D.
    Cal. Sept. 4, 2014). The ’681, ’110, and ’716 patents all con-
    tain claims that recite methods for a computer-based noti-
    fication system. See
    id. The California
    District Court
    conducted patent eligibility analysis for each asserted
    claim in the ’681, ’110, and ’716 patents and concluded that
    they were patent ineligible. See
    id. at *7,
    9, 11, 12.
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    6   ELECTRONIC COMMUNICATION      v. SHOPPERSCHOICE.COM, LLC
    District Court explained that “the substantive strength of
    the litigating position in this case does not render [it] ‘ex-
    ceptional[,]’” as ECT’s “litigating position was [not] so obvi-
    ously weak[.]” J.A. 1627. The District Court explained
    that, as “[t]here were no binding cases on point that stated
    that automated delivery notification [wa]s an abstract
    idea[,]” “the [District] Court analogized delivery notifica-
    tion to the kinds of conventional business practices that
    have been found to be abstract ideas.” J.A. 1627. “Moreo-
    ver,” the District Court stated that it “had to” analyze
    whether independent claim 11 “was directed to a trans-
    formative application of an abstract idea[,]” suggestive of
    some substantive strength. J.A. 1628. Second, the District
    Court stated that it “[could not] conclude that [ECT] exhib-
    ited the kind of unreasonable behavior that would make
    this case stand apart from others.” J.A. 1628. Accordingly,
    the District Court denied ShoppersChoice’s Motion for At-
    torney Fees. J.A. 1628. ShoppersChoice moved for recon-
    sideration, J.A. 2175–76, which the District Court denied,
    J.A. 1629.
    DISCUSSION
    I. Standard of Review and Legal Standard
    Pursuant to the Patent Act’s fee-shifting provision, a
    “[district] court in exceptional cases may award reasonable
    attorney fees to the prevailing party.” 35 U.S.C. § 285 (em-
    phasis added). “[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., 
    572 U.S. 545
    ,
    554 (2014). A “[d]istrict court[] may determine whether a
    case is ‘exceptional’ in the case-by-case exercise of [its] dis-
    cretion, considering the totality of the circumstances.”
    Id. While “there
    is no precise rule or formula” for considering
    the totality of the circumstances,
    id. (internal quotation
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    ELECTRONIC COMMUNICATION    v. SHOPPERSCHOICE.COM, LLC     7
    marks and alteration omitted) (citing Fogerty v. Fantasy,
    Inc., 
    510 U.S. 517
    , 534 (1994)), a district court may weigh
    such factors as “frivolousness, motivation, objective unrea-
    sonableness (both in the factual and legal components of
    the case)[,] and the need in particular circumstances to ad-
    vance considerations of compensation and deterrence[,]”
    id. at 554
    n.6 (internal quotation marks omitted) (citing
    
    Fogerty, 510 U.S. at 534
    n.19). Section 285 “imposes no
    specific evidentiary burden,” and is instead “a simple dis-
    cretionary inquiry[.]”
    Id. at 557.
          We review a district court’s denial or grant of attorney
    fees under § 285 for abuse of discretion. See Highmark Inc.
    v. Allcare Health Mgmt. Sys., Inc., 
    572 U.S. 559
    , 561 (2014);
    see also ThermoLife Int’l LLC v. GNC Corp., 
    922 F.3d 1347
    ,
    1356 (Fed. Cir. 2019) (“We review a district court’s grant of
    attorney[] fees under § 285 for abuse of discretion.”). An
    abuse of discretion occurs where a district court makes “a
    clear error of judgment in weighing relevant factors or in
    basing its decision on an error of law or on clearly errone-
    ous factual findings.” Bayer CropScience AG v. Dow Agro-
    Sciences LLC, 
    851 F.3d 1302
    , 1306 (Fed. Cir. 2017)
    (internal quotation marks and citation omitted). “A factual
    finding is clearly erroneous if, despite some supporting ev-
    idence, we are left with the definite and firm conviction
    that a mistake has been made.” Insite Vision Inc. v.
    Sandoz, Inc., 
    783 F.3d 853
    , 858 (Fed. Cir. 2015) (internal
    quotation marks and citation omitted). A district court
    must “provide a concise but clear explanation of its reasons
    for the fee award.” Hensley v. Eckerhart, 
    461 U.S. 424
    , 437
    (1983); see In re Rembrandt Techs. LP Patent Litig., 
    899 F.3d 1254
    , 1276 (Fed. Cir. 2018).
    II. The District Court’s Exceptional Case Determination
    Constitutes an Abuse of Discretion
    The District Court denied ShoppersChoice’s Motion for
    Attorney Fees, by finding the case not “exceptional” under
    the Lanham Act. J.A. 1627–28 (citing 15 U.S.C. § 1117).
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    8   ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC
    ShoppersChoice contends that the District Court abused
    its discretion in weighing relevant factors, Appellant’s
    Br. 31, and by applying the incorrect attorney fee statute,
    id. at 40.
    We agree with ShoppersChoice.
    A. The District Court Failed to Address ECT’s Manner of
    Litigation
    The District Court clearly erred by failing to address
    ECT’s manner of litigation and the broader context of
    ECT’s lawsuit against ShoppersChoice. See generally
    J.A. 1626–28. These are relevant considerations. See SFA
    Sys., LLC v. Newegg Inc., 
    793 F.3d 1344
    , 1350 (Fed.
    Cir. 2017) (“[A] pattern of litigation abuses characterized
    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.”). Be-
    fore the District Court was evidence that ECT sent stand-
    ardized demand letters and filed repeat patent
    infringement actions to obtain low-value “license fees” and
    forcing settlements. See Motion for Attorney Fees at 5. For
    example, ShoppersChoice provided the District Court with
    evidence that, between 2011 and 2015, ECT, under its for-
    mer name Eclipse, filed lawsuits against at least 150 de-
    fendants, alleging infringement of claims in the ’261 patent
    and in other patents in the ’261 patent’s family.
    Id. at 4.
     This number does not reflect the additional pre-litigation
    demands made by ECT. See generally
    id. 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 allega-
    tions of infringement. See
    id. at 4–6.
    Not only did Shop-
    persChoice provide the District Court with a list of other
    court proceedings involving ECT and its demand letters in-
    volving claim 11,
    id. at 5,
    ShoppersChoice filed the True
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    ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC     9
    Grit opinion with the District Court prior to its attorney fee
    determination, J.A. 2155–56.
    Indeed, the True Grit opinion reveals problems with
    the District Court’s analysis. The opinion provided a de-
    tailed account of ECT’s practice of seeking nuisance-value
    license fees. True Grit, 
    2019 WL 3064112
    , at *8–9. In the
    decision, the California District Court concluded that
    awarding attorney fees against ECT was appropriate, ei-
    ther “consider[ing] only the litigation history of ECT (as
    both ECT and Eclipse IP) or the entire history of the enti-
    ties that True Grit has demonstrated are related (including
    Shipping & Transit[, LLC (‘S&T’)]) the [California District]
    Court can discern a clear pattern of serial filings, and also
    several (and presumably many more) instances of threats
    of litigation, intended only to obtain quick settlements[.]”
    Id. at *9.
    In reviewing ECT’s actions, the California Dis-
    trict Court explained that “ECT’s immediate demand for a
    low[-]value settlement, apparent willingness to reduce that
    amount to avoid any challenge to its patent, and immediate
    provision of a [covenant not to sue] to True Grit once the
    declaratory judgment action was filed demonstrate ECT’s
    ‘in terrorem’ tactics—threatening litigation in hopes of a
    quick settlement with no intention of ever testing either
    the strength of its patent or its allegations of infringe-
    ment.”
    Id. Moreover, the
    California District Court took
    judicial notice of “yet another litigious entity,” S&T, “seek-
    ing nuisance value patent ‘rents’ that is helmed by many of
    the same individuals that control ECT[.]”
    Id. at *5.
    It ex-
    plained that “[a]fter extracting nuisance value rents in
    many filed cases—and more than likely additional pre-liti-
    gation demand situations—[S&T] finally stopped sending
    demand letters and filing lawsuits after several federal
    courts” awarded attorney fees.
    Id. The California
    District
    Court stated that S&T then “filed for bankruptcy in an ap-
    parent bid to avoid paying attorney[] fees or other sanc-
    tions.”
    Id. The California
    District Court highlighted that
    “ECT [does not] affirmatively state—in the [California
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    10 ELECTRONIC COMMUNICATION v. SHOPPERSCHOICE.COM, LLC
    District] Court’s view, because it cannot while remaining
    in compliance with [Federal Rule of Civil Procedure]
    Rule 11 and ethical rules—that the same group of people
    do not control the actions of each of these rent-seeking shell
    holding companies.”
    Id. Moreover, the
    California District
    Court explained that ECT did not contest True Grit’s as-
    sertion that, of the 875 times ECT has asserted the ’261
    patent and other patents in the patent family, ECT has
    never “tak[en] a single case to a merits determination.”
    Id. at *6.
    6
    6    Additionally, before the District Court was evi-
    dence that ECT’s conduct regarding the ’261 patent was
    not an isolated practice. ShoppersChoice presented evi-
    dence that ECT was managed by Peter Sirianni and had
    employed Edward Trumbull as a licensing agent. See Mo-
    tion for Attorney Fees at 5. ShoppersChoice asserted that,
    prior to and concurrent with running Eclipse and ECT,
    Mr. Sirianni and Mr. Trumbull were associated with S&T,
    which has been widely recognized as “one of the most pro-
    lific” non-practicing entity plaintiffs in the United States.
    Id. at 5–6.
    ShoppersChoice also provided evidence that, at
    its peak, S&T had filed over five hundred lawsuits involv-
    ing patent infringement and related claims, and that the
    pervasive litigation only stopped after several federal
    courts granted attorney fees against S&T.
    Id. at 5;
    see, e.g.,
    Shipping & Transit, LLC v. 1A Auto, Inc., 
    283 F. Supp. 3d 1290
    , 1299 (S.D. Fla. 2017); Shipping & Transit,
    LLC v. LensDiscounters.com, No. 16-80980-Civ-Rosen-
    berg/Brannon, 
    2017 WL 5434581
    , at *7–8 (S.D. Fla. July
    11, 2017); Shipping & Transit, LLC v. Hall Enterprises, No.
    16-cv-06535-AG-AFM, 
    2017 WL 3485782
    , at *8 (C.D. Cal.
    July 5, 2017). Following these decisions, S&T filed for
    bankruptcy. Chapter 7 Voluntary Petition at 1, In re Ship-
    ping & Transit, LLC, No. 9:18-bk-20968-MAM (Bankr. S.D.
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    ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC 11
    Despite the arguments and evidence presented by
    ShoppersChoice before the District Court regarding ECT’s
    manner of litigation, including the True Grit opinion, the
    District Court only briefly addressed ECT’s litigation con-
    duct, explaining that it “[could not] conclude that [ECT] ex-
    hibited the kind of unreasonable behavior that would make
    this case stand apart from others” and that it was not the
    “‘rare case’” that would warrant an exceptional determina-
    tion. J.A. 1628 (quoting Octane 
    Fitness, 572 U.S. at 555
    ).
    There was no mention of the manner in which ECT liti-
    gated the case or its broader litigation conduct. J.A. 1626–
    28. Such conduct is a relevant consideration. See Roth-
    schild Connected Devices Innovations, LLC v. Guardian
    Prot. Servs., Inc., 
    858 F.3d 1383
    , 1390 (Fed. Cir. 2017) (“[I]n
    the absence of evidence demonstrating that [ECT] engaged
    in reasonable conduct before the District Court, the undis-
    puted evidence regarding [ECT’s] vexatious litigation war-
    rants an affirmative exceptional case finding here.”).
    “While [a] district court need not reveal its assessment
    of every consideration of § 285 motions, it must actually
    assess the totality of the circumstances.” AdjustaCam,
    LLC v. Newegg, Inc., 
    861 F.3d 1353
    , 1360 (Fed. Cir. 2017).
    By not addressing the “adequate evidence of an abusive
    pattern” of ECT’s litigation, 
    Newegg, 793 F.3d at 1352
    , the
    District Court failed to conduct an adequate inquiry and so
    abused its discretion, see 
    Rothschild, 858 F.3d at 1388
    (“A
    district court abuses its discretion when, as here, it fails to
    conduct an adequate inquiry.” (internal quotation marks,
    brackets, and citation omitted)); see also Octane 
    Fitness, 572 U.S. at 554
    , 554 n.6 (stating that, while “there is no
    precise rule or formula” in considering the totality of cir-
    cumstances, the district court may weigh, inter alia, “the
    need in particular circumstances to advance considerations
    Fla. Sept. 6, 2018), ECF No. 1; see Motion for Attorney Fees
    at 5–6.
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    12 ELECTRONIC COMMUNICATION v. SHOPPERSCHOICE.COM, LLC
    of compensation and deterrence” (internal quotation marks
    omitted) (citing 
    Fogerty, 510 U.S. at 534
    n.19)); 
    Newegg, 793 F.3d at 1350
    (“[A] pattern of litigation abuses charac-
    terized by the repeated filing of patent infringement ac-
    tions 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.”).
    B. The District Court Failed to Sufficiently Address the
    Objective Weakness of Claim 11
    The District Court clearly erred by failing to consider
    the objective unreasonableness of ECT’s alleging infringe-
    ment of claim 11 against ShoppersChoice. The Attorney
    Fee Order did not reference, much less reconcile or account
    for, the District Court’s determination on the objective un-
    reasonableness of the claims against ShoppersChoice with
    the conflicting conclusions reached in True Grit or McKin-
    ley. J.A. 1626–28; see Octane 
    Fitness, 572 U.S. at 554
    n.6
    (explaining that a district court, in analyzing the totality of
    circumstances, may weigh, inter alia, the “objective unrea-
    sonableness (both in the factual and legal components of
    the case)”). In True Grit, the California District Court con-
    cluded that “no reasonable patent litigant would have be-
    lieved that [c]laim 11 of the ’261 patent”—the same claim
    at issue in the instant case—“was viable[.]”             
    2019 WL 3064112
    , at *4.
    In McKinley, which was decided two years before ECT
    filed its Complaint against ShoppersChoice, the California
    District Court invalidated claims of patents in the ’261 pa-
    tent’s family as patent ineligible under § 101, finding the
    claims “directed to the abstract idea of asking people, based
    on their location, to go places[,]” and implemented with
    only “‘generic computer[s]’” that did not transform the
    claims into patent eligible subject matter.              
    2014 WL 4407592
    , at *11 (quoting 
    Alice, 573 U.S. at 223
    ). In
    True Grit, the California District Court explained that all
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    ELECTRONIC COMMUNICATION     v. SHOPPERSCHOICE.COM, LLC 13
    of the asserted claims in McKinley came from patents that
    share the same specification as the ’261 patent, and that
    “[c]laim 11 of the ’261 [p]atent suffers from the same type
    of obvious defect” as the asserted claims in McKinley. 
    2019 WL 3064112
    , at *4. While ShoppersChoice stops short of
    claiming that either McKinley or True Grit bind the Dis-
    trict Court, see generally Appellant’s Br., the absence in the
    Attorney Fee Order of any reference to either relevant case,
    or any allusion to their opposing conclusions, is problem-
    atic, J.A. 1626–28; see 
    AdjustaCam, 861 F.3d at 1360
    (ex-
    plaining that “[t]he record developed over [time] points to
    this case as standing out from others with respect to the
    substantive strength of [the] litigating position[,]” as the
    “suit became baseless after the district court’s Markman
    order” as shown by “the evidence proffered by” the plain-
    tiff). Accordingly, we conclude that the District Court
    abused its discretion in weighing relevant factors in its ex-
    ceptional case analysis.
    C. Conclusion
    For the foregoing reasons, we vacate the District
    Court’s Attorney Fee Order and remand for further pro-
    ceedings. In assessing the totality of the circumstances on
    remand, the District Court should consider, in a manner
    consistent with this opinion, ECT’s manner of litigation
    and the objective unreasonableness of ECT’s infringement
    claims.
    We further note that the District Court applied the in-
    correct attorney fee statute. Specifically, the District Court
    applied 15 U.S.C. § 1117, J.A. 1267, which provides for the
    “award [of] reasonable attorney fees to the prevailing
    party” in “exceptional cases” concerning trademark viola-
    tions, 15 U.S.C. § 1117(a). Instead, the District Court
    should have applied 35 U.S.C. § 285, as the lawsuit in-
    volved the sole claim of patent infringement. J.A. 1 (find-
    ing independent claim 11 patent ineligible following a
    claim of infringement); see 35 U.S.C. § 285 (stating that, in
    Case: 19-2087    Document: 71     Page: 14    Filed: 07/01/2020
    14 ELECTRONIC COMMUNICATION v. SHOPPERSCHOICE.COM, LLC
    the context of patent infringement remedies, “[t]he court in
    exceptional cases may award reasonable attorney fees to
    the prevailing party”). Although we acknowledge that the
    District Court ultimately applied the proper standard,
    J.A. 1627, 1628 (citing Tobinick v. Novella, 
    884 F.3d 1110
    ,
    1118 (11th Cir. 2018) (concluding that the exceptional case
    standard pertaining to 35 U.S.C. § 285 applies to 15 U.S.C.
    § 1117)), on remand the District Court should apply § 285
    and relevant precedent.
    Accordingly, the Attorney Fee Order of the U.S. Dis-
    trict Court for the Southern District of Florida is
    VACATED AND REMANDED
    COSTS
    Costs to ShoppersChoice.
    

Document Info

Docket Number: 19-2087

Filed Date: 7/1/2020

Precedential Status: Precedential

Modified Date: 7/1/2020