No Fee Award Against Plaintiff Who Asserted Patents Invalidated Under Alice

A district court has roundly rejected a request for an award of attorney fees against a plaintiff who asserted business method patents later found invalid under 35 U.S.C. § 101 and Alice Corp v. CLS Bank.  O2 Media LLC v. Narrative Science Inc., No. 15-CV-05129 (N.D. Ill. Jan 3, 2017). After succeeding with a Rule 12(b)(6) Motion to Dismiss, the defendant sought fees as the prevailing party under 35 U.S.C. § 285, arguing that this was an “exceptional case.”  It was not, said the court: the patents may have been invalid, but “Alice did not require the plaintiff to give up any hope of enforcing patents previously granted by the Patent Office pursuant to its standard procedures."

First, the court rejected the argument that fees were warranted based on the defendant’s argument that the plaintiff had not conducted an adequate pre-suit investigation.  The court never reached the issue of infringement, and therefore never developed a record to support findings to award fees based on what the plaintiff allegedly knew about the defendant’s accused system.

Likewise, the plaintiff’s request for $1.25 million in licensing fees “does not mean that it was attempting to troll for settlements or otherwise improperly extract value from” the defendant.  The plaintiff “had never filed suits based on these patents before, and did so against only one defendant.”

And finally, the plaintiff’s failure to appeal was not evidence of frivolousness.  Quite the opposite: “the fact that O2 Media accepted this Court's ruling without attempting to impose frivolous costs with further motions suggests that its conduct was reasonable.”

In sum, the court saw nothing to justify a fee award:

perhaps this litigation could have been avoided with better communication between the parties, the Court finds no reason to brand O2 Media's litigation behavior as deserving disapprobation. O2 Media owned a presumptively valid patent. It sought to enforce that patent. It lost. The only thing exceptional about this course of conduct is that O2 Media stopped fighting sooner than it had to. The Court therefore concludes that Narrative Science is not entitled to attorney's fees.

Lessons for Practice

Business method patents are all but dead.  But they will not die an easy death.  As this court noted, a lot of business method patents out there were legitimately granted.  One can debate whether this court was right that it is legitimate to try to enforce many of those patents now.  Regardless, this case shows a little life for patent owners who want to roll the dice on their business method patents.

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