Patent Plaintiff Losing on Alice Isn’t an Exceptional Case

There was no exceptional case under 35 U.S.C. § 285 where a plaintiff filed and prosecuted a complaint alleging infringement of a patent whose claims were held invalid for failure to claim patent-eligible subject matter under 35 U.S.C. § 101.  Telinit Technologies, LLC v. Alteva, Inc., No. 2:14-CV-369 (E.D. Texas, March 3, 2017).  After a claim construction, the court had granted a defendant’s motion for judgment on the pleadings of U.S. Patent Number 6,192,123.  The defendant then sought attorneys’ fees under Section 285.

The defendant, Jive, contended that the case was exceptional because the defendant was a non-practicing entity, had produced fewer documents than the defendants, and “settled with every company against whom it had asserted the ’123 Patent other than Jive.”  Jive also argued that its success in “overcome[ing] the presumption of presumption of validity by clear and convincing evidence” showed that the case was exceptional.

But the case was filed before Alice Corp. Pty. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014).  The case was not exceptional under Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).:

Jive’s only evidence in support of its claim that Telinit’s litigating position lacked strength is the fact that the Court found the patent invalid under § 101. Though Telinit was ultimately unsuccessful in its defense of the ’123 Patent’s validity, Jive has not shown or even alleged that Telinit’s positions on validity were meritless. The Court’s finding of invalidity under § 101 at a time when the law of § 101 was unsettled is not enough to make this case exceptional. Further, Jive’s argument that Telinit’s settlements with other defendants make this case exceptional is unpersuasive, as Jive has not presented evidence that Telinit was engaged in abusive litigation conduct.

Lessons

Plaintiffs whose patents are found to be invalid under Section 101 and Alice should not expect their cases to be found exceptional as a matter of course.  Findings of an exceptional case based on claiming infringement of a patent ultimately found to fall under Alice typically are accompanied by some other fact, such as vexatious litigation conduct, although, contrary to the conclusion reached here, one court held that prosecuting a suit alleging infringement of a business method patent brought before Alice after that decision met the subjective standard of Octane Fitness.