Auto Makers Flatten Patent Troll

07 October 2013 Dashboard Insights Blog

On August 9, 2013 the Federal Circuit decided Taurus IP, LLC v. DaimlerChrysler Corp., 2013 U.S. App. LEXIS 16507 (Court of Appeals, August 9, 2013). Taurus IP (a non-practicing entity) accused the auto manufacturers (DaimlerChrysler Company, Mercedes-Benz and Chrysler Group) for infringing claim 16 of U.S. Patent No. 6,141,658 (‘658 patent). The Federal Circuit affirmed the district court’s ruling that this case is exceptional under 35 U.S.C. § 285 and thus affirmed the award of $1.6 million in attorneys’ fees to the auto manufacturers. The ‘658 patent relates to a computer system for managing product knowledge related to products offered for sale by a selling entity. Among other features, claim 16 includes a user, user-defined relationship information, and a user system.

Claim Construction Term “User”

The Federal Circuit ruled that a term must be construed in light of the written description in which it resides. See Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc). The Federal Circuit stated, that “we cannot look at the ordinary meaning of the term . . . in a vacuum.” Rather, the court must look at the ordinary meaning in the context of the written description and the prosecution history.  (quoting Medrad, Inc. v. MRI Devices Corp., 401 F.3d 1313, 1319 (Fed. Cir. 2005)). The Federal Circuit ruled that the district court properly construed the term “user” as “a person who is capable of creating and editing user-defined relationship information.”

The Federal Circuit reasoned that “the language of claim 16 makes it clear that the “user” must define the relationship information. Further, the written description of the ‘658 patent firmly supports this construction by only disclosing the term “users” with sufficient internal access to the data model to allow the creation and editing of relationship information. For example, the ‘658 patent discloses that “[e]ach type of user is responsible for certain goals of the system” such as “system management” or “data management.” (See ‘658 patent col. 12 ll. 2-11). Similarly, the patent discloses that “the system can ensure that each type of user can perform the tasks assigned to him or her, while maintaining database security.” Id., col. 13 ll. 45-48. Accordingly, Taurus IP acted in subjective bad faith and objective baselessness when Taurus IP continued to pursue the case after the above claim construction of the term “user.”

Exceptional and Attorney’s Fees Granted

Absent misconduct in litigation or in securing the patent, a case may be found exceptional under 35 U.S.C. § 285 only if (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless. Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). To be objectively baseless, the patentee’s assertions–whether manifested in its infringement allegations or its claim construction positions– “must be such that no reasonable litigant could reasonably expect success on the merits.” Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008), quoted in iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1378 (Fed. Cir. 2011).

Objectively Baseless

The Federal Circuit ruled that, “Taurus improperly asserted and maintained its positions in the litigation. See Post-Trial Decision, 559 F. Supp. 2d at 967-68.” The Federal Circuit further reasoned that “no reasonable litigant in Taurus’s position [after the claim construction] could have expected a finding that a web surfer accessing the accused external websites satisfied the requirement for a “user,” as recited in claim 16.” When patentees have sought unreasonable claim constructions divorced from the written description, the Federal Circuit has found infringement claims objectively baseless. See, e.g., MarcTec, 664 F.3d at 919. Because the specification and prosecution history clearly refute [the patentee's] proposed claim construction, the district court did not err in finding that [the patentee's] infringement claims were objectively baseless.

Subjective Bad Faith

The Federal Circuit states the District Court’s fact findings supports an implicit conclusion that Taurus subjectively knew that the DaimlerChrysler Patent Suit lacked a reasonable basis and was, therefore, pursued and maintained in bad faith. See MarcTec, 664 F.3d at 918. After careful consideration and review of the record, the Federal Circuit agreed with the District Court that [the patentee's] proposed claim construction, which ignored the entirety of the specification and the prosecution history, was thus unsupported by the intrinsic record, was frivolous, and supported a finding of bad faith.

Therefore, the Federal Circuit affirmed that this case was exceptional under 35 U.S.C. § 285 and maintained the award of Attorneys fee of $1.6 million for the defendants.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services

Insights