Print PDF

Litigation Misconduct Not Supported

December 29, 2004

Decision icon Decision

Last Month at the Federal Circuit - January 2005

Judges: Mayer (author), Rader, and Schall

In Stephens v. Tech International, Inc., No. 04-1215 (Fed. Cir. Dec. 29, 2004), the Federal Circuit reversed a district court’s order finding the case exceptional.

Matthew Stephens and Spectrum Laboratories, Inc. (collectively “Spectrum”) own U.S. Patent No. 6,162,647 (“the ‘647 patent”), which is directed to a method for removing unwanted substances from human urine samples using chromium trioxide in an aqueous solution. Spectrum sued Tech International, Inc. (“Tech”) for infringement. The district court granted partial SJ of noninfringement to Tech, finding no literal infringement because claim 1, which only claimed chromium trioxide, did not read on Tech’s accused product, which used sodium dichromate. It also held that the prosecution history estops Spectrum from claiming infringement under the DOE. Tech then moved for attorney fees—which the district court ultimately granted—because (1) Spectrum’s infringement suit was frivolous and in bad faith, (2) Spectrum engaged in litigation misconduct, and (3) Spectrum’s background investigation and credit check on a key witness conducted after SJ of noninfringement was vexatious behavior.

The Federal Circuit concluded that the district court had erred in concluding that Spectrum’s suit was frivolous. The record showed that when placed in aqueous solution, chromic acid and sodium dichromate are identical. And, because the use of chromic acid encompasses the use of sodium dichromate in the field of urinalysis, Spectrum had adequate grounds to believe that Tech directly infringed the patent. Concerning litigation misconduct, Spectrum had placed Tech on notice of potential infringement of potentially patentable subject matter contained in a separate patent application under 35 U.S.C. § 154(d)(1) and (2). Spectrum believed that one of Tech’s products infringed several claims of that pending application. The Federal Circuit found that Spectrum had operated within its rights under § 154 when it notified Tech of the potential infringement. Finally, the fact that Stephens initiated a credit check and background investigation after issuance of a SJ order of noninfringement is not by itself vexatious behavior, and, therefore, the Court reversed the finding that the case was exceptional.