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Patentee’s Loss on Infringement Did Not Make Case Exceptional

January 04, 2005

Decision icon Decision

Last Month at the Federal Circuit - February 2005

Judges: Newman (author), Lourie, and Dyk

In Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., No. 03-1379 (Fed. Cir. Jan. 4, 2005), the Federal Circuit vacated an award of attorney fees after finding an action for DJ of patent invalidity and noninfringement to be an exceptional case.

Dutailier International, Inc. and Dutailier, Inc. (collectively “Dutailier”) own U.S. Patent No. D417,983 (“the ‘983 patent”). In January 2000, Dutailier sent Brooks Furniture Manufacturing, Inc.(“Brooks”) a cease and desist letter alleging infringement of the ‘983 patent. Brooks responded by filing suit in the U.S. District Court for the Eastern District of Tennessee seeking a DJ that it did not infringe and that the ‘983 patent was invalid. The Tennessee court granted Brooks’s motion for SJ for noninfringement and denied its motion for SJ for invalidity as moot. The district court also granted Brooks’s request for attorney fees, concluding that the circumstances of the case were exceptional. The Court did not set an amount of the award, however, but instead asked the parties to confer to see if they could agree upon an amount for attorney fees. The Federal Circuit initially dismissed the appeal because there was no specific award. On remand, the district court determined the amount of the fees.

On this appeal, Dutailier argued that many of Brooks’s claims were dismissed by stipulation and Dutailier’s patent remains valid; thus, the district court erred in ruling that Brooks was the prevailing party. The Federal Circuit disagreed, noting that Brooks had raised several defenses to the charge of patent infringement, any of which would have achieved Brooks’s goals of preserving its position in the market. Therefore, when Brooks established its noninfringement of the Dutailier patents, it prevailed in litigation. That other defenses were unsuccessful or were withdrawn does not change the outcome in Brooks’s favor.

Dutailier asserts that it had a goodfaith belief in the strength of its infringement claim, because it conducted a thorough investigation by its marketing staff and designers followed by infringement opinions by both Canadian and United States patent attorneys. All of the experts and attorneys that Dutailier consulted concluded that there was substantial similarity between the accused chairs and the design set forth in the ‘983 patent. The district court had found that one of the attorneys’ opinions, although it appeared to be thorough and detailed, failed to analyze two apparent differences in the two chair designs. Therefore, the opinion was unreasonable and any reliance on the opinion was unreasonable. The Federal Circuit disagreed, concluding that the fact that an infringement opinion may not have mentioned every detail of the patented or the accused design does not necessarily render it unreliable. According to the Court, infringement is often difficult to determine, and a patentee’s ultimately incorrect view of how a court will find does not of itself establish bad faith. Moreover, that Dutailier is a larger company than Brooks, that it has sued others, and that it is unwilling to grant a license, are not indicative of bad faith. Accordingly, the Federal Circuit reversed the finding of bad faith and vacated the order of attorney fees.