Federal Circuit Reverses Denial of Attorneys’ Fees

In Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC, No. 2019-2087 (Fed. Cir. July 1, 2020), the Federal Circuit vacated and remanded the District Court’s denial of attorney fees to ShoppersChoice.com.

Electronic Communication Technologies (“ECT”) sued ShoppersChoice in September 2016 alleging infringement of a patent directed to travel status notification. ShoppersChoice challenged patent eligibility under 35 U.S.C. § 101 via a motion for judgment on the pleadings, which the district court granted.  ShoppersChoice then filed a motion for attorney fees, which the district court denied.

In its motion for fees, ShoppersChoice presented evidence of ECT’s manner of litigation, including sending standardized demand letters and filing hundreds of repeat patent infringement actions for the purpose of obtaining low-value license fees and forcing settlements. ShoppersChoice also filed the opinion of another case involving ECT and the same patent-in-suit. See Kindred Studio Illustration & Design, LLC v. Elec. Commc’n Techs., LLC (“True Grit”), Case No. 2:18-cv-07661-GJS, 2019 WL 3064112, at *6–9 (C.D. Cal. May 23, 2019). In True Grit, the court outlined ECT’s practice of seeking nuisance-value license fees, and failing to take cases to a merits determination despite asserting the patent-in-suit and related patents 875 times. Despite this evidence, the district court ultimately denied ShoppersChoice’s motion after finding the case was not exceptional, but the district court applied the Lanham Act instead of 35 U.S.C. § 285.

On appeal, the Federal Circuit vacated and remanded the district court’s denial of attorneys’ fees, concluding that the district court’s evaluation under the incorrect attorney fee statute and its failure to address ECT’s pattern of litigation abuses constituted an abuse of discretion. The Court specifically pointed to the ample evidence of ECT’s manner of litigation presented in the True Grit opinion.  The Court vacated and remanded, directing the district court to apply the correct attorney fee statute, 35 U.S.C. § 285, as opposed to the Lanham Act, and to consider ECT’s “manner of litigation and the objective unreasonableness of ECT’s infringement claims” when assessing the totality of circumstances.