“Sloppy” Attorney Arguments Not Litigation Misconduct, But Attorney’s Fees Still Possible

In Gaymar Industries v. Cincinnati Sub-Zero Products, No. 14-1174 (Fed. Cir. June 25, 2015), the Federal Circuit affirmed a finding that the patentee’s claims were not objectively baseless, but reversed a finding that the case was not “exceptional” under 35 U.S.C. § 285, insofar as the holding was “significantly” based on the accused infringer’s purported misconduct.

After a successful inter partes reexamination, the accused infringer CSZ alleged that the patent owner Gaymar’s litigation position was frivolous and that Gaymar had engaged in misconduct. In denying CSZ’s motion for attorney’s fees under § 285, the magistrate judge stated that he would not recommend an award of attorney’s fees even if the case was exceptional due to CSZ’s purported misconduct. In particular, the judge was disturbed by CSZ’s “misrepresentations to the court,” “shifting legal theories,” and general “overstatements.” The Federal Circuit, however, held that while the conduct of the parties is a relevant factor under Octane, CSZ’s “sloppiness” before the court did not amount to litigation misconduct. The Federal Circuit left open the possibility that CSZ’s sloppiness could spoil its attempt to obtain attorney’s fees, remanding for reconsideration on the totality of the circumstances test under Octane.