Electronic Communication Technologies v. ShoppersChoice.com was decided on July 1, 2020, on appeal from the Southern District of Florida. The district court granted Defendant ShoppersChoice’s motion for judgment on the pleadings invalidating independent claim 11 of Plaintiff ECT’s asserted patent. The Federal Circuit affirmed. Subsequently, the district court denied ShopperChoice’s motion for attorney fees, finding that “ECT’s litigating position was not so obviously weak” and that ECT did not “exhibit[] the kind of unreasonable behavior that would make this case stand apart from others.” ShoppersChoice appealed.
The Federal Circuit vacated the denial of fees and remanded.
The Federal Circuit reviews “a district court’s denial or grant of attorney fees under § 285 for abuse of discretion.” “An abuse of discretion occurs where a district court makes a clear error of judgment in weighing relevant factors or in basing its decision on an error of law or on clearly erroneous factual findings.”
“The District Court clearly erred by failing to address ECT’s manner of litigation and the broader context of ECT’s lawsuit against ShoppersChoice.” “Before the District Court was evidence that ECT sent standardized demand letters and filed repeat patent infringement actions to obtain low-value license fees and forcing settlements.” “[B]etween 2011 and 2015, ECT, under its former name Eclipse, filed lawsuits against at least 150 defendants, alleging infringement of claims in the [asserted] patent and in other patents in the … family.” “ECT’s demand for a low-value settlement—ranging from $15,000 to $30,000—and subsequent steps—such as failure to proceed in litigation past claim construction hearings—indicates the use of litigation to achieve a quick settlement with no intention of testing the strength of the patent or its allegations of infringement.” Moreover, in a different case in the Central District of California, a district court entered an award of attorney fees against ECT. The California “opinion provided a detailed account of ECT’s practice of seeking nuisance-value license fees.” “By not addressing the adequate evidence of an abusive pattern of ECT’s litigation, the District Court failed to conduct an adequate inquiry and so abused its discretion.”
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“The District Court clearly erred by failing to consider the objective unreasonableness of ECT’s alleging infringement of claim 11 against ShoppersChoice.” In the California case, the district court “concluded that no reasonable patent litigant would have believed that claim 11…was viable.” In another case “decided two years before ECT filed its Complaint against ShoppersChoice,” another court “invalidated claims of patents in the [asserted] patent’s family as patent ineligible under § 101.” “[T]he absence in the Attorney Fee Order of any reference to either relevant case, or any allusion to their opposing conclusions, is problematic.”
Accordingly, the district court “abused its discretion in weighing relevant factors in its exceptional case analysis.”