Don’t file a patent infringement suit without a reasonable investigation. THERMOLIFE v. GNC

Don’t file a patent infringement suit without a reasonable investigation. THERMOLIFE v. GNC

A patent is a set of exclusive rights granted to the inventor of a new invention. To be granted a patent in the United States an inventor must file a patent application with the United States Patent and Trademark Office.  The patent application is reviewed to ensure that it complies with all of the requirements for a patent.  If the patent application meets all the requirements the inventor will be granted a patent.  A patent grants its owner the exclusive right to make, use, sell and import the invention in the United States.  If someone other than the inventor attempts to exercise one of these exclusive rights that can be considered patent infringement.  A patent owner can file a lawsuit to stop patent infringement with an injunction and to get monetary damages for patent infringement which has occurred.

Patent infringement lawsuits are complex and costly.  Litigating a patent infringement lawsuit is time consuming for both the plaintiff, the defendant and the court.  The legal fees for a patent infringement lawsuit are high to begin with and if one of the parties in the suit acts unreasonably the costs can grow substantially. To encourage litigants to be cooperative, patent law allows the prevailing party in a patent infringement lawsuit to be awarded attorneys fees in exceptional cases. 35 U.S.C. § 285. An exceptional case is one that, under the totality of the circumstances, “stands out from others with respect to the substantive strength of a party’s litigating position” or “the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).

This statute is not intended to penalize litigants who vigorously prosecute a case, rather it is intended to encourage litigants to act professionally at all times.  Conduct which needlessly slows down the trial process or ignores the instructions of the court qualifies as an exceptional case.  Also if a plaintiff files a patent infringement lawsuit without adequately investigating the allegations of infringement that can qualify as an exceptional case.

A case which illustrates a plaintiff that did not adequately investigate its infringement claim, and had to pay the defendant’s attorneys fees is: THERMOLIFE INTERNATIONAL LLC v. GNC CORP, 2018-1657 (C.A.F.C. 2019).  The plaintiff in this case exclusively licensed four patents from a university.  The patents claim using different amino acids to help boost the performance of athletes.  The defendants produce products which are intended to boost the performance of athletes.    The plaintiff sued the defendants for patent infringement. The defendants responded that their products did not infringe on the plaintiff’s patents and that the patents were invalid because the patents were anticipated by prior art.  During the course of the trial evidence was presented that the plaintiffs did not read the ingredients of the defendant’s products or conduct any tests to see if the defendant’s product actually infringed on the plaintiff’s patent.  The defendant’s asserted that filing a patent infringement lawsuit without adequate investigation, was simply a tactic to try to extract nuisance-value settlements.

The district court held all asserted claims invalid. The district court found that the case was exceptional and awarded the defendant attorneys fees. The district court did not take issue with how the plaintiff litigated the case or attempted to defend the validity of its patents. Rather, the district court concluded that plaintiffs were unjustified in alleging infringement in the first place, having failed to do an adequate pre-filing investigation.

The plaintiff appealed to the Court of Appeals for the Federal Circuit.  The Federal Circuit affirmed the district court’s award of attorneys fees. The Federal Circuit held that the district court did not abuse its’ discretion in the determination of exceptionality based on plaintiffs’ inadequate pre-suit investigation of infringement in these and
related cases.

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