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   A while back, we reported on fee shifting in patent cases and why it is such an important concept (the post on the Monolithic Power Systems case is here; the post on the Monolithic appeal is here, and here is the post on Octane Fitness v. ICON Health.

     To over-simplify somewhat, fee-shifting awards the defendant its legal fees and costs in a case where it is deemed to be the “prevailing party” and where the case is found to be “exceptionable” (see Section 285 of the Patent Act).  The law dictates that the party seeking fees must establish (by a preponderance of the evidence) that the case is “exceptional.”

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Natural waves are nice, but you can make your own (if you’re wealthy enough to buy a stationary wave machine..). Photo: The Cove at Terranea, Palos Verdes, California

Way back in May 2008, Plaintiff Wave Loch/Light Wave (“Wave Loch”)  filed suit against American Wave Machines (“AWM”) alleging that AWM’s stationary wave machine infringed Wave Loch’s  patents. Stationary wave machines are used in places like surf parks, water parks and on cruise ships.

Before the Court got down to construing the patent claims, Defendant AWM asked the Court to stay the case pending the Patent Office’s reexamination of the patents-in-suit (U.S. Patent Nos. 5,236,280 and 5,393,170).  While the district court case was stayed, the Patent Office cancelled all of Plaintiff Wave Loch’s allegedly infringed claims. Accordingly, Defendant AWM had the stay lifted and then moved for judgement on the pleadings in May 2014.

The hearing on AWM’s motion was continued so that Plaintiff Wave Loch could substitute its counsel. Then in July 2014, Wave Loch filed a motion to amend its complaint to add additional patent claims and additional accused products to its infringement contentions. The Court saw Wave Loch’s motion to amend as a last ditch attempt to block the adverse ruling that was sure to follow AWM’s motion for judgement on the pleadings:

As Plaintiff’s admit, the proposed amendments relate to “same or extraordinarily similar technology”,, “require interpretation and analysis of the same patents already at issue”, and “involve substantial overlapping questions of fact and law.” This begs the question: why if the technology is [“the same”], did Plaintiffs not assert these fifty-one patent claims against the [accused] products in the original Complaint? It appears to the Court that Plaintiffs are attempting, at best, to take a second bite of the apple at the USPTO by asserting perviously unasserted and therefore unchallenged provisions of their patents. At worst, Plaintiffs are attempting to prolong frivolous litigation to harass Defendant.  In either scenario, the amendments appear to be undertaken in bad faith.

After that, there was nothing more for the Court to do but to grant Defendant AWM’s motion for judgment on the pleadings, which the Court did in the same ruling. The Court based its decision on the fact that the USPTO had cancelled each patent claim that Wave Loch asserted in its original infringement contentions.

After the Court issued its decision, AWM moved to have the case declared exceptional and for its attorneys’ fees and costs.  Reiterating that Wave Loch had moved to amend its complaint in bad faith to avoid an adverse ruling, the Court awarded AWM $29,530 for its attorneys’ fees and costs.

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