CIONCA on Patents: Think Twice Before Suing for Patent Infringement and Fight Back when Unreasonably Sued 

Introduction 

On July 5, 2017, the Federal Circuit made a decision in AdjustaCam, LLC v. Newegg. In July 2010, AdjustaCam sued Newegg and other defendants for patent infringement, the subject matter being rotatable computer-mounted camera clips and their means of rotation. A Markman (i.e., patent claim construction) hearing was held in April 2012, which the Court found that AdjustaCam’s case was baseless. While the cases against most other defendants were dropped afterwards, AdjustaCam continued the litigation against with Newegg. However, AdjustaCam requested for dismissal without prejudice, and Newegg moved for an exceptional case shortly afterwards, stating that AdjustaCam’s infringement accusations were baseless and in bad faith. The district court denied Newegg’s motion. Newegg later appealed in light of Octane Fitness, LLC v. Icon Health & Fitness, Inc., and the case was reassigned to a new judge. However, Newegg’s request for attorney’s fees was denied once again as the district court based their decision on the previous district judge’s analysis. Newegg timely appealed and the case was again before the United States Court of Appeals for the Federal Circuit. 

Decision 

In light of Octane Fitness, LLC v. Icon Health & Fitness, Inc., “[A]n ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” In regards to AdjustaCam, LLC v. Newegg, the Federal Circuit ultimately reversed and remanded the case, articulating their belief that the district court abused its discretion. When instructed to gauge the case as ‘exceptional,’ the district court utilized previous findings rather than conducting a novel independent analysis, a course of action that should not have happened since some facts had changed since the case’s initial ruling. In addition, “its decision was based on ‘a clearly erroneous assessment of the evidence.’” Newegg’s product rotates on at least two axes, but AdjustaCam claimed that “Newegg’s ball-and-socket joint limited the rotation to a single axis at a time.” This argument implies that although Newegg’s product utilizes multiple axes, it infringes on AdjustaCam’s patent because both products rotate on a single axis at all times, regardless of whether it is one of one axis or one of multiple axes. However, AdjustaCam failed to provide evidence to support their argument, and it was established that Newegg’s camera clip does not infringe on that ground. Moreover, throughout the progression of the case, AdjustaCam’s “pattern of low and erratic settlements, though not determinative, reinforces a conclusion of unreasonableness.” In conclusion, the district court’s previous decision was reversed and the case remanded. Costs were ordered to be paid to Newegg. 

Conclusion 

Before taking action on asserting patent infringement claims, the patent owners must thoroughly analyze the extent of their patented claims. It is important to ensure that patent infringement accusations are not baseless, and that patent infringement evidence is prepared prior to filing a patent infringement case. This is because filing a baseless patent infringement patent exposes the patent owner to liability for attorney fees of the accused infringers. Furthermore, one should understand that patent claims must be carefully written to provide a clear scope of protection. Having clear, carefully-verbalized patent claims will make it easier to determine when legal action is appropriate. 

Full AdjustaCam, LLC v. Newegg decision can be read here: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/16-1882.Opinion.6-29-2017.1.PDF