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Case exceptional where Plaintiff did not perform a simple test of the publicly available accused products

Case exceptional where Plaintiff did not perform a simple test of the publicly available accused products

ThermoLife v. GNC was decided on May 1, 2019 on appeal from the Southern District of California. Plaintiff ThermoLife brought suit against Defendant GNC, and other defendants, for patent infringement. This was one of 81 infringement lawsuits the exclusive licensee filed. The patents relate to “methods and compositions involving the amino acids arginine and lysine, to be ingested to enhance vascular function and physical performance.” The district court denied the defendants’ motion for summary judgment on invalidity. After a bench trial, the district judge held all asserted claims of all four patents invalid for anticipation or obviousness. The district court then granted the defendants’ motion for attorney fees, finding that ThermoLife “had conducted an inadequate pre-filing investigation, resulting in objectively unreasonable infringement contentions,” and that ThermoLife’s “motivation was seemingly to extract nuisance-value settlements from a large number of defendants.” ThermoLife appealed.

The Federal Circuit affirmed the exceptionality finding.

The district court did not abuse its discretion in finding that plaintiffs did not conduct an adequate pre-suit investigation into infringement by defendant. “That determination would suffice to support the exceptional-case determination.”

The district court did not err by basing its exceptionality case determination on plaintiffs’ infringement allegations, an issue that “was neither fully adjudicated nor even fully litigated before the judgment on the merits.” No due process or procedural rights of plaintiffs were violated because “Plaintiffs did not request a hearing, they had an opportunity to meet the contentions made in the fees motion, and they have made no concrete persuasive argument for what discovery was needed and requested but denied.”

Plaintiffs further argued that “If Defendants thought Plaintiffs’ infringement case was meritless from day one, they likely would have sent Rule 11 notices at some point in the last three-and-a-half years, rather than wait until the case was closed.” The Federal Circuit disagreed that such purported lack of notice precludes awarding attorney fees. Although “the lack of the early notice … can support a denial of attorney’s fees,” and “the presence of such notice, followed by continuation of litigation, can be a factor in justifying an award of attorney’s fees,” such early notice is not rigidly required. “Plaintiffs’ suits against a large number of defendants, involving numerous products and several patents and claims, reasonably led not only to coordination among numerous defendants but to the agreement of all parties, for efficiency, to give priority to the common issue of validity so that even discovery as to party-specific issues like infringement could be postponed.” The lack of early notice does not bar defendants’ recovery of fees if the district court otherwise finds, as it did here, that “plaintiffs failed to undertake an adequate pre-filing investigation to support their infringement allegations.”

The district court did not abuse its discretion in the inadequate-investigation determination. The district court did not err in finding that one gram of L-arginine or an equivalent was required under an asserted claim, and in finding that “plaintiffs did not conduct adequate investigations to apply the one-gram minimum to the accused products.” “[A]ll the relevant products were publicly available.” “Whether testing is necessary for a responsible accusation of infringement necessarily depends on the availability of the products at issue, the existence and costs of testing, and whether other sufficiently reliable information exists.”
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Although product testing “is not necessarily a required part of an adequate pre-filing investigation,” the district court did not err in finding that this case “was one in which there was no adequate substitute for simple testing of publicly available products.” “[T]he labels of at least some, perhaps many, of the accused products made clear that they did not contain one gram [minimum].” It was not disputed that plaintiffs “could have determined the amounts of L-arginine or [an equivalent] by performing … a simple test.” And the record did not “reveal that plaintiffs performed such a test.”

Considering the totality of the circumstances, the district court did not err in finding a pattern of misconduct by the plaintiffs. “The district court’s ‘pattern’ determination ultimately is tied to the finding that plaintiffs failed to conduct an adequate pre-suit investigation into infringement.” The Federal Circuit, however, added that the fact that “plaintiffs brought many suits and settled many for seemingly small amounts” does not “show misconduct without the additional evidence of inadequate pre-suit investigation.” “[F]iling a large number of suits does not, by itself, justify an inference of … an improper motive.” Moreover, “there is no minimum damages requirement to file a patent infringement case, and asserting seemingly low damages against multiple defendants—or settling with defendants for less than the cost of litigation—does not necessarily make a case ‘exceptional.’”

 

ThermoLife Int’l LLC v. GNC Corp., 922 F.3d 1347 (Fed. Cir. 2019)