The U.S. Court of Appeals for the Federal Circuit issued a soft, but distinct, reprimand to a lower court, for failing in its duty to provide sufficient "reasoning for its determination that a case is exceptional" that the appellate court can "provide meaningful review." The Federal Circuit also expounded on how a district court should conduct an "exceptional case" analysis when claim meaning is disputed. Innovation Technologies, Inc. v. Splash! Medical Devices, LLC., Case No. 06-CV-0647 (Fed. Cir., June 16, 2008) (Friedman, J.).
Innovation Technologies owns a patent relating to a method of irrigating wounds and sued a competitor, Splash! Medical Devices for infringement. Over a year later, Innovation "(1) executed a covenant not to sue Splash for infringement of the patent by the Splash device involved in [the] case and (2) moved to dismiss its suit with prejudice." The district court granted the motion. Thereafter, Splash moved for attorneys' fees under 35 U.S.C. § 285. The district court granted the motion and issued a one-paragraph order, the substance of which was contained in three-conclusory sentences. Innovation appealed.
The Federal Circuit vacated the district court's order and remanded it "for that court to make additional findings ... and, based on those findings, to re-determine the 'exceptional case' and 'attorney fee' issues." The crux of the Court's opinion centered around a trial court's duty to provide enough findings for a reviewing court to provide a "meaningful review." Although the parties had presented the district court with five issues that should be resolved in deciding whether exceptional fees were warranted, "[t]he district court made no findings on any of these issues." The Court concluded, "[w]ithout such findings, we cannot perform our review function. Indeed, the district court did not even indicate, and we cannot tell, upon which of these bases the district court relied in finding this case 'exceptional.'"
The Federal Circuit also criticized the district court for failing to engage in the underlying claim construction issue. It is interesting to note that claim construction enters the analysis as a corollary to determining the reasonableness of Innovation's actions. Although a full-blown claim construction was not required, the Court concluded that the district court must "make a sufficient analysis of the claims' probable meaning to enable it to determine whether Innovation's proposed construction of the disputed language was sufficiently plausible to justify filing suit based upon that construction."
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