After it prevailed on a motion for judgment on the pleadings, ShopperChoice argued that no reasonable patentee in the plaintiff's position could have believed that Claim 11 of 261 patent covered patent eligible subject matter at the time suit was filed. ShopperChoice based its argument on the prior opinion of a California Federal District Court, which invalidated claims of patents in the '261 patent's family based on the finding that they were directed to "the abstract idea of asking people, based on their location to go places," and implemented with only "'generic computer[s]'" that did not transform the claims into patent eligible subject matter. McKinley, 2014 WL 4407592, at *11 (quoting Alice, 573 U.S. at 223, 134 S. Ct. 2347). ShopperChoice also noted that three years later, in True Grit, a sister court in the Central District of California cited McKinley as authority for invalidating Claim 11 of the '261 patent - the same patent and claim as that at issue in the instant suit — finding that this claim "suffers from the same type of obvious defect as the asserted claims in McKinley."
The district court explained that the plaintiff "seemingly advances that the USPTO approval of its Patent Application, post-McKinley,4 absolutely insulates it from §285 fee liability under the circumstances of this case, where it asked the USPTO to double-check the patent-in-suit and the asserted claim under §101, and specifically disclosed the McKinley ruling to the Patent Office in an Information Disclosure Statement accompanying its application, so the Office would be aware of the ruling when deciding whether to issue the '261 patent. ECT asserts that it asked the Patent Office to double check the subject matter eligibility a second time, after receiving notice that claims of the patent- in -suit would be allowed, and the Patent Office did not change its position on patent eligibility of the claims in it post-Alice review of the claims."
The district court disagreed with this argument, noting that while "[o]rdinarily, the fact that a patentee asserts claims in litigation that are ultimately found invalid under §101 is insufficient, standing alone, to make the case exceptional. However, this case does stand out from the typical case in which claims of a patent are invalidated by a court, because in this case the patentee obtained an adverse ruling on the patent eligibility of claims from the same patent family and originating from the same specifications as those at issue here a full two years prior to filing of suit. That ECT cited McKinley in its patent application, and that the Patent Office nonetheless issued the '261 Patent on the claims in issue, does not automatically cloak an enforcement case which follows with a cloak of objective reasonability. The Court easily rejects such an inference here, where the manner in which the McKinley was presented to the USPTO during prosecution of the '261 Patent was misleading at best: as Shopperschoice shows, in making its disclosure to the USPTO, ECT represented that the McKinley decision 'is not material to the examination of the claims of the pending applications,' as it contended those claims 'are directed to subject matter that is different than and patentably distinct form the claims that were held invalid' in McKinley."
Based on this analysis, the district court concluded that "[c]onsidering the totality of circumstances regarding ECT's litigation positioning in this matter, including the fact that (1) the McKinley case clearly signaled that the claims arising from the original specification at issue in this case were likely invalid; (2) ECT gave misleading information regarding the McKinley case to the Patent Office in its prosecution of the '261 patent; (3) ECT continued to vigorously enforce patents claims under '261 patent , notwithstanding the McKinley ruling and multiple other authorities ruling on the patent eligibility of similar claims, the Court finds no reasonable patentee in ECT's shoes could have believed that Claim 11 of the 261 patent was patent eligible, or a contest on its eligibility would at least be unpredictable."
As a result, the district court determined that the case exceptional and awarded attorney's fees.
Electronic Communication Technologies, LLC v. Shopperschoice.com, LLC, Case No. 16-CV-81677-MARRA (S.D. Fla. Oct. 30, 2020)
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