Pathway Innovations and Technologies, Inc. v. IPEVO, Inc.

S.D. California

Pathway Innovations and Technologies, Inc. v. IPEVO, Inc.

DecidedApril 24, 2020

Docket3:17-cv-00312

StatusUnknown

This text of Pathway Innovations and Technologies, Inc. v. IPEVO, Inc. (Pathway Innovations and Technologies, Inc. v. IPEVO, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Pathway Innovations and Technologies, Inc. v. IPEVO, Inc., (S.D. Cal. 2020).

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Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PATHWAY INNOVATIONS AND Case No.: 17-CV-312-CAB-BLM TECHNOLOGIES, INC., 12 ORDER DENYING MOTION FOR Plaintiff, 13 EXCEPTIONAL CASE FINDING v. 14 IPEVO INC., a California corporation; [Doc. No. 42] 15 and DOES 1 through 10, inclusive, 16 Defendants. 17 18 19 20 This matter is before the Court on Defendant IPEVO, Inc.’s motion for an 21 exceptional case finding under 35 U.S.C. § 285. The motion has been fully briefed, and 22 the Court deems it suitable for submission without oral argument. The motion is denied. 23 I. Background 24 Plaintiff Pathway Innovations and Technologies, Inc. (“Pathway”) filed this lawsuit 25 on February 16, 2017, asserting one claim for infringement of U.S. Patent No. 8,508,751. 26 [Doc. No. 1.] IPEVO first appeared on April 7, 2020, by filing a motion to stay the case 27 pursuant to 28 U.S.C. § 1659(a) pending final determination in a proceeding involving 28 IPEVO and Pathway before the United States International Trade Commission (“ITC”). 1 [Doc. No. 8.] On April 17, 2017, Pathway filed a notice of non-opposition to the motion 2 to stay [Doc. No. 11], and on the following day, the Court stayed and administratively 3 closed the case. [Doc. No. 12.] 4 The ITC proceeding terminated on December 14, 2017, but with its notice to the 5 Court of that termination, Pathway asked for the stay to continue until the Patent Trial and 6 Appeal Board (“PTAB”) decided whether to institute inter partes review (“IPR”) of the 7 ‘751 Patent. [Doc. No. 14.] The Court granted Pathway’s request and ordered that the stay 8 would remain in place. [Doc. No. 15.] The PTAB instituted IPR, and the stay remained 9 in place for two more years, with no activity on this case other than joint status reports 10 from the parties on the progress of the IPR proceeding [Doc. Nos. 17, 19, 21], followed by 11 orders maintaining the stay [Doc. Nos. 18, 20, 22.] 12 Finally, almost three years after the case was filed, and with no notice of the final 13 outcome of the IPR proceeding, IPEVO filed an answer to the complaint on December 16, 14 2019. [Doc. No. 23.] On January 3, 2020, in response to a court order, the parties filed a 15 status report indicating that Pathway had offered to dismiss this case with prejudice, with 16 each side to bear their own fees and costs, and that IPEVO had rejected that offer and 17 intended to seek attorney’s fees pursuant to 35 U.S.C. § 285. [Doc. No. 27.] A day later, 18 Pathway filed a motion for voluntary dismissal without prejudice, with each party to bear 19 its own fees and costs. [Doc. No. 28.] IPEVO opposed the motion, arguing that the Court 20 should dismiss the complaint with prejudice. [Doc. No. 31.] On February 13, 2020, the 21 Court dismissed the case with prejudice and gave IPEVO until March 13, 2020, to file a 22 motion for an exceptional case finding under section 285. [Doc. No. 40.] IPEVO’s motion 23 is now before the Court. 24 II. Exceptional Case Finding Under 35 U.S.C. § 285 25 With its motion, IPEVO seeks its attorney fees pursuant to 35 U.S.C. § 285. Section 26 285 states that “[t]he court in exceptional cases may award reasonable attorney fees to the 27 prevailing party.” 35 U.S.C. § 285. Thus, to award fees, the Court must find both that 28 IPEVO was the prevailing party and that this case was exceptional. There is no dispute 1 that IPEVO was the prevailing party. The only question is whether this case was 2 exceptional. 3 “[A]n ‘exceptional’ case is simply one that stands out from others with respect to the 4 substantive strength of a party’s litigating position (considering both the governing law and 5 the facts of the case) or the unreasonable manner in which the case was litigated. District 6 courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their 7 discretion, considering the totality of the circumstances.” Octane Fitness, LLC v. ICON 8 Health & Fitness, Inc., 572 U.S. 545, 554 (2014); see also Highmark Inc. v. Allcare Health 9 Mgmt. Sys., 572 U.S. 559, 563 (2014) (“[T]he determination of whether a case is 10 ‘exceptional’ under § 285 is a matter of discretion.”). “[I]t is the ‘substantive strength of 11 the party’s litigating position’ that is relevant to an exceptional case determination, not the 12 correctness or eventual success of that position. . . . A party’s position on issues of law 13 ultimately need not be correct for them to not ‘stand[] out,’ or be found reasonable.” SFA 14 Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015) (emphasis in original) 15 (quoting Octane Fitness, 572 U.S. at 554). 16 Factors relevant to this analysis include “frivolousness, motivation, objective 17 unreasonableness (both in the factual and legal components of the case) and the need in 18 particular circumstances to advance considerations of compensation and deterrence.” 19 Octane Fitness, 572 U.S. at 554 n.6 (citation omitted). “[T]he amount of the attorney fees 20 depends on the extent to which the case is exceptional. In other words, the exceptionality 21 determination highly influences the award setting.” Special Devices, Inc. v. OEA, Inc., 269 22 F.3d 1340, 1344 (Fed. Cir. 2001). Ultimately, “the aim of § 285 is to compensate a 23 defendant for attorneys’ fees it should not have been forced to incur.” Kilopass Tech., Inc. 24 v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013). 25 Here, as recounted above, this case was not actually litigated in this forum. Pathway 26 merely filed a complaint, sought a stay, and then sought dismissal based on the outcome of 27 the proceedings before the ITC and PTAB, which were the forums where the case was truly 28 litigated. The complaint in effect served as little more than a placeholder. Thus, with its 1 motion, IPEVO is asking the Court to consider the substantive strength of Pathway’s 2 infringement case for the first time. Yet the Supreme Court justified the abuse of discretion 3 standard of review for section 285 determinations on the grounds “the district court is better 4 positioned to decide whether a case is exceptional, because it lives with the case over a 5 prolonged period of time.” Highmark, 572 U.S. at 564 (internal quotation marks and 6 citation omitted). Arguably, any case where the district court has not lived with the case 7 at all and is in no better position to review records of administrative proceedings than an 8 appellate court cannot be deemed exceptional precisely because the district court record is 9 devoid of information to support such a finding. Regardless, based on the record in this 10 case and the briefing on the instant motion, IPEVO has not convinced the Court by a 11 preponderance of the evidence that the substantive strength of Pathway’s litigating position 12 stands out from others. Further, the manner in which Pathway litigated this lawsuit— 13 agreeing to a stay while proceedings before the ITC and PTAB were ongoing, and then 14 dismissing the case based on the outcome of those proceedings—was not unreasonable. 15 Accordingly, this case is not exceptional under section 285.

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 PATHWAY INNOVATIONS AND Case No.: 17-CV-312-CAB-BLM TECHNOLOGIES, INC., 12 ORDER DENYING MOTION FOR Plaintiff, 13 EXCEPTIONAL CASE FINDING v. 14 IPEVO INC., a California corporation; [Doc. No. 42] 15 and DOES 1 through 10, inclusive, 16 Defendants. 17 18 19 20 This matter is before the Court on Defendant IPEVO, Inc.’s motion for an 21 exceptional case finding under 35 U.S.C. § 285. The motion has been fully briefed, and 22 the Court deems it suitable for submission without oral argument. The motion is denied. 23 I. Background 24 Plaintiff Pathway Innovations and Technologies, Inc. (“Pathway”) filed this lawsuit 25 on February 16, 2017, asserting one claim for infringement of U.S. Patent No. 8,508,751. 26 [Doc. No. 1.] IPEVO first appeared on April 7, 2020, by filing a motion to stay the case 27 pursuant to 28 U.S.C. § 1659(a) pending final determination in a proceeding involving 28 IPEVO and Pathway before the United States International Trade Commission (“ITC”). 1 [Doc. No. 8.] On April 17, 2017, Pathway filed a notice of non-opposition to the motion 2 to stay [Doc. No. 11], and on the following day, the Court stayed and administratively 3 closed the case. [Doc. No. 12.] 4 The ITC proceeding terminated on December 14, 2017, but with its notice to the 5 Court of that termination, Pathway asked for the stay to continue until the Patent Trial and 6 Appeal Board (“PTAB”) decided whether to institute inter partes review (“IPR”) of the 7 ‘751 Patent. [Doc. No. 14.] The Court granted Pathway’s request and ordered that the stay 8 would remain in place. [Doc. No. 15.] The PTAB instituted IPR, and the stay remained 9 in place for two more years, with no activity on this case other than joint status reports 10 from the parties on the progress of the IPR proceeding [Doc. Nos. 17, 19, 21], followed by 11 orders maintaining the stay [Doc. Nos. 18, 20, 22.] 12 Finally, almost three years after the case was filed, and with no notice of the final 13 outcome of the IPR proceeding, IPEVO filed an answer to the complaint on December 16, 14 2019. [Doc. No. 23.] On January 3, 2020, in response to a court order, the parties filed a 15 status report indicating that Pathway had offered to dismiss this case with prejudice, with 16 each side to bear their own fees and costs, and that IPEVO had rejected that offer and 17 intended to seek attorney’s fees pursuant to 35 U.S.C. § 285. [Doc. No. 27.] A day later, 18 Pathway filed a motion for voluntary dismissal without prejudice, with each party to bear 19 its own fees and costs. [Doc. No. 28.] IPEVO opposed the motion, arguing that the Court 20 should dismiss the complaint with prejudice. [Doc. No. 31.] On February 13, 2020, the 21 Court dismissed the case with prejudice and gave IPEVO until March 13, 2020, to file a 22 motion for an exceptional case finding under section 285. [Doc. No. 40.] IPEVO’s motion 23 is now before the Court. 24 II. Exceptional Case Finding Under 35 U.S.C. § 285 25 With its motion, IPEVO seeks its attorney fees pursuant to 35 U.S.C. § 285. Section 26 285 states that “[t]he court in exceptional cases may award reasonable attorney fees to the 27 prevailing party.” 35 U.S.C. § 285. Thus, to award fees, the Court must find both that 28 IPEVO was the prevailing party and that this case was exceptional. There is no dispute 1 that IPEVO was the prevailing party. The only question is whether this case was 2 exceptional. 3 “[A]n ‘exceptional’ case is simply one that stands out from others with respect to the 4 substantive strength of a party’s litigating position (considering both the governing law and 5 the facts of the case) or the unreasonable manner in which the case was litigated. District 6 courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their 7 discretion, considering the totality of the circumstances.” Octane Fitness, LLC v. ICON 8 Health & Fitness, Inc., 572 U.S. 545, 554 (2014); see also Highmark Inc. v. Allcare Health 9 Mgmt. Sys., 572 U.S. 559, 563 (2014) (“[T]he determination of whether a case is 10 ‘exceptional’ under § 285 is a matter of discretion.”). “[I]t is the ‘substantive strength of 11 the party’s litigating position’ that is relevant to an exceptional case determination, not the 12 correctness or eventual success of that position. . . . A party’s position on issues of law 13 ultimately need not be correct for them to not ‘stand[] out,’ or be found reasonable.” SFA 14 Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015) (emphasis in original) 15 (quoting Octane Fitness, 572 U.S. at 554). 16 Factors relevant to this analysis include “frivolousness, motivation, objective 17 unreasonableness (both in the factual and legal components of the case) and the need in 18 particular circumstances to advance considerations of compensation and deterrence.” 19 Octane Fitness, 572 U.S. at 554 n.6 (citation omitted). “[T]he amount of the attorney fees 20 depends on the extent to which the case is exceptional. In other words, the exceptionality 21 determination highly influences the award setting.” Special Devices, Inc. v. OEA, Inc., 269 22 F.3d 1340, 1344 (Fed. Cir. 2001). Ultimately, “the aim of § 285 is to compensate a 23 defendant for attorneys’ fees it should not have been forced to incur.” Kilopass Tech., Inc. 24 v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013). 25 Here, as recounted above, this case was not actually litigated in this forum. Pathway 26 merely filed a complaint, sought a stay, and then sought dismissal based on the outcome of 27 the proceedings before the ITC and PTAB, which were the forums where the case was truly 28 litigated. The complaint in effect served as little more than a placeholder. Thus, with its 1 motion, IPEVO is asking the Court to consider the substantive strength of Pathway’s 2 infringement case for the first time. Yet the Supreme Court justified the abuse of discretion 3 standard of review for section 285 determinations on the grounds “the district court is better 4 positioned to decide whether a case is exceptional, because it lives with the case over a 5 prolonged period of time.” Highmark, 572 U.S. at 564 (internal quotation marks and 6 citation omitted). Arguably, any case where the district court has not lived with the case 7 at all and is in no better position to review records of administrative proceedings than an 8 appellate court cannot be deemed exceptional precisely because the district court record is 9 devoid of information to support such a finding. Regardless, based on the record in this 10 case and the briefing on the instant motion, IPEVO has not convinced the Court by a 11 preponderance of the evidence that the substantive strength of Pathway’s litigating position 12 stands out from others. Further, the manner in which Pathway litigated this lawsuit— 13 agreeing to a stay while proceedings before the ITC and PTAB were ongoing, and then 14 dismissing the case based on the outcome of those proceedings—was not unreasonable. 15 Accordingly, this case is not exceptional under section 285. 16 Ultimately, it appears that all, or almost all, of the attorney fees IPEVO incurred in 17 this federal lawsuit are the result of its current effort to obtain fees for proceedings before 18 the ITC and the PTAB. In other words, IPEVO did not incur significant attorneys’ fees as 19 a result of this federal lawsuit that it would not otherwise have incurred in light of the ITC 20 proceeding, meaning the aim of section 285 has been served. See Kilopass Tech., 738 F.3d 21 at 1313. Thus, even if this case is exceptional as a result of Pathway’s litigating positions 22 before the ITC and PTAB, the Court would exercise its discretion to decline to award 23 IPEVO any attorney fees. Cf. Special Devices, 269 F.3d at 1344 (“[T]he amount of 24 attorney fees awarded may be zero, even though the case is exceptional.”). 25 26 27 28 1 II. Conclusion 2 For the foregoing reasons, the Court does not find this case to be exceptional under 3 ||35 U.S.C. § 285, and declines to award IPEVO any attorney fees. Accordingly, IPEVO’s 4 motion is DENIED. 5 It is SO ORDERED. 6 Dated: April 24, 2020 € Z 7 Hon. Cathy Ann Bencivengo 8 United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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