Phonometrics, Inc. v. ITT Sheraton Corp.

64 F. App'x 219
CourtCourt of Appeals for the Federal Circuit
DecidedApril 29, 2003
DocketNo. 02-1417
StatusPublished
Cited by11 cases

This text of 64 F. App'x 219 (Phonometrics, Inc. v. ITT Sheraton Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phonometrics, Inc. v. ITT Sheraton Corp., 64 F. App'x 219 (Fed. Cir. 2003).

Opinion

PROST, Circuit Judge.

Phonometrics, Inc. appeals from the order of the United States District Court for [220]*220the Southern District of Florida granting-in-part and denying-in-part ITT Sheraton Corporation’s (“Sheraton’s”) motion for attorney fees pursuant to 28 U.S.C. § 1927 and 35 U.S.C. § 285. We have jurisdiction to consider this appeal under 28 U.S.C. § 1295(a)(1). Because the district court made certain errors in its award, we affirm-in-part and vacate-in-part the district court’s order and remand this case for further proceedings consistent with this opinion.

The district court found that the maintenance of this lawsuit after January 15, 1998-the date we issued our opinion in Phonometrics, Inc. v. Northern Telecom Inc., 133 F.3d 1459, 45 USPQ2d 1421 (Fed. Cir.l998)-to be vexatious, unjustified and undertaken in bad faith. According to the district court, it was clear after we issued the claim construction in Northern Telecom that Sheraton did not infringe U.S. Patent No. 3,769,463 (“the ’463 patent”). Thus, the district court concluded that

Plaintiffs continued maintenance of this case after Northern Telecom has resulted in unjustified multiplication of proceedings. This unjustified, vexatious and bad faith maintenance of the lawsuit is deserving of an award of fees and costs pursuant to both 28 U.S.C. § 1927 and 35 U.S.C. § 285. Accordingly, this Court grants Defendant attorneys’ fees and costs incurred after January 15, 1998, the date that the Federal Circuit issued its opinion in Northern Telecom. Both Plaintiff and Plaintiffs counsel are responsible for these fees and costs.

Phonometrics, Inc. v. ITT Sheraton Corp., No. 94-6502-CIV-RYSKAMP, slip op. at 8 (S.D.Fla. Mar. 22, 2002). The court subsequently awarded Sheraton attorney fees in the amount of $65,466.17 and costs in the amount of $8,081.42, holding Phonometrics and its counsel jointly and severally liable to Sheraton for these amounts. Phonometrics, Inc. v. ITT Sheraton Corp., No. 94-6502-CIV-RYSKAMP, slip op. at 7 (S.D.Fla. May 6, 2002).

I

Pursuant to 35 U.S.C. § 285, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”

The determination of whether a case is exceptional and, thus, eligible for an award of attorney fees under § 285 is a two-step process. First, the district court must determine whether a case is exceptional, a factual determination reviewed for clear error. After determining that a case is exceptional, the district court must determine whether attorney fees are appropriate, a determination that we review for an abuse of discretion. A district court abuses its discretion when its decision is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary or fanciful.

Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1460, 46 USPQ2d 1169, 1178 (Fed. Cir.1998) (en banc) (citations omitted). “The prevailing party may prove the existence of an exceptional case by showing: inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.” Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034, 61 USPQ2d 1470, 1479 (Fed.Cir.2002) (citing Hoffmann-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365, 54 USPQ2d 1846, 1850 (Fed.Cir.2000)). “Litigation misconduct and unprofessional behavior are relevant to the award of attorney fees, and may suffice, by themselves, to make a case exceptional.” Epcon Gas, 279 F.3d at 1034, 61 USPQ2d at 1479 (citing Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574, 38 USPQ2d [221]*2211551, 1557-58 (Fed.Cir.1996)). When “the patentee is manifestly unreasonable in assessing infringement, while continuing to assert infringement in court, an inference is proper of bad faith, whether grounded in or denominated wrongful intent, recklessness, or gross negligence.” Eltech Sys., Corp. v. PPG Indus., 903 F.2d 805, 811, 14 USPQ2d 1965, 1970 (Fed.Cir.1990).

The district court concluded that this case is exceptional because Phonometrics continued to litigate the case even after it knew that it could not prevail on the merits. This finding is not clearly erroneous. Since we issued the Northern Telecom opinion clarifying the construction of certain claim terms of the ’463 patent, Phonometrics has been unable to articulate any plausible basis for how the Sheraton accused systems meet the claim limitation of a “call cost register means, including a digital display, for providing a substantially instantaneous display of cumulative call cost in dollars and cents.” See ’463 Patent, col. 8, ll. 41-43. Phonometrics took no affirmative steps to end this litigation and instead proceeded to oppose a motion for summary judgment of noninfringement. Its arguments in opposition to summary judgment, both before the district court and on appeal before this court, attempted to reargue claim construction in spite of our precedential holding in Northern Telecom, and in spite of our explicit warning in Phonometrics, Inc. v. Choice Hotels International, Inc., 21 Fed.Appx. 910 (Fed.Cir.2001) not to relitigate issues of claim construction that had been previously decided. In light of these facts, the district court’s determination that this case is exceptional is not clearly erroneous. We therefore affirm the district court’s ruling that this case is. an exceptional one under § 285.

II

Section 1927 addresses “[cjounsel’s liability for excessive costs.” According to this statute:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.

28 U.S.C. § 1927 (2000).

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64 F. App'x 219, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phonometrics-inc-v-itt-sheraton-corp-cafc-2003.