Taltech Ltd. v. Esquel Enterprises Ltd.

604 F.3d 1324, 95 U.S.P.Q. 2d (BNA) 1257, 2010 U.S. App. LEXIS 9666, 2010 WL 1889168
CourtCourt of Appeals for the Federal Circuit
DecidedMay 12, 2010
Docket2009-1344
StatusPublished
Cited by13 cases

This text of 604 F.3d 1324 (Taltech Ltd. v. Esquel Enterprises Ltd.) 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
Taltech Ltd. v. Esquel Enterprises Ltd., 604 F.3d 1324, 95 U.S.P.Q. 2d (BNA) 1257, 2010 U.S. App. LEXIS 9666, 2010 WL 1889168 (Fed. Cir. 2010).

Opinions

Opinion for the court filed by Circuit Jusge MAYER. Dissenting opinion filed by Circuit Judge GAJARSA.

MAYER, Circuit Judge.

Talteeh Limited and TAL Apparel Limited (collectively “TAL”) appeal the supplemental judgment of the United States District Court for the Western District of Washington reinstating its July 13, 2007, judgment, awarding attorney fees and costs under 35 U.S.C. § 285, and post-judgment interest at the rate allowable at the time of the earlier judgment. Taltech Ltd. v. Esquel Enters. Ltd., 609 F.Supp.2d 1195, 1211 (W.D.Wash.2009) (Taltech). We affirm the award of attorney fees and costs, and reverse the post-judgment interest rate.

BACKGROUND

Talteeh Limited owns United States Patent No. 5,568,779 (“'779 patent”) which is drawn to seams including thermal adhesive to reduce pucker. TAL Apparel Limited, licensee of the '779 patent, manufactures and sells garments, including dress shirts. On April 29, 2004, defendant Esquel Enterprises, Ltd. (“Esquel”), an apparel manufacturer and TAL competitor, filed a complaint seeking a declaratory judgment of non-infringement, and TAL counterclaimed, alleging infringement.

Following a bench trial, the district court concluded that Talteeh inventor John Wong engaged in inequitable conduct during prosecution of the '779 patent before [1328]*1328the United States Patent and Trademark Office (“PTO”) when he did not disclose a raincoat seam that included heat-fusible adhesive tape (undisclosed raincoat seam, “URS”), and when he misrepresented a raincoat seam previously made and sold by TAL (“double top-stitch seam”). Based on these inequitable conduct findings, and a finding of litigation misconduct, the court declared the case exceptional under 35 U.S.C. § 285. The July 13, 2007, final judgment awarded Esquel attorney fees and costs based on the exceptional case finding. TAL appealed.

This court vacated the inequitable conduct determination. TALtech Ltd. v. Esquel Apparel, Inc., 279 Fed.Appx. 974 (Fed.Cir.2008). The attorney fees and costs were also vacated because the exceptional case finding was based, at least in part, on TAL’s inequitable conduct in failing to disclose the URS. The case was remanded for the district court to determine if the URS was cumulative to German Patent No. 1 104 802 (“Robers”). Id. at 977.

On remand, the district court set out its previously presented reasons as three separate and independent bases to support its finding of exceptional case: (1) inequitable conduct in failing to disclose the URS; (2) inequitable conduct in misrepresenting the double top-stitch seam; and (3) abusive litigation tactics. Taltech, 609 F.Supp.2d at 1211. On these bases, the court entered a supplemental final judgment which also imposed interest from the date of the earlier July 13, 2007, judgment. TAL moved under Rule 60(a) of the Federal Rules of Civil Procedure that the judgment specify an interest rate under 28 U.S.C. § 1961 from the date of the new judgment. The motion was denied. TAL appeals both the exceptional case finding and the judgment interest rate. This court has jurisdiction under 28 U.S.C. § 1295(a).

DISCUSSION

District courts may award reasonable attorney fees to a prevailing party “in exceptional cases.” 35 U.S.C. § 285. “ ‘[T]he types of conduct which can form a basis for finding a case exceptional [include] ... inequitable conduct before the P.T.O., [and] misconduct during litigation.’” Hoffmann-La Roche, Inc. v. Invamed, Inc., 213 F.3d 1359, 1365 (Fed.Cir.2000) (quoting Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed.Cir.1989)). To establish inequitable conduct the accused infringer must prove by clear and convincing evidence that the patentee withheld material information with intent to deceive the PTO. Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 872 (Fed.Cir.1988) (en banc to overrule precedent that stated “gross negligence” mandates a finding of deceptive intent). Materiality and intent are questions of fact that we review for clear error. GFI, Inc. v. Franklin Corp., 265 F.3d 1268, 1273 (Fed.Cir.2001). If the materiality and intent requirements are met, the court must then determine whether the cited conduct amounts to inequitable conduct by balancing the levels of materiality and intent; a greater showing of one allows a lesser showing of the other. Larson Mfg. Co. of S.D. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1327 (Fed.Cir.2009) (citing Digital Control, Inc. v. Charles Machine Works, 437 F.3d 1309, 1313 (Fed.Cir.2006)); Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed.Cir.2008) (“[T]he district court must still balance the equities to determine whether the applicant’s conduct before the PTO was egregious enough to warrant holding the entire patent unenforceable.”). “Thus, even if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent [1329]*1329unenforceable.” Star Scientific, 537 F.3d at 1365.

We review the district court’s ultimate determination of inequitable conduct for an abuse of discretion. Larson Mfg., 559 F.3d at 1327 (citing Digital Control 437 F.3d at 1313). “An abuse of discretion occurs ‘when [the district court’s] decision is based on clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary, or fanciful.’ ” Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352, 1357 (Fed.Cir.2008) (quoting Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed.Cir.1998) (en banc)).

We review a finding that a case is exceptional within the meaning of 35 U.S.C. § 285 for clear error. Nilssen, 528 F.3d at 1357. “Once a case is determined to be exceptional, we review a district court’s decision to award attorney fees under an abuse of discretion standard.” Id. (citing Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1328 (Fed.Cir.2003)).

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Taltech Ltd. v. Esquel Enterprises Ltd.
604 F.3d 1324 (Federal Circuit, 2010)

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604 F.3d 1324, 95 U.S.P.Q. 2d (BNA) 1257, 2010 U.S. App. LEXIS 9666, 2010 WL 1889168, Counsel Stack Legal Research, https://law.counselstack.com/opinion/taltech-ltd-v-esquel-enterprises-ltd-cafc-2010.