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Regarding “Patent Trolling”, Plaintiff Ordered to Pay Attorney’s Fees after First Application of New Standard for Awarding Attorney’s Fees in Patent Cases

In the case of Lumen View Tech. LLC v. Findthebest.com, Inc. , the Southern District of New York has become the first court to hand down an opinion and order following the Supreme Court decision of Octane Fitness, LLC v. Icon Health & Fitness, Inc. In Octane Fitness, the Supreme Court made it easier for defendants in patent infringement proceedings to collect attorney’s fees if the case is deemed baseless and/or was brought in bad faith. In Lumen View Tech. LLC v. Findthebest.com, Inc., the defendant (Find the Best) operated a search engine. The plaintiff (Lumen) issued a letter to the defendant threatening legal repercussions if a “one time licensing fee” was not paid for violating patent 8,069,073 (“ hereafter the ′073 patent”).

Interestingly, the ‘073 patent deals with a computer implemented matchmaking method between two or more parties. Prior to the litigation, Find the Best informed Lumen that they were not in violation of the ‘073 patent as their search engine only requires preference data from a single user and not between multiple parties, as the patented process requires. After several communications between the parties (including an accusation by Lumen’s attorney that Find the Best had committed a hate crime by using the term “patent troll”), litigation proceeded with Lumen claiming infringement of their ‘073 patent.

The court eventually ruled that the ‘073 patent was invalid for claiming an abstract idea. It further found that the case was exceptional under the totality of the circumstances test articulated in Octane Fitness, stating “[n]o reasonable litigant could have expected success on the merits in Lumen’s patent infringement lawsuit against FTB because the ‘073 Patent claimed a bilateral matchmaking process requiring multiple parties to input preference information, while FTB’s ‘AssistMe’ feature utilizes the preference data of only one party.” The court went on to state that under the motivation prong of the test “Lumen’s motivation in this litigation was to extract a nuisance settlement from FTB on the theory that FTB would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation.” Finally, the court found that under the deterrence prong of the test “Lumen’s motivation in this litigation was to extract a nuisance settlement from FTB on the theory that FTB would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation.” Using this reasoning, the court awarded fees and nontaxable expenses.

In related news, the Innovation Act (a bill providing changes to 35 U.S.C. with the goal of dissuading “patent trolls”) has stalled in congress. Part of this act was designed to make recovering attorney’s fees by a prevailing party easier than it is today by awarding fees “unless the court finds that the position and conduct of the nonprevailing party or parties were reasonably justified in law and fact or that special circumstances make an award unjust.” It is expected that the Innovation Act will return to the floor in a year’s time. In the meantime, Octane Fitness provides the applicable standard for recovering attorney’s fees in patent infringement cases. In light of these changes, patent owners must be more certain of their position prior to initiating litigation against an alleged infringer. Conversely, those accused of patent infringement that is believed to be baseless have one more avenue to pursue for recovery of attorney’s fees.