The US Court of Appeals for the Federal Circuit affirmed a district court's award of attorneys' fees and expenses to deter serial patent filers' future "abusive litigation." Blackbird Tech LLC, DBA Blackbird Technologies v. Health in Motion LLC, DBA Inspire Fitness, Leisure Fitness Equipment LLC, Case No. 18-2393 (Fed. Cir. Dec. 16, 2019) (Wallach, J.).
Blackbird sued Health in Motion and Leisure Fitness (HIM) for infringing a patent directed to exercise equipment that includes a housing with a structural surface defining an arcuate path and multiple pairs of pulleys positioned along the arcuate path. Shortly after filing the case, Blackbird offered to settle for $80,000. HIM rejected the offer, stating that they believed that Blackbird would be ordered to pay their attorneys' fees, and countered with a settlement offer that included Blackbird paying HIM $120,000. Over the course of the next year, Blackbird continued to negotiate until it eventually offered HIM a license to the patent for zero dollars. HIM declined.
HIM filed a motion for summary judgment shortly before discovery was scheduled to end. Blackbird opposed. Without notifying HIM in advance, Blackbird filed a notice of voluntary dismissal with prejudice, executed a covenant not to sue, and filed a motion to dismiss for lack of subject matter jurisdiction. Blackbird argued that since it issued a covenant not to sue, there was no case or controversy and the suit had to be dismissed.
The district court dismissed Blackbird's claims, but denied its motion to dismiss. The court authorized HIM to seek recovery of costs, expenses and attorneys' fees. After HIM filed such a request, the district court granted HIM attorneys' fees and expenses for $364 thousand, which was the total amount requested by HIM. The district court found the case was "exceptional" under 35 U.S.C. § 285 because of Blackbird's litigation positions and the unreasonable manner in which Blackbird litigated the case. Blackbird appealed.
On appeal, Blackbird argued that its infringement positions and claim construction were reasonable. The Federal Circuit found Blackbird's arguments unpersuasive, finding that the district court did not abuse its discretion in concluding the case "stands out" with respect to the lack of substantive strength in Blackbird's litigation position and the manner in which Blackbird litigated. Specifically, the Court noted Blackbird's unorthodox settlement offers, delay tactics in discovery, and filings to dismiss the case on the eve of trial were indicative of abusive litigation. The Court also noted that "the exercise of even a modicum of due diligence by Blackbird, as part of a pre-suit investigation, would have revealed the weaknesses in the litigation position."
The Federal Circuit also found that the district court did not abuse its discretion in considering the need to deter future abusive litigation. At the time the district court granted HIM's motion for fees, Blackbird had filed more than 100 patent infringement lawsuits, none of which had been decided on the merits in favor of Blackbird. The Court agreed that granting a fee award was warranted to curb the abusive litigation. Accordingly, the Court affirmed the district court's award.
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