IP Law Daily, PATENT—D. Del.: Prevailing automakers entitled to attorney fees from Vehicle Operation Technologies, (Jul 6, 2015)

By Mark Engstrom, J.D.

A patent infringement action that Vehicle Operation Technologies brought against Ford Motor Company, Mitsubishi Motors North America, and other automakers was an exceptional case that was subject to an award of attorney fees to the prevailing defendants, the federal district court in Wilmington, Delaware, has ruled (Vehicle Operation Technologies LLC v. Ford Motor Co., July 1, 2015, Andrews, R.). The defendants were directed to submit a proposed fee award.

Background. Vehicle Operation Technologies (VOT) sued Mitsubishi, Ford, BMW, General Motors, Nissan, Porsche, and Honda for the infringement of U.S. Patent No. 7,145,442, which described a “vehicle operation display system.” Because VOT failed to conduct an objectively reasonable pre-suit investigation, the court dismissed the case as a sanction for violating Rule 11(b)(2) of the Federal Rules of Civil Procedure. A procedural defect prevented the court from granting monetary sanctions at that time. All but two of the defendants—Mitsubishi and Ford—stipulated to dismissal.

Analysis. The sole issue was whether the case was exceptional. The defendants argued that the court’s Rule 11 decision made it so. The defendants acknowledged that a Rule 11 sanction did not “require” a court to rule that the case was exceptional. Nevertheless, the defendants noted that courts had “repeatedly held that sanctionable conduct makes a case exceptional.”

VOT argued that it had litigated the case—as a whole—in a reasonable manner. According to VOT, the defendants failed to identify any unreasonable conduct or delay other than the court’s rejection of VOT’s claim construction arguments.

With respect to its claim construction position, VOT argued that: (1) a subsequent ruling by the Patent Trial and Appeal Board (PTAB) was contrary to the court’s construction of the term “display” and (2) the PTAB’s ruling “counsels against” an award of attorney fees. In VOT’s view, the PTAB found a “significantly different and narrower” disclaimer than the court had found. In light of the PTAB’s decision, VOT argued that its claim construction position had not been unreasonable.

The court concluded that the case was exceptional under 35 U.S.C. §285. According to the court, VOT did not act reasonably in everything other than its claim construction position. Further, VOT mischaracterized the court’s ruling on claim construction. The court did not simply reject VOT’s construction; it found that VOT’s construction was “frivolous and objectively unreasonable.”

In addition, VOT mischaracterized the PTAB’s claim construction. The court construed “display” to mean “a dedicated display in which the claimed information is present at all times,” and the PTAB construed that term to mean “a dedicated display, i.e., a display that is not selectable by a driver and does not use a filtering process to determine what is to be presented.”

Those constructions were not “very far apart,” in the court’s view. The information was present on the display “at all times,” the court explained, “because a driver cannot select what to display and the information isn’t filtered.”

VOT argued that the PTAB had rejected the defendants’ argument that the inventor disclaimed coverage of “all non-dedicated displays.” The court noted, however, that the PTAB had found that “the applicant’s statements to the Examiner during prosecution clearly and unambiguously disclaimed non-dedicated displays.”

Finally, VOT unsuccessfully argued that the assessment of fees against a represented party would be inequitable and improper if the Rule 11 violation was premised on a “legal” argument. According to the court, an objectively unreasonable legal argument was an appropriate consideration, even if the party was represented by legal counsel.

The case is Civil Action Nos. 13-539-RGA and 13-712-RGA

Attorneys: Richard D. Kirk (Bayard, P.A.) for Vehicle Operation Technologies LLC. Benjamin J. Schladweiler (Aronstam & Moritz LLP) for Ford Motor Company. Sean T. O’Kelly (O’Kelly Ernst & Bielli) for Mitsubishi North America.

Companies: Ford Motor Co.; Mitsubishi North America

Cases: Patent DelawareNews