Post-Alice Plaintiffs Beware: The Northern District of California Awards Attorneys’ Fees in Exceptional Case

Abstract ideas are not patentable pursuant to 35 U.S.C. § 101. And, in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) the Supreme Court set forth a framework to determine whether a patent is directed to an unpatentable abstract idea. Following Alice, defendants frequently move to dismiss patent infringement actions based on Section 101. That is exactly what recently happened in Cellspin Soft, Inc., v. Fitbit, Inc. in the Northern District of California.

In that case, the 14 defendants filed a joint motion to dismiss pursuant to Section 101, arguing that the patents were directed to the “abstract concept” of acquiring, transferring, and publishing data and that the claims recited only “generic computer technology” to carry out the abstract idea, and thus lacked a requisite “transformative step” which would render the abstract idea patentable. The District Court agreed and entered judgment in the defendants’ favor.

Following their successful motion to dismiss, the defendants moved, again successfully, for attorneys’ fees under 35 U.S.C. § 285. In patent infringement actions, courts have discretion, pursuant to Section 285, to award attorneys’ fees in an “exceptional case.” And, the district court found that the Cellspin case was just that.

In considering the defendants’ motion for fees, the district court acknowledged that the plaintiff’s claims lacked “substantive strength” in the wake of “significant post-Alice precedent.” The district court also relied on the plaintiff’s aggressiveness in litigating its “exceptionally meritless claims.” For example, the plaintiff did not consent to stay discovery pending resolution of the Section 101 motion to dismiss and filed an amended complaint three days before oral argument on the motion to dismiss.

With respect to the plaintiff’s decision to litigate, the district court noted that while patents may be presumed valid, “they are not presumed eligible under Section 101.” The district court also criticized the plaintiff for attempting to “hide behind its own refusal to analyze its patents critically”; suggested that the plaintiff would have been wise to litigate a “test case” rather than aggressively pursue 14 simultaneous lawsuits; and noted that the plaintiff “could have waited to issue overarching discovery requests.”

All of those factors led the district court to find the case exceptional under § 285 and award the defendants attorneys’ fees.

This decision sets forth a cautionary tale for patent infringement plaintiffs post-Alice and it remains to be seen if other district courts will follow suit. Gibbons P.C. will continue to monitor and report developments.