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Joao Control & Monitoring Systems, LLC v. Chrysler Group LLC

United States District Court, E.D. Michigan, Southern Division

August 16, 2017

JOAO CONTROL & MONITORING SYSTEMS, LLC, Plaintiff,
v.
CHRYSLER GROUP LLC, Defendant.

          OPINION & ORDER (1) DENYING DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND NONSTATUTORY COSTS (DKTS. 191, 193); AND (2) DENYING PLAINTIFF'S MOTION FOR LEAVE TO FILE A SUR-REPLY (DKT. 199)

          MARK A. GOLDSMITH, UNITED STATES DISTRICT JUDGE

         In this patent infringement case, Plaintiff Joao Control & Monitoring Systems, LLC (“JCMS”) alleges that Defendant FCA U.S. LLC (formerly Chrysler Group LLC) (“FCA”) has infringed several of its patents by manufacturing, selling, and using its UConnect Access product. On June 10, 2016, the Court granted FCA's motion for summary judgment as to invalidity, holding that the asserted claims in the patents were invalid as anticipated and/or obvious based on prior art pursuant to 35 U.S.C. §§ 102, 103. See Joao Control & Monitoring Sys., LLC v. Chrysler Grp. LLC, 193 F.Supp.3d 797 (E.D. Mich. 2016).

         This matter is before the Court are FCA's motion for attorneys' fees and non-statutory costs (Dkts. 191 (redacted), 193 (under seal)), and JCMS's motion for leave to file a sur-reply (Dkt. 199). Because oral argument will not aid the decisional process, the motion will be decided based on the parties' briefing. See Fed.R.Civ.P. 78(b); E.D. Mich. LR 7.1(f)(2). For the reasons stated below, the Court denies both motions.

         I. BACKGROUND

         A. Overview of the Asserted Patents

         JCMS alleged that FCA infringed four patents by making, selling, and using a system named UConnect Access: (i) U.S. Patent No. 5, 917, 405 (‘405 Patent), entitled “Control Apparatus and Methods for Vehicles”; (ii) U.S. Patent 6, 549, 130 (‘130 Patent), entitled “Control Apparatus and Method for Vehicles and/or Premises”; (iii) U.S. Patent No. 6, 542, 076 (‘076 Patent), entitled “Control, Monitoring and/or Security Apparatus and Method”; and (iii) U.S. Patent No. 7, 397, 363 (‘363 Patent), entitled “Control and/or Monitoring Apparatus and Method.”

         The four patents are all part of the same family of patents and are thus related. The written description sections of the asserted patents are largely the same.

         The asserted patents relate inter alia to a security system to prevent a thief from stealing a vehicle or, alternatively, to allow the owner of a vehicle to recover a stolen vehicle. In one example embodiment of the invention, the asserted patents teach a system that allows a vehicle owner, after a thief steals his car, to safely turn off the vehicle or lock out the thief from the vehicle after his getaway. When his car is stolen, the vehicle's owner would use his cellular telephone or personal computer to access an online website (or a central security office), where he could then control various vehicle systems. The website or central security office would communicate with the vehicle's onboard computer, thereby allowing the vehicle's owner to control systems of the vehicle.

         More specifically, the patented system allows the vehicle's owner to remotely initiate certain actions, including turning off the fuel supply system, the exhaust system, or the ignition system; locking the vehicle hood; turning on an interior or exterior siren, alarm, or horn; activating an intercom system for providing communications between vehicle owner and the vehicle occupants; and/or activating a video and/or audio recording device within the vehicle. The patented system would only allow the vehicle owner to turn off these vehicle systems when it is safe to do so, such as when the thief turns off the engine or the vehicle is stopped. The asserted patents also teach that the patented system can have a vehicle position and locating device, which can be utilized to allow the vehicle's owner to determine the position and/or location of the vehicle after it is stolen.

         B. Procedural Background

         On September 16, 2013, this case was transferred to this Court from the U.S. District Court for the Southern District of New York. After substantial discovery, the Court conducted a claim construction hearing on March 24, 2015. The Court then issued a formal claim construction opinion on August 26, 2015. Joao Control & Monitoring Sys., LLC v. Chrysler Grp. LLC, No. 13-cv-13957, 2015 WL 5063260 (E.D. Mich. Aug. 26, 2015).

         After the Court issued its claim construction opinion, the parties conducted expert witness discovery. The parties then filed cross-motions for summary judgment. The Court heard oral argument on April 15, 2016, and allowed supplemental briefing after oral argument (Dkts. 127, 133). On June 10, 2016, the Court issued a written opinion and order granting FCA's motion for summary judgment as to the invalidity of the nineteen asserted claims and dismissed the case with prejudice. Joao Control, 193 F.Supp.3d at 821. Based on a prior published European patent application 92400712.3 to inventor Frossard, entitled “System for Controlled Shutdown and for Location of a moveable or mobile equipment” (Frossard”) (Dkt. 59-33), the Court concluded that all nineteen asserted claims were anticipated and/or obvious.

         JCMS filed a motion for reconsideration as to the validity of one of the asserted independent claims and related dependent claims (Dkt. 183). Pursuant to the Court's standard practice, the Court allowed FCA to submit a response brief (Dkt. 187), and allowed JCMS to submit a final reply brief (Dkt. 188). On October 7, 2016, the Court issued a written opinion and order denying JCMS's motion for reconsideration. Joao Control & Monitoring Sys., LLC v. Chrysler Grp. LLC, No. 13-cv-13957, 2016 WL 5859084 (E.D. Mich. Oct. 7, 2016). JCMS filed a notice of appeal (Dkt. 185), but the Federal Circuit later dismissed the appeal based on an agreement between the parties. 1/27/2017 Order (Dkt. 202).

         Currently pending before the Court are FCA's motion for attorneys' fees (Dkts. 191, 193), which has been fully briefed, and JCMS's motion for leave to file a sur-reply (Dkt. 199), which FCA opposes (Dkts. 200, 201). JCMS has also submitted a notice of supplemental authority in support of its opposition to the FCA's motion for attorneys' fees (Dkt. 204), to which FCA filed a response (Dkt. 205).

         C. Reexamination and Inter Partes Review Proceedings

         In June 2014, Volkswagen Group of America, Inc. filed ex parte reexamination proceedings at the United States Patent and Trademark Office (“USPTO”), challenging the validity of one claim from each of the asserted patents in this case. Joao Control, 193 F.Supp.3d at 802. The USPTO only upheld the validity of Claim 21 of the ‘363 Patent. Id. The USPTO Patent Examiner found the other claims challenged in the reexamination proceedings (Claim 1 of the ‘405, Claim 48 of the '130 Patent, and Claim 3 of the ‘076 Patent) to be invalid. Id. At the time of the Court's summary judgment decision, JCMS had appealed the adverse decisions of the USPTO Patent Examiner. Id. Volkswagen did not rely upon the primary prior art reference at issue in the motion for summary judgment, specifically the published European patent application 92400712.3 to inventor Didier Frossard, entitled “System for controlled shutdown and for location of a movable or mobile equipment.” Id. at 802-803.

         In response to JCMS asserting its patents, accused infringers filed numerous inter partes review proceedings at the USPTO challenging the validity of various claims in the ‘405, ‘130, ‘076, and ‘363 Patents. Id. at 803. Of particular note to this case, in the automotive field, Nissan North America, Inc. filed petitions to institute inter partes review proceedings to invalidate each of the asserted ‘405, ‘130, ‘076, and ‘363 Patents. Id. In January 2016, the USPTO decided to institute formal inter partes review proceedings against each of the ‘405, ‘130, 076, and ‘363 Patents, because Nissan had demonstrated that there was “a reasonable likelihood it would prevail in establishing the unpatentability” of the challenged claims in the patents. Id. (quoting 35 U.S.C. § 314(a)). In making its preliminary decision, the USPTO relied heavily on Frossard. Id. At the time the Court issued its summary judgment decision, a trial had not yet taken place in the Nissan inter partes review proceedings. Id.

         II. STANDARD OF DECISION

         The Patent Act of 1952 provides: “The court in exceptional cases may award reasonable attorneys to the prevailing party.” 35 U.S.C. § 285. In 2014, the Supreme Court changed the law on what constitutes an exceptional case in order to award attorneys' fees:

[A]n “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). The Supreme Court noted that, when Congress used the word “exceptional” in § 285, “‘exceptional' meant ‘uncommon, ' ‘rare, ' or ‘not ordinary.'” Id.

         In Octane Fitness, the Supreme Court also changed the burden of proof for establishing whether a case is exceptional. Before Octane Fitness, the party seeking attorneys' fees had to prove that the case was “exceptional” by clear and convincing evidence. Id. at 1754, 1758. After Octane Fitness, the party seeking an award of attorneys' fees must show that the case is exceptional by a preponderance of the evidence, “a change in the law lowering considerably the standard for awarding fees [under § 285]. . . .” Bayer Cropscience AG v. Dow Agrosciences LLC, 851 F.3d 1302, 1305 (Fed. Cir. 2017).

         Under the Supreme Court's new standard for “exceptional, ” the district court, considering the totality of the circumstances, must decide whether the case “stands out” from other cases, for example, with respect to its lack of substantive strength on the merits or the unreasonable manner in which the case was litigated. “The Supreme Court rejected . . . a rigid approach in Octane Fitness, holding that whether a party's merits position was objectively reasonable is not dispositive under § 285. . . . Instead, the Supreme Court adopted a holistic and equitable approach in which a district court may base its discretionary decision on other factors, including the litigant's unreasonableness in litigating the case, subjective bad faith, frivolousness, motivation, and ‘the need in particular circumstances to advance considerations of compensation and deterrence.” Bayer Cropscience, 851 F.3d at 1306. This liberalized earlier interpretations of § 285.[1]

         In Highmark Inc. v. Allcare Health Management System, Inc., 134 S.Ct. 1744 (2014), a case decided on the same day as Octane Fitness, the Supreme Court emphasized that the determination of whether to award attorneys' fees is within the sound discretion of the district court. The Supreme Court held ‚Äúthat an appellate court should review all aspects of a district ...


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