United States District Court, E.D. Michigan, Southern Division
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)
A. GOLDSMITH, UNITED STATES DISTRICT JUDGE
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.
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.
Overview of the Asserted Patents
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.”
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.
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.
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
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).
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
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).
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).
Reexamination and Inter Partes Review
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.
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.
STANDARD OF DECISION
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.'”
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).
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 §
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 “that an appellate court should
review all aspects of a district ...