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SFP Works, LLC v. Buffalo Armory, LLC

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

September 13, 2017

SFP WORKS, LLC, Plaintiff,


          DENISE PAGE HOOD United States District Judge

         This matter comes before the Court on Magistrate Judge David R. Grand's Report and Recommendation (Doc. #108) regarding Defendant's Motion for Award of Attorneys' Fees. (Doc. #86). Defendant filed objections in response to Magistrate Judge Grand's Report, and Plaintiff SFP filed a brief in opposition to Defendant's objections to the Report. Even though neither the Report and Recommendation nor the Local Rules provide for such a filing, Defendant filed a reply to Plaintiffs response, which the Court has reviewed and considered.

         I. Background

         Plaintiff brought this action alleging that Defendant infringed Plaintiffs patent, U.S. Patent No. 8, 480, 824 (the "824 Patent"), by using Plaintiffs patented steel treatment technology after Defendant's license granting the right to use that process expired. The case was assigned to U.S. District Judge Gerald E. Rosen. On October 31, 2016, Judge Rosen entered an Opinion and Order granting Defendant's motion for summary judgment on Plaintiffs patent infringement claim (the "Opinion"). (Doc. #83). In the Opinion, Judge Rosen found that Defendant's "Star Process" did not infringe on the 824 patent because, in the Star Process, steel is heated for 5.6 seconds, not "rapidly heat[ed], within 5 seconds, " as set forth in the relevant claims of the 824 Patent. (Id. at 6-18). Judge Rosen also held that Plaintiffs infringement claim under the "doctrine of equivalents" failed because it was barred by the principle of prosecution history estoppel. (Id. at 18-26).

         Defendant then filed a Motion for Award of Attorneys' Fees as the prevailing party under 35 U.S.C. § 285. (Doc. #86). Defendant claims that Plaintiffs patent infringement claims "were incredibly weak and contradicted by the prosecution history, the specification of the 824 patent, and Plaintiffs discovery responses." Id. Defendant asserts that the bases for Plaintiffs infringement claims were "objectively unreasonable, " making this case "exceptional" within the meaning of Section 285, such that an award of more than $587, 000 in attorneys' fees and expenses is justified. On February 1, 2017, because of Judge Rosen's retirement, this case was randomly reassigned to the undersigned.

         II. Legal Standard

         Section 285 provides that a court "in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. Recently, the Supreme Court set forth the standard for determining whether a case is "exceptional" under §285:

... an "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). In Octane Fitness, despite articulating a less rigid standard than previously had existed, the Supreme Court emphasized that a fee award under § 285 should still be the exception, not the rule. Id. at 1757. Factors to be considered in determining whether a case is "exceptional" include, but are not limited to, "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. at 1756, n. 6 (internal quotations omitted).

         In its Motion for Award of Attorneys' Fees, Defendant primarily argues that attorneys' fees are appropriate in this case under the "objective unreasonableness" prong of the "exceptional circumstances" analysis.

         III. Magistrate Judge Grand's Report and Recommendation

         Magistrate Judge Grand recommended that the Court deny Defendant's Motion for Award of Attorneys' Fees under Section 285. Magistrate Judge Grand concluded that Defendant failed to show that Plaintiff: (1) initiated the lawsuit without an adequate pre-filing investigation or for vexatious purposes, or (2) engaged in litigation misconduct. (Doc. #108 at 6). Magistrate Judge Grand stated that the Opinion does not reflect that Judge Rosen believed Plaintiffs arguments were frivolous, exceptionally weak, or advanced in bad faith. Magistrate Judge Grand stated that: (a) Judge Rosen noted that Plaintiff presented evidence of some "actual infringement;" and (b) at oral argument, Defendant's counsel acknowledged that Defendant's process was capable of functioning in a manner that would infringe on Plaintiffs patent. (Doc. #108 at 6 (citing Doc. #83 at 15-18)). Magistrate Judge Grand found that the arguments presented by Plaintiff are not objectively unreasonable, this case is more typical than exceptional, and an award of attorneys' fees is not warranted. Id. at 5-6.

         IV. Analysis

         A. "Drawing the Steel" ...

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