Malibu Boats, LLC v. Skier's Choice, Inc.
| Decision Date | 09 November 2021 |
| Docket Number | 3:18-015,3:19-cv-225 |
| Parties | MALIBU BOATS, LLC, Plaintiff, v. SKIER'S CHOICE, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Tennessee |
ORDER DENYING DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND COSTS
Before the Court is Defendant Skier's Choice, Inc.'s (“Skier's Choice”) Motion for Attorneys' Fees and Costs (ECF No. 260) and its Memorandum in Support of the Motion (ECF No. 261), filed on June 4, 2021. Plaintiff Malibu Boats, LLC (“Malibu”) filed a Response in Opposition on July 16, 2021. (ECF No. 264.) Defendant filed a Reply on August 6, 2021. (ECF No. 265.) Plaintiff filed a Motion for Leave to File Sur-Reply on September 10, 2021. (ECF No. 266.) The Court granted the Motion for Leave to File on September 13, 2021.[1] (ECF No. 267.) For the reasons discussed below, Defendant's Motion for Attorneys' Fees and Costs is DENIED.
This was a patent infringement case in which Plaintiff asserted Defendant infringed U.S. Patent Nos. 9, 260, 161 (the “'161 Patent”); 8, 578, 876 (the “'873 Patent”); the 9, 199, 965 (the “'695 Patent”); and 10, 322, 777 (the “'777 Patent”). (ECF No. 176 at PageID 6281.)
The early procedural background of this case was described in the Court's Order Granting in Part and Denying in Part Defendant's Motions for Summary Judgment and is adopted here:
On January 12, 2018, Malibu Boats filed the Complaint as to the '161, '873, and '695 Patents. (ECF No. 1.) On March, 9, 2018, Defendant filed its Answer and Counterclaims. (ECF No. 19.) Skier's Choice asserts a counterclaim for declaratory judgment, seeking a judgment of “non-infringement, invalidity, and unenforceability” for the Asserted Patents. (Id. at PagelD 214.) On April 3, 2018, Malibu Boats filed its Answer to Skier's Choice's Counterclaim. (ECF No. 25.) On June 19, 2019, Malibu Boats filed the second case, asserting infringement of the newly issued '777 Patent. (Case No. 3:19-cv-225, ECF No. 33.) The Court granted Skier's Choice's Motion to Consolidate the Cases on November 27, 2019. (ECF No. 73.)
(Id. at PageID 6285.) After the Court's Summary Judgment Order, the case proceeded to trial on May 10, 2021. (ECF No. 223.) For the remaining claims, the jury rendered its verdict on May 21, 2021 (ECF No. 225), and the Court entered its Judgment based on the verdict on May 24, 2021 (ECF No. 259). The Judgment ordered that Claims 1 and 34 of the '161 Patent were invalid and not infringed; Claim 1 of the '777 Patent was invalid and not infringed; and Claim 14 of the '777 Patent was invalid. (Id.)
Defendant then filed this Motion for Attorneys' Fees and Costs on June 4, 2021. (ECF No. 260.) Plaintiff filed a Response in Opposition on July 16, 2021. (ECF No. 264.) Defendant filed a Reply on August 6, 2021. (ECF No. 265.) Plaintiff filed a Motion for Leave to File Sur-Reply on September 10, 2021. (ECF No. 266.) The Court granted the Motion for Leave to File on September 13, 2021. (ECF No. 267.) As stated above, the Court considered the proposed Sur-Reply that was filed with that Motion. (ECF No. 266-1.)
Section 285 of 35 U.S.C. provides, “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 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.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). “This determination is made on a case-by-case exercise of the district court's discretion and examination of the totality of the circumstances.” Id. at 554. “[A] case can be found exceptional when a party prolongs litigation in bad faith.” Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1328 (Fed. Cir. 2013). “[F]ee awards are not to be used as a ‘penalty for failure to win a patent infringement suit.'” Stone Basket Innovations, LLC v. Cook Med. LLC, 892 F.3d 1175, 1184 (Fed. Cir. 2018) (quoting Octane, 572 U.S. at 548).
The Court must determine whether this case is “exceptional” such that Defendant is entitled to fees under 35 U.S.C. § 285. Defendant contends that “[a]lthough Malibu's positions in this case involved factual disputes ultimately necessitating trial, the lack of credible evidence to support Malibu's unsubstantiated claims renders this case exceptional.”[2] (ECF No. 261 at PageID 11485.) Specifically, Skier's Choice identifies the following actions by Malibu that it asserts make this case exceptional: (1) Malibu's position that the secondary tabs of Flow 3.0 were “upright”; (2) Malibu's position that the Skier's Choice tabs divert water; (3) Malibu's anticipation and obviousness positions with respect to Gen 1; and (4) Malibu's positions on enablement and written description. (Id. at PagelD 11485-97.) Defendant also contends that Malibu made contradictory claims before the Patent Office and this Court. (Id. at PagelD 11497-502.) In response, Plaintiff contends that its positions were reasonable and that Skier's Choice is “relitigat[ing] arguments that it lost during claim construction, summary judgment, and Rule 50(a) motions.” (ECF No. 264 at PageID 11617.) (emphasis omitted.) Malibu asserts that its position that the Flow 3.0 surf system infringed the '873 Patent had support in the record and that its claims of infringement of the '777 and '161 Patents were reasonable because there was sufficient factual basis to overcome a summary judgment motion. (Id. at PagelD 1161824.) Malibu also asserts that its positions regarding the validity of its patents were reasonable and in good faith, as it was entitled to a presumption of validity, and the issue of the validity of the patents at trial had overcome summary judgment and judgment as a matter of law. (Id. at PageID 11625-27.) Additionally, Malibu contends that Skier's Choice's argument regarding Malibu's position as to validity and Malibu's representations to the PTO and this Court are reiterations of Skier's Choice's claim construction arguments. (Id. at PageID 11627-34.)
In its Reply, Skier's Choice further contends that Malibu's claim of proceeding in good faith is contradicted by the record because “Malibu's motivation here was to claim patent rights to something Malibu did not invent in order to extract a license from Skier's Choice - not to stop Skier's Choice from making and selling a patented invention.” (ECF No. 265 at PageID 11869.) Skier's Choice also clarifies that its basis for seeking attorney fees is that Malibu's positions at trial were unreasonable, not that Malibu lost the trial. (Id. at PageID 11875.) Skier's Choice additionally reasserts that Malibu's prosecution of its patents and representations to the Court further make this case exceptional. (Id. at PagelD 11886-87.) In its Sur-Reply, Malibu contends that it is improper for Skier's Choice to speculate on Malibu's intentions for the case as evidence that this case is exceptional and merits attorney fees. (ECF No. 266-1 at PageID 11991.) Malibu also contends that the cases Skier's Choice cites that support awards of attorney fees when the case went to trial are easily distinguishable from this case's facts. (Id. at PagelD 11996-97.)
Skier's Choice's assertion that Malibu's trial positions were unreasonable enough to merit an award of attorney fees lacks support in the record. Skier's Choice first asserts that Malibu's position that the Flow 3.0 infringed the '873 Patent was “baseless” because the secondary tabs could not be “upright” and thus this infringement claim was an unreasonable position to take at trial. (ECF No. 261 at PageID 11485.) On summary judgment, however, the Court had already denied Skier's Choice's motion for non-infringement based on this same argument by Skier's Choice, holding that “Skier's Choice's arguments, while veiled as a noninfringement theory, in fact require rewriting the claim term to define the first and second positions.” (ECF No. 176 at PageID 6292-93.) After the Court denied summary judgment on this argument, it was not unreasonable for Malibu to proceed with the argument at trial, even if Malibu did not ultimately prevail.
Skier's Choice also contends that Malibu's position that Skier's Choice's boats' tabs diverted water was unreasonable because Malibu's expert performed insufficient testing to establish such a claim. (ECF No. 261 at PageID 11487-91.) However, in the Court's Order Granting in Part Defendant's Motion for Judgment as a Matter of Law, the Court held that there was “a sufficient factual basis for a reasonable juror to find that claims 1 and 34 of the '161 Patent and claims 1 and 4 of the ‘'777 Patent are infringed by the accused products.” (ECF No. 233 at PageID 7442.) This sufficient factual basis necessarily included support that Skier's Choice's boats' tabs divert water, and as a result, it was similarly not unreasonable for Malibu to proceed with this infringement theory at trial, even if it were ultimately unsuccessful.
Next, Skier's Choice asserts that “Malibu's position[s] as to anticipation and obviousness were so flawed that they cause this case to be ‘exceptional.'” (ECF No. 261 at PageID 11491.) In support, Skier's Choice points out that the jury “held the asserted claims invalid as anticipated or obvious” even though at trial:
Malibu nevertheless clung to its baseless infringement assertions and disputed Gen 1 as being anticipatory or a non-infringing alternative by relying on the flawed premises that Gen 1 boats could not shift ballast while a boat was moving, that Gen 1 is patented, and that Gen 1...
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