WASHINGTON (Legal Newsline) -- A federal appeals court ruling late last month could make it easier for wrongfully accused patent infringement defendants to recover their attorneys' fees.
A three-judge panel of the U.S. Court of Appeals for the Federal Circuit, in its Dec. 26 decision, instructed the U.S. District Court for the Northern District of California to reconsider its ruling denying Sidense Corp. an award of attorneys' fees it incurred in successfully defending a patent infringement lawsuit filed against it by Kilopass Technology Inc.
The Federal Circuit handles all U.S. patent appeals.
"In sum, we vacate the district court's decision denying the motion for attorneys' fees and remand for consideration whether Kilopass' doctrine of equivalents theory was objectively baseless, and then, whether the totality of the circumstances demonstrates that Kilopass acted with subjective bad faith," Judge Kathleen M. O'Malley wrote in the panel's 29-page decision.
"If the district court determines that the case is exceptional after applying the correct legal standard, it should then determine in its discretion, whether to award attorneys' fees under U.S.C. § 285."
Kilopass and Sidense are competitors in the embedded non-volatile memory, or NVM, market.
Memory cells use transistors to store information. NVM memory consists of memory devices that retain their information, or state, when power is removed.
In 2010, Kilopass sued Sidense in the California federal court, alleging both literal infringement and infringement under the doctrine of equivalents.
"This latest Federal Circuit decision once again confirms what we have said since the day Kilopass filed this meritless lawsuit against us in May of 2010," Sidense President and CEO Xerxes Wania said in a statement last week. "Competition should happen in the marketplace, not the courts.
"As a result of the lawsuit, in order to defend ourselves and our customers, Sidense was forced to incur substantial legal fees and expenses, which we expect to recoup from Kilopass.
"This is an excellent result for Sidense and a clear warning to patent holders that abusive patent litigation will not be tolerated by the courts."
Roger Cook, litigation counsel for Sidense and partner at Atlanta-based Kilpatrick, Townsend & Stockton, noted that attorney fee awards to compensate prevailing patent infringement defendants for the cost of defending such "baseless" patent infringement claims have been rare -- mostly out of concern that such awards also might inhibit "meritorious" patent enforcement.
"The Federal Circuit's decision strikes a well-reasoned middle ground, allowing district courts to punish abusive patent infringement claimants without chilling legitimate patent infringement claims," Cook said.
Although it is "obviously disappointed" with the Federal Circuit's decision to send the case back to the Northern District of California, Kilopass said in a company statement that it is "confident" that the federal court will, once again, agree that it only brought the lawsuit after a "careful examination of the merits" and had an "objectively reasonable" basis for doing so.
"We look forward to putting this dispute behind us and focusing on continuing to serve our customers' needs," the company said.
From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.
Federal Circuit ruling could mean more losers in patent infringement lawsuits will have to pay
