S.D.N.Y Denies Attorneys’ Fees and Costs Despite Summary Judgment Win on Invalidity and Non-Infringement

Authored by Lewis V. Popovski, Abhishek Bapna,and Vivian Cheng 

District Judge P. Kevin Castel denied defendants Acco Brands Corp.’s and Staples, Inc.’s motion for attorneys’ fees and costs under 35 U.S.C. § 285, and granted in part their motion for an order requiring plaintiff to post an appeal bond pursuant to Rule 7 of the Federal Rules of Appellate Procedure. The court had previously granted defendants’ motion for summary judgment of invalidity and non-infringement.

In their motions for fees and costs, defendants advanced four main arguments. First, they argued that the infringement positions plaintiff had taken during the case were “nonsensical” and “[in]coherent.” The court explained, however, that defendants had devoted a single paragraph to this issue in their motion, and failed to “demonstrat[e] why such pejorative labels are appropriate.” Second, defendants claimed plaintiff had conducted an “inadequate” pre-suit investigation. But, the court concluded that its summary judgment decision turned less on plaintiff’s infringement positions than on questions of claim construction. As the court explained, this case was unlike “cases in which a defendant’s noninfringement can be factually proven and a plaintiff’s putative cause of action clearly eliminated before filing suit.” Third, defendants claimed that plaintiff had failed to secure third-party expert testimony in support of his doctrine of equivalents argument. The court noted, however, that defendants had not cited any authority suggesting that expert testimony is a requirement, and further, that plaintiff had properly relied on the testimony of Acco’s director of product innovation. Finally, defendants argued that plaintiff’s conduct in settlement discussions demonstrates that he had filed the action merely to extract an unreasonable settlement. Specifically, plaintiff’s first two settlement offers came before any sales figures were produced, and were accompanied by a statement that the offer will change if litigation begins. The court, however, noted that it was Acco’s in-house counsel that solicited a settlement proposal before any sales figures were produced, and ruled that the statement accompanying the offers did not constitute egregious conduct. Thus, the court denied the motion for fees and costs.

Defendants also requested an appeal bond in an amount sufficient to cover their estimated fees and costs in defending against plaintiff’s appeal. The judge denied the request to include the estimated fees, explaining that the purpose of a Rule 7 bond is to ensure that appellees recover the costs to which they may be entitled if they prevail, and defendants had failed to prove they are entitled to any fees even if they prevail. But, the judge granted defendants’ alternative request for a bond covering just their estimated costs of $2,000.

Case: Chizmar v. Acco Brands Corp. et al., No. 14-CV-2181 (PKC), 2015 BL 229234 (S.D.N.Y. July 17, 2015)

Amended Complaint Too Vague to Meet Even the Generous Pleading Standard of Form 18 Results in Dismissal Without Leave to Amend Again

Authored by Lewis V. Popovski, Abhishek Bapna, and Vivian Cheng

District Judge Valerie Caproni granted defendants CBS Corporation’s and CBS Interactive, Inc.’s motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss plaintiff Edwin Lyda’s Amended Complaint for failure to state a claim without leave to amend. Plaintiff owns U.S. Patent Nos. 7,434,243, entitled “Response Apparatus Method and System,” and 7,730,506, entitled “Method and Apparatus for Response System.” The patents contain method and system claims relating to the transmission of wireless signals from a user input device to a central receiver for use in television audience voting and polling.

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S.D.N.Y. Invalidates Patent Claims for Crowd-Funding as Too Abstract

Authored by Lewis V. Popovski, Abhishek Bapna, and Vivian Cheng

District Judge Katherine Polk Failla granted declaratory judgment plaintiff Kickstarter, Inc.’s motion for summary judgment that U.S. Patent No. 7,885,887 (“the ’887 patent”) is invalid under 35 U.S.C. § 101. The ’887 patent claims “a system and method for raising financing and/or revenue by [an] artist for a project, where the project may be a creative work of the artist.”

The court first reviewed Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), its predecessors, and its progeny, and then applied the two-step framework clarified in Alice to “distinguish[] patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.” Under step 1, the court concluded that the ’887 patent’s broad claims directed to incentive-based crowd-funding embodies an abstract idea that is “incontestably similar to other ‘fundamental economic concepts,’ and to other types of ‘organizing human activity,’ both of which have been found to be abstract ideas by the Supreme Court and the Federal Circuit.” Under step 2, the court found no additional “inventive concept” to “transform” the claimed idea of crowd-funding into patent-eligible subject matter. It explained that “[b]eyond the abstract idea of patronage, the claims merely recite ‘well-understood, routine conventional activities,’ by requiring either conventional computer activities or routine data-gathering steps.” The court found that even the “ordered combination of steps” found in the ’887 patent “describe an abstract idea, devoid of a concrete or tangible application.” Neither the repetition of words like “particular” and “specific,” nor limitations like “operable from a remote site . . . [which] might add some degree of particularity” could save the ’887 patent from a holding of invalidity. The court concluded that [w]hile the concept of fan-funding may have been made a more realistic and fruitful endeavor with the advent of widespread Internet access, ‘cloaking [that] otherwise abstract idea in the guise of a computer-implemented claim’ does not bring it within Section 101.”

Case: Kickstarter, Inc. v. Fan Funded, LLC, No. 11 Civ. 6909 (KPF), 2015 BL 206324 (S.D.N.Y. June 29, 2015)