OneSubsea IP UK Ltd. v. FMC Tech., Inc., No. 22-1099 (Fed. Cir. May 23, 2023) | Sheppard Mullin Richter & Hampton LLP
Topic
This case addresses the proper standard for an appeal of a discretionary decision by a successor judge as well as requests for attorneys’ fees under 35 U.S.C. § 285 and certain circumstances that do not make a case exceptional.
Background
In 2016, OneSubsea brought an infringement suit against FMC alleging infringement of ten patents directed generally to “subsea recovery of production fluids from an oil or gas well.” The crux of OneSubsea’s infringement theory came down to “whether fluid flows through FMC’s accused device as required by the OSS patents.”
During claim construction, the District Court ruled that the term “divert,” as used in the asserted patents, means “the direction of the fluid’s flow is forced to change from its current flowpath to a different flowpath.” FMC used the District Court’s claim construction as the basis for a motion for summary judgment of noninfringement, which OneSubsea opposed.
Rather than immediately deciding the summary judgment motion, the District Court stayed the case pending the outcome of parallel inter partes reviews (“IPRs”) at the Patent Trial and Appeal Board challenging the validity of the asserted patents. In reaching this decision, the District Court noted that “it is unclear from the current record whether FMC’s dispositive motion would be granted.”
The IPRs were decided three years later, leaving infringement litigation alive, at which point the District Court lifted the stay and reinstated the case. Ultimately, the parties filed renewed summary judgment motions, with OneSubsea electing to use a different expert than they used in their original opposition to FMC’s summary judgment motion. In response, and at the sua sponte direction of the District Court, FMC moved to exclude the new expert’s testimony under Federal Rule of Evidence 702 and Daubert for failure to take the District Court’s Markman order into account when performing the infringement analysis, which the District Court granted. The District Court then granted FMC’s motion for summary judgment, noting that without expert testimony to support their infringement arguments, OneSubsea “has failed to present admissible evidence of more than a single flowpath through . . . [FMC’s accused device].
Following the District Court’s grant of summary judgment in favor of FMC, FMC filed a motion for attorneys’ fees and non-taxable costs under 35 U.S.C. § 285. FMC argued that it was entitled to an exceptional case finding justifying attorneys’ fees under § 285 because of OneSubsea’s “substantively weak” and “objectively baseless” infringement theories, and a host of litigation misconduct theories, including presenting an expert witness who disregarded the District Court’s claim construction order, misrepresenting to FMC which of the infringement claims had been dropped throughout the litigation, and unreasonably prolonging the case. With briefing completed for the motion for attorneys’ fees, but prior to a decision on the motion, the presiding judge retired, and the case was transferred to Judge Bennett. Judge Bennett denied FMC’s motion for attorneys’ fees, which FMC appealed.
Issues
Abuse of Discretion and Successor Judges: Is the abuse of discretion standard proper for an appeal of a discretionary decision by a successor judge?
Exceptional Case Findings Under 35 U.S.C. § 285: When a District Court allows a case to proceed after summary judgment, can a party obtain an exceptional case finding by complaining that the opposing party’s legal theories are “objectively baseless”?
Holdings
Abuse of Discretion and Successor Judges: Yes – the abuse of discretion standard is proper for appeals to discretionary decisions by a successor judge.
Exceptional Case Findings Under 35 U.S.C. § 285: No – declining to end a case on summary judgment effectively confirms that the infringement theories advanced by the patentee (at least those at issue in the summary judgment motion) are not “objectively baseless.”
Reasoning
Abuse of Discretion and Successor Judges: FMC argued that under the Supreme Court’s ruling in Highmark, the de novo standard should be used in this case because the ultimate decision on the § 285 motion was made by Judge Bennett, who had no exposure to the multi-year proceedings prior to the § 285 motion. The Federal Circuit rejected FMC’s arguments, citing extensive case law “in which appellate courts have consistently reviewed successor judges’ decisions on discretionary issues for abuse of discretion.” While carving out a potential to apply the higher de novo standard in situations in which credibility determinations were deemed material to the outcome of the case, the Federal Circuit noted that FMC did not adduce any evidence as to why the Federal Circuit would be better positioned to decide the motion than Judge Bennett.
Exceptional Case Findings Under 35 U.S.C. § 285: FMC argued that OneSubsea’s infringement theories were objectively baseless after the District Court’s claim construction ruling on the term “divert.” The Federal Circuit promptly rejected FMC’s arguments, noting that the District Court did not grant the original motion for summary judgment, instead commenting that it was “unclear from the current record whether FMC’s dispositive motion would be granted,” and even noting in 2019 that OneSubsea originally “had an expert to raise a fact issue.” As the Federal Circuit explained, “[w]hen a district court, fully aware of the competing contentions of the parties, declines to end the case on summary judgement and allows a plaintiff’s case to proceed, the district court may have effectively determined that the position of the party opposing summary judgment is not objectively baseless, making it nearly impossible for the plaintiff’s case (on the issue that was the subject of the summary judgment motion) to ‘stand out’ as lacking substance at that time.”
