On December 17, 2015, Judge Rodney Gilstrap of the Eastern District of Texas awarded attorneys’ fees under 35 U.S.C. section 285 to defendants in a set of consolidated patent lawsuits initiated by eDekka LLC. 12/17 Order at 1. A prolific patent assertion entity, eDekka filed more than 200 lawsuits in 2014 and 2015 in the Eastern District of Texas, asserting a single patent, U.S. Patent No. 6,266,674, against numerous online retailers. eDekka claimed that these retailers had infringed the ’674 patent by offering a “shopping cart feature” on their e-commerce websites. The court had issued an earlier order September 21, 2015, in which it found the ’674 patent invalid for claiming unpatentable subject matter under Alice Corp. Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014). 9/21 Order at 1. The September 21, 2015 order formed the basis for the court’s December 17 ruling awarding attorneys’ fees.
Judge Gilstrap’s December 17 order marks the first “exceptional case” decision based on an unpatentability ruling under Alice since the Supreme Court relaxed the standard for obtaining attorneys’ fees in patent cases in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). Under the rule articulated in Octane Fitness, Judge Gilstrap found that eDekka’s case satisfied both criteria for exceptionality under 35 U.S.C. section 285 because eDekka’s cases were “objectively unreasonable,” and because eDekka litigated in an “unreasonable manner.” 12/17 Order at 3. As to objective unreasonableness, the court noted that it did not require claim construction to find the ’674 patent invalid because its claims “were clearly directed toward unpatentable subject matter,” and eDekka “repeatedly offered insupportable arguments on behalf of an obviously weak patent.” Id. at 5-6. The court also found that eDekka’s method of filing hundreds of lawsuits showed that it was litigating in an unreasonable manner, concluding that eDekka acted with the goal of “‘exploiting the high cost to defend complex litigation’ to extract ‘nuisance value settlement[s]’ from defendants.” Id. at 8 (citations omitted).
While this decision represents a first for “exceptionality,” it is also notable because it was issued in the Eastern District of Texas, which is often perceived as a more plaintiff-friendly venue. Since the Alice decision issued last year, more than 70 percent of motions challenging patentability have been granted in district courts around the country. In contrast, less than 35 percent of such motions have been granted in the Eastern District of Texas. With Judge Gilstrap’s recent ruling, however, defendants sued in the Eastern District of Texas and beyond have another weapon against plaintiffs asserting patents of questionable validity under Alice.