Background
Viavi Solutions Inc. sued Platinum Optics Technology Inc. for allegedly infringing four patents covering low-angle-shift optical filters used in three-dimensional sensing applications. Viavi alleged that PTOT supplied a filter identified as the 11246 Filter, or a materially similar filter, for incorporation into mobile devices sold in the United States. Viavi’s infringement charts, however, compared its patent claims only with a 11246 Filter obtained during earlier Asian litigation, and licensing agreements had released PTOT from liability for sales made before May 1, 2020.
PTOT submitted an employee declaration stating that the 11246 Filter was not designed for the relevant mobile devices and had not been manufactured or sold since May 2020. Viavi did not dispute those statements but continued litigating while seeking discovery about other PTOT filters. After a stay for inter partes review proceedings, Viavi sought to add a newly obtained product, Filter #25, to its infringement contentions. A magistrate judge denied that amendment, and Viavi voluntarily dismissed the action with prejudice.
The district court found the case exceptional under 35 U.S.C. § 285 and awarded PTOT a portion of its attorney’s fees incurred beginning January 20, 2021, when PTOT submitted the declaration. The court declined to impose sanctions under 28 U.S.C. § 1927 or its inherent authority because it did not find subjective bad faith or knowing or reckless pursuit of a frivolous argument.
The Court’s Holding
The Federal Circuit affirmed. It held that the district court neither clearly erred in its factual findings nor abused its discretion by determining that Viavi’s deficient pre-suit investigation and manner of litigation made the case exceptional. Although patent owners are not categorically required to reverse-engineer an accused product before suing, Viavi could readily have purchased and inspected the relevant consumer devices. When it eventually did so, it found a non-Viavi filter different from the 11246 Filter and filed a separate action based on that product.
The court also upheld the finding that Viavi acted unreasonably after receiving the undisputed declaration foreclosing infringement by the 11246 Filter. Because that filter remained the only specifically charted accused product, Viavi could not preserve an unsupported claim merely to obtain discovery in hopes of identifying a different potentially infringing product. Its references to materially similar filters and the possibility that the same filter had been renamed did not provide a reasonable basis to continue the case.
The district court also permissibly found that Viavi’s reliance on the 11246 Filter was unreasonable because Viavi had evidence only of sales during the period covered by the parties’ license and identified no post-May 1, 2020 sales. Considering the totality of the circumstances, the district court acted within its discretion in awarding only the fees incurred after PTOT submitted the declaration.
Key Takeaways
- A patent owner need not always obtain and reverse-engineer an accused product before filing suit, but its pre-suit investigation must be reasonable in light of readily available evidence.
- A plaintiff cannot keep an unsupported infringement claim alive solely to pursue discovery for a different, unidentified accused product.
- Under 35 U.S.C. § 285, litigation conduct after decisive contrary evidence emerges can support an exceptional-case finding even when the court declines to find subjective bad faith.
Why It Matters
The nonprecedential decision underscores that detailed claim charts do not cure a pre-suit investigation focused on the wrong product. Patent plaintiffs should verify that the charted product was actually sold during the accused period and promptly reassess their contentions when undisputed evidence eliminates the factual basis for infringement.
The ruling also illustrates that fee awards may be tailored to the point when continued litigation became unreasonable. Here, the district court limited the award to fees incurred after PTOT’s declaration conclusively undermined Viavi’s only specifically charted infringement theory.