iLOR v. Google

Reversing the U.S. District Court for the Eastern District of Kentucky, the Federal Circuit ruled on Tuesday, January 11 that iLOR v. Google was not an exceptional case under 35 U.S.C. § 285 and that therefore defendant Google was not entitled to attorneys’ fees and costs and expenses from plaintiff iLOR.

iLOR brought an infringement suit against Google, asserting its rights in a single patent claim that included the phrase “the toolbar being displayable based on a location of a cursor in relation to a hyperlink.” In the prosecution history for the asserted patent, iLOR filed a disclaimer distinguishing the invention over a prior art reference because the reference required clicking while the invention used proximity of a cursor to a hyperlink. Nonetheless, in iLOR v. Google, iLOR accused Google of infringement based on Google Notebook, which allowed a user to effect the display of a toolbar by pointing a cursor to a hyperlink and right-clicking on the hyperlink.

Ruling that the contentious phrase in the claim meant “the toolbar is ‘automatically displayed’ upon the placement of the cursor in proximity to a hyperlink with no further action on the part of the user,” the district court granted summary judgment on non-infringement. The Federal Circuit affirmed that decision in a previous appeal, and Google moved in the district court to recover attorneys’ fees and costs and expenses under 35 U.S.C. § 285. Finding iLOR’s case “objectively baseless” and in bad faith, the district court granted Google’s motion, and iLOR again appealed to the Federal Circuit.

The Federal Circuit noted that imposing sanctions on a patent plaintiff absent misconduct requires objective baselessness of the claim as well as subjective bad faith in bringing suit. The objective baselessness element asks whether the suit was so unreasonable that no reasonable litigant could believe it would succeed. This test is to be based on the record from the infringement proceedings, without considering the plaintiff’s state of mind. The court also noted that a defendant seeking § 285 remedies from a plaintiff must show this objective baselessness by clear and convincing evidence.

In the case at hand, the parties agreed that the case turned essentially on claim construction. The court found that the language of the asserted claim and the specification supported the district court’s ruling but did not preclude iLOR’s claim construction. Regarding the prosecution history, the court found that iLOR could reasonably have argued that it directed the disclaimer only to a non-asserted claim in the same patent. The court further characterized claim construction issues as sometimes complex and unpredictable, then mentioned the earlier appeal on claim construction, including oral argument and a precedential opinion, all in support of a conclusion that iLOR’s proposed construction was not frivolous. The court found that iLOR’s proposed construction was incorrect but not objectively baseless and declined to address the element of subjective bad faith. Accordingly, the Federal Circuit reversed the district court’s ruling that the case was exceptional under § 285.

This ruling shows the high burden of proving an “exceptional case” to obtain an award of attorney fees under § 285. In its earlier rulings in this case regarding claim construction, the Federal Circuit had found that the asserted claim, the specification, and the prosecution history all supported the district court’s claim construction and not iLOR’s claim construction. In this ruling, however, the court ruled that “simply being wrong about claim construction should not subject a party to sanctions where the construction is not objectively baseless.” Though a party can win easily on an issue, as Google did here, showing objective baselessness to support an attorneys’ fees award may require a nearly vacuous case from the other party.