Delaware District Court Finds Exceptional Case Based on Plaintiff's Opposition To Alice Motion

On March 18, 2019, the court in Finnavations LLC v. Payoneer, Inc., No. 1-18-cv-00444, Dkt. No. 35 (D. Del. Mar. 18, 2019) granted defendants’ motion for exceptional case and awarded defendants attorneys’ fees. Typically, courts grant exceptional case motions against plaintiffs based on litigation misconduct or clearly unreasonable or unfounded infringement positions. The opinion in Finnavations is notable because the plaintiff’s exceptional behavior was based entirely in Finnavations’ opposition to defendants’ motion to dismiss the case under 35 U.S.C. § 101. In other words, the court held that by defending the validity of its patent against defendants’ Alice motion, Finnavations acted objectively unreasonably.

The facts in Finnavations appear extreme: the patent examiner only allowed the asserted patent after rejecting its claims four times under section 101, the claims as issued are almost indistinguishable from the claims at issue in Alice, and Finnavations’ briefing was “not just mediocre or bad; it was ugly.” Opinion at 3, n.2. Based on these facts, Finnavations should have known before filing the case that the patent was likely to be invalidated under Alice. On the other hand, Finnavation’s patent was, like all patents, duly issued by the patent office and entitled to a presumption of validity. Based on the opinion, in some cases, asserting a patent with potential validity issues may be exception in and of itself, effectively rendering the patent unenforceable before it is litigated.

More broadly, the Finnavations opinion underscores the District of Delaware’s increased willingness in recent years to grant exceptional case motions. Once rare, exceptional case findings in Delaware after Octane Fitness are no longer uncommon. While the facts in most cases are not as unusual as Finnavations, potential plaintiffs in Delaware should be prepared for the real possibility of attorneys’ fees if they take litigation positions that could be considered vexatious or unusually weak.