Plaintiff’s failure to reevaluate case post Alice results in fee award to opposing side

By: Seema Mehta


Patent-owner Inventor Holdings, LLC, sued American retailer Bed Bath & Beyond (BBB) for infringement of US Pat. No. 6,381,582, directed to a method of purchasing goods at a local point-of-sale system from a remote seller.  The suit was filed in April 2014, a mere two months before the U.S. Supreme Court issued its decision in Alice Corp. v. CLS Bank International in June 2014.  The district court determined in an August 2015 decision that the patent embodied the ineligible abstract idea of paying for remote orders at local retailers.

BBB subsequently filed a motion for an award of attorney fees, arguing that this case is exceptional under the standard articulated in Octane Fitness LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), which the district court granted.  The district court held that following Alice, the plaintiff’s claims were “objectively without merit.”

The plaintiff was so ordered by the federal district court to pay attorney fees and costs in the amount of $931,903.45, incurred by BBB in successfully defending against infringement claims, after the asserted patent was found to be ineligible under Section 101.  Inventor Holdings appealed this decision to the U.S. Federal Circuit.

Inventor Holdings argued that patent eligibility was still a very evolving area of the law, and that Alice did not fundamentally change §101 law.  However, the U.S. Federal Circuit found that Alice was a significant change in the law as applied to the facts of this particular case.  Because the claims of the ‘582 patent were so obviously directed to a fundamental economic practice, and did not have any steps or processes that required anything more, the plaintiff should have reassessed its case in view of new controlling law.  Affirming the district court’s decision, the U.S. Federal Circuit agreed that once the Alice decision came down, the patent infringement claims asserted by the plaintiff should have been voluntarily withdrawn.

While it is true that the law, and equally, courts that apply the law to a certain set of facts can be very unpredictable, this case definitely puts all plaintiffs on notice that they should take a second look at whether a recently filed suit still has merit based on recently issued U.S. Supreme Court cases that directly affect the claims as filed.