Appeals Court Decides That Search-Related Infringement Case Against Google Isn’t Frivolous

A search-related tech company’s patent infringement lawsuit against Google wasn’t frivolous and deserved a full hearing even though the smaller company’s CEO publicly proclaimed in a blog post that its technology is different from Google’s, and even though the legal system agreed with that conclusion, ruled a federal appeals court on Tuesday.

In a 3-0 opinion, the three Federal Circuit appeals court judges said that Google had not met the exacting legal standards needed to prove that the case was frivolous, and that the online blog post by the plaintiff company’s CEO Steve Mansfield claiming that its technology is different from Google’s is irrelevant.

Instead, the “finding of objective baselessness” of the case has to be determined by the record made in the infringement proceedings, the court ruled.

“Google has not met its high burden to show by clear and convincing evidence that this suit was brought frivolously or that iLOR’s position on claim construction was obviously baseless,” wrote Federal Circuit Judge Timothy B. Dyk regarding iLOR’s appeal of a lower court’s decision to award Google more than half a million dollars in attorneys’ and other fees when it agreed with Google that iLOR’s suit was bogus.

“The question is whether iLOR’s broader claim construction was so unreasonable that no reasonable litigant could believe it would succeed,” Dyk added. “In light of the claim terms, specification, and prosecution history, we believe that iLOR could reasonably argue for the claim construction that it proposed.”

Federal Circuit Chief Judge Randall Rader and Judge Richard Linn were the other two judges on the case.

The case is notable because it’s the latest development in a broader movement by many deep-pocketed tech companies, in the absence of movement on patent reform legislation in Congress, to try to discourage patent infringement lawsuits against themselves by making the prospect of bringing such suits riskier and potentially more expensive for the would-be litigants.

The appeal court’s Tuesday decision illustrates that at least three of the judges of the court– including the chief judge — believe in upholding strict standards when deeming a patent infringement lawsuit frivolous.

“This ruling shows the high burden of proving an “exceptional case” to obtain an award of attorney fees under § 285,” according to the intellectual property law firm Oblon Spivak.  “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.”

Large companies that incorporate many different tech ideas into their complex products, such as Google, Microsoft and  Intel, are frequent targets of patent infringement lawsuits over very specific and seemingly esoteric functions.

To change this state of affairs, Netflix, led by Stanford Law School’s patent guru Mark Lemley, who is also a litigator at the San Francisco law firm of Durie Tangri, is challenging the Federal Circuit’s legal standards concerning defendants and attorneys’ fees.

Netflix argues that the Federal Circuit’s interpretation of the legal standards prescribing attorneys’ fees violates a 1994 Supreme Court precedent that said that prevailing plaintiffs and defendants have to be treated alike under the Copyright Act.

The Federal Circuit’s legal standards are actually different for plaintiffs and defendants, with some arguing that the standards are higher for defendants.

A Who’s Who of internet companies and online retailers have filed friend-of-the-court arguments supporting Netflix. They include Amazon.com, Crutchfield, Facebook, J.C. Penney, L.L. Bean, Newegg, Oracle, Overstock.com, Microsoft, Samsung Electronics, Toyota Motor Sales, and Yahoo!,

Netflix has asked for a full-on hearing of its appeal regarding attorneys’ fees from the Northern District of California from the entire group of  judges at the Federal Circuit.

If the court decides to hear the case and depending on what it decides, the case could head to the Supreme Court, which has had a record in recent years of disagreeing with the Federal Circuit on landmark patent law issues.

For its part, the iLOR v. Google case dates back to 2007 when tech company iLOR filed a patent infringement suit in the Eastern District of Kentucky against Google.

iLOR was a search-related tech company that earned praise from Search Engine Watch’s Danny Sullivan for its innovative technology that enhances search to make the experience less cumbersome.

The company’s suit claimed that a Google Notebook feature that allows a user to right-click on a hyperlink and save it for later through a pop-up toolbar infringes upon one of the claims in one of iLOR’s patents.

Google countersued for a declaratory judgement of non-infringement. It also wanted the judge to declare the patent invalid and unenforceable based on inequitable conduct.

The court sided with Google, but Google followed up by asking the court to award it attorneys’ fees, costs and expenses, which if granted, is usually a humiliating development for the lawyers representing the losing side.

In this case, the district court for the Eastern District of Kentucky sided with Google again, and decided that iLOR had acted in subjective bad faith.

iLOR appealed that decision, after which the court increased the amount that iLOR had to pay. The company appealed that decision too, and that is when the case moved to the Federal Circuit.