Yu v. Apple Inc.

Background

Yanbin Yu and Zhongxuan Zhang alleged that Apple cell phones with dual-lens cameras infringed U.S. Patent No. 6,611,289. The court previously dismissed their original complaints under 35 U.S.C. § 101 and the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank International, concluding that the patent was directed to unpatentable subject matter. The court allowed amendment, but later dismissed the amended complaints with prejudice and entered judgment against the plaintiffs.

Apple moved for attorney’s fees under 35 U.S.C. § 285. That provision allows a court to award reasonable fees to the prevailing party in an exceptional case. The court stated that exceptional status is evaluated under the totality of the circumstances, including the case’s frivolousness, motivation, objective unreasonableness, and whether compensation or deterrence is warranted. Fee shifting requires circumstances showing that the case was egregious on its merits, in its handling, or both. The court also emphasized that fees are not a penalty for merely losing a patent case and that the circumstances making a case exceptional should be reasonably apparent from the record.

The Parties’ Positions and the Court’s Analysis

Apple sought fees only for work involved in moving to dismiss the amended complaint. The court viewed that request as effectively conceding that the infringement claim was not exceptional when filed. The court also noted that, in the first dismissal order, it had found that amendment would not necessarily be futile. It determined that neither the substantive strength of the plaintiffs’ position nor the manner in which they litigated the case was unreasonable or exceptional. The court distinguished a Federal Circuit case involving litigation misconduct and unreliable expert testimony. It also rejected Apple’s argument based on Yu’s alleged status as a non-practicing entity, stating that such entities may pursue infringement claims and lose without automatically having to pay a defendant’s legal fees.

Disposition

The court found that Apple had not shown exceptional circumstances and denied Apple’s motion for attorney’s fees. The court decided the motion without oral argument and vacated the scheduled hearing. Judge James Donato signed the order on May 12, 2020.