People.ai, Inc. v. SetSail Technologies, Inc.

Background

People.ai, Inc. brought a patent-infringement action against SetSail Technologies, Inc. in December 2020. The case initially involved four patents. People.ai later amended its complaint to add a fifth patent, then withdrew one patent and later filed a second amended complaint asserting three patents.

Before the parties’ planned summary-judgment procedure became ripe, SetSail filed a motion under Rule 12(c), which allows judgment on the pleadings. The court applied the two-step test from Alice Corp. v. CLS Bank and ruled that all asserted claims were directed to patent-ineligible abstract concepts under Section 101. The court vacated the pending summary-judgment motions as moot, and judgment was entered.

SetSail then moved for attorney’s fees under Section 285 of the Patent Act. Section 285 permits fees to the prevailing party in an “exceptional” case—one that stands out because of the weakness of a party’s litigation position or the unreasonable way the case was litigated.

SetSail’s Arguments

SetSail argued that the case was exceptional because People.ai asserted facially implausible claims, conducted an inadequate pre-suit investigation, maintained claims after they became nonviable, and used the lawsuit to interfere with SetSail’s financing and ability to compete for business. SetSail also argued that People.ai’s withdrawal of patents and its conduct during the planned summary-judgment procedure unnecessarily increased SetSail’s legal fees.

Court’s Analysis

The court acknowledged that People.ai did not present a strong argument at the first step of the eligibility analysis and that the claims ultimately failed at both steps of the court’s analysis. But the court found that People.ai’s arguments did not rise to the level of frivolousness or objective unreasonableness. The court also noted that the Patent and Trademark Office had issued the patents after the Supreme Court’s decision in Alice, and that the claims were presumably valid when People.ai asserted them.

The court declined to consider litigation material that had not become ripe or played a role in the case. It also declined to conduct a full evidentiary investigation into SetSail’s accusation that People.ai filed the action to affect SetSail’s financing. The court found that People.ai’s pre-suit investigation was limited, but recognized that the patents concerned back-end server functionality that could make investigation difficult. The court further found that People.ai had withdrawn one patent by the applicable deadline and had not violated a prior order by dropping another patent.

Ruling

The court held that SetSail had not shown that anything about the lawsuit made it exceptional under Section 285. Judge William Alsup therefore denied SetSail’s motion for attorney’s fees.