“BAD FAITH” LITIGATION STANDARD HAS OBJECTIVE AND SUBJECTIVE COMPONENTS

800 Adept, Inc., v. Murex Securities, Ltd., [2007-1272, -1356] (August 29, 2008) [PLAGER, Gajarsa, Dyk] The Federal Circuit vacated the trial court’s damages award, the permanent injunction, and the judgment with respect to willfulness, enhanced damages, and attorney fees to Adept; affirmed invalidity of Targus’ patents except for two claims which were remanded for a new trial.
DISCUSSION: This patent case involves technology for routing “1-800” telephone calls to an appropriate service location, e.g., the service provider closest to the customer who placed the call.
The Federal Circuit found that the plain language of the claims makes clear that the “assigning” step requires that “a telephone number of a service location” be assigned to each potential caller. Nothing in the claims suggests that storing an algorithm that will be used to determine the telephone number of the correct service location during a telephone call constitutes an assignment of a service location telephone number to a potential caller before a telephone call is placed. The Federal Circuit concluded that based on consideration of the claims, the written description, and the remainder of the intrinsic evidence, we the trial court was correct in the first instance when it construed the “assigning” language to refer to “a designation made prior to the telephone call of the first parties.”
Regarding Adept’s tortuous interference claims, the Federal Circuit said that “State tort claims against a patent holder, including tortious interference claims, based on enforcing a patent in the marketplace, are “preempted” by federal patent laws, unless the claimant can show that the patent holder acted in “bad faith” in the publication or enforcement of its patent.” The Federal Circuit noted that the Supreme Court said long ago, “Patents would be of little value if infringers of them could not be notified of the consequences of infringement, or proceeded against in the courts. Such action, considered by itself, cannot be said to be illegal.” The Federal Circuit instructed that the “bad faith” standard has objective and subjective components. The objective component requires a showing that the infringement allegations are “objectively baseless.” The subjective component relates to a showing that the patentee in enforcing the patent demonstrated subjective bad faith. The Federal Circuit cautioned that Courts “must ‘resist the temptation to engage in post hoc reasoning by concluding’ that an ultimately unsuccessful ‘action must have been unreasonable or without foundation.’”