Lawyer Charges on Undecided Inequitable Conduct Points

by Dennis Crouch

United Cannabis Corp (UCANN) vs. Pure Hemp Collective, — F.4th — (Fed. Cir. 2023)

The UCANN vs. Pure Hemp patent case has come to a detailed with the Federal Circuit affirming the district court docket’s resolution to disclaim lawyer charges to Pure Hemp. The unique infringement lawsuit was filed in 2018, with UCANN suing Pure Hemp for infringing US Patent No. 9,730,911, masking numerous excessive focus hashish and CBD extract formulations. Through the litigation, UCANN filed for chapter, inflicting the case to be stayed, and ultimately, the events stipulated to a dismissal of the infringement claims with prejudice. Nevertheless, the stipulated dismissal didn’t embrace any dialogue of lawyer charges — resulting in the present attraction.

Following the dismissal, Pure Hemp moved for lawyer charges and sanctions, arguing that UCANN’s counsel dedicated inequitable conduct throughout patent prosecution and that UCANN’s litigation counsel had a battle of curiosity. The district court docket sided with UCANN and denied lawyer charges, stating (1) that Pure Hemp was not the prevailing celebration and (2) that Pure Hemp didn’t show that the case was distinctive. The Federal Circuit has now affirmed the choice, discovering that the district court docket didn’t abuse its discretion find the case unexceptional. Though district court docket the district court docket erred in not discovering Pure Hemp to be the prevailing celebration, the error was innocent.

The same old rule in American litigation is that every celebration pays their very own lawyer charges – win or lose.  However, the regulation typically permits for charge shifting in egregious circumstances.  The patent act supplies a statute on level that permits an award of cheap lawyer charges in distinctive circumstances. “The court docket in distinctive circumstances could award cheap lawyer charges to the prevailing celebration.”  35 U.S.C. 285.  The statute right here has two stipulations, a permissive, and a restrict on the outcomes.

• Distinctive circumstances: In Octane Health, the Supreme Courtroom outlined an distinctive case as one which “stands out from others with respect to the substantive energy of a celebration’s place or the unreasonable method by which the case was litigated. Octane Health, LLC v. ICON Well being & Health, Inc., 572 U.S. 545 (2014).
• Prevailing celebration: The award can solely go to the “prevailing celebration” within the litigation.  This concern is usually difficult as a result of sometimes neither celebration wins on all grounds raised or receives all the outcomes requested.
• The court docket … could award: This offers the district court docket permissive authority to award or deny charges, even in distinctive circumstances.  As well as, in Highmark, the Supreme Courtroom held that the willpower of whether or not a case is “distinctive” can also be given to the sound discretion of the district court docket. Highmark Inc. v. Allcare Well being Mgmt. Sys., Inc., 572 U.S. 559 (2014).  Actually, in Highmark, the court docket ultimately concluded that “an appellate court docket ought to apply an abuse-of-discretion commonplace in reviewing all features of a district court docket’s §285 willpower.” Id.
• Cheap lawyer charges: There isn’t any single method for calculating “cheap lawyer charges.” Usually, the district court docket will take into account a lot of components in figuring out what constitutes an affordable charge, such because the period of time spent on the case, the complexity of the case, the charges charged by comparable attorneys within the space, and the outcomes achieved. Finally, the district court docket has broad discretion in figuring out what constitutes an affordable lawyer charge below this statute. Gaymar Indus., Inc. v. Cincinnati Sub-Zero Prods., Inc., 790 F.3d 1369 (Fed. Cir. 2015) and SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344 (Fed. Cir. 2015).

Prevailing celebration: The district court docket held that Pure Hemp was not the prevailing celebration. On attraction, the Federal Circuit discovered that to be clear error. Pure Hemp achieved the profitable results of having the infringement case dismissed with prejudice – and thus prevailed.  It doesn’t matter that the tactic was by way of an agreed-upon dismissal quite than court docket motion.

Distinctive Case – Inequitable Conduct: Pure Hemp raised the problems of inequitable conduct earlier than the district court docket, however the court docket didn’t conduct an evidentiary listening to and ultimately determined that the proof offered was missing.  Pure Hemp appealed and argued “the district court docket abuse its discretion by failing to conduct an ample [factual] inquiry.”  Choose Stark rebuked the lawyer right here — stating that Pure Hemp ought to have requested an evidentiary listening to quite than merely interesting. As an alternative, Pure Hemp had instructed the district court docket that it didn’t want such a listening to.

It’s self-evident {that a} district court docket doesn’t abuse its discretion by not conducting a post-dismissal inequitable conduct continuing, in help of decision of a § 285 movement, when the transferring celebration explicitly disclaims any need for such a continuing.

Slip Op. Right here, the alleged inequitable conduct includes the next:

The lawyer who prosecuted the patent-in-suit admitted to copying and pasting textual content from the prior artwork into the patent specification and never disclosing that prior artwork to the USPTO.

Pure Hemp Temporary. The briefing argued that “Cooley attorneys even have a coverage of withholding references till after the primary workplace motion, in direct contravention of patent workplace steering.”  Nonetheless, on this case, the references have been by no means submitted previous to issuance.  The transient goes-on to comment that “in tutorial circles, it’s known as plagiarism.”

In conclusion, the Federal Circuit affirmed the district court docket’s resolution to disclaim lawyer charges to Pure Hemp within the UCANN vs. Pure Hemp Collective patent case.  The appellate court docket’s resolution although didn’t attain the substance of whether or not the patentee’s actions constituted inequitable conduct or litigation misconduct. We’ll have to order these for an additional day.

Is the Federal Circuit dealing with a Persistent Downside of Inequitable Conduct?