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ARTICLE · 01 SEPTEMBER 2015

Filing Serial Lawsuits For Nuisance Settlements May Be "Exceptional" If Improper Intent Established

McDermott Will & Emery
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The plaintiff, SFA Systems (SFA), sued various defendants for patent infringement in a series of cases filed in the U.S. District Court for the Eastern District of Texas, including the defendant, Newegg.

United StatesIntellectual Property
John Low, Ph.D.
John Low, Ph.D.
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SFA Systems, LLC v. Newegg, Inc.

In considering a district court's denial of attorneys' fees in view of the Supreme Court's Octane Fitness standard for finding an "exceptional case" under 35 U.S.C. § 285 ( IP Update Vol. 17, No. 5), the U.S. Court of Appeals for the Federal Circuit found that a practice of filing lawsuits for the purpose of extracting nuisance settlements—a charge often leveraged against many non-practicing entities (NPEs)—could make a case "exceptional." However, the unanimous appellate panel found that there was insufficient evidentiary support in this case to find that the district court had abused its discretion in denying the fees sought. SFA Systems, LLC v. Newegg, Inc., Case No. 14-1712 (Fed. Cir., July 10, 2015) (O'Malley, J.).

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