United States Court of Appeals
for the Federal Circuit
__________________________
OLD RELIABLE WHOLESALE, INC.,
Plaintiff-Appellant,
v.
CORNELL CORPORATION,
Defendant-Appellee.
__________________________
2010-1247
__________________________
Appeal from the United States District Court for the
Northern District of Ohio in case no. 06-CV-2389, Senior
Judge David D. Dowd, Jr.
__________________________
Decided: March 16, 2011
__________________________
R. ERIC GAUM, Hahn Loeser & Parks, LLP, of Cleve-
land, Ohio, argued for plainff-appellant. With him on the
brief was SHANNON V. MCCUE.
MATTHEW J. SCHAAP, Severson, Sheldon, Dougherty &
Molenda, P.A., of Apple Valley, Minnesota, argued for
defendant-appellee. With him on the brief was GARY L.
HUUSKO.
__________________________
Before NEWMAN, MAYER, and BRYSON, Circuit Judges.
OLD RELIABLE v. CORNELL 2
MAYER, Circuit Judge.
Old Reliable Wholesale, Inc. (“Old Reliable”) appeals a
judgment of the United States District Court for the
Northern District of Ohio awarding Cornell Corporation
(“Cornell”) attorney fees pursuant to 35 U.S.C. § 285. See
Old Reliable Wholesale, Inc. v. Cornell Corp., No. 06-CV-
2389, 2010 U.S. Dist. LEXIS 8756 (N.D. Ohio Feb. 2,
2010) (“Attorney Fees Decision”). We reverse.
BACKGROUND
Old Reliable is the assignee of U.S. Patent No.
5,069,950 (the “’950 patent”), which is directed toward
insulated roof board. Independent claim 1 of the ’950
patent provides:
1. A composite insulated roof board structure
comprising:
(a) an insulated roof board member compris-
ing (1) a main portion of rigid coherent solid
insulating material, and (2) a top portion
comprising a plurality of spaced blocks above
said main portion and integral therewith, said
blocks defining therebetween a network of in-
terconnected channels at the same level for
horizontal venting of water vapor; and
(b) a relatively hard, dense protective top
layer which is adhered to the tops of the
blocks of said insulated roof board member.
’950 patent, col.7 l.25-col.8 l.7.
Cornell, a Wisconsin roof manufacturer, produces sev-
eral different insulated roofing products. Its Vent-Top
ThermaCal 1 (“VT-1”) consists of a bottom layer of poly-
isocyanurate insulation, a layer of paper felt facing
bonded to the insulation, spaced blocks on top of the felt
3 OLD RELIABLE v. CORNELL
facing, and a top layer of oriented strand board (“OSB”).
Its Vent-Top ThermaCal 2 (“VT-2”) consists of a bottom
layer of polyisocyanurate insulation, a layer of OSB,
spaced blocks on top of the layer of OSB, and an addi-
tional layer of OSB on top of the blocks.
In 2006, Old Reliable filed an infringement action
against Cornell, asserting that the VT-1 product infringed
claims 1, 2, 3, 6 and 7 of the ’950 patent. In response,
Cornell argued that the ’950 patent was invalid because it
was anticipated by its VT-2 product, which was sold
before the critical date for the ’950 patent. Cornell fur-
ther asserted that the ’950 patent was anticipated, or
rendered obvious, by several other prior art references,
including the Air-Flo insulated roofing panel manufac-
tured by Branch River Foam Plastics, Inc. (“Branch
River”).
Old Reliable, however, argued that the VT-2 did not
anticipate the ’950 patent because it did not teach all of
the structural elements required by the asserted claims.
Specifically, Old Reliable asserted that because the VT-2
contained a layer of OSB between the insulation and the
spaced blocks, the blocks were not “integral” with the
“main portion” of insulating material. See ’950 patent,
col.7 l.29-col.8 l.2 (requiring “a top portion comprising a
plurality of spaced blocks above said main portion and
integral therewith” (emphasis added)). Old Reliable
further contended that the Air-Flo product was not an-
ticipatory prior art because it did “not disclose blocks that
define interconnected channels” as required by the as-
serted claims and did not allow for cross-venting.
In September 2007, Cornell deposed Anthony Crooks-
ton, Jr., Old Reliable’s founder and the named inventor on
the ’950 patent. Crookston stated that the Inventsaboard
(the commercial embodiment of the ’950 patent), the VT-1
OLD RELIABLE v. CORNELL 4
(the accused product) and the VT-2 (the product alleged to
anticipate) did “[e]xactly the same thing.” Cornell also
produced literature indicating that the Branch River Air-
Flo product had channels that could “be provided in either
direction” to suit particular roofing requirements.
In a March 3, 2008, deposition, James Rice, Ph.D.,
Old Reliable’s expert, acknowledged that if the Air-Flo
product had been manufactured with cross-channels it
would have been “identical to” the invention claimed in
the ’950 patent. Furthermore, Richard Dauphinais, a
long-time Branch River employee, testified that Branch
River filled an order in which it had cut cross-channels
into its Air-Flo product prior to the ’950 patent’s critical
date.
In December 2007, the district court issued a claim
construction order, construing the term “integral” to mean
“formed with or joined to” and the term “adhered” to mean
“attached.” In March 2009, the trial court granted Cor-
nell’s motion for summary judgment of patent invalidity,
concluding that the VT-2 product was anticipatory prior
art. Although the court acknowledged that the VT-2
contained a layer of OSB between the insulation and the
spaced blocks, it determined that the spaced blocks were
nonetheless “integral” with the main portion of insulating
material as required by the asserted claims. Old Reliable
Wholesale, Inc. v. Cornell Corp., No. 06-CV-2389, 2009
U.S. Dist. LEXIS 25181, at *14-15 (N.D. Ohio Mar. 24,
2009) (“Invalidity Decision”).
The trial court also determined that the ’950 patent
was anticipated by the Branch River Air-Flo product. Id.
at *15-17. Rejecting Old Reliable’s argument that the
Air-Flo product did not contain the cross-ventilation
feature required by the asserted claims, and relying of the
deposition testimony of Dauphinais, the district court
5 OLD RELIABLE v. CORNELL
held that an Air-Flo product with cross-ventilation was
sold prior to the ’950 patent’s critical date. Id. at *16.
In addition, the court concluded that the ’950 patent
was invalid as obvious under 35 U.S.C. § 103(a). Noting
that “[a]nticipation is the epitome of obviousness,” the
court determined that since the VT-2 and the Air-Flo
products anticipated the ’950 patent, they also rendered
the asserted claims obvious. Id. at *18 (citations and
internal quotation marks omitted).
Old Reliable timely appealed to this court. On De-
cember 11, 2009, after briefing and oral argument, we
affirmed the district court’s summary judgment of patent
invalidity without opinion pursuant to Fed. Cir. R. 36.
See Old Reliable Wholesale, Inc. v. Cornell Corp., 355 Fed.
App’x 417 (Fed. Cir. 2009).
I. The Attorney Fees Award
On April 17, 2009, Cornell filed a motion in district
court asking that the case be declared exceptional and
that it be awarded attorney fees pursuant to 35 U.S.C.
§ 285. On February 2, 2010, the district court granted
the motion, and awarded Cornell attorney fees and re-
lated travel and out-of-pocket expenses in the amount of
$183,517.11. The court also awarded Cornell its costs of
$13,111.53 pursuant to 28 U.S.C. § 1920. Attorney Fees
Decision, 2010 U.S. Dist. LEXIS 8756, at *21-22.
Although it determined that the case was exceptional,
the trial court held that Cornell was only entitled to
recover attorney fees for the portion of the infringement
litigation following the September 26, 2007, Crookston
deposition. Id. at *12. The court concluded that Old
Reliable may have “had some basis” for its contention that
the VT-2 product did not anticipate the ’950 patent prior
to this deposition. Id. at *13. The case became excep-
OLD RELIABLE v. CORNELL 6
tional, however, after Crookston “admitted in deposition
that the VT-2 . . . did the same thing as his invention.”
Id. at *12. After this testimony, “it was apparent that
[the ’950] patent was anticipated and any further action
against Cornell for infringement was baseless.” Id. at
*13. In the court’s view, Old Reliable’s decision to main-
tain its infringement action following Crookston’s deposi-
tion was “improper and unjustified” and “warranted a
finding of an exceptional case” under 35 U.S.C. § 285.
Attorney Fees Decision, 2010 U.S. Dist. LEXIS 8756, at
*13.
II. The Reexamination Proceedings
On October 16, 2008, the United States Patent and
Trademark Office (“PTO”) granted Cornell’s request for ex
parte reexamination of the ’950 patent. 1 On June 15,
2010—after this court had affirmed the district court’s
invalidity determination and the district court had
awarded Cornell attorney fees—the PTO issued a notice
of intent to issue an ex parte reexamination certificate
confirming the patentability of all claims of the ’950
patent. After reviewing numerous prior art references,
including the VT-2 and the Air-Flo, the PTO concluded
that “[n]one of the prior art discloses nor renders obvious
the combination of features” disclosed in the ’950 patent.
Soon thereafter, however, the PTO withdrew the no-
tice of intent to issue an ex parte reexamination certificate
for the ’950 patent. In withdrawing the notice, the PTO
stated that “the claims of [the ’950 patent] are invalid”
and noted that this court had affirmed the district court’s
invalidity determination.
1 In December 2009, Old Reliable provided the PTO
with a copy of this court’s judgment affirming the district
court’s determination that the ’950 patent was invalid.
7 OLD RELIABLE v. CORNELL
Ill. The Appeal of the Attorney Fee Award
On March 2, 2010, Old Reliable filed a timely notice of
appeal of the district court’s judgment awarding Cornell
attorney fees under section 285. This court has jurisdic-
tion pursuant to 28 U.S.C. § 1295(a)(1). When reviewing
a section “285 exceptional case determination, we review
the district court’s underlying factual findings for clear
error and its legal conclusions without deference.” Qual-
comm Inc. v. Broadcom Corp., 548 F.3d 1004, 1026 (Fed.
Cir. 2008).
DISCUSSION
A district court is vested with authority to award at-
torney fees to a prevailing party in patent litigation if it
determines that the case is “exceptional.” 35 U.S.C.
§ 285. While the discretion granted to a trial court under
section 285 is broad, it is not unbridled. See Wedgetail,
Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302, 1304 (Fed.
Cir. 2009) (noting that “only a limited universe of circum-
stances warrant a finding of exceptionality in a patent
case”); Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324,
1329 (Fed. Cir. 2003) (emphasizing that section 285 is
limited to cases where the award of fees “is necessary to
prevent a gross injustice” (citations and internal quota-
tion marks omitted)); Cambridge Prods., Ltd. v. Penn
Nutrients, Inc., 962 F.2d 1048, 1050 (Fed. Cir. 1992)
(“[T]he exceptional nature of the case must be established
by clear and convincing evidence.”). In view “of the sub-
stantial economic and reputational impact” of an award of
attorney fees, this court is required “to examine the record
with care to determine whether the trial court has com-
mitted clear error in holding the case exceptional or has
abused its discretion with respect to the fee award.”
Medtronic Navigation, Inc. v. BrainLAB Medizinische
Computersysteme GmbH, 603 F.3d 943, 953 (Fed. Cir.
OLD RELIABLE v. CORNELL 8
2010).
“Absent misconduct in conduct of the litigation or in
securing the patent, sanctions may be imposed against
the patentee only if both (1) the litigation is brought in
subjective bad faith, and (2) the litigation is objectively
baseless.” Brooks Furniture Mfg., Inc. v. Dutailier Int’l,
Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). The standard
for establishing that a claim is “objectively baseless”
under section 285 “is identical to the objective reckless-
ness standard for enhanced damages and attorneys’ fees
against an accused infringer for § 284 willful infringement
actions under In re Seagate Technology, LLC, 497 F.3d
1360 (Fed. Cir. 2007) (en banc).” iLOR, LLC v. Google,
Inc., Nos. 2010-1117, 2010-1172, 2011 U.S. App. LEXIS
516, at *11 (Fed. Cir. Jan. 11, 2011). Thus, “objective
baselessness” depends not on the state of mind of the
party against whom fees are sought, see Seagate, 497 F.3d
at 1371, but instead on “an objective assessment of the
merits” of the challenged claims and defenses. iLOR,
2011 U.S. App. LEXIS 516, at *12 (citations and internal
quotation marks omitted). Unless an argument or claim
asserted in the course of litigation is “so unreasonable
that no reasonable litigant could believe it would suc-
ceed,” it cannot be deemed objectively baseless for pur-
poses of awarding attorney fees under section 285. Id.;
see also Dominant Semiconductors Sdn. Bhd. v. OSRAM
GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008).
While Old Reliable’s arguments in support of the va-
lidity of the ’950 patent proved unsuccessful, we conclude
that the “exacting standard” for establishing that a case is
exceptional under section 285, iLOR, 2011 U.S. App.
LEXIS 516, at *10, has not been met. Old Reliable had
reasonable grounds for its argument that the ’950 patent
was valid over the prior art, even following inventor
testimony that the prior art VT-2 product and the com-
9 OLD RELIABLE v. CORNELL
mercial embodiment of the ’950 patent did “[e]xactly the
same thing.” Likewise, because there was a genuine
dispute regarding whether the Branch River Air-Flo
product allowed for the cross-ventilation disclosed in the
’950 patent, Old Reliable had a legitimate basis for its
contention that the Air-Flo product was not anticipatory
prior art. Finally, given that the PTO, after reviewing the
relevant prior art, issued a notice of intent to issue an ex
parte reexamination certificate confirming the patentabil-
ity of all claims of the ’950 patent, we are unwilling to
conclude that Old Reliable lacked a reasonable foundation
for arguing that its patent was not anticipated.
I. The Crookston Deposition
The linchpin for the district court’s award of attorney
fees was its determination that Old Reliable had no
reasonable basis for maintaining its infringement action
following the September 26, 2007, Crookston deposition.
In the court’s view, Old Reliable may have “had some
basis” for its contention that the VT-2 product did not
anticipate the ’950 patent prior to the deposition, but
when Crookston testified that Cornell’s prior art VT-2
product did “[e]xactly the same thing” as the commercial
embodiment of the ’950 patent, “it was apparent that [the
’950] patent was anticipated and any further action
against Cornell for infringement was baseless.” Attorney
Fees Decision, 2010 U.S. Dist. LEXIS 8756, at *13 (em-
phasis omitted) (footnote and internal quotation marks
omitted).
We disagree. “Anticipation requires that all of the
claim elements and their limitations are shown in a single
prior art reference.” In re Skvorecz, 580 F.3d 1262,
1266 (Fed. Cir. 2009); see also Advanced Display Sys., Inc.
v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000)
(explaining that “invalidity by anticipation requires that
OLD RELIABLE v. CORNELL 10
the four corners of a single, prior art document describe
every element of the claimed invention, either expressly
or inherently”). Regardless of whether the VT-2 and the
commercial embodiment of the ’950 patent did “[e]xactly
the same thing,” there could be no anticipation unless the
VT-2 disclosed, either expressly or inherently, all the
structural limitations contained in the asserted apparatus
claims. See Skvorecz, 580 F.3d at 1268 (explaining that a
prior art device did not anticipate because it did not
contain the “offset” structure disclosed in the asserted
claims); Applied Med. Res. Corp. v. United States Surgical
Corp., 147 F.3d 1374, 1380 (Fed. Cir. 1998) (emphasizing
that a prior art device does not anticipate “simply by
possessing identically named parts, unless these parts
also have the same structure or otherwise satisfy the
claim limitations”); In re Ruskin, 347 F.2d 843, 846
(CCPA 1965) (Even where a prior art device is the “func-
tional equivalent” of a patented product, it does not
anticipate unless it discloses the structure required by the
asserted claims.). Because Old Reliable pointed to alleged
structural differences between the VT-2 and the commer-
cial embodiment of the ’950 patent, it was not required to
concede that its patent was anticipated even following
inventor testimony that the two products were function-
ally equivalent. 2
2 In addition to arguing that the VT-2 did not con-
tain the structural limitations of claim 1 of the ’950 pat-
ent, Old Reliable also contended that the VT-2 functioned
differently than the patented device because, due to the
additional layer of OSB, it had a much greater load-
bearing capacity than the patented product. Crookston’s
testimony that the VT-2 and the commercial embodiment
of the ’950 patent did “[e]xactly the same thing” may have
served to rebut Old Reliable’s argument that the two
products were functionally different. It was not, however,
11 OLD RELIABLE v. CORNELL
II. Distinguishing the VT-1 and VT-2 Products
Where a patent is granted in a field of invention
abundant with prior art, a patentee will sometimes find it
difficult to establish that his patent is broad enough to
cover an accused product, yet narrow enough “to evade
the strictures of a crowded art field.” Augustine Med., Inc.
v. Gaymar Indus., Inc., 181 F.3d 1291, 1301 (Fed. Cir.
1999). As the district court correctly recognized, Old
Reliable faced significant challenges in its effort to estab-
lish that the ’950 patent was not anticipated by the VT-2
product, but was nonetheless infringed by the VT-1 prod-
uct. See Invalidity Decision, 2009 U.S. Dist. LEXIS
25181, at *8-15.
Independent claim 1 of the ’950 patent requires a
“main portion” of solid insulating material and “a top
portion [comprised of] a plurality of spaced blocks” that is
above the insulation layer and “integral therewith.” ’950
patent, col.7 l.28-col.8 l.2. In the prior art VT-2 product,
the foam insulation layer is separated from the spaced
blocks by a layer of OSB. In the accused VT-1 product, by
contrast, the foam insulation layer is separated from the
spaced blocks by a layer of felt facing. Old Reliable ar-
gued that the VT-2 did not anticipate the ’950 patent
because, due to the layer of OSB between the insulation
and the spaced blocks, the blocks were not “integral” with
the “main portion” of insulating material as required by
the asserted claims. In order to establish infringement,
however, Old Reliable argued that in the VT-1 product
the spaced blocks were “integral” with the “main portion”
of insulating material, notwithstanding the fact that the
blocks were separated from the insulating material by a
layer of felt facing.
sufficient to establish that the VT-2 met the structural
limitations of the asserted claims.
OLD RELIABLE v. CORNELL 12
The district court concluded that Old Reliable was
“trying to have it both ways in order to preserve its in-
fringement claim against [the VT-1 product] and avoid
invalidating the ’950 Patent based on the prior art of [the
VT-2 product].” Invalidity Decision, 2009 U.S. Dist.
LEXIS 25181, at *14. Rejecting what it perceived as the
“inconsistent positions” taken by Old Reliable, the court
determined that the spaced blocks were “integral” with
the insulation layer in both the VT-1 and the VT-2 prod-
ucts. Id.
We cannot agree, however, that Old Reliable’s argu-
ment that the spaced blocks were integral with the main
portion of insulating material in the VT-1, but not in the
VT-2, was objectively meritless. See Aspex Eyewear Inc. v.
Clariti Eyewear, Inc., 605 F.3d 1305, 1315 (Fed. Cir. 2010)
(explaining that “[d]efeat of a litigation position, even on
summary judgment, does not warrant an automatic
finding that the suit was objectively baseless”). There
was nothing frivolous or inherently implausible about Old
Reliable’s assertion that, from a physical standpoint,
separating the insulation from the spaced blocks by a thin
layer of felt facing is different than separating the insula-
tion from the blocks with a bulky layer of OSB. As Old
Reliable explained, “unlike felt facing, which is flexible,
the OSB is inflexible and a separate structural component
that does not conform to and form part of the insulating
material.” Invalidity Decision, 2009 U.S. Dist. LEXIS
25181, at *11 (internal quotation marks omitted). Indeed,
Cornell’s own Material Safety Data Sheet (“MSDS”)
indicated that the felt facer was part of the polyiso-
cyanurate foam insulation, but that the OSB was a sepa-
rate structural component from the insulation layer. 3
3 Cornell’s MSDS describes the appearance of its
roof board products as follows:
13 OLD RELIABLE v. CORNELL
Furthermore, although Cornell had been selling its
VT-2 product for several years before it introduced the
VT-1, the VT-1 quickly surpassed the VT-2 in terms of
sales. The undisputed commercial success of the VT-1
provided a legitimate basis for Old Reliable’s assertion
that secondary considerations weighed against any find-
ing that the ’950 patent was invalid over the prior art.
See Geo M. Martin Co. v. Alliance Mach. Sys. Int’l LLC,
618 F.3d 1294, 1304 (Fed. Cir. 2010) (“Secondary consid-
erations of non-obviousness must be considered when
present.”).
III. The Rice Deposition
The trial court also pointed to testimony from Rice,
Old Reliable’s expert, in support of its conclusion that an
award of attorney fees was warranted. The court stated:
On March 3, 2008, plaintiff’s expert, James Rice,
PhD, conceded that [the] felt facer of the accused
VT-1 product was “integral with” the spaced
block[s] just as the OSB of the non-infringing VT-
2 was “integral with” the spaced blocks. This ren-
dered the presence of the board in the VT-2 irrele-
vant[,] making it invalidating prior art. Pursuing
Appearance and Odor: (Polyisocyanurate Foam)—
White or cream colored solid with a black fiber-
glass facing, and with no odor. (Oriented strand
board/Plywood)—Light to dark tan colored solid
with limited odor.
The MSDS also states that the “products are manu-
factured/assembled using rigid foam insulation board,
which is completed polymerized polyisocyanurate rigid
cellular plastic material along with either oriented strand
board or untreated/treated plywood panel products.”
(emphasis added).
OLD RELIABLE v. CORNELL 14
the infringement suit after this evidence is further
evidence of [Old Reliable’s] bad faith.
Attorney Fees Decision, 2010 U.S. Dist. LEXIS 8756, at
*13 n.20.
On review, we cannot agree that Old Reliable’s deci-
sion to continue its infringement action after Rice’s testi-
mony was objectively unreasonable or evidence of bad
faith. 4 Rice testified that when a block of insulating
material is manufactured from polyisocyanurate, the
foam insulation will stick to anything it touches and
become “integral” with that object. The question of
whether the foam insulation becomes integral with the
OSB, however, is different than the question of whether
the spaced blocks are integral with the “main portion” of
insulating material as required by the asserted claims.
See ’950 patent, col.8 ll.1-2. Rice asserted, moreover, that
the OSB in the VT-2 product “does not become part of the
‘main portion’ of the insulating material because, unlike
the felt facing, OSB is an inflexible separate structural
component that changes the overall structure” of the roof
board. Invalidity Decision, 2009 U.S. Dist. LEXIS 25181,
at *12 (footnote omitted). This testimony clearly sup-
ported Old Reliable’s contention that the VT-2 did not
anticipate because it did not meet all of the structural
limitations of independent claim 1 of the ’950 patent.
4 When making a section 285 fee award, subjective
considerations of bad faith are irrelevant if the challenged
claims or defenses are not objectively baseless. iLOR,
2011 U.S. App. LEXIS 516, at *13; see also Prof’l Real
Estate Investors, Inc. v. Columbia Pictures Indus., Inc.,
508 U.S. 49, 60 (1993) (“Only if challenged litigation is
objectively meritless may a court examine the litigant’s
subjective motivation.”). Because we conclude that Old
Reliable’s arguments in support of the validity of the ’950
patent were not objectively baseless, we need not reach
the question of whether it acted in bad faith.
15 OLD RELIABLE v. CORNELL
Thus, even following Rice’s deposition, Old Reliable had a
non-frivolous basis for asserting that, due to the interven-
ing layer of OSB between the insulation and the spaced
blocks, the VT-2 was not invalidating prior art.
IV. Anticipation by the Branch River Air-Flo Product
We likewise conclude that Old Reliable had a reason-
able foundation for its argument that the ’950 patent was
not anticipated by the Branch River Air-Flo product. Old
Reliable contended that the Air-Flo was not invalidating
prior art because it did not contain the cross-ventilation
feature disclosed in the ’950 patent. The district court
rejected this argument, relying on the testimony of Dau-
phinais, a long-time Branch River employee, who stated
that Branch River had filled an order in which it had cut
cross-channels into its Air-Flo product prior to the critical
date of the ’950 patent. 5 Invalidity Decision, 2009 U.S.
Dist. LEXIS 25181, at *15-17.
Old Reliable, however, had non-frivolous grounds for
asserting that Dauphinais’ testimony was inadequate to
establish anticipation by the Air-Flo. It argued that his
testimony was inherently unreliable, noting that Dauphi-
nais appeared uncertain as to when the events in question
occurred. Old Reliable contended, moreover, that his
testimony was wholly uncorroborated and that none of the
documentation produced by Cornell showed cross-venting
5 The district court also relied on Rice’s testimony
in concluding that the Air-Flo was anticipatory prior art.
See Invalidity Decision, 2009 U.S. Dist. LEXIS 25181, at
*15. Rice acknowledged, in response to a hypothetical
question, that if cross-channels had been cut into the Air-
Flo product, it would have been invalidating prior art.
Nothing in his testimony, however, established that the
Air-Flo product, as it was manufactured and sold prior to
the ’950 patent’s critical date, contained the cross-venting
feature of the asserted claims.
OLD RELIABLE v. CORNELL 16
on the Air-Flo product before the ’950 patent’s critical
date. See Lazare Kaplan Int’l, Inc. v. Photoscribe Techs.,
Inc., No. 2009-1251, 2010 U.S. App. LEXIS 25967, at *32
(Fed. Cir. Dec. 22, 2010) (“Generally, corroboration is
required of any witness whose testimony alone is asserted
to invalidate a patent. This requirement stems from the
suspect nature of oral testimony concerning invalidating
events.” (citations and internal quotation marks omit-
ted)). Thus, although the district court chose to credit
Dauphinais’ testimony, Old Reliable had reasonable
grounds for challenging that testimony and for contending
that the Air-Flo was not anticipatory prior art.
V. The Reexamination Proceedings
On June 15, 2010, the PTO issued a notice of intent to
issue an ex parte reexamination certificate confirming the
patentability of all claims of the ’950 patent. After
reviewing numerous prior art references, including the
VT-1 and the Air-Flo, the PTO concluded that “[n]one of
the prior art discloses nor renders obvious the combina-
tion of features” disclosed in the ’950 patent. While it is
true that this “court is not bound by the PTO’s actions
and must make its own independent determination of
patent validity,” Medrad, Inc. v. MRI Devices Corp., 401
F.3d 1313, 1322 (Fed. Cir. 2005), it is equally true that
the PTO has acknowledged expertise in evaluating prior
art and assessing patent validity. See Hyatt v. Kappos,
625 F.3d 1320, 1334 (Fed. Cir. 2010) (en banc) (recogniz-
ing the deference owed the PTO as “the knowledgeable
agency charged with assessing patentability”); Tech.
Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1331
(Fed. Cir. 2008) (“This is not to say that the determina-
tions made by the corps of examiners are not important,
or should not be worthy of appropriate deference to their
expertise in . . . technical matters, especially when we
have the benefit of well-reasoned explications.”); Applied
17 OLD RELIABLE v. CORNELL
Materials, Inc. v. Advanced Semiconductor Materials Am.,
Inc., 98 F.3d 1563, 1569 (Fed. Cir. 1996) (“The presump-
tion of validity is based on the presumption of administra-
tive correctness of actions of the agency charged with
examination of patentability.”). The fact that the PTO,
after assessing the relevant prior art, confirmed the
patentability of all claims of the ’950 patent undercuts
Cornell’s contention that Old Reliable had no reasonable
basis for its assertion that its patent was not anticipated. 6
Cornell argues that this court should not give weight
to the PTO’s notice of intent to issue an ex parte reexami-
nation certificate confirming the validity of the ’950
patent. 7 In support, it notes that an appellate tribunal
generally does not review arguments or evidence not
6 Whereas clear and convincing evidence is required
to invalidate a patent in district court, a patent can be
invalidated during PTO reexaminations by a simple
preponderance of the evidence. In re Swanson, 540 F.3d
1368, 1377 (Fed. Cir. 2008).
7 The record is not entirely clear as to why the PTO
issued the notice of intent to issue a reexamination cer-
tificate confirming the patentability of all claims of the
’950 patent on June 15, 2010, but then withdrew that
notice two weeks later. It appears, however, that the
agency did not realize that this court had affirmed the
district court’s invalidity determination when it issued its
original notice. When it withdrew the notice, the PTO
stated that “the claims of [the ’950 patent] are invalid”
and noted that “the Federal Circuit has issued an Order
affirming the District Court[’s]” invalidity determination.
See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1429 (Fed. Cir.
1988) (explaining that the PTO will discontinue reexami-
nation in situations where a trial court finds a patent
invalid and that decision is either upheld on appeal or not
appealed).
OLD RELIABLE v. CORNELL 18
presented to the district court. 8 See Singleton v. Wulff,
428 U.S. 106, 120 (1976) (“It is the general rule, of course,
that a federal appellate court does not consider an issue
not passed upon below.”). Cornell, moreover, “disputes
the accuracy and completeness of the reexamination
proceedings,” and contends that “[t]he examiner did not
have, nor could he have reviewed, all of the information,
facts and testimony upon which the district court based
its decision to invalidate the ’950 patent.”
We do not find these arguments persuasive. Although
the results of the PTO reexamination proceedings were
not available to the district court, this court can take
judicial notice of the fact that the PTO, after assessing the
relevant prior art, issued a notice of intent to issue a
reexamination certificate confirming the patentability of
all claims of the ’950 patent. See Advanced Software
Design Corp. v. Fed. Reserve Bank, 583 F.3d 1371, 1379
n.3 (Fed. Cir. 2009) (explaining that this court can take
judicial notice of a decision from another court or agency);
Grp. One Ltd. v. Hallmark Cards, Inc., 407 F.3d 1297,
1306 (Fed. Cir. 2005) (emphasizing that judicial notice
may be taken at any stage of a proceeding). Moreover,
although the PTO may not have considered all the depo-
sition testimony relied upon by the district court in mak-
ing its invalidity determination, the fact remains that the
PTO assessed the VT-2 and the Air-Flo, as well as many
other prior art references, and yet confirmed the validity
of all claims of the ’950 patent over the prior art.
8 The trial court entered judgment awarding attor-
ney fees to Cornell on February 2, 2010. It therefore did
not have the benefit of the PTO’s reexamination determi-
nation upholding the validity of the ’950 patent when it
issued its fee award decision.
19 OLD RELIABLE v. CORNELL
“[I]t is the trial court’s decision, not the PTO’s, that is
before us on appeal.” Tech. Licensing, 545 F.3d at 1331.
This court, therefore, is not reviewing the correctness of
the PTO’s reexamination validity determination. We
conclude, however, that the fact that the PTO confirmed
the validity of the ’950 patent on reexamination provides
probative evidence on the issue of whether Old Reliable
had a reasonable basis for its assertion that its patent
was not anticipated.
VI. Litigation Misconduct
Where a party engages in litigation misconduct, fees
can be awarded pursuant to section 285 even absent clear
and convincing evidence that an asserted claim or defense
is objectively baseless. Brooks Furniture, 393 F.3d at
1381. Litigation misconduct generally involves unethical
or unprofessional conduct by a party or his attorneys
during the course of adjudicative proceedings. 9 See ICU
Med., Inc. v. Alaris Med. Sys., Inc., 558 F.3d 1368, 1380
(Fed. Cir. 2009) (affirming an award of attorney fees
where a party made “multiple, repeated misrepresenta-
tions” to the court (citations and internal quotation marks
omitted)); Mathis v. Spears, 857 F.2d 749, 752 (Fed. Cir.
1988) (affirming an award of attorney fees where a party
“blatantly misled[] the PTO” and then “attempted to
employ the courts as handmaidens to its iniquity” (foot-
note omitted)).
9 The trial court specifically determined that sanc-
tions were to be assessed only against Old Reliable and
not against its attorneys. See Attorney Fees Decision,
2010 U.S. Dist. LEXIS 8756, at *17 n.23 (“The Court’s
award of attorney fees to Cornell is against [Old Reliable]
only. The Court does not award the fee against counsel
for [Old Reliable] and finds no basis for an award against
[Old Reliable’s] lawyers.” (emphasis in original)).
OLD RELIABLE v. CORNELL 20
No such litigation misconduct is present here. Con-
trary to the trial court’s assertions, the failure of Old
Reliable to engage in settlement negotiations, see Attorney
Fees Decision, 2010 U.S. Dist. LEXIS 8756, at *16, does
not constitute the type of conduct worthy of sanctions
under section 285. 10 “[T]here is a presumption that an
assertion of infringement of a duly granted patent is made
in good faith,” and “[c]lear and convincing evidence is
required to overcome that presumption.” Medtronic, 603
F.3d at 954. Because Old Reliable had an objectively
reasonable basis for maintaining an infringement suit,
the refusal to make or accept an offer of settlement is not,
in and of itself, sufficient to establish litigation miscon-
duct. See McNeil-PPC, Inc. v. L. Perrigo Co., 337 F.3d
1362, 1372 (Fed. Cir. 2003) (emphasizing that a patentee
has the right to “vigorously . . . enforc[e] a presumptively
valid patent”).
CONCLUSION
Accordingly, the judgment of the United States Dis-
trict Court for the Northern District of Ohio is reversed
and the award of attorney fees is vacated.
COSTS
No costs.
REVERSED AND FEE AWARD VACATED
10 We note that the record shows that Old Reliable
did, in fact, propose an offer of settlement, but that the
offer was rejected by Cornell in May 2007.