In Fraunhofer-Gesellschaft zur Förderung der Angewandten Forschung e.V. v. Sirius XM Radio Inc., No. 17-184-JFB-SRF (Mar. 8, 2019), Magistrate Judge Fallon denied the defendant’s motion to declare the case exceptional. The defendant had prevailed on a license defense.
Judge Fallon found that the plaintiff’s position on the merits was not objectively unreasonable. According to the Court, there was no binding authority or directly analogous decision cited by the parties addressing the “unique situation” at issue here: the validity of a sublicense to a patent when the sublicensor rejects its license during bankruptcy proceedings. The Court acknowledged that the rationale for its decision was drawn from persuasive, not precedential, authority (dicta from a Federal Circuit decision), and that the plaintiff supported its position with citation to persuasive authority and had a reasonable, though ultimately unsuccessful, interpretation of the agreement.
Nor did Judge Fallon find anything exceptional or vexatious about the plaintiff’s discovery conduct or opposition to the defendant’s motions to stay. Judge Fallon stated that the reasonableness of the plaintiff’s positions on the merits was partly why the Court chose not to stay the case.
Key Point: Although this case was on appeal, Magistrate Judge Fallon chose not to defer ruling on the fees motion until after appeal, since, according to the Court, the outcome of the appeal would not affect the reasons for denying the defendant’s motion for exceptional case.