Nichia Denied Attorney’s Fees in LED Design Suit

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In the latest chapter of a lawsuit that has become a stark demonstration of the futility of patent litigation, Japanese LED maker Nichia lost its motion for attorney’s fees in a design patent dispute with Korean competitor Seoul Semiconductor (Seoul).  Nichia had moved for a fee award of about $2.5 million.  In February, Nichia won a Pyrrhic victory when it obtained a judgment against Seoul for $250 (the actual money damage was a paltry $62, but the statutory minimum award for design patent infringement is $250) in a case that cost both sides millions of dollars in legal fees.

Section 285 of the patent statute provides for the award of attorney’s fees to the prevailing party in “exceptional cases.”  A case may be deemed exceptional for many reasons, including where infringement is found to be willful or a party has engaged in litigation misconduct.  However, an award of attorney’s fees is discretionary, and a judge can deny attorney’s fees even in exceptional cases.

Here, despite a jury verdict that Seoul had willfully infringed four of Nichia’s LED design patents, Judge Maxine M. Chesney of the U.S. District Court in San Francisco denied attorney’s fees because Nichia’s ultimate claim for relief was based on such a small monetary loss.  Judge Chesney noted that Nichia proceeded with the litigation after its claim for inducing infringement (which, if successful, could have resulted in damages of over $4 million) was dismissed on summary judgment.

The court’s order (order.pdf) characterized Nichia’s attempt to pursue the remaining allegations of direct infringement based on only two sales in the U.S. as the use of a “sledgehammer to kill a gnat” and noted that Seoul spent about $2 million in legal fees to defend that portion of the case.

Judge Chesney also observed that the parties are engaged in other disputes in Korea and Japan and suggested that Nichia’s persistence here may have been an attempt to gain “some unstated ancillary advantage over defendants in Asia.” 

Although that may have been Nichia’s motivation, there is nothing that prevents a patent holder from pursuing a “de minimis” injury.  A patentee has the right to enforce its patent even for tiny damages amounts:  the Federal Circuit’s opinion in Embrex, Inc. v. Service Engineering Corp. held that the patentee can sue for a de minimis amount so long as the lawsuit is not “performed for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry.”  The result here guaranteed one thing – no one was amused by this lawsuit.

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Eric Lane

Eric Lane, the founder and principal of Green Patent Law, is an intellectual property lawyer and registered U.S. patent attorney in New York and is a member of the bar in New York and California. Eric has more than two decades of experience working with wind, solar PV, CSP, biofuels, and geothermal, energy storage technologies, carbon capture and sequestration, medical devices, data communications, mechanical, chemical, internet and software.