Andersen Manufacturing Inc. v. Wyers Products Group, Inc.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR ATTORNEYS' FEES

          William J. Martinez United States District Judge

         Plaintiff Andersen Manufacturing, Inc. (“Andersen”), brought this suit against Defendant Wyers Products Group, Inc. (“Wyers”), for patent infringement. The inventions at issue are an adjustable-height trailer hitch made from aluminum, as described in U.S. Patent No. 7, 156, 412 (“412 Patent”); and a process for manufacturing that hitch, as described in U.S. Patent No. 7, 222, 510 (“510 Patent”). At summary judgment, the Court found that (i) the 412 Patent was invalid as anticipated and (ii) Wyers did not infringe the 510 Patent (“Summary Judgment Order”). Andersen Mfg. Inc. v. Wyers Prod. Grp., Inc., 2019 WL 479777 (D. Colo. Feb. 7, 2019) (ECF No. 114). The Court entered final judgment in Wyers's favor on February 7, 2019. (ECF No. 115.)

         Currently before the Court is Wyers's Motion to Declare this Case Exceptional and for Award of Attorney Fees and Costs. (ECF No. 118.) For the reasons explained below, the Court grants this motion in part and denies it in part, awarding Wyers $131, 542.07 in attorneys' fees.

         I. LEGAL STANDARD

         “The court in exceptional cases may award reasonable attorney fees to the prevailing party [in a patent case].” 35 U.S.C. § 285. “[A]n ‘exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). The question of whether a case is exceptional is evaluated “case-by-case . . . considering the totality of the circumstances, ” and is within the trial court's discretion. Id. Moreover, the two types of “exceptionality”-i.e., “the substantive strength [or weakness, rather] of a party's litigating position” and “the unreasonable manner in which the case was litigated, ” id.- are “ultimately consider[ed] . . . together under the ‘totality of the circumstances, '” SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1347 (Fed. Cir. 2015). The burden of proof is preponderance of the evidence. Octane Fitness, 572 U.S. at 557.

         II. BACKGROUND

         A. The Patents and Related Prior Art

         1. The 412 Patent

         The U.S. Patent & Trademark Office (“PTO”) issued the 412 Patent to Andersen on January 2, 2007. See 412 Patent, cover sheet. The field of the invention is towing hitches, such as for towing a boat or RV behind a truck. Id. at 1:14-62. As relevant here, the patent discloses a “stepped” (adjustable) hitch assembly, which permits the user to attach trailers of varying heights while keeping the trailer level. In the following illustrations from the patent, Figure 5 depicts the “drop bar” component whose upper (horizontal) segment slides into the towing vehicle's hitch adapter, and whose other (vertical) segment is a series of graded steps over which the "sleeve" in Figure 6 can slide, locking into various heights. The hollow column disclosed in Figure 6 secures the ball mount-the item that actually makes contact with the trailer-illustrated in Figure 7.

         (Image Omitted)

         As will become clear below, the 412 Patent was not the first to propose this basic design. The patentable innovation asserted in the 412 Patent is that the components are made of aluminum, rather than steel. Id. at 1:42-2:4.

         2. The 510 Patent

         The PTO issued the 510 Patent to Andersen on May 29, 2007, from an application that traces back to the same application from which the 412 Patent arose. See 510 Patent, cover sheet. The 412 and 510 Patents share the same specification, but in terms of the claimed invention, the 510 Patent emphasizes the method for creating aluminum drop bars, as compared to the 412 Patent's emphasis on the hardware itself.

         The illustrations relevant to the 510 Patent focus on a non-adjustable drop bar, i.e., one that emerges horizontally from the vehicle's hitch adapter, then slopes downward, then bends again into a lower horizontal component, to which the ball adapter is attached, as in the following:

         (Image Omitted)

         With this end product in mind, the patent illustrates how aluminum may be extruded through a die to form a thick metal sheet with the appropriate drop bar profile (Figure 1), after which the sheet can be sliced into multiple proto-drop bars that are machined into their final form (Figure 2):

         (Image Omitted)

         Although these illustrations only show the vaguely S-shaped, non-adjustable drop bar, the 510 Patent does not limit itself to manufacturing that shape. It also applies to extrusion of aluminum drop bars in the upside-down-L shape of the drop bar emphasized in the 412 Patent. See 510 Patent, fig. 5; id. at 6:12-17.

         3. Moss 472 & Moss 405

         In this case, whether the patents-in-suit describe anything novel-particularly the 412 Patent-has mostly revolved around the significance of two prior art references. The first is a June 5, 2002 patent application by Newell Ryan Moss et al., U.S. Patent Application Pub. No. 2003/0052472 A1, to which the parties refer as "Moss 472." Moss 472 disclosed a vertically adjustable hitch assembly similar to that disclosed in the 412 Patent, save that Moss's stepped gradations are a series of holes drilled through the middle of the vertical segment of the drop bar:

         (Image Omitted)

         Moss 472, fig. 1. Moss 472 states that, "[i]n certain embodiments of the present invention, the apparatus 10 and the components thereof are made of steel, however, aluminum, ferrous alloys, or any other material possessing sufficient strength and durability may be used." Moss 472 ¶ 57 (emphasis added).

         But before Moss filed the document known as Moss 472, he filed U.S. Patent Pub. No. 2002/0113405 A1, to which the parties refer as "Moss 405." Moss 472 expressly incorporates Moss 405. See Moss 472 ¶ 17 (declaring "U.S. patent application Ser. No. 10/078, 322," which became the Moss 405 publication, to be "incorporated herein by reference"). Moss 405 discloses essentially the same invention as in Figure 1 of Moss 472, reproduced above, but Moss 405 also discloses a different potential embodiment, designed not to be a trailer hitch, but a mount for something like a flagpole:

         (Image Omitted)

         Moss 405 names item 98-comprising the tube (100) and its adjoining bracket (102)- the "standard," which then attaches to the horizontal segment (34) that is meant to be inserted into a hitch adapter. Id. ¶ 69.

         Regarding Figure 15, Moss 405 states the following:

Aluminum may serve well for the standard 98. Similarly, the trunnion 12 [sic: 34] may be fabricated of aluminum for ease in fabrication. Since the standard 98 need not sustain the same loads as may a hitch 10, lighter materials such as aluminum, or metals of lighter gauges may serve as the standard 98 and trunnion 34.

Id. ¶ 70. This suggests that, when Moss filed the document that became Moss 405, he viewed aluminum as unsuitable for trailer hitches. The incorporation by reference of Moss 405 into Moss 472 thus creates a tension with Moss 472's endorsement of aluminum for trailer hitches.

         B. Diversi-Tech Lawsuit

         Andersen owns a third patent related to trailer hitches, U.S. Patent No. 6, 908, 099 ("099 Patent"), issued on June 21, 2005. It discloses minor variations on the method of manufacturing a drop bar that would eventually become the 510 Patent.^[1]

         In November 2005, Andersen sued a company named Diversi-Tech for infringement of the 099 Patent (“Diversi-Tech Lawsuit”). See Andersen Mfg., Inc. v. Diversi-Tech Corp., No. 2:05-cv-9923 (D. Utah, Nov. 4, 2005). Andersen moved for a preliminary injunction, and Diversi-Tech's response brief highlighted Moss 472 as teaching that aluminum could be used for a trailer hitch. (ECF No. 118-3 at 24-25.)^[2] Without mentioning Moss 472, U.S. District Judge Dee Benson denied the preliminary injunction in July 2006, reasoning that there was prior art evidence of using aluminum for trailer hitches and for manufacturing them in the way claimed by the 099 Patent, so there was a strong question of invalidity and therefore Andersen had failed to show a likelihood of success on the merits. (ECF No. 96-8 at 60-63.)

         In July 2007, Judge Benson denied a second preliminary injunction motion, this one based on the newly issued 412 Patent. (ECF No. 96-10.) He again found that there were substantial prior art references both to drop-bar-style trailer hitches and the use of aluminum “in the trailer hitch industry.” (Id. at 3-4.) So, again, he held that there was a strong question of invalidity and therefore Andersen had failed to show a likelihood of success on the merits. (Id. at 4.)

         The Federal Circuit affirmed Judge Benson's two denials. (ECF No. 28-3.) “Practically no activity” took place in the action after that, and Judge Benson dismissed it with prejudice for lack of prosecution on October 5, 2009. (ECF No. 96-12 at 2-3.)

         C. Wyers's Hitch

         Since 2012, Wyers has offered for sale its "Razor" adjustable hitch, which is made of aluminum and is remarkably similar to the device disclosed in the 412 Patent:

         (Image Omitted)

(ECF No. 96-32 at 2.) As this photograph shows, the only apparent differences between the Razor and the invention disclosed in the 412 Patent are that the graded steps face toward the towing vehicle, and the surface facing away from the towing vehicle is rounded.

         D. Origins of this Lawsuit and Proceedings Before Transfer

         This case began in January 2016 in the United States District Court for the District of Idaho, the Hon. B. Lynn Winmill presiding. (ECF No. 1.) In May 2016, Wyers filed with the PTO a request for ex parte reexamination of the 412 Patent. (ECF No. 28-1 at 3; ECF No. 29-2 through 29-9.) Shortly afterward, Wyers moved for a stay of the lawsuit pending the outcome of the reexamination. (ECF No. 28-1.) Andersen opposed, arguing that whether the PTO would grant Wyers's request remained speculative, and, in any event, Wyers's request for ex parte reexamination (as opposed to inter partes review) would not definitively resolve anything because the results of ex parte proceedings may be re-litigated in court. (ECF No. 34 at 2-3.) Andersen further asserted that “reexaminations could take five years or more, ” and so a stay “would be highly prejudicial” due to the delay. (Id. at 3; see also id. at 10 (“Although[] the Patent Office resolves 95% of ex parte reexaminations within 25 months, if there is an appeal to the Patent Trial and Appeals Board or the Federal Circuit, the reexamination can take much longer.”).)

         In September 2016-before a ruling from Judge Winmill-Wyers informed the Court that the PTO had granted the reexamination request. (ECF Nos. 45-1, 45-3.) Andersen responded that it still opposed to stay because “[r]esolution of the reexamination including any appeal could take five years or more.” (ECF No. 49 at 1-2.)

         Judge Winmill denied the motion to stay in December 2016, reasoning that the stay would be unduly prejudicial to Andersen given the length of reexamination proceedings-“[m]ost of these reexaminations, including the inevitable appeal to the Patent Trial and Appeal Board, take three to five years to ...