# Petition for Writ of Certiorari — Forest Laboratories, Inc. v. Abbott Laboratories > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_2396%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2004 - **Citation:** 540 U.S. 1109 ## Text Supreme Court, U.S. FILED 0 No. 03 > B94 NW 5 2003 > TYE FRY IN THE Supreme Court of the United States FOREST LABORATORIES, INC. and ONY INC., Petitioners, v. ABBOTT LABORATORIES, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT PETITION FOR A WRIT OF CERTIORARI HERBERT F. SCHWARTZ Counsel of Record KENNETH B. HERMAN FisH & NEAVE 1251 Avenue of the Americas New York, New York 10020 (212) 596-9000 Attorneys for Petitioners 183652 ce COUNSEL PRESS (800) 274-3321 * (800) 359-6859 1 QUESTIONS PRESENTED This petition is one of two submitted within one week in different cases seeking review of the Federal Circuit’s “bright-line” rule limiting the district courts’ discretion to award reasonable attorney fees as a result of misconduct by a party in a patent case. The questions presented here are: 1. Did the Court of Appeals for the Federal Circuit err in establishing a “bright-line” rule defining only certain conduct as “exceptional” under 35 U.S.C. § 285 and thereby limiting the discretion of federal district courts to prevent gross injustice by awarding attorney fees to a prevailing party because of pre-litigation misconduct? 2. Did the Court of Appeals for the Federal Circuit err in holding that clear and convincing evidence of pre-litigation misconduct that gave rise to a finding of equitable estoppel cannot, as a matter of law, make a patent case “exceptional”? =~ ll CORPORATE DISCLOSURE STATEMENT Petitioners Forest Laboratories, Inc. and ONY Inc. have no parent companies. There are no publicly-held companies that own ten percent or more of the stock of the petitioners. 11 TABLE OF CONTENTS Questions Presented ............-- eee eeeeeee Corporate Disclosure Statement ..........-----. Oe STE eee eee ee ee ee Table of Cited Authorities ..............ceceee. Table of Appendices .........--. eee cece renee Opinions Below .......:..---seee seer eee eeeee Deeieemeel GO SOTISGICHION 2... 2... eee eee sees Statutory Provision Involved ..........-.+++++ EEE SN EEE ee ee Reasons for Granting the Petition .............-- Conclusion se ae oe ee eo ee ee Se Se ee eS SAS eS Pe Pe Page 1V vi 10 20 TABLE OF CITED AUTHORITIES Page CASES J Aromatique, Inc. v. Gold Seal, Inc., po OE ge ee ere 17, 18 - Brasseler, U.S.A. I, L.P. v: Stryker Sales Corp., 267 F.36 1370 (Fed. Cw. 2001). wn. ccc ceees 15 Brennan v. Hawley Prods. Co., 98 F. Supp. 369 (N.D. Tl. 1951) ............. 13,14 Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048 (Fed. Cir. 1992)... 66.0 escccs 15, 16 Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., ee Sie FR ERED es che oot e este xsesceees 10, 11 Fogerty v. Fantasy, Inc., ; es AEF CPOE 6h eV eRe eee e eee 17 Hoffmann-La Roche Inc. v. Invamed Inc., 213 £.36 1599 (POG. Cit, ZO0U) wn i viccss 15 L.A. Gear, Inc. v. Thom McAn Shoe Co., 966 F.20 1117 (red. Cir. 19935)... «606 se cee es 13 McNeil-PPC, Inc. v. L. Perrigo Co., 337 F.30 1362 (Fed. Cir. 20035)... 6. es ene 3, 4, 10 Cited Authorities Page Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d 668 (ed Cir. 1964) ...... 260 cceveess 13 Yarway Corp. v. Eur-Control USA, Inc., TTS 8.26 268 Ded. Cie. TIES) jcc cctcccionss 15, 16 STATUTES AND LEGISLATIVE MATERIALS 15 U.S.C. § 1117(a) (Supp. 2003) .............. 6,17 yy, BUR See Be. |) eeeeererrrr errr re ry 2 (Eis tom Bo). Seererrr reese errr 3, ha 35 USL... 6 TORT) ics veveki enters tates 12 35 USL. © 259 CIOS) os vas vine veces eeeeses 6, 12 33 U.S.C. § TES GOGE) sce era eeee re cnvscyees passim 35 U.S.C. § 285, Revision Note, reprinted in 1952 PE CE AM Pe ee 656s cae eda eee 6, 12 Patent Rights — Protection, S. Rep. No. 79-1503 (June 14, 1946), reprinted in 1946 U.S.C.C.A.N. Pk Ss sppeereretetretr rte. ce 5, 11-12 Patent Rights — Protection, ch. 726, Pub. L. No. 79-587 (Aug. 1, 1946), reprinted in 1946 ts fat oS Sere er ye 5, 12 VI TABLE OFAPPENDICES Appendix A — Opinion Of The United States Court Of Appeals For The Federal Circuit Filed August i ee re yee ee ee ee ar? Appendix B — Decision And Order Of The United States District Court For The Western District Of New York Filed September 30, 2002 .......... Appendix C — Decision And Order Of The United States District Court For The Western District Of New York Filed September 4, 2001 ........... Appendix D — Opinion Of The United States District Court For The Western District Of New York Decided June 23, 1999 ................ Page la l3a 15a ] No. 03- IN THE Supreme Court of the United States FOREST LABORATORIES, INC. and ONY INC., Petitioners, V. ABBOTT LABORATORIES, Respondent. On PETITION FOR A WRIT OF CERTIORARI TO THE UNitTED STATES CouRT OF APPEALS FOR THE FEDERAL CIRCUIT PETITION FOR A WRIT OF CERTIORARI Petitioners Forest Laboratories, Inc. and ONY Inc. respectfully petition for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case. ~ 2 OPINIONS BELOW The opinion of the court of appeals (Pet. App. 1a-12a) is reported at 339 F.3d 1324. The opinions of the United States District Court for the Western District of New York (Pet. App. 13a-31a and 32a-90a) are unreported. STATEMENT OF JURISDICTION The judgment of the court of appeals was entered on August 7, 2003. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). STATUTORY PROVISION INVOLVED This case presents an issue of how Section 285 of Title 35 of the United States Code is interpreted. Section 285 provides that: — The court in exceptional cases may award reasonable attorney fees to the prevailing party. STATEMENT OF THE CASE The court of appeals’ decision eviscerates the intent of 35 U.S.C. § 285 to compensate the wronged party. After a four-month trial, the district court awarded attorney fees to petitioners Forest Laboratories, Inc. (“Forest”) and ONY Inc. (“ONY”), under § 285. The district court found by clear and convincing evidence that respondent Abbott Laboratories (“Abbott”) had engaged in bad-faith conduct by repeatedly encouraging Forest and ONY over an eleven-year period to pursue the development of Infasurf® — a surfactant replacement drug used to treat the lungs of premature oi aaa 3 babies. Abbott did so because it “was betting on two horses.” Pet. App. 22a. Before its own drug — Survanta® — received regulatory approval, Abbott was encouraging ONY to proceed with the development of Infasurf® so that it could rely on Infasurf® as its backup drug in the event that Survanta® failed to obtain approval. But once Survanta® was approved by the FDA, Abbott did an about-face and charged ONY and Forest with infringement, prompting the suit that ultimately led to the attorney fees award. The district court found that petitioners did not infringe and that Abbott was barred by equitable estoppel from asserting its patents against petitioners. After finding clear and convincing evidence that Abbott had acted in bad faith, the district court awarded Forest and ONY fees and expenses to avoid a “gross injustice” and to deter other companies from similar conduct in the future. The court of appeals reversed. Announcing a new “bright-line” rule, it held that “exceptional cases” are only those involving misconduct during litigation, inequitable conduct before the patent office, willful infringement, or a frivolous suit. It concluded that all other types of pre- litigation misconduct, such as Abbott’s bad-faith conduct, which led to a finding of equitable estoppel, cannot, as a matter of law, be deemed “exceptional.” ' 1. In McNeil-PPC, Inc. v. L. Perrigo Co., 337 F.3d 1362 (Fed. Cir. 2003), also a case involving pharmaceuticals, decided six days before the ruling in this case, the Federal Circuit also reversed a district court’s award of attorney fees to a prevailing alleged patent infringer for failure to satisfy its new bright-line test. The Eastern District of Pennsylvania did not find that McNeil had committed inequitable conduct before the Patent Office, but awarded attorney fees to Perrigo based on a finding, (Cont'd) COASTER 7 ET IT ITE EES 4 The court of appeals’ decision is contrary to the statutory intent of 35 U.S.C. § 285 and to the treatment by another circuit court of appeals of the analogous statute in trademark. The court of appeals justified its treatment of Abbott’s pre-litigation conduct on the grounds that “the consequence of estoppel is loss of the cause of action.” Pet. App. 9a. This, however, does nothing to compensate petitioners for the substantial fees they incurred and for the time their product was delayed because of Abbott’s misconduct. The court of appeals’ rationale simply undermines the purpose of § 285, which is to prevent gross injustice to the harmed party. The award of fees contemplated by § 285 is not a mere technicality, but rather a part of a legislative provision that regulates the course of conduct that ultimately becomes the subject of litigation. A. Statutory Framework. The question in this case is straightforward: may the court of appeals create a rigid definition of “exceptional case” that limits the circumstances under which the district court may exercise its discretion to award attorney fees? Section 285 of the Patent Act is the statutory provision addressed to attorney fees. It provides, in its entirety, that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285 (2001). (Cont'd) which the court of appeals found was “not clearly erroneous,” that ~ McNeil prosecuted the pertinent patent applications with “‘studied and deceptive ignorance.’” Jd. at 1371. The court of appeals, however, held that because McNceil’s misconduct did not rise to the level of “clear arid convincing evidence of inequitable conduct [before the PTO] or misconduct during litigation,” it could not result in an award of attorney fees because it was not one of its identified bright-line “‘exceptional’” circumstances. Jd. at 1372. Perrigo has recently filed a petition for a writ of certiorari also seeking this Court’s review of the court of appeals’ new bright-line rule. 5 Section 285 was enacted to prevent a gross injustice to a prevailing accused infringer and was not limited simply to compensate a prevailing patentee. Patent Rights — Protection, S. Rep. No. 79-1503 (June 14, 1946), reprinted in 1946 U.S.C.C.A.N. 1386-87. Prior to 1946, attorney fees were not recover only profits and damages. Patent Rights — Protection, S. Rep. No. 79-1503 (June 14, 1946), reprinted in 1946 U.S.C.C.A.N. 1387. In 1946, an amendment to the damages section of the patent the Senate Committee on Patents states that “the provision relating to attorney’s fees is made discretionary with the court.” Patent Rights — Protection, S. Rep. No. 79-1503 (June 14, 1946), reprinted in 1946 U.S.C.C.A.N. 1387. The Committee added that the discretion given the court in this respect . . . will discourage infringement of a patent by anyone thinking that al! he would be required to pay if he loses the suit would be a royalty. The provision is also made general so as to enable the court to prevent a gross injustice to an alleged infringer. Id. (emphasis added). 6 The 1952 Patent Act placed the attorney fees provision in 35 U.S.C. § 285 and amended it to its current form. 35 U.S.C. § 285 (1954). It did not substantively change the provision. 35 U.S.C. § 285, Revision Note, reprinted in 1952 U.S.C.C.A.N. 2403, 2423. The Revised Note states that § 285 “is substantially the same as the corresponding provision in R.S. 4921 [the 1946 version]; ‘in exceptional cases’ has been added as expressing the intention of the present statute as shown by its legislative history and as interpreted by the courts.” /d. Like the patent statute, the Lanham Act provides that “(t]he court in exceptional cases may award reasonable attorney fees to the prevailing party” in a trademark action. 15 U.S.C. § 1117(a) (Supp. 2003). B. This Litigation. Petitioner ONY developed Infasurf®, the first lung surfactant replacement therapy used in the United States for treating respiratory distress syndrome in premature babies. Infasurf® utilizes as its active ingredient calf lung surfactant extract (“CLSE”’). Beginning in 1983, ONY discussed CLSE with respondent Abbott. Between 1983 and 1991, Abbott actively encouraged petitioner ONY to pursue the development and clinical testing of CLSE and was fully aware that they intended to commercialize it. Abbott also knew in June 1991 that ONY and Forest became partners to further develop and market Infasurf®. Abbott is the exclusive licensee of U.S. Patent Nos. 4,338,301 and 4,397,839 owned by Tokyo Tanabe Company Ltd. (“the Tanabe patents”). Abbott did not raise the question of possible infringement by CLSE of the Tanabe patents until it wrote to Forest in June 1994 — eleven years after Abbott first met with ONY to discuss CLSE. In fact, in 1984, Abbott conducted a patentability search for Infasurf® and led Forest 7 and ONY to believe that Infasurf® was not covered by any patents — including the Tokyo Tanabe patents. Abbott was aware that ONY was then telling the world that Infasurf® was not covered by patents and Abbott did not say anything contrary. Abbott did not raise its infringement allegations until a decade later. At that time, ONY and Forest provided Abbott with samples of Infasurf® and a memorandum detailing why Infasurf® did not infringe. When Abbott continued threatening litigation for more than one and one-half years, Forest and ONY filed suit for a declaratory judgment in March 1996. After more than three years of litigation, the district court found that Infasurf® did not infringe the Tanabe patents — on the same grounds set forth in the non- infringement memorandum — and that Abbott was equitably estopped from asserting those patents against ONY and Forest. The court of appeals affirmed the judgment of no infringement and, having done so, declined to reach the issue of equitable estoppel. Following the appeal, the district court granted ONY and Forest’s motion for attorney fees, finding by clear and convincing evidence that Abbott had acted in bad faith. Pet. App. 13a-3la. It held that “Abbott misled ONY and Forest into reasonably believing that Abbott did not intend to enforce the Tokyo Tanabe patents against them” (Pet. App. 22a) and that Abbott had pursued its allegations of infringement “with a reckless disregard for the facts in an attempt to prevent Infasurf® from reaching the market.” Pet. App. 25a. In its separate opinion holding that Abbott was equitably estopped, which it incorporated by reference into its opinion awarding attorney fees, the district court concluded that 8 ‘“Abbott’s failure to mention possible infringement before 1994 was sufficiently misleading to amount to bad faith.” Pet. App. 68a. The district court highlighted numerous specific examples of Abbott’s misleading conduct from 1983 to 1991, and catalogued that conduct as: “Initial Encouragement and Patentability Search”; “Contacts Between June 1984 and April 1986”; “April 1986 Meeting”; and “Contacts Between 1987 and 1991.” Pet. App. 51a-59a. The district court also described how “Abbott monitored CLSE, ONY and Forest” for many years but did not allege infringement. Pet. App. 59a. The district court, in fact, characterized Abbott’s conduct as “betting on two horses,” meaning it was seemingly cooperating with petitioners while developing its own surfactant product. Pet. App. 22a. Abbott did so to remain free to finalize a collaboration with petitioners if its own product — Survanta® — failed to obtain FDA approval. Pet. App. 22a-23a. Abbott never offered an adequate explanation for its conduct. Pet. App. 23a. Abbott declined to call the three Abbott employees from its witness list who would have been in the best position to explain Abbott’s actions (if the actions could have been explained). Pet. App. 23a. As the district court observed, “once [ONY and Forest] put forth sufficient evidence to establish an equitable estoppel defense ... [i]t was up to Abbott to either rebut such evidence or run the risk of an adverse verdict. Abbott chose the latter option.” Pet. App. 23a. The district court concluded that “Abbott’s bad faith conduct makes this an ‘exceptional’ case for purposes of § 285, and that Abbott should be required to pay attorneys’ 9 fees in order to prevent a gross injustice to ONY and Forest and to deter Abbott and other patentees from similar conduct in the future.” Pet. App. 27a. On appeal, Abbott argued, among other things, “that its private pre-litigation conduct was an inappropriate ground ‘on which to base a finding of exceptionality.” Pet. App. 6a. Forest and ONY maintained that a finding of exceptionality based on pre-litigation misconduct was within the discretion of the district court, and that Abbott had presented no legal support to the contrary. Pet. App. 7a. The court of appeals reversed. The court of appeals “agree[d] with Abbott that the district court erred in awarding attorney fees to ONY and Forest.” Pet. App. 7a. It “conclude[d] that the court erred finding this case to be ‘exceptional’ under 35 U.S.C. § 285.” Pet. App. 12a. It reasoned that it had “repeatedly identified as ‘exceptional’ those cases involving ‘inequitable conduct before the [Patent Office]; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.’” Pet. App. 8a (citations omitted). It found that the district court’s ruling of exceptionality “due to Abbott’s bad-faith conduct which led to a holding of equitable estoppel” amounted to an “expansive reading of § 285.” Id. Asserting that it had never “upheld a finding of exceptionality based on a patentee’s bad-faith business conduct toward an accused infringer prior to litigation,” it declined “to expand the scope of the statutory term ‘exceptional’ in that manner.” Pet. App. 9a. The court of appeals ignored the fact that it was, indeed, that “business conduct” that led directly to the lawsuit. It found that because Abbott’s suit was not frivolous, it could not be “exceptional” 10 on the basis of bad faith, notwithstanding that “bad faith” and “frivolous suit” are separate grounds for “exceptionality.” * REASONS FOR GRANTING THE PETITION This petition presents an important question of statutory interpretation that relates to the district court’s ability in its discretion to punish misconduct, prevent injustice, and to make whole the party subjected to the bad-faith pre-litigation conduct. The court of appeals’ new bright-line definition of “exceptional case” limits the district courts’ exercise of discretion provided in the broad terms of § 285 as explained in the statutory history. That decision undermines the words of the statute, the clear legislative history, and decades of interpretation by the federal courts, all of which place the determination of “exceptionality” in the discretion of the district court on a case-by-case basis. This Court has cautioned the court of appeals against too strongly favoring the clarity of new “bright-line” rules in nettlesome patent questions where Congressional intent and long-standing controlling precedent command that the question be left to the discretion of the district court. * 2. Similarly, in McNeil, 337 F.3d at 1372, the court of appeals reversed an award of attorney fees based on the patentee’s pre- litigation misconduct in procuring patents because “[w]e have not previously held [a patentee] liable for attorney fees. . . in the absence of clear and convincing evidence of inequitable conduct [before the PTO] or misconduct during litigation. We decline Perrigo’s invitation to do so on these facts.” 3. For example, in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 730 (2002), the court of appeals (Cont'd) ll 11 The court of appeals’ decision also is inconsistent with the decisions interpreting the attorney fee shifting provisions in other areas of intellectual property, such as trademark, which as this Court has explained, is closely related to the patent attorney fee provision. 1. The statutory provision and its legislative history provide district courts with discretion to determine if a patent case is “exceptional” and thereby warrants an award of attorney fees. Section 285 provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” “Exceptional case” is not further defined by Congress in the statute. Thus, the statute leaves the district court to determine in its discretion “exceptionality” and the subsequent awarding of attorney fees based on a case-by- case analysis of the losing party’s misconduct. The legislative history makes plain that “exceptionality” is to be determined by the district court — the court that has the opportunity to hear the evidence of the misconduct. The 1946 Patent Act added a punitive fee compensation provision to the patent law for the first time. Patent Rights — Protection, S. Rep. No. 79-1503 (June 14, 1946), reprinted (Cont'd) concluded that the flexible-bar rule for determining when prosecution history estoppel foreclosed a patentee’s claim of equivalents “should be overruled because this case-by-case approach has proved unworkable.” The court of appeals believed that its new complete- bar rule “would promote certainty in the determination of infringement cases.” /d. This Court reversed despite acknowledging that the new “bright-line rule. . . would have provided more certainty in determining when estoppel applies.” Jd. at 739. It held “that the doctrine of equivalents and the rule of prosecution historyestoppel are settled law” and, therefore, “[t]he responsibility for changing them rests with Congress.” Jd. ———————————— l OOO 12 in 1946 U.S.C.C.A.N. 1386-87; compare Patent Rights — Protection, ch. 726, Pub. L. No. 79-587 (Aug. 1, 1946), reprinted in 1946 U.S.C.C.A.N. 744, with 35 U.S.C. § 70 (1929). Then 35 U.S.C. § 70 provided that “(t]he court may in its discretion award reasonable attorney’s fees to the prevailing party upon the entry of judgment on any patent case.” Patent Rights — Protection, ch. 726, Pub. L. No. 79- 587 (Aug. 1, 1946), reprinted in 1946 U.S.C.C.A.N. 744; 35 U.S.C. § 70 (1951). When the attorney fee provision was codified in its current form in the 1952 Act, the term “in exceptional cases” was substituted for “in its discretion.” 35 U.S.C. § 285 (1954). The Revised Note states, however, that § 285 “is substantially the same as the corresponding provision in R.S. 4921 [the earlier 1946 provision]; ‘in exceptional cases’ has been added as expressing the intention of the present statute as shown by its legislative history and as interpreted by the courts.” 35 U.S.C. § 285, Revision Note, reprinted in 1952 U.S.C.C.A.N. 2403, 2423. The 1946 Note of the Senate Committee on Patents explains that “the provision relating to attorney’s fees is made discretionary with the court.” Patent Rights — Protection, S. Rep. No. 79-1503 (June 14, 1946), reprinted in 1946 U.S.C.C.A.N. 1387. The Committee explained that the discretion given the court in this respect... will discourage infringement of a patent by anyone thinking that all he would be required to pay if he loses the suit would be a royalty. The provision is also made general so as to enable the court to prevent a gross injustice to an alleged infringer. Id. Thus, the substitution of “in exceptional cases” for “in its discretion” in 1952 did not in any way limit the a 13 discretion of the district court to determine “exceptionality” on a case-by-case basis. Moreover, since the compensatory and punitive attorney fee provision entered the patent law in 1946, federal courts have held that it is to be implemented at the discretion of the trial court. In Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d 688, 691 (Fed Cir. 1984), the court of appeals explained that “[s]ubsequent to the 1946 amendments, attorney fee awards were granted by the courts, in their discretion, primarily upon findings of extraordinary circumstances.” Despite the fact that “the Patent Act of 1952, [which] codified the attorney fee provision in 35 U.S.C. § 285,... omits explicit reference to the court’s discretion . . . [c]ases decided under § 285 have noted that ‘the substitution of the phrase “in exceptional cases” has not done away with the discretionary feature.’” Jd. (quoting Hoge Warren Zimmermann Co. v. Nourse & Co., 293 F.2d 779, 783 (6" Cir. 1961)).? At least one early case decided the specific question at issue here, determining that it is within the discretion of a district court to award attorney fees for pre-litigation misconduct. In Brennan v. Hawley Prods. Co., 98 F. Supp. 369, 370(N.D. Ill. 1951), the court barred an action for patent infringement because of laches and the defendant received an allowance of attorney fees. The trial court’s laches decision 4. See also L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1128 (Fed. Cir. 1993) (remanded for a determination of whether to award attorney fees to patentee because “[t]he trial judge is in the best position to weigh the factors ‘that may contribute to a fair allocation of the burdens of litigation as between winner and loser,’ in view of the entirety of the litigation circumstances”) (citation omitted). ——————— —————— Nnn>>n 14 was affirmed by the court of appeals and certiorari was denied by this Court. /d. The defendant sought an allowance of fees for legal services rendered on appeal. /d. The court granted the requested attorney fees because “the record shows not only a long delay on the part of the plaintiff in instituting litigation on his claims of infringement, but also such a change in the condition of the defendant that it would be inequitable to allow plaintiff to enforce his claim for infringement.” Jd. The court explained that making such an award was “‘in its discretion’ ... where one party has been guilty of some inequitable or unconscionable conduct.” Jd. (citation omitted). That the bad-faith laches misconduct was “pre-litigation” was of no consequence. 2. The court of appeals ignored that the statutory provision and its legislative history afford the district courts ~ with discretion to determine “exceptionality.”’ The court of appeals said nothing about the Congressional intent that attorney fees be awarded at the discretion of the district court. Instead, the court of appeals cited its own precedent for the limiting proposition that “[w]e have repeatedly identified as ‘exceptional’ those cases involving ‘inequitable conduct before the [Patent Office]; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.” Pet. App. 8a. Accordingly, it concluded “that Abbott’s ‘equitable estoppel’ conduct was not an appropriate basis for awarding attorney fees under § 285 and that the district court’s reliance on that ground was legal error.” Pet. App. 9a. The court of appeals did not even explain why awarding attorney fees has often been deemed appropriate in other types of pre-litigation conduct, such as inequitable conduct or willful infringement. ———— 15 None of the cases relied on by the court of appeals as support for its new “bright-line” rule considered whether pre- litigation misconduct may be a basis for awarding attorney fees. In Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048, 1051 (Fed. Cir. 1992), the prevailing alleged infringer was not entitled to attorney fees because its “bare assertion in its initial brief of entitlement under § 285 is not accompanied by any attempt at proving that this case is exceptional.” In Hoffmann-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000), the court of appeals affirmed the district court’s finding that the patentee “made a reasonable pre-filing inquiry” and, therefore, had not brought a frivolous suit. In Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370 (Fed. Cir. 2001), the court of appeals affirmed an award of attorney fees where the patentee had engaged in inequitable conduct before the PTO. In Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268, 277 (Fed. Cir. 1985), the court of appeals reversed the district court’s erroneous holding that alleged infringers had to pay the patentee’s attorney fees because they “acted in bad faith by attempting to invent around the patent which they had licensed.” The court of appeals reiterated that “the incentive to ‘design around’ patents is a positive result of the patent system.” In other words, there was no misconduct at all. Other decisions of the court of appeals make plain that, until recently, there was no such “bright-line” rule. In Cambridge Prods., 962 F.2d at 1050-51, and Brasseler, 267 F.3d at 1380 (emphasis added), it stated that “[iJn the case of awards to prevailing accused infringers ... ‘exceptional cases’ are normally those of bad faith litigation or those involving fraud or inequitable conduct by the patentee in procuring the patent.” In Hoffmann-La Roche, 213 F.3d at 1365 (emphasis added; citation omitted), it stated 16 that “‘/a/mong the types of conduct which can form a basis for finding a case exceptional are willful infringement, inequitable conduct before the P.T.O., misconduct during litigation, vexatious or unjustified litigation, and frivolous suit.”” Moreover, unlike this case, the cases relied on by the court of appeals frequently start their analysis with an acknowledgement that “[t]he award of attorney fees under § 285 is within the discretion of the court.” Cambridge Prods., 962 F.2d at 1050; Yarway Corp., 775 F.2d at 277 (Section 285 “provide[s] the authority for the district court to act under its discretion” as long as “the exercise of discretion not be in conflict with the policies of the Patent Act”). 3. The court of appeals reformulated the district court's discretion to award attorney fees by instituting its new “bright-line” rule as the “proper legal standard under § 285” and reviewing de novo the district court's application of it. The court of appeals’ decision interferes with the district court’s exercise of discretion by combining its new “bright- line” rule to its previous statements that it must review the legal application of § 285 de novo. Specifically, the court of appeals refused to consider bad-faith pre-litigation conduct as a basis for attorney fees. Thus, the court of appeals has changed the first step in its standard of review — it must “review de novo whether the [district] court applied the proper legal standard under § 285” — by sua sponte eliminating an entire class of conduct from the analysis. Pet. App. 5a. As a practical matter, the court of appeals has given itself de novo authority to determine whether the district court followed its new “bright-line” rule. 17 Here, by reviewing the application of its new rule de novo, the court of appeals determined that the district court committed “legal error.” Pet. App. 9a. In doing so, the court of appeals never reached the real issues of whether the district court’s factual findings on which it based a conclusion that Abbott’s estoppel misconduct rendered the case “exceptional” were clear error or whether the district court’s award of attorney fees based on its factual findings was an abuse of discretion. By adopting this legal standard that it reviews de novo, the court of appeals has given itself a vehicle with which to substitute its own judgment regarding the award of attorney fees for that of district courts — which it did in this case. 4. Federal district courts exercise their discretion to determine whether a trademark case is “exceptional” and thereby warrants an award of attorney fees; instances of pre- litigation misconduct are considered in determining the “exceptionality” of trademark cases. Like the Patent Act, the Lanham Act provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party” in a trademark action. 15 U.S.C. § 1117(a). This Court has recognized that the fee shifting provision in the patent law is closely related to that in trademark. Fogerty v. Fantasy, Inc., 510 U.S. 517, 525 n.12 (1994). Like the patent provision, the determination of an “exceptional” case is left to the district court’s discretion. Aromatique, Inc. Vv. Gold Seal, Inc., 28 F.3d 863, 876 (8th Cir. 1994). Federal courts “have defined the characteristics of exceptional cases with adjectives suggesting egregious conduct by a party,” e.g., “groundless, unreasonable, vexatious, or pursued in bad faith.” /d. at 877. Such conduct is not limited to specifically identified circumstances, but rather is “one in which one party’s 18 behavior went beyond the pale of, acceptable conduct.” Id. Pre-litigation misconduct may lead to a finding of exceptionality. In Aromatique, the court of appeals reversed a holding of trademark infringement and awarded attorney fees to the alleged infringer because the plaintiff, among other things, twice wrote the alleged infringer prior to litigation alleging infringement and falsely asserting that the plaintiff’s trade dress was federally registered. 28 F.3d at 878. The court of appeals held that “(t]his record compels the conclusion that [the alleged infringer] has shown that [the plaintiff’s] conduct was exceptional within the meaning of Section 35 of the Lanham Act.” Jd. at 879. 5. The court of appeals’ decision is inconsistent with its own rule; “bad faith” is different from “frivolous suit” or “vexatious litigation.” The court of appeals’ bright-line rule identifies, in part, “litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; [and] a frivolous suit” as conduct that “repeatedly” rendered a case “exceptional.” Pet. App. 8a (emphasis added). The court of appeals’ bright-line rule conflates the rule itself by making “bad faith” mean the same thing as “misconduct during litigation,” “frivolous suit” and “vexatious litigation.” For example, the court of appeals states that “[a]lthough a lawsuit pursued in bad faith is a sufficient basis for imposing attorney fees under § 285, such bad faith requires not misleading pre-litigation conduct, but vexatious, unjustified, or frivolous litigation.” Pet App. 10a. This ignores that the plain meaning of otherwise bad-faith conduct encompasses more than litigation misconduct or bringing a frivolous suit. It also is contradicted by the court of appeals’ analysis of whether Abbott’s suit was frivolous in which it acknowledges that the bad faith equitable estoppel events are separate and apart from a consideration of whether the suit was frivolous. 19 Pet. App. 10a-11a (“The record, however, does not support the district court’s finding that Abbott maintained its infringement counterclaim in bad faith. Even if Abbott had knowledge of the events that would ultimately lead to a holding of equitable estoppel, its litigation position was not frivolous or baseless.”). The plain words of the statute and the legislative history show that “bad faith” should be interpreted to mean all dealings between the parties that relates to the litigation. Here, the court of appeals did not reverse a single one of the district court’s numerous fact findings in support of its conclusion that Abbott’s “equitable estoppel” business conduct was in bad faith and that Abbott provided no evidence of good faith. Rather, the court of appeals legislated a change to the statute to prevent recovery of attorney fees in cases of bad-faith pre- litigation conduct. 20 CONCLUSION The petition for a writ of certiorari should be granted. Congress, in 35 U.S.C. § 285, gave discretionary authority to the district courts to award attorney fees in “exceptional” patent cases to prevent a gross injustice to an abused party. The court of appeals, however, through its new bright-line rule defining the legal standard of § 285 and de novo review of the district courts’ application of it, has removed the discretion of the district court and decided the specific circumstances under which attorney fees may be awarded. Its bright-line rule also has undone the distinction between “bad-faith” misconduct and bringing a “frivolous suit.” Here, this has resulted in a fundamentally unfair result. The district court, which was in the best position to determine if respondent’s conduct rendered the case “exceptional” after adjudicating years of litigation and a four-month trial, exercised its discretion to award fees to petitioners to compensate them for their substantial and unjustified loss incurred in successfully defending this suit. That compensation has now been taken from them because of second-guessing by the court of appeals. Respectfully submitted, HERBERT F. SCHWARTZ Counsel of Record KENNETH B. HERMAN FisH & NEAVE 1251 Avenue of the Americas New York, New York 10020 (212) 596-9000 Attorneys for Petitioners APPENDIX eR Nett aE, oA RATE MRR dos la APPENDIX A — OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT FILED AUGUST 7, 2003 UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT 03-1067 FOREST LABORATORIES, INC. AND ONY, INC., Plaintiffs-Appellees, v. ABBOTT LABORATORIES, Defendant-Appellant, and TOKYO TANABE COMPANY, LTD., Defendant. DECIDED: August 7, 2003 Before LOURIE, RADER, and DYK, Circuit Judges. LOURIE, Circuit Judge. Abbott Laboratories appeals from the decision of the United States District Court for the Western District of - New York awarding attorney fees and expenses to ONY, Inc. 2a Appendix A and Forest Laboratories, Inc. based on Abbott’s conduct that led to a holding of equitable estoppel. Forest Labs., Inc. v. Abbott Labs., No. 96-CV-159A (W.D.N.Y. Sept. 4, 2001) (“Forest IV’). Because we conclude that the court erred in finding this case to be “exceptional” under 35 U.S.C. § 285, we reverse. BACKGROUND Tokyo Tanabe Company, Ltd. owns U.S. Patents 4,338,301 and 4,397,839, which are directed to a lung surfactant composition for treating respiratory distress syndrome in premature babies. Pursuant to an exclusive license of the ’301 and °839 patents, Abbott developed a commercial product known as Survanta® in the 1980s. At about the same time, ONY developed its own product. for treating neonatal respiratory distress syndrome called Calf Lung Surfactant Extract (“CLSE”). In June 1991, ONY entered into an agreement with Forest for Forest to further develop and market CLSE under the trade name Infasurf®. From 1983 until 1991, Abbott and ONY maintained contact regarding the development of CLSE. Abbott met with ONY in November 1983 to discuss the development, composition, and testing of CLSE, and later informed ONY that it had opted to develop the Tanabe product instead of CLSE because the Tanabe product had patent protection. In April 1984, at Abbott’s request, ONY submitted a memorandum of invention to Abbott disclosing “everything known about CLSE” for Abbott to conduct a patentability search. Upon completion of the search, Abbott informed ONY that CLSE was likely not patentable in light of two “pertinent i the Pe Br ie be i 3 & : Pe is Fy g Lin - 3a Appendix A references,” but did not mention the °301 and ’839 patents; nonetheless, Abbott encouraged ONY that it “look[ed] forward to working with [ONY] in the future.” In April 1986, Abbott again met with ONY to discuss the possibility of joint development of CLSE and suggested that “some future collaboration” might still be possible. Abbott continued to monitor the development of CLSE until 1991, while internally expressing concern that ONY might receive FDA approval for CLSE before Abbott could do so for Survanta®. In July 1991, Abbott received both FDA approval and orphan drug status (providing seven years’ market exclusivity) for Survanta®, which it then proceeded to market. Several years later, Abbott informed ONY and Forest that it had reason to believe that Infasurf® would infringe the °301 and °839 patents if it were to be marketed. Nonetheless, in March 1995, ONY filed a new drug application for approval to market Infasurf®. The FDA then notified ONY that Infasurf® was the “same drug” as Survanta® under the Orphan Drug Act, 21 U.S.C. 88 360aa-360dd (1994), and that it therefore could not be approved for sale until Abbott's period of exclusivity expired in July 1998. In light of Abbott’s June 1994 letter claiming infringement and the FDA’s notification that Infasurf® and Survanta® were the “same drug,” ONY and Forest sued Abbott and Tanabe in the U.S. District Court for the Western District of New York, seeking a declaratory judgment of noninfringement and invalidity of the °301 and ’839 patents. Abbott and Tanabe counterclaimed for infringement. A jury found both patents infringed and not invalid and, in an advisory verdict, rejected ONY and Forest’s defense of 4a Appendix A equitable estoppel. The district court, however, granted ONY and Forest a judgment of noninfringement as a matter of law (“JMOL”) on the ground that Abbott and Tanabe had failed to present any evidence at trial to show that CLSE met the water content limitations of the patents in suit either literally or under the doctrine of equivalents. Forest Labs., Inc. v. Abbott Labs., No. 96-CV-159A, 1999 U.S. Dist. LEXIS 23217, at *20-21 (W.D.N.Y. June 23, 1999) (“Forest I’). In a separate opinion, the court also ruled that Abbott, and Tanabe by imputation, was equitably estopped from asserting infringement of the ’301 and ’839 patents against ONY and Forest because: (1) Abbott, in bad faith, misled ONY and -~ Forest to believe that it would not assert infringement by encouraging their development of Infasurf® and by neglecting its duty to inform them of any possible infringement; (2) ONY and Forest reasonably relied on Abbott’s misleading conduct; and (3) ONY and Forest would suffer economic and evidentiary prejudice if Abbott were permitted to proceed with its infringement counterclaim. Forest Labs., Inc. v. Abbott Labs., No. 96-CV-159A, 1999 U.S. Dist. LEXIS 23215, at *25-26 (W.D.N.Y. June 23, 1999) (“Forest IT’). On appeal, we affirmed the JMOL of noninfringement and, having done so, declined to consider the equitable estoppel issue. Forest Labs., Inc. v. Abbott Labs., 239 F.3d 1305, 1314 (Fed. Cir. 2001) (“Forest IT’). The district court subsequently granted ONY and Forest’s motion for attorney fees and expenses against Abbott, but not Tanabe. The court found the case to be “exceptional” under 35 U.S.C. § 285 because Abbott, in bad faith, encouraged ONY to develop CLSE, disregarded its duty to advise ONY and Forest of possible infringement, and pursued 5a Appendix A its infringement counterclaim with a “reckless disregard for the facts in an attempt to prevent Infasurf from reaching the market.” Forest IV, slip op. at 12. In so finding, the court rejected Abbott’s argument that fees could not be awarded for bad-faith conduct that occurred prior to litigation and held that, in any event, Abbott had acted in bad faith during litigation by bringing suit with knowledge of its prior bad- faith conduct toward ONY and Forest. /d. at 11. Having found the case to be exceptional, the court then chose to exercise its discretion and award attorney fees in order to avoid a “sross injustice” and to deter patentees from similar bad- faith conduct in the future. Jd. at 15. Upon the parties’ stipulation as to the amount of any fee award, the court entered an award against Abbott of $6.5 million in attorney fees and expenses. Forest Labs., Inc. v. Abbott Labs., No. 96-CV-159A (W.D.N.Y. Sept. 30, 2002). Abbott timely appealed the fee award to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). DISCUSSION A determination whether to award attorney fees under 35 U.S.C. § 285 involves a two-step process. First, a district court must determine whether the prevailing party has proved by clear and convincing evidence, Ruiz v. A.B. Chance Co., 134 F.3d 654, 669 (Fed. Cir. 2000), that the case iS “exceptional.” 35 U.S.C. § 285 (2000); Cybor Corp. v. FAS Techs., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc). We review de novo whether the court applied the proper legal standard under § 285, and we review the court’s factual findings, including whether the case is exceptional, for clear 6a Appendix A error. Brasseler, U.S.A. I, L.P. v. Stryker'Sales Corp., 267 F.3d 1370, 1378 (Fed. Cir. 2001). A finding is clearly erroneous when, despite some supporting evidence, “the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). Second, if the district court finds the case to be exceptional, it must then determine whether an award of attorney fees is appropriate. Cybor Corp., 138 F.3d at 1460. We review that determination for an abuse of discretion. /d. A district court abuses its discretion when “its decision is based on clearly ‘erroneous findings of fact, is based on erroneous interpretations of the law, or is clearly unreasonable, arbitrary or fanciful.” Jd. (citation omitted). On appeal, Abbott first argues that the district court improperly found this case to be exceptional. Abbott contends that the court’s underlying determination of equitable estoppel was clear error and, in any event, was based on only a preponderance of the evidence, whereas a finding that a case is exceptional under § 285 requires clear and convincing evidence. Abbott also argues that its private pre-litigation conduct was an inappropriate ground on which to base a finding of exceptionality and that it did not engage in bad- faith conduct during litigation because its legal position was neither frivolous nor baseless. Abbott further maintains that the district court’s decision to award attorney fees was an abuse of discretion in light of the court’s erroneous, or at least debatable, holding of equitable estoppel; the absence of any allegation of litigation misconduct; and the jury’s advisory rejection of ONY and Forest’s equitable estoppel defense. Finally, Abbott argues that the fee award serves ORO, UNE Gee io Gn ee Paes 7a Appendix A neither of the intended purposes of § 285 in that it does not deter unwarranted infringement claims or prevent injustice to those falsely accused of infringement. ONY and Forest respond that the district court properly found that Abbott’s bad-faith conduct, viz., its failure to raise the issue of infringement with ONY and Forest between 1983 and 1994, while encouraging the development of Infasurf® as an alternative until it received FDA approval for Survanta®, makes this case exceptional. They point out that the court did not need to find by clear and convincing evidence that the elements of an equitable estoppel defense were proved, but only that this case was exceptional. ONY and Forest also maintain that a finding of exceptionality was appropriate because Abbott should have recognized that its pre-litigation conduct precluded it from bringing suit. They further argue that Abbott’s bad-faith conduct continued during litigation because Abbott persisted with its counterclaim of infringement in complete disregard of its history of dealings with ONY and Forest. In addition, ONY and Forest contend that Abbott’s failure to offer any evidence of infringement with respect to the water content limitations of the asserted patents renders this case exceptional. Finally, ONY and Forest argue that the district court did not abuse its discretion in awarding fees in this case because, as the court explained, the holding of equitable estoppel alone did not make ONY and Forest whole, and not awarding fees could encourage other patentees that have engaged in similar bad-faith conduct to bring unwarranted infringement claims. We agree with Abbott that the district court erred in awarding attorney fees to ONY and Forest. Section 285 8a Appendix A provides that a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285 (2000). We have repeatedly identified as “exceptional” those cases involving “inequitable conduct before the [Patent Office]; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.” Brasseler, 267 F.3d at 1380 (citation omitted); e.g., Hoffman-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed. Cir. 2000). None of those circumstances is present here, yet the district court found that this case was exceptional due to Abbott’s bad-faith conduct which led to a holding of equitable estoppel. Forest IV, slip op. at 9-H. We disagree with the court’s expansive reading of § 285. In interpreting § 285, we have been mindful of the limited circumstances in which an award of attorney fees is appropriate. See Mach. Corp. of Am. v. Gulifiber AB, 774 F.2d 467, 472 (Fed. Cir. 1985). The Senate Report accompanying § 285’s predecessor statute, which is applicable to the present statute as well, states that “‘[i]t is not contemplated that the recovery of attorney’s fees will become an ordinary thing in patent suits.’” Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d 688, 690-91 (Fed. Cir. 1984) (quoting S. Rep. No. 79-1503 (1946)). Indeed, we have recognized that § 285 is an exception to the American Rule and a change to the pre-1946 practice of not awarding attorney fees based upon equitable considerations in patent cases. Jd. at 690. In the context of fee awards to prevailing accused infringers, we have observed that § 285 is limited to circumstances in which it is necessary to prevent “a gross injustice” to the accused infringer, see Mach. Corp., 774 F.2d at 472 (quoting S. Rep. No. 79-1503 (1946)), and have upheld 9a Appendix A findings of exceptionality to prevent such an injustice only when the patentee has procured its patent in bad faith (7.e., committed inequitable conduct before the Patent Office) or has litigated its claim of infringement in bad faith. See Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048, 1050-51 (Fed. Cir. 1992); Mach. Corp., 774 F.2d at 472. We have not, however, upheld a finding of exceptionality based on a patentee’s bad-faith business conduct toward an accused infringer prior to litigation, and we decline to expand the scope of the statutory term “exceptional” in that manner. Cf. Yarway Corp. Vv. Eur-Control USA, Inc., 775 F.2d 268, 277-78 (Fed. Cir. 1985) (reversing a finding of exceptionality premised on an accused infringer’s bad-faith conduct of attempting to design around a patent in order to circumvent a license agreement). Equitable estoppel may be imposed in a patent case when a patentee induces another party to believe that it will not sue that party for infringement. A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1042 (Fed. Cir. 1992) (en banc). Reliance by the other pafty as well as prejudice are required in order to estop the patentee from later suing. Jd. at 1042-43. The consequence of estoppel is loss of the cause of action, id. at 1028, and we have not extended the consequences to include attorney fees under the rubric of exceptional case. Such business conduct, even though sufficiently relied upon and prejudicial to lead to estoppel, does not make any subsequent lawsuit exceptional. Accordingly, we conclude that Abbot’s “equitable estoppel” conduct was not an appropriate basis for awarding attorney fees under § 285 and that the district court’s reliance on that ground was legal error. 10a Appendix A We also agree with Abbott that the district court clearly erred in finding that Abbott engaged in bad-faith litigation. Although a lawsuit pursued in bad faith is a sufficient basis for imposing attorney fees under § 285, such bad faith requires not misleading pre-litigation conduct, but vexatious, unjustified, or frivolous litigation. See, e.g., Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1375 (Fed. Cir. 2001) (affirming an award of attorney fees under § 285 for the “extreme litigation misconduct” of falsifying evidence); Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805, 810-11 (Fed. Cir. 1990) (affirming an award of attorney fees under § 285 for pursuing a baseless claim of infringement). There is no suggestion that Abbott engaged in vexatious litigation tactics; the pertinent inquiry is thus whether Abbott knew or should have known that it would be estopped from asserting the °301 and ’839 patents against ONY and Forest, but pursued its infringement counterclaim anyway. See Haynes Int'l Inc. v. Jessop Steel Co., 8 F.3d 1573, 1579 (Fed. Cir. 1993) (“A frivolous infringement suit is one which the patentee knew or, on reasonable investigation, should have known, was baseless.’’), reh'g granted on other grounds, 15 F.3d 1076 (1994). The district court answered that question in the affirmative, observing that Abbott “obviously knew of its own bad faith conduct prior to the commencement of the lawsuit,” Forest IV, slip op. at 11, and nevertheless pursued its infringement counterclaim with a “reckless disregard” for the facts of the case and the validity of ONY and Forest’s equitable estoppel defense, id. at 12. The record, however, does not support the district court’s findings that Abbott maintained its infringement counterclaim in bad faith. Even if Abbott had knowledge of the events : < & it 8 i ‘| F| | 3 ; my a lla Appendix A that would ultimately lead to a holding of equitable estoppel, its litigation position was not frivolous or baseless. Indeed, based on the facts of this case, it was far from a foregone conclusion that ONY and Forest would be able to establish their equitable estoppel defense successfully. Abbott never expressly communicated to Forest or ONY that it did not intend to enforce its patents; instead, the district court had to infer a misleading statement from Abbot's conduct and did so only after finding that Abbott had a duty to advise ONY and Forest of any possible infringement when it provided ONY with a patentability opinion. See ABB Robotics, Inc. v. GMFanuc Robotics Corp., 52 F.3d 1062, 1063 (Fed. Cir. 1995); see also A.C. Aukerman Co., 960 F.2d at 1041 (“[E]quitable estoppel is not limited to a particular factual situation nor subject to resolution by simple or hard and fast rules.”). Although the equitable estoppel issue 1s not before us, we note that it was never finally resolved, for we declined to consider Abbott’s appeal of that issue when we affirmed the JMOL of noninfringement. Forest III, 239 F.3d at 1314. Once it had been concluded that ONY and Forest were not infringing the Abbott-Tanabe patents, whether Abbott would be estopped from enforcing those patents against ONY and Forest became moot. In any event, we cannot even say with confidence that the equitable estoppel determination would have been affirmed had we reached the issue on appeal. Moreover, the district court’s denial of ONY and Forest’s motion for JMOL at the close of the evidence and the jury’s advisory verdict of no equitable estoppel suggest that Abbott’s position was not baseless. In light of these considerations, we conclude that Abbott’s litigation position with respect to the equitable estoppel issue cannot be characterized as clearly and convincingly 12a Appendix A vexatious, unjustified, or frivolous. Accordingly, the district court’s finding that Abboti engaged in bad-faith litigation was Clearly erroneous. Finally, we reject ONY and Forest’s argument that an award of attorney fees is appropriate because Abbott failed to offer any evidence of infringement regarding the water content limitations of the asserted patents. Although Abbott ultimately lost its infringement counterclaim on that ground, id., we cannot say that such a lack of proof is clear and convincing evidence that Abbott, acting in bad faith, asserted a baseless or frivolous counterclaim of infringement. Indeed, the jury’s finding of infringement suggests otherwise. Moreover, the district court expressly disclaimed reliance on Abbott’s failure to prove infringement as a basis for imposing attorney fees, noting that Abbott presented “plausible yet untenable arguments regarding claim construction and the doctrine of equivalents.” Forest IV, slip op. at 16-17. Thus, even if Abbott’s lack of evidence of infringement could support a findings exceptionality under § 285, the district court did not abuse its discretion in choosing not to award fees on that ground. CONCLUSION For the foregoing reasons, we conclude that the district court erred in finding this case to be “exceptional” under 35 U.S.C. § 285 based on Abbott’s pre-litigation conduct toward ONY and Forest. Accordingly, the decision of the district court is REVERSED. ety Sand