I was working on an update on the Iris Connex case (you remember – noninfringement dismissal after expedited claim construction, $507,000 in sanctions against plaintiff and nonparty) when I saw Dennis Crouch’s summary this morning of the Federal Circuit’s decision in Asetek Danmark v. CMI USA (“Cooler Master”) (Fed. Cir. 2017) focused on the issue on enjoining a nonparty.
In light of that case, I realized that the time might be right for a detailed post on the issue of the new EDTX-created mechanism for nonparty liability, which I’ll refer to as a the “Iris Connex” test.
The significance of this new test appears to be starting to seep in – I just read an analysis of it in an article by some TBL partners that correctly noted it as evidence that “courts on the front lines of patent litigation, and particularly in the Eastern District of Texas, are more adept at addressing potential systemic abuses than reform-minded politicians.” 23 No. 25 Westlaw Journal Intellectual Property 1. The specific proposals they were addressing were those in recent patent reform bills that sought to increase transparency in NPE cases to address exactly the abuses that the Court found in this case, but which ran into trouble trying to craft specific measures that didn’t cause other problems. When faced with a “shell corporation” scheme to elude liability under Section 285, the article wrote that “the Eastern District of Texas created a solution – and set an example for other courts and patent litigants to follow.” The article opines, and I think correctly so, that this may be another example of the courts developing an effective solution to a problems using existing tools before Congress legislates one.
But first, we need some background facts on the Iris Connex case. After all, it is the one Judge Gilstrap described as “the clearest example of an exceptional case to yet come before the undersigned. Simply put, if this case is not an exceptional case, then there are none.”
The next 4,296 words are my attempt to summarize the case, its resolution, and its significance. Pour yourself a cup of coffee, pull up a seat, and let’s get exceptional.