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Judge Schofield Finds Assertion of “Weak” Patent Claims Not Exceptional for Purposes of Awarding Attorney’s Fees under 35 U.S.C. § 285

On January 23, 2023, United States District Judge Lorna G. Schofield (S.D.N.Y.) denied Maropost Marketing Cloud, Inc.’s (“Maropost”) motion to declare its dispute with Zeta Global Corp. (“Zeta”) exceptional for purposes of awarding attorney’s fees under 35 U.S.C. § 285. 

Zeta brought claims against Maropost for “breach of contract, tortious interference with contract and declaratory judgment” and “infringement of three patents owned by Zeta.”  Op. at 2.  Maropost successfully obtained dismissal of the non-patent claims based on a forum selection clause.  Id.  During claim construction, Zeta withdrew one asserted patent, and the court dismissed another, finding the claims indefinite.  Id.  Zeta then proceeded to litigate a single patent, U.S. Patent No. 8,108,475 (the “’475 Patent”).  Id.

The claims of the ’475 Patent “describe[] a three-step process of (1) receiving a ‘failure message’ from an Internet Service Provider (‘ISP’), (2) classifying a ‘failure type’ using the failure message and (3) determining email invalidity based on the ‘failure type’ and the identity of the ISP.”  Id.  Eventually, the asserted claims were found to be patent-ineligible abstract ideas because “[c]lassification of failure messages and deciding whether to invalidate email addresses on that basis is [] an abstract idea.”  Op. at 3.  According to Judge Schofield, that does not make this case exceptional.

The court explained that “Section 285 of the Patent Act provides that a district court ‘in exceptional cases may award reasonable attorney fees to the prevailing party.’”  Op. at 4.  It pointed to “a two-step inquiry: first, ‘a district court must determine whether a case is exceptional’; second, if the court determines the case is exceptional, ‘it must calculate the amount of the attorney’s fees award.”  Id. (citing Large Audience Display Sys., LLC v. Tennman Prods., LLC, 660 F. App’x 966, 970 (Fed. Cir. 2016)).  The court described the approach as a “case-by-case exercise” of discretion that includes relevant factors such as “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.”  Id. 

The court concluded that this was “not an exceptional case” and noted that “[w]hile Zeta’s merits arguments were unsuccessful, they were for the most part not frivolous or objectively unreasonable.”  Op. at 4.  The court explained that “[i]t was not unreasonable for Zeta to attempt to distinguish the contrary but constantly evolving case law” concerning patentable subject matter.  Id. at 5-6.  Similarly, the court found that Maropost’s arguments about the unreasonableness of Zeta’s infringement positions failed as Maropost’s characterizations of its products did not refute Zeta’s infringement claims. Id. at 6-7. 

Maropost also pointed to Zeta’s discovery tactics, litigation approach, and alleged motivations as bases for exceptionality.  Op. at 7.  The court rejected the arguments about Zeta’s discovery tactics, for which it “had at least colorable bases” and explained that because “Zeta was entitled to pursue claims based on its patents, it was entitled to pursue reasonable discovery in an effort to prove those claims.”  Id.  Maropost’s contention that Zeta should have recognized that its claims became “worthless” after a change in Maropost’s technology were also rejected because, as the court explained, “Zeta was not required to take Maropost’s word for it.”  Id.  While the court concluded that “Zeta pursued relatively weak Patent Claims that ultimately were unsuccessful,” that was not a basis for finding the case exceptional.  Id. at 7-8. 

The case is Zeta Global Corp. v. Maropost Marketing Cloud, Inc., No. 20-cv-3951 (S.D.N.Y.)