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Hi-Tech Pharmaceuticals Wins Almost $1 Million in Legal Fees From Thermolife and Stanford After Federal Circuit Affirms Major Patent Case

NORCROSS, Ga., May 2, 2019 /PRNewswire/ -- "Today we finished driving a stake into the ground in our relentless fight against patent trolls – The Federal Circuit Court of Appeals affirmed our  award of our legal fees from the Third most litigious patent troll in America – Thermolife International and Ron Kramer" said Jared Wheat, President of Hi-Tech Pharmaceuticals. To that end,  Hi-Tech Pharmaceuticals, Inc. ("Hi-Tech") moved for attorney fees against Plaintiffs The Board of Trustees of the Leland Stanford Junior University and ThermoLife International, LLC (collectively "Plaintiffs") in accordance with the requirements set forth in Federal Rule of Civil Procedure 54(d)(2)(B), Hi-Tech Pharmaceuticals recovered  $913,370.006 in attorney fees and $25,071.46 in expenses, which the Federal Circuit Court of Appeals affirmed.

The Federal Circuit opined…. We conclude that the district court in this case acted within its discretion in determining, on the limited arguments plaintiffs made in response to the fee motions, that plaintiffs did not conduct an adequate pre-suit investigation into infringement by Hi-Tech and Vital. That determination would suffice to support the exceptional-case determination. And we read the district court's additional discussion of plaintiffs' filing of numerous suits on the patents at issue here as itself ultimately resting on the same lack of adequate pre-suit investigation, not simply on ThermoLife's limited product sales, the expiration dates of three of the four patents, the number of suits filed, or the amounts of the settlements. For those reasons, we affirm the exceptional-case determination.

The district court also committed no reversible error in determining that plaintiffs did not conduct adequate investigations to apply the one-gram minimum to the accused products. Importantly, it was not disputed in the district court that "all the relevant products were publicly availa-ble." Fees Op., 2017 WL 1235766, at *5. Nor was it disputed that plaintiffs could have determined the amounts of L-arginine or its hydrochloride salt (in the recommended servings of the accused products) by performing what Vital characterized as a "simple test." J.A. 10537; see also J.A. 10710 (Hi-Tech's motion). Nor, finally, does the record reveal that plaintiffs performed such a test.

Beginning in March 2013, Thermolife filed eighty-one related patent infringement lawsuits in this Court, including the instant case regarding Hi-Tech Pharmaceuticals. We prevailed in our argument that this case was "exceptional" due to the fact that Plaintiffs (1) lacked a reasonable basis to allege infringement; and (2) pursued a file-and-settle strategy typical of "patent trolls" while simultaneously engaging in "questionable litigation conduct." Hi-Tech also successfully argued that this case is "exceptional" because of Plaintiffs' aggressive litigation tactics; namely that Thermolife and Stanford sued many defendants in order to extract nuisance-value settlements, which is typical behavior for a "patent troll."

Hi-Tech, VPX and GNC  proceeded to the invalidity trial phase, and after a five-day trial in August, the Court concluded that (1) claim 1 of the '459 Patent was invalid as anticipated; (2) claims 1, 4, 5, 7, 8, and 10 of the '872 Patent were invalid as obvious; (3) claims 1, 2, 3, 4, 5, 8, and 14 of the '006 Patent were invalid as obvious; and (4) claims 1, 2, and 6 of the '916 Patent were invalid as obvious. (Id. at 46:10–13.) In short, on September 29, 2016, the Court found that all patents-in-suit were invalid, thereby concluding the litigation.

Hi-Tech argued during its forty-five-page presentation at oral argument several times specifically pointed to Plaintiffs' Counsel's inadequate pre-filing investigation. Under 35 U.S.C. § 285, the court "in exceptional cases may award reasonable attorneys' fees to the prevailing party" in a patent infringement lawsuit. The Supreme Court recently construed this language in Octane Fitness, LLC v. ICO Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). Octane established a more flexible approach: "a district court may award fees in the rare case in which a party's unreasonable conduct—while not necessarily independently sanctionable—is nonetheless so 'exceptional' as to justify an award of fees." Id. at 1757.

In 2013 alone Thermolife and Kramer filed (117) patent infringement cases and (66) of those patents were licensed from Stanford University. On September 21, 2016, Hi-Tech Pharmaceuticals, VPX Sports, and GNC won a major courtroom battle against ThermoLife International regarding an L-arginine patent, which has now been invalidated. "It was surprising to me that Stanford got involved in this type of litigation" said Jared Wheat. The Times Higher Education World University Rankings 2014-2015 list the best global universities – Stanford ranks #5.   

The pattern of action was one found to show that Thermolife and Stanford brought suit against many defendants without carefully reviewing their claims as a calculated risk that might yield nuisance-value settlements. Accordingly, the court ruled the evidence weighed in favor of finding this case to be exceptional.

Given the foregoing, the Court CONCLUDED that under the totality of the circumstances Hi-Tech had shown that this case is exceptional such that an award of attorney fees is justified. In particular, Plaintiffs' pre-filing investigation was severely lacking, thus resulting in frivolous claims and the objective unreasonableness of certain infringement contentions; Plaintiffs' motivation was seemingly to extract nuisance-value settlements from a large number of defendants; and awarding fees here will advance compensation- and deterrence-oriented goals.

Hi-Tech Pharmaceuticals, a leading global manufacturer of dietary supplements and OTC Pharmaceuticals sent a message out to Patent trolls that Hi-Tech will not give in to their attempts to "shake down" money from our company. Patent trolls are a serious threat to business and to innovation. Patent trolls brazenly use unethical tactics to force settlements from legitimate businesses that are not willing to fight the case due to extremely high costs associated with patent litigation. Until Congress reforms the patent laws, companies of all sizes and industries could – and likely will – find themselves in the crosshairs of a greedy patent troll looking for a quick grab for cash.

"At Hi-Tech, we've always believed paying off extortionists only encourages more extortion, and there had to be a negative consequence of continuously suing Hi-Tech without just cause. We insisted on seeking a return of our legal fees from Thermolife and Kramer and won a major victory at the Federal Circuit. Hi-Tech believes that forcing a patent troll to pay, no matter what amount, sends the clearest possible message to all abusive patent trolls and their contingency fee lawyers that if they file a frivolous lawsuit against Hi-Tech, they will suffer some consequence, even if it is only making less money or having to do more work than they planned to. We hope that our lawsuit will provide a beacon of hope for real innovators and honest entrepreneurs facing demands from abusive patent trolls. I think Thermolife and Kramer are basically a parasitic tax on the supplement industry.  We want to encourage other companies to create as much friction as possible, rather than feeding the beast with easy settlement checks." said Jared Wheat.

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SOURCE Hi-Tech Pharmaceuticals, Inc.

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Last Updated: 02-May-2019