mCom IP, LLC v. City National Bank of Florida

mCom IP, LLC v. City National Bank of Florida The Federal Circuit affirmed the Rule 12(b)(6) dismissal with prejudice because mCom showed no error in the district court's obviousness-based invalidity ruling on claim 17. It reversed the § 285 fee award and the § 1927 sanction against counsel because the grounds presented did not show an exceptional case or bad faith, and it declined to remand. The decision confirms that invalidity or lack of merit alone does not make a case exceptional under § 285 or support § 1927 sanctions. It also shows that a fee movant must build a record on exceptional weakness, any license defense, and alleged nuisance-value motives, or it risks outright reversal without remand. Affirmed in part and reversed in part. Background: the IPR held unpatentable all but claims 2, 8, 14, and 17 of the '508 patent. mCom then sued City National on those four claims. The district court dismissed with prejudice, holding the claims invalid on the same obviousness grounds as the IPR-cancelled claims. It also held infringement inadequately pleaded and denied leave to amend. mCom appealed the dismissal only as to claim 17. Dismissal: affirmed on invalidity. The court rejected mCom's argument that the district court never invalidated claim 17, and called the § 101 eligibility argument beside the point. The district court had ruled on § 103, not § 101, and eligibility is no substitute for a nonobviousness argument. The court did not decide the alternative infringement-pleading ruling, though it noted the complaint looked similar to the one found deficient in the companion HSBC case. Leave to amend: denial affirmed with no abuse of discretion. The request was procedurally improper under Rule 7(b)(1) and did not explain the proposed amendments. Section 285: reversed. Mere invalidity is not enough; the claims must be unusually weak. City National never explained why mCom could not reasonably think the unchallenged, presumptively valid claims differed from the IPR-cancelled ones. A district court obviousness challenge also carries a higher burden than an IPR. Struck and dismissed complaints, the NCR license, and the 'previous litigation' references also failed. There was no finding that a license covered City National, and the record showed nothing about the character of mCom's other suits. Section 1927: reversed. Under Eleventh Circuit law the sanction requires egregious, objectively reckless conduct tantamount to bad faith. The district court made no frivolousness finding and no finding of needless obstruction. Insufficient diligence in investigating the case did not suffice. The court ordered no remand for further fee proceedings and said the parties bear their own costs. § 103 § 101 attorney fees / sanctions claim preclusion waiver / forfeiture infringement precedential