Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 1 of 12
`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 1 of 12
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`EXHIBIT 8
`EXHIBIT 8
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`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 2 of 12
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`
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`1(650) 320-1832
`yarchaikovsky@paulhastings.com
`
`December 8, 2020
`
`VIA EMAIL
`Eley O. Thompson
`Foley & Lardner LLP
`321 North Clark Street Ste 3000
`Chicago, Illinois 60654-4762
`
`
`
`
`Re:
`
`Philips North America LLC v. Fitbit Inc.
`Case No. 1:19-CV-11586 –IT
`Section 285
`
`
`
`
`Dear Counsel:
`
`We write to follow up on my letter dated February 25, which spelled out our notice to
`Philips that Fitbit intends to seek its attorneys’ fees from Philips according under 35 U.S.C.
`§ 285 and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).
`
`This correspondence highlights additional facts and events that have occurred since my
`prior letter, further underscoring how this case stands out from others as indicated by:
`
`
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`
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`
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`ineligibility of all of the asserted claims of U.S. Patent Nos. 6,013,007 (the ’007
`Patent), 7,088,233 (the ’233 patent), 8,277,377 (the ’377 Patent) and 6,976,958
`(the ’958 Patent) as directed to unpatentable subject matter under 101;
`the District Court ruling in the parallel Philips v. Garmin litigation in C.D. Cal.
`confirming the indefiniteness of the asserted claims of the ’007 Patent (exactly as
`we informed you would occur in my February letter);
`ignoring evidence of non-infringement and invalidity of the ‘958 patent, requiring
`the parties devote limited resources to ‘958 claim construction process, only to
`drop the ‘958 patent without explanation on the eve of the Markman hearing;
` defective infringement contentions, including missing claim elements from the
`accused Fitbit products;
`failure of the joint infringement allegations under the standards of Centillion Data
`Systems v. Qwest Comm., 631 F. 3d 1279 (Fed. Cir. 2010) and Akamai Tech. v.
`Limelight Networks, 692, F3d 1301 (Fed Cir. 2012) (en banc);
`invalidity of the patents based on the same prior art relied upon in Philips’ failed
`European patent actions;
`
`
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`
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`

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`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 3 of 12
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`December 8, 2020
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` Philips’ history of serial meritless lawsuits and continued pursuit of meritless
`claims within each of those meritless lawsuit, including in Europe, this action, and
`the ITC, all directed to running up defense costs for the purpose of demanding a
`higher cost-of-defense settlement; and
` Philips’ discovery abuses and failure to diligently prosecute this case, as
`evidenced by its failure to promptly review discovery provided by Fitbit, failure
`to honor the Court schedule it insisted upon at the outset of the case, and failure to
`timely produce key materials when required.
`
`The totality of the circumstances demonstrates that this case stands out from others and
`reflects a corrupt litigation strategy that requires deterrence. Each of these items is addressed
`below.
`I.
`
`The asserted patent claims are not patentable subject matter under 101
`
`All the asserted patents were prosecuted and issued prior to the Supreme Court decision
`in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014) that established a two-step test
`for determining patent eligibility. As set forth in Fitbit’s motion to dismiss Philips’ original
`complaint, the asserted patents are directed to abstract ideas, using known, generic components
`to carry out the abstract ideas. Philips was well aware of this deficiency in view of the manner in
`which it drafted its complaint. When Fitbit responded to Philips’ complaint with a motion to
`dismiss, based on the asserted claims being directed to unpatentable subject matter under 35
`U.S.C. § 101, Philips responded by amending the complaint to add factual allegations, not
`tethered to the specification or scope of the claims, in an effort to delay the ineligibility
`determination, while it continued its efforts to extract an unwarranted settlement. Fitbit was
`forced to file a renewed motion to dismiss to address the amended complaint. The strength of
`Fitbit’s motion was effectively acknowledged by Philips’ actions in filing an amended
`complaint. But artful pleading cannot cure the legal defects in the respective patent claims and
`specifications. See, e.g., Secured Mail Sols. LLC v. Universal Wilde, Inc., 873 F.3d 905, 913
`(Fed. Cir. 2017) (“[C]ourt[s] need not accept as true allegations that contradict . . . the claims and
`the patent specification.”). The Federal Circuit has affirmed an award of fees under 35 U.S.C.
`§ 285 in similar circumstances. Inventor Holdings, LLC v. Bed Bath and Beyond, Inc, 876 F 3d.
`1372 (Fed. Cir. 2017) (affirming award of fees based on plaintiff’s continued assertion of patent
`claims invalid under 101/Alice analysis.)
`
`Philips followed its amended complaint with another request for a mediation, again
`indicating that its litigation strategy was driven not by the merits of its case, but the desire to
`inflate Fitbit’s costs and extract an unwarranted settlement amount commensurate with the cost
`of defense, not any value attributable to the asserted patents. Philips’ naked reliance on expanded
`pleadings instead of anything in the claims or specifications of the asserted patents demonstrates
`
`

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`December 8, 2020
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`its concession of the substantive weakness of its case and highlights the unreasonableness of its
`litigation campaign against Fitbit.
`
`II.
`
`The asserted means-plus-function claims of the ’007 patent lack a linked algorithm
`to perform the claimed functions
`
`The asserted claims of the ’007 patent include the claim element “means for computing
`athletic performance feedback” expressed in means-plus-function (MPF) format. Using this MPF
`claiming format requires the ’007 patent specification to clearly link to the algorithm used to
`achieve this computing function. Aristocrat Techs. Austl. Pty. Ltd. v. Int’l Game Tech., 521 F.3d
`1328, 1333 (Fed. Cir. 2008). The ’007 patent specification lacks any disclosure of a specific
`algorithm tied to the performance of this computing function. This fatal flaw has been repeatedly
`pointed out to Philips1, with no response justifying continued assertion of these claims. See
`February 21, 2020 letter from Yar Chaikovsky to Eley Thompson regarding deficient
`infringement contentions. Philips’ assertion of this patent in the face of such well-settled case
`law is a clear indicator that Philips’ purpose is not to test the merits of its claim, but to engage in
`unreasonable litigation conduct to attempt to extract an undeserved settlement from Fitbit.
`Philips’ tacit acknowledgment of this flaw is evidenced by its failure to provide the required
`MPF initial disclosure called for by local rule 16.6(d)(1)(A)(iv) and its failure to identify any
`corresponding algorithm structure in the claim construction meet and confer process. Even after
`Philips’ belatedly presented its expert declaration with the purported algorithm that Philips’
`claims would satisfy the structural requirements to perform the function of the claim, Philips
`never amended its infringement contentions to show where in any Fitbit product the algorithm is
`found. Shortly after the Fitbit Markman hearing, the District Court in the Garmin litigation found
`all asserted claims of the ‘007 patent indefinite, exactly as Fitbit and Apple had informed Philips
`would occur. There is no reason to expect that the court in Massachusetts will depart from the
`analysis of the court in the Garmin case finding the claims of the ‘007 patent indefinite. The only
`reason for Philips’ continued prosecution of these defective claims is to drive up costs and
`maintain “cost of defense” settlement leverage. Continued assertion of a patent claim with
`known validity defects supports a finding of exceptional case. See Eko Brands v. Adrian Rivera
`Maynez Ent. Inc., 946 F.3d 1367 at 1376 (Fed. Cir. 2020).
`
`
`1 During Philips’ unsuccessful effort to license the asserted patents to Apple in 2017, this same
`legal flaw was highlighted by Apple in its responsive presentation as the reason the ‘007 patent
`was invalid. Despite Fitbit’s express request for such documents in Request for Production No.
`2, served on Philips on January 10, 2020, Philips withheld this Apple document from production
`until September 10, 2020. Philips hid the fact that Apple had also pointed to this same legal flaw
`until after completion of the claim construction briefing and after the Court hearing on this issue.
`
`

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`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 5 of 12
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`December 8, 2020
`Page 4
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`III.
`
`Philips’ Infringement allegations are defective, including missing claim elements
`from the accused Fitbit products
`
`Reasonable investigation of Fitbit’s accused devices shows key differences between the
`products and the asserted claims, demonstrating the lack of infringement by Fitbit. As explained
`in greater detail in the meet-and-confer letter from Yar Chaikovsky to Luke Silva dated February
`13, 2020, attached and incorporated herein by reference, Philips’ infringement contentions fail to
`comply with the disclosure requirements of the local rules, and expose the lack of a rigorous
`analysis of Fitbit’s accused products. Philips’ defective infringement allegations provide yet
`further evidence of Philips’ unreasonable litigation conduct. This failure to provide fulsome
`infringement contentions is further bolstered by Philips’ contradictory actions concerning the
`‘007 patent. Philips concedes that the means for computing athletic performance feedback data is
`governed by 35 U.S.C. 112(6) and offers through its expert witness a series of grade school
`mathematic equations that it claims are the algorithms that perform the claimed function. Yet
`Philips simultaneously fails to allege or show this algorithm (or its equivalent) is present in any
`accused Fitbit products. Philips expert also concedes that even the algorithm that he offers fails
`to perform the function of calculating calories burned, which the patent explicitly includes in its
`description of “athletic performance feedback.”
`
`IV.
`
`Fitbit’s Accused Products Do Not Infringe the Asserted Claims of the ’007 patent
`
`The ’007 performance tracking patent requires a means for computing athletic
`performance feedback data from a series of time-stamped waypoints obtained by a GPS receiver.
`As Philips should know, most of Fitbit’s accused products do not have a GPS module. The two
`accused products with a GPS module do not use any algorithm disclosed in the ’007 patent to
`calculate athletic performance feedback data from time-stamped waypoints obtained by the GPS
`module, as is required in the means for computing limitation recited in all asserted claims.
`Philips’ infringement contentions do not identify any accused product that uses the algorithm
`offered by Philips’ expert.
`
`In addition, none of the accused products with a GPS module are sold as a package with
`or require the use of headsets in order to function, and Philips has provided no explanation of
`how Fitbit directly or indirectly infringes any asserted claim requiring a headset. Moreover, as
`Philips should have been aware through even cursory investigation of the accused products,
`interaction with a headset to obtain voice cues requires a third-party phone; Fitbit devices with a
`GPS do not provide any GPS-related information from any algorithm disclosed in the ’007 patent
`to the headset. Regardless, the accused Fitbit devices do not provide any computed athletic
`performance feedback data using any algorithm disclosed in the ’007 patent as part of any audio
`cue.
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`

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`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 6 of 12
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`December 8, 2020
`Page 5
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`Philips’ ’007 infringement contentions also point to Fitbit challenges as the alleged
`“comparison with athletic performance data of other athletes,” yet Fitbit’s challenges are
`dependent upon actions by third-parties not under the control of Fitbit. The challenges offered by
`Fitbit prior to the expiration of the ‘007 patent were only step-based (and not based on any
`calculated athletic performance feedback data from time-stamped waypoints obtained by the
`GPS module using any algorithm disclosed in the ’007 patent.)
`
`V.
`
`Fitbit’s Accused Products Do Not Infringe the Asserted Claims of the ’377 patent
`
`The ’377 exercise data monitoring patent recites a method that requires a user to
`download an app to a mobile phone to then receive on the mobile phone data indicating the
`physiologic status of a user at least partially while that user is exercising, and to send exercise-
`related data to a server to receive in response from the server a calculated response with exercise-
`related information. The accused Fitbit devices do not perform nor control the recited step of
`using a downloaded application to receive data indicative of a physiological status of a user
`while that user is exercising. Fitbit has no control over whether a user chooses to exercise while
`using both the Fitbit device, at the same time the Fitbit app on a mobile phone is receiving data
`indicative of a physiological status of a user while that user is exercising. See Akamai Tech. v.
`Limelight Networks, 692, F3d 1301 (Fed Cir. 2012) (en banc) (direct infringement of method
`claim requires performance of all steps of the method either by the accused infringer, either
`personally of through another acting under his direction or control, or through a joint enterprise
`such that all actions of one actor are attributable to the other). Indeed, Fitbit cannot discern, nor
`has Philips provided an explanation of who or what directly infringes, or how Fitbit could
`indirectly infringe the claims of the ’377 patent.
`
`VI.
`
`Fitbit’s Accused Products Do Not Infringe the Asserted Claims of the ’958 patent
`
`The ’958 interrupt handler patent claims an internet-enabled wireless web device with
`removable memory, running an app that receives a health parameter corresponding to a patient’s
`condition from a monitoring device, and the internet-enabled wireless web device is configured
`to store that health parameter data in the event of an interruption of the wireless connection
`between the internet-enabled wireless web device and the server. In February we explained that
`Fitbit did not infringe this patent. The Fitbit application is not configured to store health
`parameter data on internet-enabled wireless web device in the event of an interruption in the
`wireless connection. If there is an interruption in connection to a server during syncing with the
`server, the Fitbit app is not configured to store health parameter data on the internet-enabled
`wireless web device. Rather, the sync process terminates and no data is stored on the internet-
`enabled wireless web device. When the next sync event occurs the entire data transfer will
`simply be repeated from the Fitbit device to the server—no data was stored on the internet-
`enabled wireless web device from the first, failed sync attempt, and therefore no stored data is
`
`

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`December 8, 2020
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`synced from the internet-enabled wireless web device. This function was easily verifiable prior
`to Philips filing the complaint.
`
`Despite our having pointed these defects out to you in February 2020, you ignored my
`prior letter and took no action. In addition to the 101 challenge filed in December of 2019, Fitbit
`was forced to file an IPR on April 8, 2020 demonstrating the invalidity of the asserted claims of
`the ‘958 patent. Yet it wasn’t until the day before the Markman hearing on August 4, 2020 did
`you informed the Court of Philips’ intention to disclaim all asserted claims of the ‘958 patent.
`Fitbit had already invested substantial time, effort and money defending itself from the spurious
`claims of the ‘958 patent, filing an IPR challenge to the validity of the patent, preparing
`invalidity contentions to address the patent, and completed the entire Markman process to
`address four claim terms of the ‘958 patent.
`
`VII. Fitbit’s Accused Products Do Not Infringe the Asserted Claims of the ’233 patent
`
`The ’233 health data transfer patent claims a system of two wireless devices that
`communicate physiologic parameters with each other using a security mechanism governing
`information transfer. Fitbit cannot discern, nor has Philips provided explanation of how Fitbit—
`who does not manufacture or sell mobile phones—infringes all asserted claims reciting two
`devices. As indicated above, the asserted claims require Fitbit to direct or control the actions of
`third-parties, yet there is no evidence that such control exists. Fitbit does not satisfy any of the
`legal requirements for direct infringement liability by joint infringers. Joint infringement of a
`system claim requires an agency or joint enterprise relationship, yet the users of mobile devices
`that may contain a Fitbit application are not agents under the direction or control of Fitbit and
`Fitbit does not establish the manner or timing of how users chose to employ their Fitbit devices
`with a mobile phone, if at all. See Intellectual Ventures v. Motorola Mobility, (Fed. Cir. 2017)
`(citing Centillion Data Systems v. Qwest Comm., 631 F. 3d 1279 (Fed. Cir. 2010). Philips’
`apparent contention is that Fitbit “uses” the claimed system. But “‘use’ of a system claim
`‘requires a party. . . to use each and every. . . element of a claimed [system].’” Centillion at 1284
`(alterations original; emphasis added); see also Intellectual Ventures I at 1329 (“[T]o use a
`system, a person must control (even if indirectly) and benefit from each claimed component.”).
`Fitbit does not control, directly or indirectly, the use of the mobile phone.
`
`The claims of the ‘233 patent are also clearly invalid in light of the prior art. Fitbit was
`forced to submit invalidity contentions and file an IPR demonstrating the invalidity of the ‘233
`patent. The PTAB agreed, ruling that “the information presented in the Petition and Preliminary
`Response establishes that there is a reasonable likelihood that Petitioner would prevail in
`challenging at least one claim of the ’233 patent.”
`
`

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`Philips does not seem to care that its patent claims are invalid, or that they are not
`infringed, so long as they provide a “cost of defense” basis to pad Philips’ settlement demands.
`
`Reasonable pre-suit investigation through publicly-available information would demonstrate that
`Fitbit does not infringe any of the asserted claims. The substantive weakness of Philips’
`infringement allegations indicate an intention of Philips to misuse the litigation process to inflate
`settlement costs for Fitbit, not to test the merits of its claims.
`
`VIII. The asserted claims of the ’007, ’377, and ’958 Patents are invalid for the same
`reason similar claims of foreign counterparts were found invalid
`
`In 2017, Philips filed a patent infringement action in Germany against, inter alia, Fitbit
`and Garmin alleging infringement of European Patent No. 1,076,806 (“EP’806”) and European
`Patent No. 1 247 229 (“EP’229”). EP’806 is in the same family as, and claims priority to, the
`’007 patent. The claims of the ’007 patent and EP’806 share a number of similarities2. EP’229 is
`in the same family as the ’377 and ’958 patents, and claims priority to the same provisional
`application as the ’377 patent. The claims of the ’377 and ’958 patents and EP’229 are also
`similar.
`
`For example, like the asserted claims of ’007 patent, the invalidated EP’806 claims recite:
`
` a GPS receiver which obtains time stamped position data;
` means for computing performance feedback data from the GPS time stamped position
`data;
` presenting audio performance feedback over a headset; and
` comparing athletic performance feedback data from different athletes on a remote server.
`
`
`Like the asserted claims of the ’377 patent, the invalidated EP’229 claims recite:
`
` an internet enabled wireless device which runs an application and renders a user
`interface;
` a monitoring device which provides health or exercise information to the internet enabled
`wireless device;
` health and exercise information indicating a physiologic status of the subject; and
` sending health or exercise information to a server, which calculates a response based on
`this information and sends the response to the wireless device.
`
`
`
`
`2 See the attached color-coded chart illustrating the similarities between these patent claims.
`
`

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`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 9 of 12
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`December 8, 2020
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`And like the asserted claims of the ’958 patent, the invalidated EP’229 claims recite (the EP’229
`claims include limitations from both the ’377 and ’958 patents):
`
` an internet enabled wireless device which runs an application, receives inputs, and
`includes two communication ports;
` a monitoring device which provides health information to the internet enabled wireless
`device;
`
`the internet enabled wireless device stores the health information; and
` a server in wireless communication with the wireless web device.
`
`In early 2019, the High Court of Justice of England invalidated certain claims of EP’806.
`Justice Carr expressly noted that the technical characteristics of GPS data made it obvious to use
`for verification of exercise activity and virtual competitions (similar to the claim element in the
`’007 patent which requires use of GPS time-stamped data to compare athletic performance data
`among users) and that providing audio feedback to runners using GPS-based data was obvious.
`This decision demonstrates that before the earliest priority date of these patents, there were
`portable and wearable devices that could monitor user physiological parameters using GPS
`modules and interact with web-enabled mobile devices. In the recent nullity action the German
`Federal Patent Court also invalidated the original asserted claims of EP ‘806.
`
`Later in 2019 the European Patent Board of Appeal affirmed the invalidity of all asserted
`claims of Philips’ EP’229 patent. The EU legal determinations that EP’806 and EP’229 are
`invalid are strong indicators that the ’007, ’377, and ’958 patents are also invalid. Indeed, the
`District Court Judge in the Philips v. Garmin case noted that the facts from the European
`litigation are relevant to the assertion of invalidity of the counterpart U.S. Patents. Case 2:19-cv-
`06301-AB-KS Document 42 Filed 11/25/19, page 5. The Federal Circuit has affirmed an
`exceptional case determination under similar facts, where the patent owner had a history of prior
`losses against the same defendant, and the same prior art was used to invalidate a related patent
`in an earlier case. See Monolithic Power Systems, Inc. v. O2 Micro Intern. Ltd., 726 F.3d 1359
`(Fed. Cir. 2013).
`
`The fact that Philips waited until August 4, 2020 to finally abandon the claims of the ‘958
`patent, on the eve of the claim construction hearing, is a strong indication that Philips was
`asserting this patent for the sole purpose of diverting Fitbit’s and the Court’s resources from
`other asserted patents and pending motions. Philips opposed Fitbit’s request to construe 14
`claims in the first round of the Markman process, resulting in the ‘958 patent accounting for 4 of
`the 10 terms to be construed. Fitbit was forced to devote a substantial portion of its limited
`briefing page count to addressing claim terms that Philips knew all along it had no intention of
`pursuing. In sum, Philips used the ‘958 patent as a diversion, to divert Fitbit (and Court)
`resources away from focusing on the remaining issues in the case.
`
`

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`December 8, 2020
`Page 9
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`IX.
`
`Philips’ discovery abuses and failure to diligently prosecute this case further
`supports an exceptional case determination and must be deterred
`
`At the case status conference on March 24, 2020 Philips pushed for an accelerated
`pretrial schedule with a fact discovery cut off of September 23, 2020. Philips argued that the
`emerging COVID pandemic should be no impediment to the ability to perform discovery
`remotely and quickly. The Court provided Philips with the accelerated schedule requested. Fitbit
`complied with that schedule, producing its technical documents and making its source code
`available for inspection on April 15, 2020. Philips, however, went to sleep. Philips did not bother
`to qualify an expert to review the Fitbit source code-related materials until August 29, 2020—
`over 19 weeks after the code was available for review. Philips also raised its first complaint on
`August 24, 2020 that Fitbit allegedly did not provide a production of technical documents. (Note
`this complaint was raised before Philips had qualified any expert to examine Fitbit’s technical
`materials.) At the very first meet and confer on this issue, Fitbit identified multiple bates
`numbers of examples of produced technical wikis. It became clear that Philips had taken no
`effort to examine the materials that Fitbit produced and made available 4 months earlier. Philips
`was simply making unsupported complaints to lay the groundwork for seeking a delay in the
`discovery schedule that it had previously insisted upon.
`
`In an apparent effort to make up for lost time, Philips’ belatedly designated expert,
`Dr. Buy, was observed reviewing source code while using a recording device, a smartphone, in
`violation of the Protective Order in this case. The source code review process was interrupted,
`pending resolution of the code review irregularities. An independent forensic examination of
`Dr. Buy’s smartphone identified system irregularities that Dr. Buy and Philips could not explain,
`including that it appeared that the clock time on the smartphone was intentionally rolled back
`prior to the forensic examination. Fitbit was forced to go to Court on September 23, 2020 to
`obtain the Court’s approval for further forensic analysis. The Court agreed further analysis was
`required. Since that date Philips has raised repeated roadblocks3 to the additional forensic
`examination, setting the stage for yet another request to the Court to further delay the pretrial
`schedule that it had previously pushed to obtain.
`
`
`3 Before the September 23 hearing date, Philips obtained a complete image of everything on Dr.
`Buy’s smartphone. Fitbit, in contrast, did not have access to this information. Following the
`Court’s order for further forensic investigation, Philips suggested a different independent
`forensic expert, Mr. Spencer, to conduct the analysis. Philips quickly changed its mind when Mr.
`Spencer was interviewed by both parties on October 1 and requested analysis of the same
`smartphone image that Philips had of Dr. Buy’s phone. (Apparently there was something on the
`phone image that Philips did not want the independent forensic expert to see.) Eight weeks have
`since expired while Philips continues to string out resolution of this forensic analysis dispute.
`
`

`

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`In addition to Philips’ source code review delays, it has also withheld timely production
`of responsive documents to obtain a tactical advantage. Fitbit’s Request for Production of
`Documents, No. 2 served January 10, 2020, sought “All Documents asserted by anyone to be
`Prior Art to the Patents-in-Suit, Related Patents or Patent Applications.” A timely response to
`this request would have provided Fitbit with identification of prior art that could have been used
`in Fitbit’s invalidity contentions served March 13, 2020, or used in the claim construction
`process in May and June, 2020. Instead, Philips waited until September 10, 2020 to produce
`responsive materials provided by Samsung and Apple to Philips in 2017, reflecting prior art that
`invalidates the Philips’ patents in suit. Simply put, Philips sat on damaging documents,
`producing them only after the opportunity to use them in a cost-effective manner had passed and
`in an apparent attempt to prejudice Fitbit by producing them after the deadline for invalidity
`contentions and the claim construction process.
`
`X.
`
`Philips’ serial meritless actions to extract unwarranted settlements supports an
`exceptional case determination and must be deterred
`
`Philips is engaged in serial meritless litigations for the purpose of extracting unwarranted
`cost-of-defense settlements. A strategy of asserting patents to drive up litigation costs in an effort
`to compel settlement, rather than a legitimate effort to “test[] the merits” of any patent rights,
`further supports a finding under § 285 that this case is exceptional. See Rothschild Connected
`Devices Innovations, LLC v. Guardian Prot. Servs., Inc., 858 F.3d 1383, 1390 (Fed. Cir. 2017)
`(“[A] pattern of litigation abuses characterized by the repeated filing of patent infringement
`actions for the sole purpose of forcing settlements, with no intention of testing the merits of
`one’s claims, is relevant to a district court’s exceptional case determination under § 285.”). See,
`also, Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 at 1327 (Fed. Cir. 2011) (exceptional case
`finding where serial plaintiff exploits the high cost to defend complex litigation to extract a
`nuisance value settlement); Blackbird Tech LLC v. Health In Motion LLC, 944 F.3d 910 (Fed.
`Cir. 2019) (totality of circumstances, including lack of substantive strength and flawed pre-suit
`investigation, coupled with multiple settlement demands related to the cost of defense, support
`exceptional case finding); Shipping & Transit, LLC v. 1A Auto, Inc., 283 F. Supp. 3d 1290, 1300
`(S.D. Fla. 2017) (looking to plaintiff’s “pattern of pervasive litigation in determining whether
`this is an ‘exceptional’ case”).
`
`Following losses in Europe, Philips filed the instant suit (which it could have filed in
`2017 at the same time as the EU lawsuit), asserting the U.S. counterparts to the same European
`patents that were found invalid, as well as the ’233 patent, whose claims are particularly
`vulnerable to challenges under section 101. When faced with a motion to dismiss this current
`U.S. action, exposing the invalidity of the asserted claims, Philips responded with yet another
`meritless action in the ITC, coupled with yet another “invitation” to pay Philips an unwarranted
`settlement. The substantive weakness of the ITC action is addressed by Fitbit’s ITC counsel in
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`Case 1:19-cv-11586-FDS Document 270-8 Filed 01/05/22 Page 12 of 12
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`December 8, 2020
`Page 11
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`the letter from Y. Ernest Hsin to David Hickerson, dated January 7, 2020 and incorporated herein
`by reference. Since that letter, Philips has lost two of the three asserted patents on summary
`determination in the ITC. The ITC staff has also joined both Fitbit and Garmin’s positions that
`none of the patents are infringed, all are invalid, and that Philips lacks a technical domestic
`industry in the remaining patents. In short, Philips has lost repeatedly in every venue it pursues,
`yet it continues to exploit the high cost of the litigation process as a cudgel to demand an
`unwarranted settlement.
`
`Philips’ pattern of lawsuits against Fitbit with serious substantive flaws in the merits of
`their allegations, accompanied by repeated invitations to Fitbit to settle the cases due to the
`presumptive rising cost of defending Philips’ suits, is the type of “exceptional” conduct the
`Supreme Court gave district courts the license to deter.
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`XI. Conclusion
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`The totality of the circumstances indicate that this case is exceptional. Philips has
`engaged in a pattern of litigation pursued for the purpose of inflating the cost of defense rather
`than testing the merits of its substantively weak claims, in an effort to increase its settlement
`leverage. Fitbit will seek its attorney fees in this case under 35 U.S.C. § 285 for defense of each
`of the four asserted patents. Fitbit also reserves its rights to