Viavi Solutions v. Platinum Optics — Federal Circuit Upholds Fees for Pursuing an Unsupported Patent Theory

Background

Viavi Solutions owns four patents covering low-angle-shift optical filters used in three-dimensional sensing applications. It sued Taiwan-based competitor Platinum Optics Technology (PTOT), alleging that PTOT supplied its 11246 filter—or a materially similar filter—for use in mobile devices sold in the United States.

Viavi did not have direct evidence that the accused 11246 filter was entering the U.S. market. Its theory rested largely on information from industry sources, its loss of some business with a major device maker, and technical comparisons involving the 11246 filter. During the litigation, however, PTOT submitted a declaration stating that it had not sold the 11246 filter for the device maker’s products. Viavi continued to include that filter in its infringement contentions while seeking discovery about other, uncharted filters.

After the district court refused Viavi’s proposed amendment, Viavi dismissed the infringement suit with prejudice. PTOT then sought attorney fees under 35 U.S.C. § 285. The district court found the case exceptional in part and awarded fees incurred after PTOT supplied the declaration that undermined Viavi’s central infringement theory. Viavi appealed.

The Court’s Holding

The Federal Circuit affirmed. Applying the deferential abuse-of-discretion standard, the court held that the district judge permissibly considered both Viavi’s limited pre-suit investigation and its conduct after receiving evidence that the 11246 filter had not been used as alleged.

The panel rejected Viavi’s argument that the fee award imposed an improperly heightened pleading requirement. Pre-suit diligence is one factor in the totality-of-the-circumstances inquiry required by the Supreme Court’s Octane Fitness framework. Here, the district court did not clearly err in finding that rumor and inference were an inadequate foundation for the specific infringement theory Viavi chose to litigate.

The court also agreed that Viavi continued to pursue an untenable theory after the PTOT declaration closed the door on infringement by the 11246 filter. Viavi could not keep a nonmeritorious accused product in the case merely to conduct broad discovery in hopes of identifying a different product that might support a viable claim. The district court therefore acted within its discretion by shifting only the fees incurred after that evidentiary turning point, even though it declined to impose sanctions for subjective bad faith.

Key Takeaways

• A patent owner should have concrete support tying the accused product to the alleged U.S. infringement before filing suit; market rumors and indirect business evidence may not be enough.
• Section 285 does not require subjective bad faith. A case can become exceptional when a party persists after evidence makes its infringement theory objectively unreasonable.
• Fee exposure can be limited to a particular phase of litigation. Here, the award began when PTOT supplied evidence that should have prompted Viavi to abandon its central theory.
• Discovery is not a license to keep a disproven product in the case while searching for some other product that might infringe.

Why It Matters

The decision underscores that patent plaintiffs must reassess their claims as the evidentiary record develops. A complaint that begins with a weak but arguably reasonable factual basis can still generate fee liability if later evidence eliminates that basis and the plaintiff presses on.

For accused infringers, the ruling shows the value of creating a clear factual record early. Evidence that directly addresses the accused product may not end the case immediately, but it can establish the point from which continued litigation becomes unreasonable and fees begin to accrue.