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Marathon Oil, others keep $5 million fee award in fracking patent case

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A Marathon Oil well site in Texas. REUTERS/Jennifer Hiller

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  • Fracking-services company sued Marathon, contractors for infringement
  • Company obtained patent by withholding information from PTO
  • North Dakota court correctly awarded fees on second take

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(Reuters) - A U.S. appeals court on Thursday affirmed an award of more than $5 million in attorneys' fees for Marathon Oil Corp and others against a Louisiana company that had pursued patent infringement claims against them despite knowing its fracking patent was invalid.

A North Dakota federal judge correctly found that the fee award was justified based on Heat On-The-Fly LLC's particularly weak infringement claims, related to a patent obtained by hiding relevant information from the U.S. Patent and Trademark Office, the U.S. Court of Appeals for the Federal Circuit said.

Energy Heating LLC and Rocky Mountain Oilfield Services LLC, and Energy Heating's client Marathon, had been embroiled in a court dispute with Heat On-The-Fly over water heaters that allegedly infringed its fracking patent.

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"This decision caps almost nine years of needless litigation brought on by Heat On-The-Fly's principals and parents," Ross Boundy of Davis Wright Tremaine, who represented Energy Heating and Rocky Mountain, said in an email. "We could not be more pleased that Heat On-The-Fly has been held accountable."

Heat On-The-Fly's attorney Devan Padmanabhan of Padmanabhan & Dawson declined to comment, and Marathon and its attorney Shane Coleman of Holland & Hart didn't immediately respond to a request for comment.

U.S. District Judge Ralph Erickson found the company's patent invalid because its founder purposely withheld information from the U.S. Patent and Trademark Office that would have kept it from issuing the patent. The Federal Circuit affirmed the ruling in 2018, but sent the case back for Erickson to reconsider his decision not to award attorneys' fees.

On remand, Erickson adopted a magistrate judge's finding that Heat On-The-Fly pursued its claims "without any apparent attempt to minimize litigation costs despite its knowledge that its patent was invalid" and recommendation to grant Energy Heating and Rocky Mountain more than $3.3 million and Marathon more than $1.7 million in fees and costs.

The company appealed again, arguing the court misapplied the factors for determining an "exceptional" case that would merit attorneys' fees under patent law.

U.S. Circuit Judge Sharon Prost, joined by Chief Circuit Judge Kimberly Moore and Circuit Judge Kara Stoll, said Thursday that the award was justified.

The district court provided "ample support" for the finding that Heat On-The-Fly's case was weak, and Prost said the company "mainly regurgitates its (losing) argument that the district court's previous order denying fees should control."

The case is Energy Heating LLC v. Heat On-The-Fly LLC, U.S. Court of Appeals for the Federal Circuit, No. 20-2038.

For Energy Heating and Rocky Mountain: Ross Boundy of Davis Wright Tremaine

For Marathon: Shane Coleman of Holland & Hart

For Heat On-The-Fly: Devan Padmanabhan of Padmanabhan & Dawson

Read more:

Fed Circuit: Judge must explain denial of attorneys' fees in fracking patent case

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Washington-based correspondent covering court cases, trends, and other developments in intellectual property law, including patents, trademarks, copyrights, and trade secrets. Previous experience at Bloomberg Law, Thomson Reuters Practical Law and work as an attorney.

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