The procedural history of this case is a long one. Essentially, Adjustacam originally sued 58 defendants in 2010. It dismissed most of its claims prior to Markman, and then in the fall of 2012 dismissed its claims against the last defendant, Newegg. Newegg sought fees under Section 285 and Judge Davis denied the motion. Octane Fitness then came out while that decision was on appeal, changing the standard for determinations of “exceptional case” under Section 285, and Newegg sought fees again. The trial court, now Judge Gilstrap, denied the renewed motion. The Federal Circuit reversed and found the case “exceptional”, and Judge Gilstrap ordered briefing on the amounts of fees. This afternoon he issued the attached order setting the fees.
Well, it’s certainly both an enhanced and exceptional day for me, as Paul Allen’s team located the wreck of the carrier Lexington in the Coral Sea, 76 years after it sank, along with – to date – 11 of the 35 aircraft it had on board when it went down.
Yes, I’m the crazy uncle that makes handcrafted wood Lexington toys for his cousins’ kids – as well as the occasional plastic model of one – but you know, every family has one of those, doesn’t it? So today, the Lexington comes with me to the office to celebrate.
Also celebrating this morning is plaintiff Eidos Display, which, following a lengthy campaign, won a 2x enhancement of its recent $4.1 million jury verdict against competitor Chi Mei Innolux. Like the Battle of the Coral Sea both sides won something, with Innolux defeating Eidos’ request for attorneys fees under Section 285. So let’s analyze what happened, note some significant comments in the opinion, and say hello to LBJ, Mr. Sam, and some East Texas lawyer sayings along the way.
The defendant in this case won a summary judgment of no infringement and asked the court to declare the case exceptional under 35 U.S.C. § 285 and award $700,000 in attorneys’ fees. The court’s resolution of the motion is yet another data point showing what conduct by a serial filer/bulk filer/ high volume filer is sufficient to trigger liability under Section 285.
I don’t mean to imply that my holidays are so dull and uneventful, or my interests so limited that a Section 285 order constitutes excitement – but given that my middle
doppelganger child Parker’s favorite Christmas presents are a Black Sheep squadron T-shirt and a B-17 bag, it’s certainly possible that’s the case. (For more information on the Black Sheep, see this post on my personal weblog. Because it’s the holidays I’ll spare you from why both the T-shirt and the bag are not totally accurate).
In any event, the attached order provides yet another instance where a court found that despite one side having lost, the case wasn’t “exceptional” for Section 285 purposes, and along the way points out arguments that are not helpful, as well as some that might be.
And now I’m back to my “fall of shot” analogy for motions for fee awards, with a second one to discuss today from the same judge. In this case, Judge Payne addressed a prevailing defendant’s request for fees and expenses, and denied the motion as to the patent claims, but granted it as to the trademark claims.
One of the things about patent litigation, as opposed to many other types, is that many cases are not resolved in one ruling or trial, or even in one proceeding. Even setting aside procedural issues such as venue, discovery, and pleadings standards, the applicable law often requires that cases proceed through multiple stages of rulings, and in some cases multiple trips to the Federal Circuit before the substantial issues are resolved – with some cases complicated by the fact that the applicable caselaw changed after the case was filed.
And it is now standard practice in most patent cases for a successful outcome for the defendant (and in some cases the plaintiff) to be followed by a motion for attorneys fees under Section 285, and for successful outcomes for the plaintiff in many cases to be followed by motions for enhanced damages under Section 284. So to paraphrase Imhotep from The Mummy (the good one with Brendan Fraser and Rachel Weisz, “[dispositive motion/trial] is only the beginning.”
MyHealth presents a case of the former, in which the resolution on the merits several months ago (see
Motions to Dismiss Under 101 Granted As To the Asserted Claims) led to this recent interesting opinion of fees under Section 285, which brings to a close – at least assuming it isn’t appealed – five years of assertion of Imhotep’s neighbor in death – the ‘985 patent.
One of my favorite things is when the same court – meaning the same judge and in approximately the same time frame so you don’t have pesky things like intervening changes in the law messing up the comparison – issues orders going opposite ways on the same question based on the different facts in the two cases. The problem is somewhat similar to naval gunnery, where a ship begins an engagement by attempting to “find the range” to a target, with salvoes of shells falling short (and throwing up splashes that are then plotted) and then long as the gunners attempt to determine what trajectory finds the target. Once they “find the range” they attempt to direct as many shells as possible to that target. Where court opinions are somewhat different is that practitioners are acutely interested in where the shots change from short to long so they know at what point a court’s denials of a motion become grants – meaning which facts cause a court that would otherwise deny a motion to consider granting it. Yesterday I posted on a very recent opinion granting attorneys fees in a patent case under Section 285 against a “bulk filer” plaintiff. Two days later, the same judge denied a motion for fees against a different “bulk filer” patent plaintiff, giving us a unique insight into what facts can make cases different. So what were the facts in this new case?
George Bernard Shaw once said “I often quote myself. It adds spice to my conversation.” In that vein, in a May 5, 2014 article on the then-new Octane Fitness case making attorneys fees easier to recover, Texas Lawyer reporter John Council wrote:
The decisions also mean that patent practitioners should be wary of where they file their patent infringement claims, especially if their clients are nonpracticing entities who attempt to enforce patent rights against accused infringers in hopes of recovering licensing fees, said Michael C. Smith, a partner in Siebman, Burg, Phillips & Smith in Marshall.
“It’s going to become a ‘loser pays’ for nonpracticing entities in courts that have not seen a lot of these cases,” Smith said. “In courts that have seen a lot of these cases, they will expect plaintiffs to drop cases if they become insurmountable. And if they pursue it after that, they will get hung.’’
(Emphasis mine because, of course). This is the case that I was talking about.
An issue patent practitioners are always interested in is when a party’s conduct in a patent infringement case meets the test for “exceptional” case status so as to justify an award of attorney’s fees under 35 U.S.C. § 285. This case presents the situation as applied to a “bulk filer” plaintiff who filed 20 cases the same day in November 2015. If that date sounds familiar, it should – that was the “Thanksgiving Special” period where hundreds of patent cases were filed in the incorrect belief that the fast-approaching December 1, 2015 amendments to pleading requirements would not apply to them.
It’s been a busy few weeks finalizing some other projects, including tests, papers, seminar presentations and the like (and I finally finished that anime-ish P-40 for Parker with accurate paint colors), but I’m finally able to turn more of my attention to some of the very interesting activity in the district in the last few weeks. And speaking of interest, there are few cases that have generated more than VirnetX v. Apple, which just had its most recent trial’s postverdict motions come out. Most legal news is interested in the bottom line – that the verdict amount of $302 million resulted in a $439 million judgment, but for practitioners the analysis of how it got there is of great interest – I am not the only one out there that enjoys a good JMOL. So I wanted to work through the motions, but only after a short … well, that’s a lie, it’s not going to be short – procedural history.
Several recent opinions out of the EDTX provide litigants with more data points on enhanced damages – when are they appropriate and when are they appropriately set aside – on how future royalties are calculated, and and on when Section 285 awards of attorneys fees in “exceptional cases” are appropriate. They also provide a helpful analysis of which non-taxable fees and expenses are not recoverable under Section 285.