Court denies Section 285 application

Applications for Section 285 “exceptional case” findings and the attorneys fees they bring are now almost standard by prevailing parties. This case provides an example of a new way to lose on such a motion. Lawyers representing defendants in patent cases need to read this opinion.

Plaintiff alleges infringment, but the Marshall jury in Judge Gilstrap’s court found no infringement and invalidated some of the asserted claims. Defendant filed a motion for “exceptional case” finding.

FedEx argued that Plaintiff IV “made this case exceptional by pursuing unreasonable positions throughout the litigation.” “In response,” Judge Gilstrap wrote, “the Court now turns its attention to the conduct of both IV and FedEx.” (Emphasis added).

Wait, what?

Judge Gilstrap concluded that IV’s infringement positions were viable, and that it did not engage in “nuisance litigation.” “The Court finds that there “is no minimum damages requirement to file a patent
infringement case,” Judge Gilstrap wrote, citing AdjustaCam, LLC v. NewEgg, Inc., 861 F.3d 1353, 1361 (Fed. Cir. 2017), and adding that “the courts of our nation are open to all who reasonably believe they have been wronged, and not only those deep pockets. If FedEx chose to spend excessive amounts of money on its attorneys, such should not curtail the access of IV or any other litigant.”

The Court similarly found that IV’s willfulness position was not “untenable” and that FedEx’s arguments regarding IV’s litigation tactics were “little more than a complaint that they were sued in the first place. “

With respect to complaints over conduct related to source code production and inspection, Judge Gilstrap referenced Shakespeare’s well-known quote “FedEx doth protest too much”. (Emphasis is in the original, I swear to God).

Things actually go downhill from there, with the Court switching targets to FedEx, noting that it “affirmatively misrepresented facts to the Court.” With respect to a complaint that the plaintiff didn’t inspect a facility it sought access to, the Court observed that FedEx effectively blocked the plaintiff from inspecting the facility (it suggested that the plaintiff join a public tour) while simultaneously giving its own expert full access. No, seriously.

Things continue to pick up speed at section H, entitled “FedEx’s Deposition Gamesmanship.” It appears FedEx designated 18 employees as potential witnesses, supplemented to add another 31, and produced 37 witnesses for 30(b)(6) deposition, yet never listed its employee who served as its lead-off witness at trial. Then there was the time FedEx sent its expert on tours of plants which had the effect of preventing him from being deposed during the expert discovery period, and until after the deadline for Daubert motions.

Finally, the Court noted that FedEx threatened to file a motion for sanctions under Rule 11, which the Court considered to be the use of the sanctions process for improper strategic or tactical purposes, i.e. to intimidate the plaintiff or seek premature disclosure of its trial theories. Readers need to consult this portion of the opinion, as the letter addressed might be one that’s sitting in your files, and which you send in many cases pretrial. So check this against your practice.

“Having considered the totality of the circumstances,” Judge Gilstrap concluded, “the Court finds that Defendants’ own bad acts and excessive conduct prevent any award to it of attorneys’ fees under § 285. FedEx’s own conduct, in several instances, went well beyond the bounds of zealous advocacy in ways this Court has, thankfully, rarely seen. Accordingly, and although they were the prevailing party in this
case, the Court must decline to reward Defendants’ misguided behavior with an award of attorneys’ fees. Like equity, he who seeks attorneys’ fees under § 285 must have clean hands. In this case, FedEx does not.”

© 2020 Michael C. Smith. Use limited to individual subscribers. Further distribution prohibited.

This blog does not constitute legal advice. If you’d like to discuss a related legal matter, please contact Michael C. Smith via email or call 903-938-8900.