Defendants GraphOn et al appeal from the order of Judge Gerald Bruce Lee striking their motion for attorneys’ fees under § 285 for being late:  the motion was filed on December 10, 2009—15 days after the Clerk entered the order of dismissal.

Fed. R. Civ. P. 54(d)(2)(B)(i) provides that a motion for attorneys’ fees must “be filed no later than 14 days after entry of judgment” unless a statute or court order provides otherwise.

Because the filing of motion for attorneys’ fees is an act required to be done “within a specified amount of time,” the Court found that Fed. R. Civ. P. 6(b)(1) applies:

When an act may or must be done
within a specified time, the court may, for good
cause, extend the time:

(A) with or without motion or notice if the court
acts, or if a request is made, before the
original time or its extension expires; or

(B) on motion made after the time has expired if
the party failed to act because of excusable
neglect.

Because defendants did not timely request more time under part (A)–which only would require a showing of “good cause,”, Judge Lee ruled that the late filing could only be accepted if defendants could show “excusable neglect.”

Defendants argued that such neglect occurred because (1)they miscounted by skipping over Thanksgiving Day and (2) they were somehow confused because the dismissal entry did not say “with prejudice.”

“Excusable neglect,” sayeth Judge Lee, is:

an equitable concept, and courts will consider “the relevant circumstances surrounding the party’s omission” to determine whether an extension is warranted under Rule 6(b)(2).  Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993). However, “inadvertence, ignorance of the rules, or mistakes construing the rules do not usually constitute excusable neglect.”  Id. at 392.

Based on this, Judge Lee found no excusable neglect.  Opinion, pp. 3-4.

Defendants argue that their delay was due to a miscalculation given the intervening Thanksgiving holiday and the fact that the Court’s Order did not state that dismissal was “with prejudice.” The Court finds Defendants’ reasons insufficient to establish excusable neglect. Federal Rule of Civil Procedure 6 makes clear that intervening holidays are included in the fourteen days allowed for a Rule 54(d) (2) (B) motion. Defendants’ miscalculation does not constitute excusable neglect.

. . .

[and] to the extent that Defendants were unclear about whether the Court’s Order dismissing the case for lack of jurisdiction constituted a dismissal with prejudice, Defendants could have moved for clarification.

2010-1143 Order

Plaintiffs Ole Nilssen & Geo Foundation appeal from the order of Judge Gettlemen finding the case exceptional and awarding attorneys fees.

Prior to starting this action in 2004 Nilssen had sued Osram Sylvania for infringing most of the patents in this case–all related to compact fluorescent lamps (“CFLs”).  Following a 2006 bench trial, Judge Darrah (ND/IL) in Osram found the patents unenforceable due to inequitable conduct by Nilssen before the PTO.  This was affirmed by the Federal Circuit in 2007.  Judge Darrah also found that case exceptional and awarded attorneys’ fees–a decision also upheld by the Federal Circuit in 2008.

Following Judge Darrah’s original decision, defendants in this case demanded that Nilssen dismiss the case and stipulate to judgment.  Nilssen initially refused but, after defendants’ filed for summary judgment, agreed as to 5 of the patents, but argued that the other 2 were not at issue in Osram and were neither invalid nor unenforceable.  Judge Gettlemen disagreed and found those other 2 unenforceable as well.

Judge Gettlemen’s opinion (all 4+ pages) is rather short on details, but he concludes that the case exceptional for the same reasons as did Judge Darrah.  (Order, p. 3).  The Judge was un-sympathetic to Nilssen’s argument that he resisted summary judgment in this case because of a good faith belief that Osram would be reversed on appeal:

According to plaintiffs, this [Osram] was a “close” case based on “technical violations.”  Of course, “close” only counts in horseshoes, and plaintiffs’ losses in the Osram litigation were complete and decisive.

Id. The Judge likewise rejected Nilssen’s plea that he had been punished enough in Osram, noting that § 285 is not about “punishment” but “compensation” for defendants who were forced to incur significant expenses to defend against a case that never should have been brought.

Notes: Osram also contained more than a small amount of litigation misconduct, something which doesn’t appear in this case (or at least isn’t discussed in any detail).  For example, there is no explanation as to whether Nillsen’s summary judgment position vis-a-vis the other 2 patents was frivolous.  The Federal Circuit in Osram did find that the exceptionality decision was supported by both the inequitable conduct as well as the litigation misconduct.

In addition, Judge Gettlemen also notes that another Nilssen case ended recently with an exceptional case finding and award of attorneys’ fee.  Nilssen v. General Electric (ND/IL 06-cv-4155).

However, I found a subsequent decision from Judge Wiseman in the MD Tennessee denying a motion for attorneys’ fees in Nilssen v. Universal Lighting.  Judge Wiseman expressly noted that his case lacked the litigation misconduct of the Osram case.

2010-1139 Exceptional Order

2010-1139 Nilssen TN Decision

Patentee B-K appeals from the order of Judge Margaret Morrow declaring the case exceptional under § 285 and awarding attorneys’ fees.  The award was due to inequitable conduct before the PTO in failing to disclose certain prior art.  The Court declined to base the decision on B-K’s alleged failure to disclose a co-inventor or on litigation misconduct.

On May 2008 the Court found B-K’s ’084 patent invalid as obvious, relying on two references not submitted to the PTO during examination.  Fresno Valves (“FVC”) then sought to declare the case exceptional and for an award of attorneys’ fees, based in part on the failure to disclose those references to the PTO.

Inequitable Conduct: The Court first addressed two threshold matters: (1) whether inequitable conduct allegations can be addressed in the context of a § 285 motion when those allegations were never included in an answer or counterclaim; (2) whether the standard is like on summary judgment (all evidence and inferences viewed in favor of the non-moving party) as advocated by B-K, or clear and convincing as urged by FVC.

The court decided it could address the inequitable conduct charge despite the lack of allegations from the pleadings, and that it would be judged under the “clear and convincing” standard.  However, the court wrote that its analysis and findings were solely for §285 purposes and did not constitute any finding or decision on enforceability.

To establish inequitable conduct, the asserting party must establish (1) that the patent applicant made an affirmative misrepresentation, failed to disclose material information, or submitted false information to the patent office; and (2) that the applicant did so with intent to deceive. If these elements are established, (3) the court must weigh them to determine whether inequitable conduct occurred.

As is often the case, the deceptive intent element was hotly contested with respect to inferring such intent.  The Court summarized B-K’s excuse for non-disclosure”the “we didn’t think it was material” rationale, and rejected it, inferring deceptive intent due to the lack of a credible explanation to the contrary:

the Federal Circuit “[has] held that absent a credible reason for withholding the information, ‘[i]ntent may be inferred where a patent applicant knew, or should have known, that withheld information would be material to the PTO’s consideration of the patent application.’” Monsanto, 514 F.3d at 1241 (quoting Critikon, 120 F.3d at 1256); Bruno Independent Living Aids, 394 F.3d at 1354 (“[A]n inference of deceptive intent may fairly be drawn in the absence of [a credible] explanation [for the non-disclosure]”). Stated differently, where a patent applicant (1) knew that prior art existed, (2) knew or should have known that it was material, (3) withheld the information, and (4) offers no good explanation for doing so, the court may infer intent to deceive.

Order, p. 25.  The Court rejected B-K blanket denial of deceptive intent because there was not good explanation as to how it thought the references were no material:

B-K argue that neither Hagen nor its patent counsel knew that the 360SL and Hydrel [references] were material, and denies that they had any intent to deceive. “A mere denial of intent to mislead (which would defeat every effort to establish inequitable conduct) will not suffice.” GFI, Inc. v. Franklin Corp., 265 F.3d 1268, 1275 (Fed. Cir. 2001) (citing FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1416 (Fed. Cir. 1997)).

Order, p. 28.  The Court further noted that deceptive intent can be inferred where (1) the applicant made a patentability argument to the PTO that could not have been made were the art of record (Order, p. 28), or where the references in question are the applicant’s own art (Order, p. 29).

Litigation Misconduct: The Court declined to find that B-K should be sanctioned for litigation misconduct, finding that “both parties engaged in overly aggressive, time-consuming and expensive litigation tactics.”  Order, p. 40.  However, it did use some of B-K’s “minor instances of litigation abuse” in weighing the discretionary component of § 285.

A subsequent order from the Court set the award at over $830,000 in fees, costs and expenses.

2010-1135 Exceptional Award

2010-1117 iLOR v Google

iLOR appeals from the finding of Judge Joseph Hood that its suit against Google was baseless and "exceptional" under 35 U.S.C. § 285 and that it should pay over $650,000 for Google's legal fees, costs and expenses.

iLOR sued Google claiming that the Google Notebook infringed 7,206,839, directed generally to  ’839 patent, which is directed to a “method for adding a user selectable function to a hyperlink.”  This user selectable function is commonly a toolbar that is associated with the hyperlink. 

iLOR sought a preliminary injunction, which the court denied because, as construed, it was undisputed that the Google Notebook did not infringe the '839 patent.  The Federal Circuit affirmed the claim construction and denial of the preliminary injunction, and the trial court further granted Google summary judgment of non-infringement.  The Federal Circuit decision is here. 

The main issue centered around whether the claim covered a toolbar that appeared only if the user "right clicked."  The courts all found that iLOR had clearly distinguished "right clicks" during prosecution–and it was undisputed that the Google Notebook displayed the hyperlink toolbar only following a right-click.

On the motion to delcare the case exception and for fees, Judge Hood found that iLOR knew or should have known that its suit against Google was baseless from the start.  There was evidence that iLOR knew before filing the lawsuit that the Google Notebook required a "right-click," and also that it knew that the patent claims did not cover a right-click.  The court wrote:

All of this is to say that, prior to instituting the present lawsuit, iLOR took the position in both its patent prosecution and its portrayal of its product to the public that it had created something unique and that the uniqueness depended upon a link enhancement toolbar that displayed automatically instead of in response to a user’s right click, as one would find in Google Notebook. It follows that iLOR was aware or should have been aware of the fatal flaws in its theory of the case in this instance, even if it failed to recognize them for what they were.

The Court concludes that this case was brought in objective bad faith and was frivolous based on iLOR’s awareness of or, at best, willful blindness to, these flaws.

Order, p. 9.

The court, after reviewing the actual hours spent and the rates charged by Google's main and local counsel, followed a lodestar approach and awarded fees for over 1500 hours and at an average hourly rate of approximately $400.  In doing so the court recognizes that patent litigators are specialists, practicing "nationally," and therefore higher rates are jusitifed:

The attorneys were clearly specialists in the field of intellectual property – which is, by its very nature, national and not necessarily regional in scope – and, specifically, infringement suits, the art of litigating such a suit, and the background issues of patent prosecution…it makes sense to proceed with such counsel, even at a higher rate than one might pay for local counsel, in a suit such as this.

Order, p. 13.

Note: Google apparently sought fees only against iLOR and not against iLOR's counsel.  Also, the court noted that Google's belated attempt to seek fees against iLOR under 28 U.S.C. § 1927 (vexatious litigation) was inapplicable because § 1927 relief is available only against attorneys and not parties.  Order, fn 1, pp. 3-4.2010-1117 Order Re Exceptional

2009-1146 Schindler Elevator v. Otis Elevator
SD/NY 06-5377
Judge Colleen McMahon

Plaintiff Schindler appeals from Judge Colleen McMahon's grant of summary judgment of non-infringement to Otis.  Schindler's patent, 5,689,094, relates to a destination dispatching elevator (such as one where the passengers do not press any buttons on-board the elevator) and was asserted against Otis's elevators at 7 World Trade Center.  The claims generally require an information transmitter carried by the passenger and a recognition device, terms the court construed to operate "without requiring any sort of personal action by the passenger" (other than merely walking in proximity to the elevator).  The 7WTC elevator system assigns floor destinations based on (i) tenant's building IDs, an RFID card; (ii) passenger input to a keypad or (iii) building security.  Because each requires action by the passenger–(i) requires the passenger to remove the ID card and place it close to the reader–there is no literal infringement.  The court found that Schindler did not make any doctrine of equivalents argument.

More reading: SJ Opinion

2009-1147 Aspex Eyewear v. Clariti Eyewear
SD/NY 07-2373
Judge Denny Chin

Aspex appeals from Judge Denny Chin's grant of summary judgment on the defense of estoppel related to allegations of infringement of 6,109,747, a patent directed to clip-on eyewear that attaches to frames via magnets.  Applying A.C. Aukerman Co v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc), the court found plaintiff equitably estopped from asserting the '747.  The elements are:

a.
The patentee, through misleading conduct, leads the alleged infringer
to reasonably infer that the patentee does not intend to enforce its
patent against the alleged infringer. "Conduct" may include specific
statements, action, inaction, or silence where there was an obligation
to speak.

b. The alleged infringer relies on that conduct.

In 2003 Aspex counsel sent cease and desist letters alleging infringement of several patents, including the '747.  When Clariti's counsel requested more information including identification of the claims asserted, Aspex counsel responded as to some patents, but not the '747.  Aspex did write in late 2006 to again raise the '747, and then filed suit in 2007.  The court found undisputed that Aspex mislead (through silence), Clariti's reliance and prejudice. 

More reading: SJ Order

2009-1149 Microstrategy v. Crystal Decisions
D/DE 03-1124
Mag. J. Mary Pat Thynge

Microstrategy appeals from the Order of Judge Mary Pat Thynge granting in part defendant's motion for attorney's fees and expenses under § 285. The court previously found that the asserted claims were either not infringed or were invalid, a decision affirmed by the CAFC.  The fees decision is mixed and based on a claim-by-claim analysis, but the court did find that Microstrategy continued to press its case despite overwhelming evidence of invalidity.  The court used March 2005 as the time at which plaintiff should have stopped–this is the date at which rebuttal expert reports were exchanged.

More reading: Order

2008-1337, 1125 Dippin' Dots v. Mosey

A case presumably on its last round as plaintiff appeals from the award under § 285 of attorney fees.  Dippin' Dots lost at trial, lost its trade dress appeal at the 11th Circuit, but partially won the appeal to the CAFC, getting a reversal on defendants' Walker Process claim.  The patent was, however, found not infringed, invalid and unenforceable.  The court originally awarded fees under the antitrust laws but, on remand after the CAFC decision, re-awarded most of the same fees under § 285.

We previously reported on the case here.

Oral argument is scheduled for Tuesday, November 4, 2008 at 2:00 P.M., Stanford University School of Law.

Summary of the Argument from Dippin' Dots.  Daniel J. Warren of Sutherland, Asbill & Brennan (Atlanta, GA) on brief.

Summary of the Argument from appellee Mosey et al.  Robert Oake, Jr., Oake Law Office (Allen, TX) and Rudolf O. Siegesmund, Siegesmund & Associates (Plano, TX) on brief.

The district court's exceptional case finding is not clearly erroneous. The district court based its finding on DDI's inequitable conduct and not on Walker Process fraud. The inequitable conduct holding was affirmed by this Court and inequitable conduct is a well-recognized basis for finding a case exceptional.

There is no requirement that “exceptional case” misconduct must exceed the minimal level of misconduct to support a finding of inequitable conduct. However, assuming arguendo that such a requirement existed, the district court found that DDI's inequitable conduct was “egregious,” and this finding has strong evidentiary support.

The district court's rationale for finding this case exceptional does not conflict with any statements this Court made in the first appeal. This Court never stated that DDI's conduct (which is determined by balancing intent and materiality) was not egregious. Indeed, this Court stated that the materiality of the non-disclosed Festival Market sales was high.

Further, although this Court made statements with regard to DDI's intent when affirming the inequitable conduct ruling, the “exceptional case” issue was not before this Court in the first appeal, and therefore this Court's statements do not constitute “law of the case.” This Court did not analyze all the inferences of intent in the first appeal – because there was no reason for this court to do so. When the evidence is analyzed for an exceptional case determination, strong inferences of intent exist under this Court's prior case law. Additionally, this Court's statements in the previous appeal regarding the evidence needed to prove Walker Process fraud are not “law of the case” because the analysis is different for determining the level of intent needed for Walker Process fraud and the level of intent needed to support an exceptional case finding.

The district court's award of attorney fees is not an abuse of discretion because the exceptional case finding is not clearly erroneous and the court considered the proper factors when making the award. Further, the district court adequately explained the basis for its award in the attorney fee orders and in the ruling on inequitable conduct.

The fees awarded were not disproportionate to the results achieved. DDI did not challenge the reasonableness or necessity of the Manufacturing Parties' fee requests below and the Manufacturing Parties achieved an excellent result by invalidating and rendering unenforceable the subject patent and defeating DDI's infringement claims by summary judgment. Further, the evidence indicated that this case was not close.

The Manufacturing Parties should be awarded fees for the antitrust aspects of the case because time spent on antitrust matters is compensable in a motion under §285. Further, since an overall excellent result was achieved, the Manufacturing Parties may still recover fees on claims that were rejected. Additionally, fees should be awarded for third party work because the fees are adequately documented.

The award of prejudgment and post judgment interest was not an abuse of discretion because the exceptional case determination and fee award were not clearly erroneous or an abuse of discretion and the evidence indicates that the interest awards were not an abuse of discretion.

Summary of the Argument from appellee Frost Bites. Keith E. Broyles, William R. Hubbard, Alston & Bird LLP (Atlanta, GA) on brief.

2008-1539 Advanced Magnetic v. Romag Fasteners

Plaintiff AMC appeals from the order of Judge Paul Crotty finding the case exceptional under § 285 and awarding attorney’s fees, and ruling AMC’s 5,572,773 patent unenforceable due to inequitable conduct.  The court also found litigation misconduct and AMC’s counsel jointly responsible for the attorney’s fees under § 1927.  During the earlier jury trial, the court granted Romag judgment as a matter of law upon the close of AMC’s case.

The case related to magnetic snap fasteners like the type commonly used in the fashion industry to secure the flap on handbags and purses.

First, the court addressed whether it had jurisdiction to hear the inequitable conduct claims after Romag had, upon getting the JMOL, agreed to dismiss its counterclaims, including that for inequitable conduct.  The court determined that it did have jurisdiction–not only did Romag "reserve" these arguments for its fees motion, but the court found inherent power to consider Romag’s claims as part of the "totality of the circumstances" implicated by a § 285 request.

As for the inequitable conduct, the court reviewed the testimony and found the patent invalid for misidentification of inventorship.

The named inventor, Irving Bauer, is also the president and owner of plaintiff AMC.  The owner of an oil burner (boiler) installation and repair business, Bauer was approached by an acquaintance to purchase 4,021,891 and 4,453,294, then the industry standards covering purse snaps.  Unfortunately for Bauer, shortly after his purchase the industry announced a design around re: the ’294, rendering the patents nearly worthless.  Bauer, however, came up with the application for the ’773, a patent which would cover the industry once again.

One problem–Bauer was not the inventor (according to the court), but rather a Robert Riceman.  Riceman claimed to have an earlier conception for the alleged industry design-around but, because of contractual obligations, his inventions would accrue to a third party and not to Bauer or Riceman.  According to the court, Bauer claimed inventorship to protect his investment in the ’294 and his plans to control the purse snap industry.  Simply put, the court found Bauer’s claim to inventorship impossible to believe.  Among the court’s many relevant paragraphs:

The Court found Bauer’s testimony regarding his purported invention completely incredible. At no point in Bauer’s rambling, often-incoherent testimony did he offer any scientific or technical explanation for the claimed increase in magnetic attraction caused by the hollow post. Nor did he present any evidence to substantiate this claim. See infra Discussion Part I.C.2. The Court refuses to believe that Bauer, lacking any training or experience in the field, and equipped only with curiosity and pluck, was able to successfully design around the industry standard ‘294 Patent. His testimony bore clear indicia of fabrication. While voluble—if not responsive—on direct, he was evasive and argumentative on cross examination. The Court is convinced beyond a shadow of a doubt that Bauer could not be the inventor of the ‘773 snap.

With the patent now invalid, the court turned to litigation misconduct and focused its gaze on AMC’s trial counsel.  AMC had retained a Dr. Dev Ratman as an infringement expert, and his reports duly opined that Romag’s snaps had, as claimed, holes int he rivets that cause an increase in magnetic attraction.  He based this on a finite element analysis.

Unfortunately, Dr. Ratman had hired another person (Bell) to perform the analysis.  Despite Rule 26 and specific discovery requests, AMC never disclosed Bell nor his test results to Romag.  The matter came to light during Dr. Ratman’s deposition shortly before trial.

More unfortunate is the fact that Bell’s tests showed that the accused snaps did not infringe.

The court found that the failure to timely acknowledge and produce the Bell tests needlessly prolonged the litigation and constituted litigation misconduct.  Further, the court found that AMC pursued its infringement claim to trial despite no evidence of infringement–yet another example of misconduct.  Because AMC’s counsel were involved in this misconduct, they were found to be joint and severally liable.

More reading:

Order

2008-1508 Grantley Patent Holdings v. Clear Channel

Clear Channel appeals from the judgment and orders of Judge Ron Clark confirming the jury’s verdict that Clear Channel willfully infringed Grantley’s patents and that the patents were not invalid or unenforceable.  With enhanced damages (+25% of damages), prejudgment interest and other add-ons, Clear Channel is staring down a payout of over $90 million.

The case has been covered by many others, including The Prior Ar and EDTexweblog.

Judge Clark denied Clear Channel’s post-trial motions–new trial, judgment as a matter of law, etc.–without a formal written opinion.  His reasons were apparently set forth during a June hearing and the transcript will be available in November.

Nor unsurprisingly, Clear Channel raised many, many issues and arguments related to the judgment, from erroneous claim construction through to bad jury instructions, including the usual "we don’t infringe" and the "patents’ are invalid."  In a nutshell, Clear Channel complains that Grantley argued a broad reading of the claims for infringement, but a narrow one for invalidity.

Although these arguments might have merit, the interesting one (to me) relates to willfulness.  There were 3 patents asserted, but Clear Channel knew of only 1 pre-suit.  It argued that its actions cannot be willful because it acted without an objectively high likelihood that it was infringing, outlining what it knew, when, and what it did, stating in part:

First, on an objective level, many bases exist to form a good faith, reasonable belief that the system Clear Channel was building would not be found to be infringing of a valid, existing patent. Many of these bases have been presented in this litigation, such as the existence of prior art in the radio industry and other industries, the anticipation by sources of prior art of which Clear Channel employees had intimate knowledge, and the narrowness of the claims as described, which included real time pricing based upon each prior order in response to a customer request. That Clear Channel hired a team to independently build the systems, which cost in excess of $32 million also proves an objectively reasonable and good faith basis to conclude that Clear Channel did not believe it was infringing a valid patent, but was employing the knowledge of its employees, who were skilled in the art.

Further, the evidence also demonstrates actual conclusions by Clear Channel concerning infringement, which were reasonable and good faith. Clear Channel employees read the ’691 patent and, after analysis determined they could proceed to develop BestRate without infringing the patent. (RR 824:14-825:13, 857:12-13, David Wilson of Clear Channel); (RR 1007:24-1008:18, Clear Channel “carefully developed Trade Winds not to infringe on methodologies which Maxagrid had patented,” Allan Ginsburg of Clear Channel); (RR 1021:3-12, Clear Channel believed that Trade Winds did not infringe because of the way Clear Channel was developing it, Allan Ginsburg of Clear Channel); (RR 1021:13-22, Clear Channel looked at diagrams in the patent and saw “reservations” while Clear Channel did not use reservations, David Murray of Clear Channel); (RR 1156:10-1157:5, David Murray of Clear Channel got a copy of the ’691 patent, discussed it with others within Clear Channel and decided development of Trade Winds could go forward; Trade Winds did not and does not use reservations).

The Clear Channel non-infringement position was objectively reasonable. Figures 1 and 6 of the ’691 patent show “reservations” as a central element of the system being depicted. The specifications state “FIG. 1 illustrates a system diagram of an integrated inventory management system (IMS) 10 according the invention.” ’691 patent 5:55-57. The Clear Channel persons reading and considering the ’691 patent were experienced in computer software for radio stations. RR 828:4-9; RR 925:24-926:13; RR 1098:6-1099:1. Whether their conclusion ultimately was correct is not the issue. As persons experienced in software for radio stations, they formed a “reasonable” and “good faith” belief that Trade Winds would not infringe. Reading the patent against the background of the system that it was developing, it would not have been known or obvious to Clear Channel that its non-infringement position was incorrect.

Clear Channel also complained that the jury was not asked about willfulness on a patent-by-patent basis, but rather globally, and there was no evidence that Clear Channel knew of the other two patents pre-suit.  In its June 10th Order, the court dismisses that argument in a footnote:

1 Clear Channel argued at the post-trial hearing on June 4, 2008 that a finding of wilfulness was not supported by the record because it was not aware of several of the patents prior to the suit being filed. However, there was considerable undisputed evidence that Clear Channel was aware of the ‘691 patent before Grantley commenced suit. For example, Clear Channel does not dispute that their Chief Information Officer (David Wilson) and one of their Ernst & Young consultants (Nick Cory) knew of the ‘691 patent in 2000. Grantley did not file this case until 2003. The jury was not asked about willfulness on a patent-by-patent basis, and Clear Channel did not object to this instruction. The dispute over whether Clear Channel was aware of the other three patents-in-suit prior to this case being filed was considered by the court, factored into its analysis of whether the willfulness justified enhanced damages, and reflected in the 25% enhancement. [Emphasis by PATracer].

However, Clear Channel dispute this:

The record reflects, however, that Clear Channel specifically objected to the general verdict form used regarding willfulness by the Court, rather than the specific verdict form of requesting an answer of willfulness patent by patent. See 7 RR 1692:7-10 (“We object to the form because it does not distinguish which patents are willfully infringed but only gives a general submission rather than the specific verdict submission.”); see also PT RR 35. To the extent the jury found willfulness based upon knowledge of any patent, the verdict form led to the rendition of an improper verdict. Similarly, interpreting the verdict to find that Clear Channel willfully infringed all patents is inappropriate.

Obviously this is only one side of the story–still, the court must have concluded that Clear Channel’s non-infringement and invalidity arguments were very, very weak, i.e., an objectively high likelihood that these arguments were wrong under Seagate:

Accordingly, to establish willful infringement, a patentee must show by
clear and convincing evidence that the infringer acted despite an
objectively high likelihood that its actions constituted infringement
of a valid patent.  The state of mind of the accused infringer is not
relevant to this objective inquiry.  If this threshold objective
standard is satisfied, the patentee must also demonstrate that this
objectively-defined risk (determined by the record developed in the
infringement proceeding) was either known or so obvious that it should
have been known to the accused infringer.

More reading:

Clear Channel’s Post Trial Motions

Counsel:

Grantley: Robins Kaplan Miller & Ciresi (Minneapolis) and Germer Gertz (Beaumont, TX).
Clear Channel: Andrews & Kurth (Texas).

2007-1545, 2008-1162 Qualcomm v. Broadcom

This is the appeal from case relating to the H.264 video compression standard resulting from the Joint Video Team, aka the case in which Qualcomm and its counsel were sanctioned.  We previously posted the Summary of the Arguments here, but now can provide copies of Qualcomm’s opening and reply briefs, and Broadcom’s response.

Oral argument has now been scheduled for Tuesday, 05 August 2008 at 10:00 A.M., Courtroom 402.

For those following all versions of the Qualcomm/Broadcom fight, a reminder that oral argument in the case where Qualcomm’s (3G) WCDMA and EV-DO cellular
chips and its QChat software were found to infringe and were permanently enjoined  (see our In Brief post) is next Wednesday, 09 July 2008, 10:00 A.M., Courtroom 203.

2008-1386 Climax Molybdenum v. Molychem

Molychem’s co-counsel Ramon Pizarro appeals from Judge Matsch’s order giving him approximately $77,000 of the attorney’s fees award rather than the $215,000 he demanded.

Background:  Climax and Molychem engaged in a protracted battle at the ITC and in district court over Climax’s claims of patent infringement and Molychem’s Walker Process antitrust counterclaims.  Climax lost its patent case at the ITC.  Following a bench trial, the court ruled against Climax on its patent claims and against Molychem on its antitrust counterclaim.  However, the district court did find Climax’s 5,985,236 invalid and unenforceable by inequitable conduct before the PTO.  Judge Matsch further found that Climax’s prosecution and litigation conduct sufficiently egregious to be an "exception case," and he awarded Molychem its reasonable attorney’s fees under § 285:

The litigation conduct in the prosecution of the claim of infringement also supports that finding. After initiating this civil action, Climax pursued Molychem before the ITC, requiring it to defend that claim in administrative proceedings and delaying the adjudication of this action. What is most egregious is the refusal of Climax to accept the ITC decision or to submit the case to this court on that administrative record, insisting that the dispute be tried again because the ITC did not have all of the available evidence. What additional evidence was produced at this trial not only confirmed the ITC decision, it proved invalidity, unenforceability by inequitable conduct and fraudulent deception of the PTO. Molychem is entitled to recover its attorneys’ fees in defending this civil action and the ITC proceedings.

Legal Fees:  Molychem had entered into a retention and contingency fee arrangement with its two counsel, Pizarro and Donald Trinen.  The agreement basically provided that the lawyers would bill Molychem at $100/hour, and Molychem would pay that amount plus costs, expenses, etc.  If Molychem recovered anything of value from Climax, it would first recoup its actual litigation costs–the remainder would be split 75% to Molychem, 12.5% to Pizarro, and 12.5% to Trinen.

Per the § 285 award, Judge Matsch gave Molychem attorney’s fees based on its counsel’s actual hours at $350/hour (Trinen) and $300/hour (Pizarro), for a total of $1.2 million, plus $350,000 in expenses.  But Molychem only paid $922,000 in fees and expenses, and thus received an award about $600,000 greater than it actually expended.

When Climax announced its intent to pay the fee award, Pizarro filed an attorney’s charging lien with the court.  He argued that the agreement wasn’t meant to cover this award and that the agreement was unenforceable because it didn’t comport with Colorado’s Rules Governing Contingent Fees.  Pizarro claimed he should receive $215,400 as the reasonable value for his services. 

The court rejected his arguments and his request, concluding that:

• the fee split applied to the "Gross Amount Collected" by Molychem, the language of which was general enough to implicitly include an award of attorney’s fees; and

• any lack of compliance with the state’s contingent fees rules reflected more Pizarro’s "professional shortcomings" rather than providing him a way to collect more for fees than he bargained.

Notes and Comments: Climax initially appealed Judge Matsch’s order on invalidity and inequitable conduct (2008-1134), but it was dismissed because that order was not "final."  It does not appear that it has re-filed that appeal.

More reading:

Order on Division of Attorney’s Fees

Order Calculating Reasonable Attorney’s Fees

Order on Invalidity, Inequitable Conduct and Exceptional Case