“Hyper-Aggressive” Settlement Posturing No Basis for Attorneys’ Fee Award

The court denied defendant's motion for sanctions under 28 U.S.C. § 1927 based on plaintiff's settlement strategy which included a settlement demand 90 times more than plaintiff's expert's damages estimate. "[T]he court struggles to understand plaintiff‘s tactic of increasing its damages demands and pursuing a very aggressive negotiation posture after a largely adverse claims construction by the court. . . . [B]ecause the law does not place any obligation on parties to settle their cases, the court is not prepared to sanction plaintiff for, effectively, declining to enter into serious settlement discussions at that point. Reality is sanction enough: defendants called plaintiff‘s bluff and plaintiff will receive nothing from this litigation except a lot of bills to pay. Similarly, the court will not sanction plaintiff‘s counsel. Hyper-aggressive settlement posturing is not, strictly speaking, a behavior that 'multiplies the proceedings' – it merely prevents the proceedings from coming to an early end."

NorthMobileTech LLC v. Simon Property Group, Inc., 3-11-cv-00287 (WIWD May 21, 2013, Order) (Conley, J.).

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The court denied defendant's motion for attorneys' fees under 35 U.S.C. § 285 based on plaintiff's settlement conduct. "[Defendant] points to [plaintiff's] settlement conduct, specifically that [plaintiff] settled early with several defendants for amounts that [defendant] asserts reflect [plaintiff's] goal of obtaining nuisance settlements. . . . [Plaintiff's] settlement pattern raises some eyebrows but because its positions were not entirely baseless, its attempts to settle claims early in the litigation for costs lower than the amounts of a defense are not sufficient, alone, to find subjective bad faith."

Site Update Solutions LLC v. Accor North America Inc., et. al., 5-11-cv-03306 (CAND May 21, 2013, Order) (Grewal, M.J.).

Failure to Disclose Parent Patent Lawsuits Insufficient for Inequitable Conduct Claim

The court granted defendant's motion to dismiss plaintiff's inequitable conduct claims that were based on a failure to disclose prior parent patent lawsuits. "[Plaintiff's complaint] alleges that '[t]he district court [in the [parent] litigation] construed terms in the [parent] Patent that are also present in the [patents-in-suit].' [Plaintiff's] Third Amended Complaint includes no explanation, however, of which terms in the [parent] Patent the court construed, or of how the court’s construction of those terms relates to the PTO’s decision to issue the [patents-in-suit]. That omission is fatal in light of [Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009)]'s requirement that the pleadings 'explain both ‘why’ the withheld information is material and . . . ‘how’ an examiner would have used this information in assessing the patentability of the claims.’”

CoStar Realty Information, Inc. v. CIVIX-DDI, LLC, 1-12-cv-04968 (ILND May 15, 2013, Order) (Holderman, J.).

Prosecution Bar does not Extend to Inter Partes Review Except as to Amendment of Claims

The court granted in part plaintiff's motion to allow two of its litigation attorneys to participate in the inter partes review of the patents-in-suit. "[Plaintiff] asserts that the inter partes proceeding will not implicate competitive decisionmaking . . . and asserting there is only a 'minor opportunity to amend' the claims. . . . The inter partes proceeding affords opportunities to amend the claims that are more flexible than implied by [plaintiff]. [Plaintiff] has not established that [the two attorneys] will not be involved in competitive decisionmaking. . . . However, the purpose of this particular AIA reform was to 'convert[ ] inter partes reexamination from an examinational to an adjudicative proceeding.'. . . Depriving [plaintiff] of the specialized representation of [the attorneys] in the inter partes review would force them to rely on counsel in that process who lack litigation skills. While [plaintiff] has not shown that counsels' participation would not potentially implicate competitive decisionmaking, [defendant's] concern regarding inadvertent use of confidential information is insufficient to overcome the potential harm to [plaintiff]." Prolitec, Inc. v. ScentAir Technologies, Inc., 2-12-cv-00483 (WIED May 17, 2013, Order) (Randa, J.).

Damages Calculation Based on Profits from Sales Made with Accused Gift Cards not Improper

The court denied defendant's motion to exclude the testimony of plaintiff's damages expert as to profits attributable to sales of accused gift cards. "According to [defendant], [plaintiff's damages expert] attributes all profits from purchases made with [the accused gift cards] to the cards themselves, without accounting for profits from sales that would have accrued even without the [accused gift] card, and [the expert] attributed all profits from sales involving gift cards to [defendant's] gift card program generally rather than allocating profits from the purported inventive feature of the asserted patent claims. . . . [Plaintiff] asserts [its expert] . . . isolates the incremental profit based upon a comparison of systems with and without the patented feature. . . . The Court has reviewed [the expert's] opinion and his asserted bases for it and concludes he utilizes the proper methodology set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318F.Supp. 1116 (S.D. N.Y. 1970). [Plaintiff's expert] relies on the evidence relating to [defendant] and includes an analysis of the incremental profits [defendant] receives from the infringing gift card systems compared to the non-infringing alternatives."

Alexsam, Inc. v. Best Buy Stores, L.P., et. al., 2-13-cv-00002 (TXED May 15, 2013, Order) (Craven, M.J.).

Inadvertent Production of Counsel’s Analysis Acknowledging Weakness of Infringement Claim did not Justify § 1927 Sanctions

The court denied defendants' motion for sanctions under 28 U.S.C. § 1927 after plaintiff inadvertently produced a document regarding the weakness of its claim. "[28 U.S.C. § 1927] allows sanctions when an attorney has pursued a claim that is without plausible legal or factual basis, or has pursued a case that a 'reasonably careful attorney' would have known to be unsound. But we also have no basis upon which to find that plaintiff’s claims are 'entirely without support.'. . . We do acknowledge, however, that there is a claim that can be made when a party seeks not to obtain a judgment but to 'obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor': abuse of process, which is a tort suit. . . . [A]t this point in the litigation this single document acknowledging the weakness of a legal claim does not support a finding that plaintiff brought a frivolous claim ‘in order to obtain an advantage unrelated to obtaining a favorable judgment.’”

Peerless Industries, Inc. v. Crimson AV, LLC, 1-11-cv-01768 (ILND May 14, 2013, Order) (Cox, M.J.).

Prior Litigation and Reexamination of Related Patent Create Substantial Controversy Supporting Declaratory Judgment Claim

The court denied defendant's motion to dismiss plaintiff's declaratory relief action for lack of subject matter jurisdiction. "[Defendant] has already initiated a patent infringement action against [plaintiff] in the Northern District of Ohio based on [plaintiff's] alleged infringement of [a similar] Patent [and] after the Ohio Litigation was stayed as a result of a reexamination of [that] Patent, [defendant] stated publically on at least two occasions that it intends to resume its vigorous prosecution against [plaintiff] when that stay is lifted. . . . [T]he [similar patent] and [the patent-in-suit] share the same specification, pertain to the same subject matter and technology, and are otherwise 'very closely related.'. . . [B]ased on the totality of the circumstances, [plaintiff] has established the existence of an actual case or controversy. . . .”

Medidata Solutions, Inc. v. DATATRAK International, Inc., 2-12-cv-04748 (NJD May 13, 2013, Order) (Martini, J.).

Stay Prior to Institution of Inter Partes Review Denied

The court denied without prejudice defendant's motion to stay pending inter partes review. "[I]t seems clear that a stay of a patent infringement action is not warranted when based on nothing more than the fact that a petition for inter partes review was filed in the USPTO. All in all, a petition can be pending before the USPTO for up to six months before the agency decides to 'initiate' an inter partes review. . . . The patent owner should be able, if it desires, to prosecute its claims, to take discovery, and to set its litigation positions, at least until such a time as the USPTO takes an interest in reviewing the challenged claims. . . . [A] stay of these proceedings would also, quite frankly, disadvantage Defendant because then this Court would be unable to prevent through pretrial case management a 'shifting sands' litigation strategy by the patent owner." Automatic Manufacturing Systems, Inc. v. Primera Technology, Inc., 6-12-cv-01727 (FLMD May 13, 2013, Order) (Dalton, J.).