Vasudevan Software, Inc. v. MicroStrategy, Inc., 3-11-cv-06637 (CAND March 11, 2013, Order) (Seeborg, J.).
Wednesday, March 13, 2013
Threat to Attack Counsel’s Other Clients Via Reexamination Not Sanctionable
The court "[s]omewhat reluctantly" denied plaintiff's motion to sanction defendant for threats to file reexamination petitions, make litigation as painful as possible, and "take action against" plaintiff's counsel. Following the threats, defendant initiated reexamination petitions as to patents owned by an unrelated party represented by plaintiff's counsel. "[Plaintiff] characterizes [defendant's] attack on a . . . client uninvolved in this case as an implicit threat to attack similarly other [clients represented by plaintiff's counsel] in an effort to pressure [plaintiff's counsel] to abandon [plaintiff's] case against [defendant] and to deter [counsel], or any other law firm, from representing [plaintiff] against [defendant]. . . . [A] strong inference can be drawn from the record that [defendant] chose to mount an assault on [plaintiff] and [its counsel] by filing the patent reexaminations and did so precisely because they thought such conduct constituted petitioning activity, thereby shielding [defendant] from sanctions for such acts. . . . [Defendant] has failed to advance any colorable good faith explanation for seeking reexamination of the [unrelated client's] patent. . . . While [defendant] and [its counsel] appear to have engaged in sharp practice that falls far short of model professional conduct, given the First Amendment implications of sanctioning a party engaged in petitioning activity, the Constitution shields [them] from sanction at this time. . . . [N]othing in this order precludes a request for sanctions should it become appropriate before the USPTO."