Thursday, May 29, 2014

Failure to Drop Damages Claim “Dwarfed” by Litigation Costs No Basis for Attorneys’ Fee Award

The court denied defendant's motion for attorneys’ fees under 35 U.S.C. § 285 and rejected the argument that a fee award was justified because plaintiff pursued a damages claim that was "dwarfed" by the cost of litigation. "[Plaintiff's] complaint did not allege [movant] had knowledge of the [patent-in-suit] prior to the lawsuit, so [plaintiff's] potential recovery against [movant] was limited to [about] six months. . . . [Movant] also informed [plaintiff] that [it] had instituted a rebate program for its customers, thereby reducing any revenues that could have formed a royalty base. . . . [Plaintiff] entered into settlements with the carriers and handset manufacturers who sold or manufactured the majority of the [movant]-enabled devices, leaving only four devices and a single wireless network. . . . The main thrust of [movant's] argument appears to be that [plaintiff] should have dropped the case, or entered into a settlement, because the potential recovery from [defendant] would be dwarfed by the costs of litigation. . . . [E]ven if the amount of damages were small relative to the cost of litigation, which seems likely based on the arguments of the parties, the Court is unaware of any de minimis exception for infringement. It cannot be the case that a plaintiff may be subjected to monetary sanctions for failing to drop a case against a defendant if the cost of litigation exceeds the potential recovery."

EON Corp. IP Holdings LLC v. FLO TV Incorporated, et al, 1-10-cv-00812 (DED May 27, 2014, Order) (Andrews, J.)

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