Reckless Assertion of Non-Frivolous Claim Does Not Justify Attorneys’ Fee Award Against Plaintiff’s Counsel

The court denied defendant's motion for sanctions under 28 U.S.C. § 1927 because counsel's assertion of an indirect infringement claim, after defendant filed a motion for summary judgment and plaintiff dropped its direct infringement claim, was reckless but not frivolous. "[Plaintiff's] counsel recklessly asserted an indirect infringement claim unsupported by any evidence of direct infringement. [Plaintiff's] reckless claim, however, was not frivolous. First, the ultimate result of the case was not obvious to [plaintiff's] counsel because he formed a good-faith (albeit incorrect) belief that he had sufficient evidence to establish indirect patent infringement. Second, the arguments advanced were not wholly without merit, considering that [plaintiff] obtained an expert who opined that [defendant's] Enabled Usage falls within [the patent-in-suit]. . . . [Plaintiff's] counsel conducted prefiling investigations and formed a good-faith belief that it had a valid infringement claim. [Plaintiff] made no attempt to extort money from [defendant], never offered a settlement demand to obtain a nuisance settlement, nor did it coerce [defendant] to settle under the threat of protracted litigation."

Action Star Enterprise, Co. Ltd. v. KaiJet Technology International, Limited, et al, 2-12-cv-08074 (CACD July 7, 2014, Order) (O'Connell, J.)