Top Petitioners, Patentees, and Firms in the PTAB in 2016

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Discovery Abuses Warrant Monetary Sanctions Against Defendant and Lead Counsel

Following settlement of the case, the court granted in part plaintiff's motion to find defendants in contempt for failing to comply with court's order compelling further document production and supplemental disclosures and imposed monetary sanctions, jointly and severally, against defendants and their lead counsel. "Whether the non-infringing alternatives information would have decidedly impacted Plaintiffs case is unimportant; the Court's concerns are Defendant's noncompliance and lack of transparency. . . . It is clear that Defendant failed to disclose crucial documents 'at the right time,' or indeed, at all, before the Court demanded an explanation for Defendant's actions. . . . Trial-related sanctions are inappropriate now. However, the Court finds that other sanctions are warranted 'to ensure the proper functioning of judicial process.'. . . It is impossible from the record to determine who among Defendant's employees and lead counsel were at fault for the discovery violations and to what degree. It is not the Court's duty to unravel the details and determine the actors' degrees of responsibility. What occurred is, at bottom, sanctionable conduct for which Defendant and its principal counsel are both responsible. . . . There was apparently a disconnect among Defendant's lead counsel: some counsel were more successful in locating documents than others, and there may have been disagreement regarding which documents were discoverable. There may well have been a similar disconnect between Defendant and its lead counsel. Significant discovery abuses resulted from these miscommunications. . . . The Court hereby imposes sanctions jointly and severally against Defendant . . . and its principal firm . . . in an amount approved by the Court."

Vir2us, Inc. v. Invincea, Inc. et al, 2-15-cv-00162 (VAED January 27, 2017, Order) (Morgan, SJ)

Counsel Not Liable for Attorney Fees Award Under 35 U.S.C. § 285​

Following summary judgment of noninfringement, the court granted defendant's motion for attorney fees under 35 U.S.C. § 285, but denied defendant's motion to hold plaintiffs' counsel jointly and severally liable for those fees. "[Defendant] seeks to hold Plaintiffs’ attorneys jointly and severally liable for attorneys’ fees under § 285; however, [defendant] cites no authority for its request, and both the text of the statute and applicable authority indicate the contrary. Furthermore, Plaintiffs’ attorneys brought this suit two years before the Supreme Court’s decision in [Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014)], which significantly altered the legal landscape concerning fee-shifting under § 285."

Technology Properties Limited, LLC v. Canon, Inc. et al, 4-14-cv-03640 (CAND January 26, 2017, Order) (Wilken, USDJ)

Non-Party Owner of Undercapitalized Plaintiff Held Personally Liable for 35 U.S.C. § 285​ Attorney Fees Award​

Following summary judgment of noninfringement and post-judgment discovery regarding plaintiff's real party in interest, the court granted defendant's motion for attorney fees under 35 U.S.C. § 285 and found that those fees could be imposed on non-parties. "[Plaintiff] is the first level of two shell corporations which were intended to shield the real actor . . . from personal liability. The Court is persuaded that [the sole shareholder of plaintiff's parent company] and those in active concert with him exploited the corporate form to operate largely in secret and to insulate the true party in interest from the risk associated with dubious infringement suits—that risk being fee shifting under Section 285. . . . [T]he Court concludes that the statutory text, current case law, and statutory purpose behind the Patent Act and Section 285 all support assessing direct Section 285 liability against non-parties, so long as (1) the actor is responsible for conduct that makes the case exceptional, (2) the actor is afforded due process, and (3) it is equitable to do so. . . . [I]f we assume that Section 285 permits recovery only against the originally named non-prevailing party, then the law has perversely incentivized third parties to act in ways that stand out from established litigation norms. This would foster the very type of litigation that the statute was meant to deter. . . . The lack of deterrence caused by empty shell plaintiffs negates the incentive to vigorously defend against meritless claims when there are no practical means by which to recover costs. . . . [T]he Court is persuaded that [this case] never would have been filed but for [the sole shareholder's] calculated assumption that he could insulate himself personally from the possible application of Section 285."

Iris Connex, LLC v. Dell Inc., 2-15-cv-01915 (TXED January 25, 2017, Order) (Gilstrap, USDJ)

Plaintiff’s Use of Litigation as Fishing Expedition Justifies Attorney Fees Award Under 35 U.S.C. § 285​

The court granted defendants' motion for attorney fees under 35 U.S.C. § 285 because plaintiff's litigation positions were baseless and the its litigation tactics were exceptional. "[T]here is substantial reason to believe that [plaintiff] initiated this litigation to embark on a fishing expedition into Defendants' operations and proprietary customer lists for the purpose of developing direct patent infringement claims against their customers. In other words, there is substantial reason to believe that [plaintiff] did not institute this litigation for a proper purpose, but rather as a means to obtain evidence of infringement against Defendants' customers it could not otherwise obtain because it did not have a good-faith belief that Defendants' customers were actually infringing the [patent-in-suit]. Indeed . . . [plaintiff] received repeated assurances from Defendants' customers that infringement of the patent was not occurring."

In Re: Bill of Lading Transmission and Processing System Patent Litigation, 1-09-md-02050 (OHSD January 24, 2017, Order) (Beckwith, USDJ)

File Access Patent Not Ineligible Under 35 U.S.C. § 101​

The court denied defendants' motion to dismiss on the ground that plaintiff’s computer file access patent encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "[T]he claimed invention is not merely an abstract idea, but rather the [patent] claims an improved method for accessing files in a data storage system of a computer system. . . . [T]he claimed invention is directed at solving a challenge unresolved by the prior art in which a search in a hierarchical directory structure did not guarantee a result. The claimed invention addressed that concern with the mechanism of allowing the user to search only those terms that are actually contained in the file description, thereby eliminating the possibility that the user may mistype or misspell a search term. . . . The description of the invention and the claims created a technological solution to the problems that had existed with conventional file access methods. Because the Court finds that the patent claims are directed to a specific improvement to computer functionality, the claims are not directed to an ineligible abstract idea."

Speed Track, Inc. v. Amazon.com, Inc. et al, 4-09-cv-04479 (CAND January 23, 2017, Order) (White, USDJ)

Patent for Manufacturing Custom Dental Crowns Not Ineligible Under 35 U.S.C. § 101​

The magistrate judge recommended denying defendants' motion to dismiss on the ground that plaintiff’s patent for manufacturing custom dental crowns encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea. "[T]he [patent-in-suit] describes a physical process for collecting information about a patient’s mouth, preparing a three-dimensional model of the mouth, scanning the model, and on the basis of data collected from this process, manufacturing the custom crown coping. . . . Defendants isolate two steps from the [patent] claims, the combination of which is allegedly the point of novelty, and ignore the remainder of the claims. Contrary to Defendants assertion, the [patent] claims are directed to a method of manufacturing physical crown copings for prosthodontics. . . . It is true as Defendants suggest that the claims, at least on their face, appear to include certain steps that could be construed as computerized steps, and thus steps that could arguably be carried out mentally. But Defendants cite no authority for the proposition that a claim reciting a method of manufacturing becomes abstract simply because it includes modeling or involves the use of computerized data."

Zircore, LLC v. Straumann Manufacturing, Inc. et al, 2-15-cv-01557 (TXED January 20, 2017, Order) (Payne, MJ)