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$11M in Attorney Fees Sought in IP Action

November 17, 2017 | Posted in : Expenses / Costs, Fee Entitlement / Recoverability, Fee Request, Fee Shifting

A recent Law 360 story by Dorothy Atkins, “VMware Seeks $11M Atty Fees for Beating Phoenix IP Suit,” reports that VMware Inc. urged a California federal judge to award it $11.2 million in attorneys’ fees and litigation costs after a jury cleared it of Phoenix Technologies Ltd.’s claims it infringed Phoenix’s software copyright and breached their licensing agreement, arguing that the case was “ill founded from the outset.”

Michael Jacobs of Morrison & Foerster LLP argued that staff at Phoenix knew that its suit was premised on an "implausible legal contention," because they waited 15 years to sue over their licensing contract, and that's highlighted by the fact that they shifted their legal theory dramatically after the close of fact discovery.  “This case was ill-founded from the outset,” Jacobs said.  “To go back and read the complaint is to remind ourselves how odd it was to receive it on its face.”

Phoenix’s bid for attorneys' fees and costs comes after a jury cleared VMware of all allegations in June.  Phoenix had sought $110 million in damages and alleged in its March 2015 complaint that VMware broke its contract with Phoenix and infringed copyrights by limiting its use of software that controls basic input and output operations, known as BIOS.

Jacobs argued that Phoenix had evidence of weakness of their case since the beginning, but failed to do its due diligence to ensure its claims were viable.  The company unfairly forced VMware to spend millions to defend itself against the suit, he said.  “This case cries out for an award of attorneys’ fees lest there be a lot more cases like it,” he said.

But Phoenix’s attorney, Michael Attanasio of Cooley LLP, argued that nothing about this case would make it objectively unreasonable to pursue.  Also, Attanasio said, VMware can't cite a single case in which claims were deemed objectively unreasonable, despite having survived summary judgment and going to trial.  Even the Supreme Court has observed that sometimes cases go to trial, and the plaintiffs lose, but that doesn’t turn it into fee shifting award, Attanasio said.

U.S. District Judge Haywood S. Gilliam Jr. said he would take the arguments under submission, along with Phoenix's motion for judgment as a matter of law and request for new trial.  In that motion, Phoenix claimed that the jury was prejudiced by VMware’s defense argument, which the court shouldn’t have allowed VMware to present.  But during the hearing, Judge Gilliam suggested that the appeals court might be a better place for that particular challenge to be resolved.

The case is Phoenix Technologies Ltd. v. VMware Inc., case number 4:15-cv-01414, in the U.S. District Court for the Northern District of California.