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Judge Stands by $1.3M Fee Award in IP Action

October 25, 2017 | Posted in : Expenses / Costs, Fee Award, Fee Award Factors, Fee Entitlement, Fee Jurisprudence, Fee Request

A recent Law 360 story by Dorothy Atkins, “Sanford, ThermoLife Can’t Trim $1.3M Atty Fees in IP Suit,” reports that a California federal judge refused to rethink $1.3 million in attorneys’ fees awarded to two pharmaceutical companies that Stanford University and ThermoLife International LLC unsuccessfully sued for patent infringement, saying the case was exceptional and that the parties' pre-litigation investigation was "severely lacking."

U.S. District Judge Janis L. Sammartino said her initial order awarding Vital Pharmaceuticals Inc. or VPX, and Hi-Tech Pharmaceuticals Inc. $1.3 million in attorneys’ fees is not manifestly unjust.  Had Stanford and Thermolife done a better job in their pre-litigation investigation, they would have known that at least some of their claims were not viable, the judge said.

The judge also rejected arguments by Stanford and ThermoLife International that the award should be tossed altogether due to the Federal Circuit’s June ruling in Checkpoint Systemts Inc. v. All-Tag Security SA, which held that the mere assertion of multiple infringement suits is not grounds for a case’s exceptionality warranting attorneys’ fees.

The judge said she clearly did not award attorneys’ fees “merely” because Stanford and ThermoLife filed multiple infringement suits.  Instead, she awarded attorneys’ fees, under the totality of the circumstances, the judge said.  The judge also noted that there are additional motions for fees and expenses still pending before her, so the final fee award could be greater than $1.3 million.

The ruling is the latest happening since ThermoLife and Stanford University launched the instant suit in 2013 along with 80 other related patent suits in California's Southern District.  After a five-day trial in August 2016, the court found all the patents-in-suit are invalid.  Following the infringement ruling, Vital sought nearly $370,000 in attorneys’ fees, and Hi-Tech sought $913,370.  On April 4, Judge Sammartino granted Vital and Hi-Tech's bid for fees, finding the loss is exceptional enough to warrant them under the Supreme Court's Octane Fitness ruling.

At the time, the judge found that ThermoLife and Stanford had pursued a "file-and-settle" litigation strategy and failed to conduct adequate research before filing its infringement suits over a patent that describes drug ingredients that improve vascular function.  “[The plaintiffs’] pattern of action here is indeed one that strongly suggests plaintiffs brought suit against many defendants without carefully reviewing their claims as a calculated risk that might yield nuisance-value settlements,” the April 4 order said.

But in June, Stanford and ThermoLife International asked Judge Sammartino to reconsider her April 4 order, arguing that the court should either decline to award attorneys’ fees or they should be cut from $1.3 million to less than $10,000 total.  In support of its motion, Stanford and ThermoLife International argued that Vital and Hi-Tech failed to parse the legal fees and costs related to the infringement of the particular patent at issue.

Stanford and ThermoLife also asked the judge to reconsider her determination that the case was exceptional under Octane Fitness, arguing in a reply brief that the Federal Circuit’s Checkpoint Systems ruling monumentally shifted precedent on exceptionality.

But the judge rejected the arguments, finding that the evidence supports her order and Stanford and ThermoLife can’t now make new arguments challenging certain evidence to try to support their motion for reconsideration arguments.  The judge however hasn’t issued final rulings yet on all of Hi-Tech and Vital’s requests for attorneys’ fees and expenses.

The case is ThermoLife International LLC v. GNC Corp. et al., case number 3:13-cv-00651, in the U.S. District Court for the Southern District of California.