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Apple, HP Test New Supreme Court Fee-Shifting Ruling

June 16, 2014 | Posted in : Defense Fees / Costs, Fee Award, Fee Entitlement / Recoverability, Fee Request, Fee Shifting

A recent The Recorder story, “Apple, HP Chase Fees from Serial Patent Plaintiff,” reports that wielding the U.S. Supreme Court’s recent decision on fee-shifting in patent cases, Apple Inc. and Hewlett-Packard Co. are seeking a combined $3.7 million from a company they describe as a serial filing non-practicing entity.

“This case ‘stands out’ because—long after it was clear that Linex has no valid claim to the technology at issue in this case—Linex continued to press its weak case through serial litigation in the hopes of extracting a settlement,” the two companies argue in Linex Technologies v. Hewlett-Packard, before U.S. District Judge Claudia Wilken.

The motion filed Tuesday renews an argument that Apple pressed before the Supreme Court as amicus curiae in Octane Fitness v. ICON Health & Fitness that companies who don’t practice their patents but use them only for litigation should be held to account through fee shifting for meritless litigation.

The Supreme Court neither adopted nor rejected that argument, which is extremely controversial within the bench, bar and industry.  Instead, it directed trial judges to consider the totality of the circumstances when deciding whether a case is so “exceptional” as to merit a fee award.

Apple and HP argued in their motion that companies innovate while others license valid intellectual property to others and may resort to litigation to seek fair value for their inventions.  “Linex does neither,” the companies contend in a motion cosigned by Wilmer Cutler Pickering Hale and Dorr partner Elizabeth Reilly, who represents Apple, and Covington & Burling partner Michael Plimack, who represents HP.

Specifically, Apple and HP contend that Linex sued 15 other companies in Texas in 2011, settling the cases for nuisance value.  After amending its claims at the U.S. Patent and Trademark Office, the company sued Apple, HP and three other companies in the International Trade Commission and in the Northern District of California.  Linex dismissed the ITC action after ITC staff filed its prehearing brief, but continued pressing its clams before Judge Wilken.

In moving for fees, Apple points to three recent district court decision applying Octane Fitness, including a May 30 decision by U.S. District Judge Denise Cote of the Southern District of New York that found “a protypical exceptional case” where the plaintiff sought a nuisance settlement on the theory that the defendant “would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation.”