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Category: Exceptional Case

Philip Morris Attorneys Earn $575K Fee Award in E-Cig Suit

February 23, 2022

A recent Law 360 story by Lauren Berg, “Philip Morris Attys Nab $575K Fee in Extinguished E-Cig Suit” reports that a Georgia federal judge on awarded Philip Morris $575,000 in attorney fees after the tobacco giant beat an electronic nicotine device pipe maker's patent infringement suit, saying the complaint included attached evidence that revealed the futility of the infringement allegations. 

U.S. District Judge Timothy C. Batten Sr. awarded Philip Morris USA Inc. and Philip Morris Products SA $575,529 in attorney fees — about $64,000 shy of their $639,043 request — finding that Healthier Choices Management Corp.'s suit is exceptional because it ignored that two U.S. Food and Drug Administration documents attached to the complaint refuted its infringement claims.

"By knowingly alleging a baseless claim of infringement, continuing to pursue that claim in the face of the court's rebuke, and then, in its proposed amended complaint, simply omitting the exhibit that rendered its claims futile, plaintiff's litigation conduct reflects 'studied ignorance' about the futility of its patent claims," Judge Batten said.  Instead of citing case law supporting the reasonableness of its litigation conduct, Healthier Choices used its opposition to Philip Morris' request for attorney fees to relitigate why the suit should not have been dismissed, according to the order.

In his order, Judge Batten found that the billing rates and number of hours reported by the Philip Morris defendants' counsel are reasonable, but said a few series of billing entries were too vague, including one labeled "attention to motion to dismiss" and another called "case development and strategy."  The judge made a 10% reduction to the total award to account for the vague entries, according to the order.  The judge said he would also subtract some money for clerical tasks performed by paralegals.

Some Defense Fees are Shifted in Flawed IP Case

February 21, 2022

A recent Law 360 story by Jeff Montgomery, “Some Defense Fees Are Shifted to Wi-LAN for Case Flaws” reports that Wi-LAN Inc. must pay a substantial share of the defense costs Vizio Inc. and Sharp Electronics Corp. incurred while fighting needlessly prolonged patent infringement claims that Wi-LAN knew were unsupportable, a Delaware federal judge has ruled. 

In a decision, U.S. District Court Judge Leonard P. Stark found that the conduct of Canada-based intellectual property licensing venture Wi-LAN was "exceptional" in its unacknowledged weaknesses and unreasonable pursuit of litigation from at least April 2018 to the final judgment against Wi-LAN on Sept. 12, 2019.

"The Court's fee award reflects the unnecessary effort defendants had to expend to continue defending claims that Wi-LAN knew or should have known by no later than the date I identified, rested on unreliable, insufficient, and inadmissible evidence," Judge Stark said in an 11-page memorandum order.

At issue were U.S. Patent Nos. 6,359,654; 6,490,250; and 5,847,774, but Judge Stark found that only Wi-LAN's handling of the '654 patent pushed the company's conduct into the orbit of Title 35 of the U.S. Code, Section 285, which allows fee awards to prevailing parties in "exceptional" circumstances.

The ruling will oblige Wi-LAN to pay Sharp's and Vizo's reasonable attorney fees incurred in fighting the '654 patent infringement claims from the date of the last third party declarations, April 26, 2018, through the court's entry of final judgment on the patent, Judge Stark said.

Gianni Cutri of Kirkland & Ellis LLP, lead counsel for Sharp and the attorney who led briefing on the motion to declare the case exceptional, said the legal team was pleased with the victory.  "We are also gratified that the court agreed with our view that it was unreasonable for Wi-LAN to continue to press its infringement claims and further ordered Wi-LAN to pay a substantial portion of Sharp Electronics Corporation's attorneys' fees because of this exceptional conduct," Cutri said.

Federal Circuit Considers Attorney Fees in Tossed IP Action

February 11, 2022

A recent Law 360 story by J. Edward Moreno, “Netflix Is Owed Atty Fees In Tossed IP Suit, Fed. Circ. Told,” reports that a Federal Circuit panel questioned whether Netflix is owed $400,000 in attorney fees after a California federal judge considered the streaming giant a "prevailing party" in a patent infringement case that was filed against it and then was voluntarily dismissed.  Texas-based Realtime Adaptive Streaming LLC is appealing a district court decision granting Netflix's motion for attorney fees, which Realtime contends was improper because it voluntarily dismissed its infringement suit against the streaming giant and so Netflix can't be considered the prevailing party.

At issue is whether Netflix can be considered a prevailing party in this case, which Realtime dismissed upon receiving an adverse ruling in a separate case enforcing the same family of patents.  Under Rule 41 of the Federal Rules of Civil Procedure, a prevailing party is established after a dismissal only if there is a "judicially sanctioned change in the legal relationship of the parties."  Netflix argues that any end to a plaintiff's case in the litigation or through the judicial process counts as a judicially sanctioned change in relationship.  Realtime, however, holds that because the case wasn't ended by a judge's ruling, Netflix doesn't count as a prevailing party.

In November 2017, Realtime filed a patent infringement suit against Netflix in Delaware alleging infringement of six data compression patents.  The magistrate judge issued a report and recommendation in December 2018 advising U.S. District Judge Colm F. Connolly to grant Netflix's motion to dismiss with regard to four of the patents, but deny it as to the remaining two.  Judge Connolly ruled in a parallel case in July 2019 that five related patents owned by Realtime's parent company were invalid. Realtime, who had relied on those patents to base its argument in the Delaware case, filed to dismiss the case it brought against Netflix days after Connolly's ruling.

Days later, Realtime refiled the underlying case in the Central District of California, challenging the same patents. Netflix had only filed a motion to transfer the case back to Delaware before Realtime voluntarily dismissed the case in November 2019.  According to Netflix, it's the prevailing party in this case and is therefore entitled to attorney fees from Realtime.  A California federal judge agreed with that argument in September 2020, granting Netflix $400,000 in attorney fees, noting in the ruling that the case was "exceptional" because of Realtime's "impermissible forum-shopping."

Judge Grants Attorney Fees in ‘Exceptional’ Copyright Action

January 19, 2022

 recent Law 360 story by Katryna Perera, “MoFo Attys Score Fees in Delta-8 Vape Maker Copyright Suit,” reports that a California federal judge has granted Morrison & Foerster LLP attorneys more than $92,000 in fees for scoring a default judgment win last year on behalf of Delta-8 vape maker AK Futures LLC, which sued a competing smoking products distributor for alleged copyright infringement.

In his order, U.S. District Judge James V. Selna granted AK Futures' complete request for $92,656 to be awarded to five attorneys and one paralegal from the law firm.  Judge Selna said the case was "exceptional" and "warranted the award of reasonable attorney's fees and costs."  He added that the billing rates charged by the attorneys and number of hours worked were reasonable.  The award comes after the firm secured a $150,000 default win for AK Futures in November 2020.

In granting default judgment, Judge Selna said AK Futures had expended effort and racked up costs in prosecuting the action, and that since AK Futures owns a valid, registered copyright on the disputed logo, its allegations of copyright infringement are sufficient to state a claim.  Judge Selna also granted the win after the defendant Smoke Tokes LLC continually failed to show up or participate in the case.

In a statement to Law360, counsel for AK Futures said it was pleased with the court's decision.  "We are pleased the court awarded our client its attorneys' fees and costs against Smoke Tokes LLC, as part of the court's judgment against this defendant, which also included enhanced statutory damages and a permanent injunction," said Thomas C. Frost of The Frost Firm.

SCOTUS Asked to Review $5M Patent Attorney Fee Award

January 18, 2022

A recent Law 360 story by Tiffany Hu, “High Court Asked to Review $5M Atty Fees in Fracking IP Suit,” reports that the U.S. Supreme Court has been asked to look into whether the Federal Circuit created "uncertainty and confusion" when it affirmed that a patent dispute over fracking technology was exceptional and warranted granting $5 million in attorney fees.  In a Jan. 12 certiorari petition, Heat On-The-Fly LLC said that the Federal Circuit erred in affirming a North Dakota federal judge's decision that its lawsuit against Energy Heating LLC and other companies was the kind of "exceptional" case that merited attorney fees.

Heat On-The-Fly had argued that the district court failed to take into account the "manner" in which the company litigated the case — including that it did not engage in litigation misconduct — but the Federal Circuit said in October that the lower court "properly considered the totality of the circumstances."  In doing so, Heat On-The-Fly said that the appeals court "ignore[d] the distinction between 'the substantive strength of a party's litigating position' and 'the unreasonable manner in which the case was litigated," citing the high court's 2014 Octane Fitness ruling.

The "decision in this case creates uncertainty and confusion regarding the factors that district courts must address and consider in order to properly exercise their discretion and consider the 'totality of the circumstances' when determining exceptionality," the petition states.

After a bench trial in 2016, U.S. District Judge Ralph R. Erickson found that Heat On-The-Fly's patent was unenforceable because the company and inventor Ransom Mark Hefley knowingly did not tell the U.S. Patent and Trademark Office when they filed a patent application for the concept in September 2009 that the invention had been in use as early as October 2006.  The district judge later rejected Energy Heating's motion for attorney fees, but the Federal Circuit in 2018 said the judge erred in refusing the request because he did not explain his decision, though it affirmed that the patent was unenforceable due to inequitable conduct.