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Category: Exceptional Case

Toys R Us Wins Attorney Fees in ‘Exceptional’ IP Action

June 27, 2022

A recent Law 360 story by Dani Kass, “Toy R Us Wins $1.6M Atty Fees in Failed Toy Pencil IP Suit” reports that Toys R Us has won more than $1.6 million in attorney fees after beating litigation in Florida federal court that a toy chalk holder sold in its stores violated intellectual property owned by Lanard Toys Ltd.

U.S. District Judge Marcia Morales Howard on Wednesday adopted a magistrate judge's report and recommendation for $1.63 million in fees, alongside another $21,000 in costs, saying a "significant fee award is warranted," particularly for failed Lanham Act claims.

"This is an exceptional case, one that stands out from others both due to the significant flaws in the legal theories advanced and in the overly aggressive and uncivil way it was litigated," Judge Howard said.

That uncivil litigation included the court having "twice admonished Lanard's lead counsel for lack of civility and professionalism," including sending emails to opposing counsel with text including: "spare me your pious and self-serving cant, and stick to your knitting as local counsel," according to the first of U.S. Magistrate Judge Patricia D. Barksdale's two reports and recommendations.

The case dates back to March 2014, but in March 2019, Judge Howard granted Toys R Us, Dollar General Corp. subsidiary Dolgencorp LLC and Ja-Ru Inc. — who all have the same counsel — summary judgment, which the Federal Circuit affirmed in May 2020.

Both courts found that a toy chalk holder designed to look like a giant No. 2 pencil doesn't infringe Lanard's design patent or trade dress, and that Lanard's copyright covering the item is invalid, because it does not qualify as a work of art.

Judge Barksdale had recommended that Toys R Us deserved fees for the Lanham Act trade dress claims, and unfair competition under both the Lanham Act and the Florida Deceptive and Unfair Trade Practices Act, but not for the patent and copyright claims. However, she stopped short of recommending Toys R Us get its requested $2.5 million.

Judge Howard on Wednesday rejected Lanard's bid to further cut fees by changing how they were calculated "given the common facts and related legal theories underlying all four claims, much of the time spent defending this action cannot feasibly be allocated to any particular claim."

In objecting to Judge Barksdale's report, Lanard argued that it has been punished enough, and that "a seven-figure award is excessive and amounts to an undue punishment." For example, the company said it has lost $2 million paying for its own attorneys, "two large retail customers" and the invalidation of its IP. The district court judge wasn't persuaded.

"Plaintiff appears to contend that its conduct in this case was reasonable given that when it initiated the case it had 'a registered patent and a registered copyright, and had uncovered evidence that defendants did use its product in the design process,'" Wednesday's order states. "Of course, those arguments do not address the more salient question of whether it was reasonable for plaintiff to assert trade dress and unfair competition claims absent any evidence of secondary meaning or consumer confusion."

Counsel for Toys R Us pointed to a footnote where Judge Howard said if she were to review the first report issued by the magistrate judge, she'd likely grant fees over the copyright claims, which "lacked merit in so many ways" and were more broadly an "overreach."

"The existence of a registered copyright notwithstanding, plaintiff's copyright infringement claim was a transparent attempt to seek 'protection over any and all expressions of the idea of a pencil-shaped chalk holder,'" the judge said.

Judge Howard added that the damages sought related to the copyright claim were also unacceptable.

"While the court did not reach the issue of damages, it is noteworthy that plaintiff combined an exceptionally weak copyright claim with a particularly expansive theory of damages without citation to a single case where any court awarded such damages or otherwise recognized the viability of such a theory," the footnote states.

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.