A recent Law 360 story by Kelly Leinhard, “Reverse Dish, Sirius XM Fee Award in IP Row, Fed. Circ. Urged” reports that patent-holding company Dragon Intellectual Property LLC urged a federal appeals court to overturn a ruling that found a decade-long infringement fight exceptional, allowing counsel for Dish Network and Sirius XM to collect more than $3 million in attorney fees.  Dragon alleged that the Delaware district court abused its discretion when finding the case exceptional, which led to higher attorney fees, by misreading claim language and not fully considering Dragon's expert testimony.

"When it accepted the unreviewed determination as resolving the issues presented by the exceptional case motions, the district court disregarded Dragon's presentation, ignored the requirements of Supreme Court authority, and abused its discretion," Dragon said.  "The exceptional case finding should be reversed."

The district court had found that the case was exceptional and that the defense team was entitled to higher fees because the infringement allegations had no merit when faced with "one of the clearest cases of prosecution history disclaimer the court had ever seen."  Disclaimers are made by applicants during patent application reviews and can limit the scope of protection provided by a patent.

Even without the disclaimer, Dragon continued to pursue the "meritless" case for nearly a decade.  However, even though Dish's counsel, Baker Botts, and Sirius' counsel, Kramer Levin Naftalis & Frankel, netted a combined $3.3 million, the attorneys still were not awarded their full fee request and petitioned the court in August for the rest of the money.  Dragon said in a response brief that the case should never have been found to be exceptional because it was based on a flawed disclaimer ruling resulting from the district court's misreading of the claim language.

According to Dragon, the district court erred by misreading the claim language as a verb — "to begin a recording" — instead of a noun — "a recording."  By conflating the noun form of the claim language with the verb form, the court caused a series of events leading to a claim construction order finding that Sirius and Dish had included clear disclaimers of continuous recording devices in their products.

The patent-holding company hinted that Sirius and Dish pushed the court toward this thinking, saying the two companies wanted to pass off the idea of beginning a recording by initiating the storage of specific broadcast program information, which Dragon said is agnostic as to whether the overall recording process was underway.  "In this exchange, the district court equated the noun form of the claim language with a verb form requiring that the entire recording process, rather than the storage of specific broadcast program information of the invention, begin upon actuation of the key," Dragon said.

The court's disclaimer ruling based on this conflation resulted in "stipulated judgments of noninfringement," Dragon said, because the court found that Dish and Sirius had clearly included a disclaimer that their product contained continuous recording devices.  The disclaimer finding has remained the foundation for "many years of subsequent litigation" without review, despite the absence of evidence proving that Dish and Sirius included a clear disclaimer on their products, Dragon said.

According to Dragon, the U.S. Supreme Court found in 1990's Lewis v. Continental Bank Corp. that an interest in attorney fees is insufficient to claim an extraordinary case, and in Dragon's case, no other justiciable case or controversy has come forward since the cases became moot.  Dragon filed the suits against the companies nearly 10 years ago in December 2013, claiming both Dish and Sirius XM were infringing a patent on a keyboard equipped with audiovisual recording and playback technology.

A recent Law 360 story by Lynn LaRowe, “5th Circ. Takes Up Atty Fees in Wrestler’s Failed IP Suit” reports that Activision Blizzard Inc. should be awarded attorney fees after a Texas jury found the company's Call of Duty character David "Prophet" Wilkes did not infringe pro wrestler Booker T's "G.I. Bro" copyright, the video game company told the Fifth Circuit during oral arguments.

After the issue of whether the Prophet character infringed Booker T's persona was decided in Activision's favor by a jury at the end of a four-day trial in June 2021,  Activision appealed U.S. District Judge Robert Schroeder III's decision to let both sides bear their own costs, arguing the judge abused his discretion by failing to properly analyze the merits of Booker T's lawsuit.

Activision attorney Jessica Lanier of Durie Tangri LLP argued Judge Schroeder was out of bounds when he ruled that it was reasonable for Booker T to have brought the suit, which led the panel to point out the case had survived numerous pretrial motions, including a motion to dismiss Judge Schroeder denied in February 2020.

Lanier also argued Judge Schroeder should have based his decision regarding fees on more than just the objective reasonableness of the factual and legal elements of the case, as established by the U.S. Supreme Court in Fogerty v. Fantasy Inc.  Fogerty provides a test for determining whether to award fees, which also provides for analyses based on frivolousness, motivation, and the needs for compensation and deterrence of bad faith litigation.

Patrick Zummo, an attorney representing Booker T, whose full name is Robert Booker Tio Huffman, argued the trial court had considered all of the Fogerty factors, but determined that the objective reasonableness component, which the trial court found weighed against awarding fees to Activision, was the most important in deciding the issue.  "First, we had a hearing," Zummo said, noting that hearings regarding attorneys fees in copyright cases are not routine.

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 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 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,'" the 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."

A recent Law 360 story by Caroline Simson, “Taiwanese Co. Says It Won’t Arbitrate Fisch Sigler Fee Dispute” reports that a Taiwanese manufacturer of smartphone camera lenses is pressing a DC federal court to quash arbitration initiated by intellectual property boutique Fisch Sigler LLP seeking millions in additional fees for its work on a "meandering, inconclusive" and expensive patent lawsuit that settled last year.  Largan Precision Co. Ltd. told the court in the lawsuit filed May 10 that it never gave its informed consent to arbitrate the dispute with Fisch Sigler, which is set to be heard by the DC Bar Attorney/Client Arbitration Board, or the ACAB.

The company noted that while the DC Court of Appeals requires any attorney who is a DC Bar member to submit to arbitration before the ACAB if a client chooses that venue to pursue a fee dispute in matters with some connection to DC, there has never been any such rule for clients.  Largan argued that since it intends to challenge the validity of an arbitration agreement that was "quietly added" to its engagement agreement with the firm near the end of their negotiations, that question should be left to the court.

"[G]overning precedent makes plain that only a court, and not an arbitration panel, can decide the threshold issue of whether a valid agreement to arbitrate exists, unless there is clear and unmistakable evidence that the parties agreed to have that question decided by the arbitrators," the company wrote.  "There is nothing here to suggest that the parties ever discussed, let alone agreed to, the ACAB deciding the specific issue of arbitrability."

Largan alleges in the litigation that the firm has already gotten $4.5 million in "fixed fee" payments.  It's now seeking an additional $5.6 million in success fees — despite the fact that Largan agreed to settle the litigation in Texas due to the outcome of parallel litigation in Taiwan that Fisch Sigler had not worked on, according to the brief.  The underlying dispute for which Largan engaged Fisch Sigler involved another Taiwanese company called Ability Opto-Electronics Technology Co. Ltd., which Largan accused of misappropriating its trade secrets in 2013.

While litigation was ongoing in Taiwan, Largan hired Fisch Sigler to file a patent infringement lawsuit in the U.S. against Ability Opto-Electronics Technology and two other entities in Texas.  Largan alleges that while the lawsuit was ongoing, Fisch Sigler charged a fixed fee despite not doing all the work that was supposed to be included under that fee.  That included depositions and a hearing in mid-2020 that Largan says never took place.

Largan won some $50 million in the Taiwanese litigation in early 2021, and it subsequently approached Fisch Sigler about settling the Texas litigation.  The company claims that the litigation had gone poorly, and that there was no reason to continue with it at that point.  It was then that the firm attempted to collect the success fee "based on the resolution of a litigation in Taiwan in which it had no role — and despite achieving nothing resembling success from the meandering, inconclusive, yet very expensive litigation it had pursued for Largan against [Ability Opto-Electronics Technology] and others in Texas and, later, California," according to the suit.

A recent Law 360 story by Andrew Karpan, “Quinn Emanuel Client Hit With $160K In Fees In IP Fight” reports that a China-based client of Quinn Emanuel Urquhart & Sullivan LLP was ordered to cough up over $160,000 in legal fees after its defense in a copyright case ran afoul of California's anti-SLAPP statute.  The amount that Northern District of California Judge Edward Chen ultimately arrived at was about $12,000 less than the final fee request from lawyers at the small San Francisco firm Tyz Law Group PC after they beat a dismissal bid in a copyright suit they leveled on behalf of Moonbug Entertainment. Moonbug is the company behind the children's educational brand CoComelon, which runs popular shows on YouTube and Netflix.

The suit accuses a Fuzhou City-based company called BabyBus (Fujian) Network Technology Co. Ltd. of building "its Super JoJo YouTube business by blatantly copying CoComelon."  BabyBus' lawyers at Quinn Emanuel responded last September with allegations that Moonbug's lawyers had been "using baseless [Digital Millennium Copyright Act] notices to effectively shut down BabyBus' lawful, competitive business."  DMCA notices are sent to companies like YouTube to ask them to take down content that infringes someone's copyright.

The legal fight is ongoing.  But Judge Chen had rejected outright BabyBus' contention that the way Moonbug pursued its case against BabyBus violated certain state laws, such as Section 17200 of the California Business & Professions Code.  This defense was legally hopeless, Judge Chen wrote last year: "No amendment can cure the fact that the state law counterclaims are preempted by the Copyright Act."

"Moonbug estimated it spent 'roughly' 324 hours in total, accounting for both compensable and non-compensable time spent on the joint motions to dismiss and strike," Judge Chen wrote.  According to the decision, the Moonbug lawyers had initially offered to settle the dispute over their legal bills for the whole effort for $96,152. BabyBus offered to pay just $15,580 instead.

The Moonbug lawyers then asked the court for $155,620 in fees but, in a later filing in the matter last year,  they beefed the number up to $173,553.  The new figure included an additional $17,933 in what the company's lawyers called "reasonable fees-on-fees" that were "not accounted for in its original fees-on-fees request," referring to legal work done in connection with the fee motion.  Judge Chen told BayBus to pay out $161,683.

"Moonbug's request for fees on fees is not unreasonable," Judge Chen decided.  He also rejected an argument from the BabyBus team that Tyz Law had deliberately overstaffed its legal response in order to collect more in fees.  "Moonbug's use of five attorneys of various levels of experience on its anti-SLAPP motions is nothing out of the ordinary," the ruling read.  The ruling did, however, trim out a little over 10 hours of work that Tyz Law had attached to the motion "for unnecessary work on a reply brief."

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