District Court Holds Plaintiff and Plaintiff's Attorneys Jointly and Severally Liable for Attorney's Fees and Costs After Finding that Attorneys Knew of False Affidavits Filed with the Patent Office

January 22, 2015

After trial, HTC Corporation and HTC America, Inc. ("HTC") filed a motion seeking to recover attorney fees and costs from plaintiff's attorneys as well as from plaintiff Intellect Wireless, Inc. ("IW"). IW withdrew its initial opposition and conceded that the case was exceptional within the meaning of the Patent Act. HTC also contended that a finding should also be made that the attorneys for IW are jointly and personally required to satisfy HTC's attorney fees and costs because, among other things, IW's attorneys unreasonably and vexatiously multiplied the proceedings within the meaning of 28 U.S.C. ยง 1927.

To begin its analysis, the district court explained that "[t]he key issue that must be determined is what and when did IW's attorneys in the infringement litigation know about the inventor's multiple false statements to the PTO and any false statements in litigation in this court concerning the patents. This determination first requires a review of the facts which led to a declaration that the patents-in-suit were unenforceable due to inequitable conduct before the PTO. See Intellect Wireless, Inc. v. HTC Corp., 910 F. Supp. 2d 1056 (N.D. Ill. 2012), affirmed, 732 F.3d 1339 (Fed. Cir. 2013). In summary, it was held that patents disclosing technology enabling wireless devices to receive and display caller identification, video messages, and caller pictures were unenforceable because false statements were made to the PTO. The statements related to invention, demonstration, and actual reduction to practice in order to overcome prior art references cited by the patent examiner. Also, false statements were made in order to claim diligence from an alleged date of invention to the date of filing a patent application."

These false statements led to a declaration that the patents-in-suit were unenforceable due to inequitable conduct before the PTO. See Intellect Wireless, Inc. v. HTC Corp., 910 F. Supp. 2d 1056 (N.D. Ill. 2012), affirmed, 732 F.3d 1339 (Fed. Cir. 2013). "In summary, it was held that patents disclosing technology enabling wireless devices to receive and display caller identification, video messages, and caller pictures were unenforceable because false statements were made to the PTO. The statements related to invention, demonstration, and actual reduction to practice in order to overcome prior art references cited by the patent examiner. Also, false statements were made in order to claim diligence from an alleged date of invention to the date of filing a patent application."

The district court summarized the facts pertaining to the false statements of the inventor as follows: "Daniel Henderson clearly knew that he had not invented (or reduced to practice) a wireless picture phone or wireless identification device in 1993, notwithstanding contrary statements to the PTO (and coincidentally false representations to the Smithsonian Institution apparently to strengthen his litigation position)."

The district court then found that the inventor had revealed these false statements to his patent litigation counsel in this case. "He revealed this to his patent attorney in 2007 and specifically to Niro in 2009 if not before. Relying on the adverse inference to be drawn from Niro's failure to disclose documents, it is found that Niro was aware of the false statements prior to the filing of the present lawsuit."

As a result, the district court concluded that the plaintiff's attorneys were liable for the attorney's fees and costs incurred by HTC. "Therefore, Niro is liable for all reasonable attorney fees and expenses incurred by HTC, not just those incurred after the November 6, 2009 email from Henderson to Niro.4 The false presentation
of Henderson's activity and knowledge justifies making Niro jointly and severally liable with IW for attorney fees and costs."

Intellect Wireless, Inc. v. HTC Corporation, Case No. 09 C 2945 (N.D. Ill. Jan. 8, 2015)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.