Articles Posted in Sanctions

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After all parties agreed to settle the case, the parties jointly moved to vacate a sanctions order. The district court declined to vacate the sanctions order, even though plaintiff’s counsel had apparently complied with the order, because the order was entered by a prior judge in a detailed ruling.
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The district court briefly summarized this patent infringement action that it found frivolous as follows: “In the 1990’s, Segan invented a system for people to browse the Internet. Today, Zynga makes video games that people can play while on Facebook. People don’t browse the Internet while playing Zynga games on Facebook. But Segan sued Zynga for patent infringement. Segan lost at summary judgment, because no reasonable juror could conclude that Zynga’s games infringe Segan’s patent.”

The district court then asked two questions: (1) was “this an “exceptional case” within the meaning of 35 U.S.C. § 285, such that Segan should pay Zynga for its attorneys’ fees?” and (2) should the law firm representing Segan “be sanctioned under Rule 11 for filing and pursuing a frivolous lawsuit?”
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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. § 1927.
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In an earlier filed decision, the district court had previously found that Escort and its defense counsel had knowingly misled the plaintiff, Fleming, which warranted a sanction of attorney fees. As explained by the district court, “they falsely claimed that the source code identified as ESC17363 was the current operating source code for Escort’s commercially sold products and that it provided a complete defense to Fleming’s patent infringement charges.”

After awarding attorney’s fees, the district court turned to Fleming’s motion to compel the production of certain documents. “Fleming seeks discovery of a wide variety of documents and communications in an effort to determine if Escort fabricated ESC17363 and falsely represented that it was created in the normal course of product development.”
In response, Escort argued that all of the material sought by Fleming was protected by the work product doctrine and the attorney client privilege.
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In this patent infringement action, the plaintiff filed a motion for entry of a standard protective order after the defendant would not agree to sign a stipulated protective order. As explained by the district court, the plaintiffs sued defendants, alleging that they infringed on several patents.

After the lawsuit was filed, plaintiffs’ counsel requested that defendants’ counsel sign off on a stipulated protective order to protect certain confidential/proprietary materials that the parties were going to exchange in discovery. The district court explained that “[t]his is standard operating procedure in patent cases in federal court and the parties and the Court routinely sign off on them in these cases.”
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In this patent infringement action between MAG Aerospace Industries, Inc. (“MAG”) and B/E Aerospace, Inc. (“B/E”), MAG filed an ex parte motion as a result of conduct during a deposition. The court began its analysis of the motion by reminding the parties that “[a] deposition is a judicial proceeding that should be conducted with the solemnity and decorum befitting its importance. Lawyers participating in depositions should comport themselves in a professional and dignified manner.”

The court went on to state that “[w]hen lawyers behave otherwise, it reflects poorly on the entire judicial process. The purpose of a deposition is for a witness to provide testimony under oath. The testimony may or may not be admissible at trial; nonetheless, the opposing party is entitled to ascertain the witness’s knowledge, as imperfect and imprecise as that knowledge may be.”
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Plaintiff Deckers Outdoor Corporation (“Plaintiff”) alleged that Defendants Superstar International, Inc. and Sai Liu (“Defendants”) produce, advertise, and sell products that infringe Plaintiff’s design patents for UGG boots. The district court previously ruled that default judgment was appropriate, considering both the procedural requirements of Federal Rule of Civil Procedure 55(b) and the factors laid out in Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In the previous order, the district court left open what relief Plaintiff could recover.

The district court then addressed whether the Plaintiff should be entitled to treble damages. As explained by the district court, “[u]nder 35 U.S.C. § 284 (“Section 284”), when a Court finds that a patent has been infringed, ‘the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.’ One way damages may be measured under Section 284 is by the patentee’s lost profits. Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009). The burden of proving damages is on the patentee. Id.”
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In this patent infringement action brought by plaintiff Trustees of Boston University (“BU”) , BU alleged that defendants infringed U.S. Patent No. 5,686,738 (the “‘738 Patent”), which pertains to light emitting diodes (“LEDs”). BU moved for sanctions against Defendants and their counsel for overdesignating documents as “Confidential-Outside Counsel Eyes Only.”

After BU served document requests for emails, Defendants ran search terms that produced over 3.5 million pages of emails. The Defendants then designated every document of that production as Outside Counsel Only, but the Defendants did not review each document to determine whether it in fact contained confidential information. As explained by the district court, “[b]ecause there was not enough time to review each document and meet [the 30-day] deadline, Defendants reviewed the documents quickly and determined that the emails generally met the requirement of the Global Protective Order, and marked them “CONFIDENTIAL-OUTSIDE COUNSEL EYES ONLY.”‘
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In Gaymar Industries, Inc. v. Cincinnati Sub-Zero Products, Inc. et al, 1-08-cv-00299 (NYWD July 3, 2014, Order) (McCarthy, M.J.), the magistrate judge recommended denial of defendant’s request for reconsideration of its failed motion for attorneys’ fees under 35 U.S.C. §285 in light of Defendant’s unclean hands.

After the court’s denial of its motion for attorneys’ fees as an “exceptional case” pursuant to 35 U.S.C. §285, Defendant Cincinnati Sub-Zero Products, Inc. (“CSZ”) moved for reconsideration in light of new case authority, i.e. Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749 (2014) and Highmark, Inc. v. Allcare Health Management System, Inc., 134 S.Ct. 1744 (2014). The court noted that Octane Fitness lowered the burden of proof for proving an “exceptional case” by rejecting the “clear and convincing” standard in favor of the “preponderance of the evidence” and relaxed the underlying test by holding that “an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances . . . . There is no precise rule or formula for making these determinations.” Citing 134 S.Ct. at 1756; Highmark, 134 S.Ct. at 1748.

The court found that neither of the submitted authorities called for a different result than previously reached. In doing so, the court noted these cases did not alter the long-standing rule that “[e]ven for an exceptional case, the decision to award attorney fees . . . [is] within the district court’s sound discretion.” Citing Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., 393 F.3d 1378, 1382 (Fed. Cir. 2005). This discretion allows the judge to consider factors, including closeness of the case, the tactics of counsel, the conduct of the parties, and any other factors that may contribute to a fair allocation of the litigation burdens of litigation between winner and loser.

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Digital-Vending Services International, LLC (“Digital-Vending”) filed a patent infringement action against The University of Phoenix, Inc. and Apollo Group, Inc. (“Defendants”). During the course of the litigation, the Magistrate Judge granted Defendants’ motion for sanctions for Digital-Vending’s spoliation.

After the matter settled, Digital-Vending and the Defendants filed a consent motion to vacate the Magistrate Judge’s opinion and order granting Defendants’ motion for sanctions for spoliation. As part of the consent motion, the parties informed the court that the Defendants had withdrawn their motion for sanction and that Digital-Vending and the Defendants had settled the case. The parties also informed the court that as part of the settlement Defendants had agree to join the consent motion and that Digital-Vending had dismissed its appeal to the Federal Circuit with prejudice.

The court then proceeded to reject the consent motion, finding that it was inappropriate and the court would not hide Digital-Vending discovery abuse. “The Court will not agree to hide the discovery abuse of the plaintiff in this case by withdrawing the October 3, 2013” order.