Texas Patent Litigation Monthly Wrap-Up: March 2022

This post summarizes two recent Eastern District of Texas opinions regarding the award of attorneys' fees under 35 U.S.C. § 285.

Traxcell Technologies, LLC v. AT&T, Inc. et al, 2-17-cv-00718 (EDTX Mar. 29, 2022) (Roy S. Payne).

Following summary judgment of non-infringement, Magistrate Judge Payne found the case "exceptional" under § 285 "based on Traxcell's pursuit of objectively baseless infringement theories and filing of meritless motions that disregarded the earlier rulings."[1] Traxcell had previously brought infringement claims on three of the four Asserted Patents in another case where the Court ultimately awarded summary judgment of non-infringement.[2] "Because the Court in this case issued the same constructions . . . as it did in the [earlier] Case, Traxcell should have known its infringement theories in this case, which were materially equivalent to its theories in [the earlier case], were unsupported."[3]

The Court further based its exceptionality finding on "Traxcell's [meritless] attempts (1) to file untimely objections to the claim construction order; (2) to seek leave to amend its complaint to assert the corrected Claim 1 of the '284 Patent; and (3) to amend its infringement contentions to include a Doctrine of Equivalents theory."[4] The Court explained that Traxcell should have known not to assert the corrected Claim 1 because "the Certificate of Correction only addressed one of the two indefiniteness issues the Court found during claim construction."[5] And despite the Court denying Traxcell's motion to amend its complaint, Traxcell "continued to assert both the invalid and corrected claim during fact discovery, expert discovery, and even planned on asserting it at trial."[6] With respect to the Doctrine of Equivalents theory, Traxcell ignored the Court's reasoning in the earlier case, "which clearly stated that prosecution history estoppel barred application of the Doctrine of Equivalents."[7] The Court found that the case became exceptional as of the date Traxcell was denied leave to assert its Doctrine of Equivalents theory because "[i]t was at this point that Traxcell should have objectively known its infringement theories could not succeed."[8]

Infernal Technology, LLC v. Sony Interactive Entertainment America LLC, 2-19-cv-00248 (EDTX Mar. 17, 2022) (Rodney Gilstrap).

Following a jury verdict of non-infringement and invalidity, Defendant Sony Interactive Entertainment LLC’s ("SIE") sought its attorneys' fees under § 285.[9] SIE based its request on three categories of conduct, namely that "1) Plaintiffs . . . infringement arguments were based on a theory contrary to the Court's claim construction; (2) Plaintiffs maintained an objectively baseless infringement claim against the PlayStation Vita console; and (3) Plaintiffs' damages case was legally deficient and not submissible.[10] Based on the totality of the circumstances, the Court found the case was not exceptional and thus did not warrant attorneys' fees.[11]

Regarding the first category of conduct, SIE argued that "Plaintiffs' 'infringement case was predicated on a blatant disregard for the Court's claim construction,' and that after reviewing SIE's code "it should have been obvious to Infernal that its infringement positions were untenable and frivolous." The Court disagreed, finding that Plaintiffs' infringement theory was not so untenable and frivolous as to warrant fees.[12] The Court further pointed to the fact that "SIE never moved for summary judgment on the issue, nor did it ever move to strike Plaintiffs' infringement expert on the issue" as weighing against awarding SIE its fees.[13]

Turning to the second category, SIE argued "that Plaintiffs 'insisted on trying its infringement claim against SIE's PlayStation Vita console to the jury—requiring SIE to fully litigate the issue at great time and expense—only to concede non-infringement at the last second and request the Court enter judgment against Infernal on that issue."[14] In finding Plaintiffs' infringement theory not obviously frivolous, the Court once again pointed to the fact that SIE did not file a motion for summary judgment on this issue.[15] The Court also noted that Plaintiffs' decision to drop their infringement claim during trial was not a basis on its own to find the case exceptional.[16]

Finally, with regards to the third category, SIE argued that deficiencies in Plaintiffs' damages report caused its expert to have to file a supplemental report, which was ultimately struck as outside the scope of the permitted supplement.[17] This led the Court to take the unusual step of bifurcating the liability and damages issues prior to the trial.[18] Nevertheless, "the issues with Plaintiffs' damages report were never fully resolved by the Court due to the bifurcation, and the Court decline[d] to find that this unresolved issue, when taken in context, warrants an award of attorneys' fees."[19]

[1] No. 2:17-cv-00718-RWS-RSP, 2022 U.S. Dist. LEXIS 56997 at *13.

[2] Id. at *5—7.

[3] Id. at *15.

[4] Id. at *16—17.

[5] Id. at *17.

[6] Id. at *17—18.

[7] Id. at *18.

[8] Id. at *21.

[9] No. 2:19-CV-00248-JRG, 2022 U.S. Dist. LEXIS 47755 at *1—3.

[10] Id. at *5.

[11] Id.

[12] Id. at *6.

[13] Id. at *7.

[14] Id.

[15] Id. at *9.

[16] Id.

[17] Id.

[18] Id. at *9—11.

[19] Id. at *11.