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March 10, 2020

Lit Alerts—March 2020

A Publication of the Litigation Practice Group

Attorney Fees: Failure to Conduct Pre-Filing Investigation Into Validity of Claims Entitles Defendant to Award of Fees

The US District Court for the Eastern District of Texas last month awarded (subscription required) just under $180,000 in attorneys' fees to the defendant in a patent infringement case because the plaintiff failed to perform a pre-filing investigation into the merits of its claims.

WPEM, LLC sued SOTI Inc. alleging it infringed a patent for a method and system of delivering company legal and safety information to mobile devices based on the device's GPS location. WPEM had discovered a user manual for version 11 of SOTI's technology on the internet and filed suit on the belief that the technology infringed its asserted patent. SOTI answered that WPEM's patent was invalid in view of version 10 of SOTI's technology, which predated WPEM's patent.

After settlement negotiations during which SOTI spurned each of WPEM's gradually reduced demands, WPEM filed a motion to dismiss its own complaint, requesting each party bear its own fees and costs. SOTI responded by requesting attorneys' fees pursuant to 35 U.S.C. § 285. Under that statute, a court may award fees to the prevailing party in exceptional cases, considering such factors as frivolousness, motivation, objective unreasonableness, considerations of compensation and deterrence, and bad faith. Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545, 554 n.6 (2014); Comput. Docking Station Corp. v. Dell, Inc., 519 F.3d 1366, 1379 (Fed. Cir. 2008).

The court found WPEM's claims were frivolous because SOTI's technology was clearly invalidating prior art for WPEM's patent. It further found the litigation was unreasonable because WPEM would have discovered the underlying facts if it had performed "even a minimally diligent infringement investigation." The version 11 user manual gave "clear notice of the existence [of] other versions of the Accused Technology," and WPEM could easily have found these versions by clicking a link. The court did not question the plaintiff's good-faith belief, but that was "not a substitute for conducting an adequate pre-filing investigation."

Because the plaintiff "conducted absolutely no pre-filing investigation into the validity or enforceability of the Asserted Patent," the prevailing defendant was awarded reasonable attorneys' fees. The plaintiff has appealed the order to the Federal Circuit.

Class Actions: Ninth Circuit Grants Writ to Vacate Order Permitting Discovery for the Sole Purpose of Identifying Class Representatives

The Ninth Circuit recently granted a petition for writ of mandamus to vacate a district court's order that authorized a putative consumer class plaintiff who had no viable class claim to conduct discovery solely to identify others who might.

The plaintiff, William Rushing, a Kentucky resident, initially sued Williams-Sonoma for damages under California state law for allegedly misrepresenting that sheets he had purchased had a 600 thread count. Rushing also sought damages for a putative class of consumers who bought bedding from Williams-Sonoma based on the same underlying alleged misrepresentations.

Before any class action was certified, the district court determined that Kentucky law governed Rushing's claim and prohibited such class actions. In response, Rushing elected to pursue his personal claims under Kentucky law and to seek "discovery from Williams-Sonoma for the sole purpose of aiding his counsel's attempt to find a California purchaser . . . who might be willing to sue" and lead a California class action. The district court granted the discovery, ordering Williams-Sonoma to produce a list of California residents who purchased the bedding identified in Rushing's complaint.

The Ninth Circuit found this discovery to be improper—and writ relief appropriate—because the district court's granting of such discovery was contrary to US Supreme Court authority. In Oppenheimer Fund, Inc. v. Sanders, the Supreme Court determined that seeking discovery of the name of a class member is not "relevant to the subject matter involved in the pending action" within the meaning of Federal Rule of Civil Procedure 26(b)(1). Moreover, the court was unable to say that the district court's error was an oft-repeated error or a novel issue, which weighed in favor of granting writ relief. Additionally, the fact that Williams-Sonoma had no other adequate means for relief available, because the disclosure and damage to its interests would have been complete before a direct appeal could be heard, also weighed in favor of granting writ relief.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.