McGlothlin et al v. Drake et al
OPINION AND ORDER: Cequent Performance Products Inc's 93 Motion for Attorney Fees is DENIED. Signed by Judge J. Leon Holmes on 10/18/2013. (mcz)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
DANNY MCGLOTHLIN and MCB SALES
& INSTALLATION SERVICES, INC.
NO. 1:11CV00055 JLH
CEQUENT PERFORMANCE PRODUCTS, INC.
OPINION AND ORDER
Danny McGlothlin and MCB Sales & Installation Services, Inc., brought this action against
Cequent Performance Products, Inc., seeking monetary damages and injunctive relief for patent
infringement, patent interference, misappropriation of trade secrets in violation of the Trade Secrets
Acts of Arkansas and Wisconsin, violations of the Arkansas Deceptive Trade Practices Act, and
tortious interference with contractual relations, as well as a declaratory judgment that two of the
patents belonging to Cequent Performance Products, Inc., are invalid. McGlothlin is the named
inventor of United States Patent No. 7,311,331, a utility patent that claims a powered jacking device
that can be installed on a trailer and used to raise or lower the trailer. He assigned the patent to MCB
Sales, which began marketing the device as the Easy Lift Motorized Jack System. MCB Sales
attempted to sell the Easy Lift to Sundowner Trailers, Inc., which informed MCB Sales that it would
not buy Easy Lifts for its trailers unless Cequent tested them first. Cequent tested the Easy Lift and
determined that the powered jacking device was too strong and might damage the Cequent-made
Bulldog jacks on the Sundowner trailers. Not long thereafter Cequent began selling its own powered
jacking device, the Bulldog Drive Kit, designed specifically for use on Cequent’s 12,000-pound
At the pleading stage, the Court dismissed without prejudice all of the plaintiffs’ claims except
their claims that Cequent’s Bulldog Drive Kit infringed the #331 patent and that Cequent
misappropriated the plaintiffs’ trade secrets. After discovery, Cequent moved for summary judgment
on those claims. The plaintiffs conceded that summary judgment should be granted on the trade
secrets claims but contested summary judgment with respect to the patent infringement claims. The
plaintiffs failed, however, to provide evidence necessary to show a genuine issue of material fact as
to the patent infringement claims, and the Court therefore granted summary judgment on those
claims, as well.
Cequent has now moved for an award of attorneys’ fees under four statutes, 35 U.S.C. § 285,
28 U.S.C. § 1927, Ark. Code Ann. § 4-75-607(1), and Wis. Stat. § 134.90(4)(c), as well as under
the Court’s inherent authority. Cequent asks the Court to award fees totaling $153,273.701 and to
require the plaintiffs and their lawyers to reimburse those fees.
Thirty-five United States Code section 285 provides, “The court in exceptional cases may
award reasonable attorney fees to the prevailing party.” The Federal Circuit has explained:
A case may be deemed exceptional when there has been some material inappropriate
conduct related to the matter in litigation, such as willful infringement, fraud or
inequitable conduct in procuring the patent, misconduct during litigation, vexatious
or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions.
Absent misconduct in the conduct of the litigation or in securing the patent, sanctions
may be imposed against the patentee only if both (1) the litigation is brought in
subjective bad faith, and (2) the litigation is objectively baseless.
Cequent obtained permission to file under seal the invoices supporting this request but never
Brooks Furniture Mfg. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005) (citations
omitted). See also Raylon LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1370 (Fed. Cir.
There is a presumption that the assertion of infringement of a duly granted patent is
made in good faith. Thus, the underlying improper conduct and the characterization
of the case as exceptional must be established by clear and convincing evidence.
Brooks Furniture Mfg., 393 F.3d at 1382 (citations omitted).
Here, the plaintiffs engaged in no misconduct during the litigation or the procurement of the
patent. The plaintiffs have submitted affidavits from the inventor, Danny McGlothlin, as well as his
attorneys, Luther Oneal Sutter and Chris Stewart. The affidavits, the veracity of which the Court
credits, demonstrate that the litigation was not brought in subjective bad faith. Thus, this is not an
exceptional case in which fees may be awarded pursuant to 35 U.S.C. § 285.
The two state statutes, Ark. Code Ann. § 4-75-607(1) and Wis. Stat. § 134.90(4)(c), likewise
require bad faith as a prerequisite for an award of attorneys’ fees. Because this action was not
brought in bad faith, attorneys’ fees will not be awarded under those statutory provisions.
The more difficult issue arises under 28 U.S.C. § 1927, which provides that any attorney “who
so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court
to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of
such conduct.” According to the Eighth Circuit, sanctions under section 1927 are warranted when
an attorney’s conduct “viewed objectively, manifests either intentional or reckless disregard of the
attorney’s duties to the Court.”2 Clark v. United Parcel Serv., Inc., 460 F.3d 1004, 1011 (8th Cir.
The Federal Circuit reviews motions for sanctions under 28 U.S.C. § 1927 pursuant to the
law of the regional circuit in which the case originated. Nystrom v. TREX Co., Inc., 424 F.3d 1136,
1141 (Fed. Cir. 2005).
2006) (quoting Tenkku v. Normandy Bank, 348 F.3d 737, 743 (8th Cir. 2003)). “The imposition of
sanctions is a serious matter and should be approached with circumspection.” Lee v. L.B. Sales, Inc.,
177 F.3d 714, 718 (8th Cir. 1999) (quoting O’Connell v. Champion Int’l Corp., 812 F.2d 383, 395
(8th Cir. 1999)). “Because section 1927 is penal in nature, it should be strictly construed so that it
does not ‘dampen the legitimate zeal of an attorney in representing his client.’” Id. (quoting
Travelers Ins. Co. v. St. Jude Hosp. of Kenner, La., Inc., 38 F.3d 1414, 1416 (5th Cir. 1994)); see
also Nat’l Elev. Insp. Servs. v. Sharpe, No. 4:13CV00237-KGB, 2013 WL 471169, at *1 (E.D. Ark.
Aug. 30, 2013); Murrin v. Fischer, No. 07-CV-1295 (PJS/RLE), 2008 WL 540857, at *33 (D. Minn.
Feb. 25, 2008). “As a result, losing argument are not always sanctionable ones.” Books Are Fun,
Ltd. v. Rosebrough, 239 F.R.D. 532, 543 (S.D. Iowa 2007).
Here, the plaintiffs’ lawyers may have been overly zealous in attempting to find a remedy for
a perceived injustice, but they did not disregard their duties to the Court. McGlothlin is a sixty-yearold man who is disabled. While he was still able to work, he invented the Easy Lift system, obtained
a patent on it, and assigned the patent to MCB Sales, which he and David Cantrell owned.3 It
appears from the timing of the creation of the Bulldog Drive Kit and the depictions of the Easy Lift
system and Cequent’s Bulldog Drive Kit, that the idea for Cequent’s Bulldog Drive Kit was derived
from McGlothlin’s invention, even though, as this Court has held, the Bulldog Drive Kit does not
infringe McGlothlin’s #331 patent. McGlothlin presented the facts to an experienced patent lawyer,
Gary Speed, who told him that he had a case but that it would cost $100,000 to pursue it.
McGlothlin did not and does not have such resources, so he was unable to proceed until someone in
his family brought the situation to the attention of the lawyers who represented him in this case.
MCB Sales is now defunct.
Thus, the lawyers who represented the plaintiffs in this case were confronted with a perceived
injustice—i.e., that Cequent derived benefit from McGlothlin’s invention but did not compensate him
or MCB Sales for it—committed against someone who lacks the resources needed to pursue
litigation. They took the case on a contingent fee basis and paid their expenses from their own
pockets while attempting to find a remedy for this perceived injustice. Their attempts to find a
remedy were futile, and perhaps misguided, but this is not a case in which the Court would say that
the lawyers’ conduct, viewed objectively, intentionally or recklessly disregarded their duties to the
Court. To require the plaintiffs’ lawyers, or the plaintiffs, to pay Cequent’s attorneys’ fees would be
unduly punitive and could dampen the legitimate zeal of lawyers who devote their time and resources
to pursuing justice for impecunious clients.
The heart of the case was the allegation of patent infringement. In response to Cequent’s
motion for summary judgment, the plaintiffs did not argue that there was literal infringement. Instead,
they argued that Cequent’s product infringed the patent through the doctrine of equivalents. In
making that argument, they relied upon the testimony of the inventor, Danny McGlothlin.4
McGlothlin provided testimony that the Bulldog Drive Kit performed a function similar to the Easy
Lift, but he was unable to provide particularized testimony explaining how the drive shaft in the
Bulldog Drive Kit was functionally equivalent to a cross member in the #331 patent. Because the
plaintiffs could not present testimony on a limitation-by-limitation basis, the Court concluded that
summary judgment should be granted as to the plaintiffs’ claims that Cequent’s product was the
functional equivalent of the patent at issue. See AquaTex Indus., Inc. v. Techniche Solutions,
The plaintiffs could not afford to retain a patent expert to testify. See Document #106-1
at 1; Document #106-2 at 2.
479 F.3d 1320, 1328 (Fed. Cir. 2007). While the plaintiffs’ argument failed on this narrow point, the
Court cannot say that the attorneys acted in disregard of their duties to the Court.
Accordingly, Cequent’s motion for attorneys’ fees is DENIED. Document #93.
IT IS SO ORDERED this 18th day of October, 2013.
J. LEON HOLMES
UNITED STATES DISTRICT JUDGE
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