Henry Chung v. Vaporous Technologies, LLC et al

Filing 84

ORDER by Judge Ronald S.W. Lew: DENYING 69 MOTION for Attorney Fees. (shb)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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12 HENRY CHUNG,
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Plaintiff,
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v.
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VAPOROUS TECHNOLOGIES, LLC, )
a Pennsylvania limited
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liability corporation;
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CHRISTIAN RADO, an
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individual; and DOES 1-10, )
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Defendants.
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CV 16-08586-RSWL-PLA
ORDER re: Defendants’
Motion for Attorneys’
Fees [69]

Currently before the Court is Defendants/Counter

23 Claimants Vaporous Technologies, LLC (“VTL”) and
24 Christian Rado’s (“Rado”) (collectively, “Defendants”)
25 Motion for Attorneys’ Fees (“Motion”) [69].

Having

26 reviewed all papers submitted pertaining to this
27 Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the
28 Court DENIES Defendants’ Motion.
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I. BACKGROUND
Plaintiff/Counter Defendant Henry Chung

3 (“Plaintiff”) filed his Complaint [1] against
4 Defendants on November 17, 2016, alleging Defendants’
5 electronic cigarette products (the “Accused Products”)
6 infringed Plaintiff’s patent, U.S. Patent No. 9,380,812
7 (the “‘812 Patent”).

On January 17, 2017, Defendants

8 filed their Answer [16] and their Counterclaim [17]
9 alleging non-infringement and invalidity of the ‘812
10 Patent.
11

The Court held a Markman hearing on January 23,

12 2018 to construe the term “water chamber.”

The Court

13 issued its Order re: Claim Construction (“Claim
14 Construction Order”) on January 25, 2018 construing
15 “the term ‘water chamber’ as a chamber for holding
16 water, not other liquids.”

Order re: Claim

17 Construction 13:6-8, ECF No. 46.
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On February 6, 2018, Plaintiff’s counsel contacted

19 Defendants’ counsel to propose that the parties agree
20 to dismiss Plaintiff’s infringement claim.

Decl. of

21 Jen-Feng Lee in Supp. of Pl.’s Opp’n to Defs.’ Mot. for
22 Att’ys’ Fees (“Lee Att’ys’ Fees Decl.”) ¶ 27, ECF No.
23 78.

Defendants’ counsel indicated that Defendants

24 would stipulate to dismissal if Plaintiff agreed to pay
25 Defendants’ counsel’s fees.

Decl. of Jen-Feng Lee in

26 Supp. of Pl.’s Mot. to Dismiss (“Lee Mot. to Dismiss
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1 Decl.”), Ex. A, ECF No. 49-3.1

After some back-and-

2 forth communication, the parties were unable to reach
3 an agreement regarding dismissal of Plaintiff’s
4 infringement claim.
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Lee Att’ys’ Fees Decl. ¶ 31.

Defendants filed their Motion for Partial Summary

6 Judgment [47] on April 23, 2018.

Plaintiff filed his

7 Motion to Dismiss [49] on April 24, 2018.

On June 4,

8 2018, the Court denied Plaintiff’s Motion to Dismiss
9 and granted Defendants’ Motion for Partial Summary
10 Judgment as to non-infringement of the ‘812 Patent
11 [61].
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Following the Court granting Defendants’ Motion for

13 Partial Summary Judgment, on June 14, 2018, Defendants
14 voluntarily dismissed their remaining invalidity
15 counterclaim [62].

The Court entered Judgment [68] in

16 favor of Defendants on July 3, 2018.
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Defendants filed the instant Motion [69] on July

18 13, 2018.

Plaintiff filed his Opposition [77] on July

19 24, 2018, to which Defendants replied [79] on July 31,
20 2018.
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II. DISCUSSION

22 A.

Legal Standard

23

The Patent Act provides that “[t]he court in

24 exceptional cases may award reasonable attorney fees to
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The Court takes judicial notice of this Declaration

26 already filed on its Docket and referenced in Mr. Lee’s
27 Declaration filed in support of Plaintiff’s Opposition to
Defendants’ Motion for Attorneys’ Fees.

See Fed. R. Evid. 201;

28 Gerritsen v. Warner Bros. Entm’t Inc., 112 F. Supp. 3d 1011, 1034
(C.D. Cal. 2015) (citation omitted).
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1 the prevailing party.”

35 U.S.C. § 285.

“[A]n

2 ‘exceptional’ case is simply one that stands out from
3 others with respect to the substantive strength of a
4 party’s litigating position (considering both the
5 governing law and the facts of the case) or the
6 unreasonable manner in which the case was litigated.”
7 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134
8 S. Ct. 1749, 1756 (2014).

“District courts may

9 determine whether a case is ‘exceptional’ in the
10 case-by-case exercise of their discretion, considering
11 the totality of the circumstances.”

Id.

Fees may be

12 awarded where “a party’s unreasonable conduct—while not
13 necessarily independently sanctionable—is nonetheless”
14 exceptional.

Id. at 1757.

“[A] case presenting either

15 subjective bad faith or exceptionally meritless claims
16 may sufficiently set itself apart from mine-run cases
17 to warrant a fee award.”

Id.

A party must prove its

18 entitlement to fees by a preponderance of the evidence.
19 Id. at 1758.
20 B.

Discussion

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1.

Substantive Strength of Plaintiff’s Litigation

22

Position

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a.

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Pre-Filing Investigation

Defendants first argue that Plaintiff failed to

25 conduct an adequate pre-filing investigation, which
26 would have objectively shown that no infringement
27 existed.

“[C]ase law makes clear that the key factor

28 in determining whether a patentee performed a
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1 reasonable pre-filing inquiry is the presence of an
2 infringement analysis.”

Q-Pharma, Inc. v. Andrew

3 Jergens Co., 360 F.3d 1295, 1302 (Fed. Cir. 2004).
4 “[A]n infringement analysis can simply consist of a
5 good faith, informed comparison of the claims of a
6 patent against the accused subject matter.”

Id.

In

7 his Opposition, Plaintiff explains the pre-filing
8 investigation he conducted, which consisted of two
9 different attorneys reviewing the ‘812 Patent and the
10 Accused Products.

See Lee Att’ys’ Fees Decl. ¶¶ 7-23.

11 The first attorney was Clement Cheng, who prosecuted
12 the ‘812 Patent, and the second attorney was Jeff Lee,
13 Plaintiff’s counsel in this Action.

Id. ¶¶ 7, 17.

14 While Mr. Cheng only appears to have reviewed a drawing
15 of the Accused Products, see id., Ex. 1, Mr. Lee
16 obtained one of the Accused Products, disassembled it,
17 and reviewed its structure, id. ¶ 8.

After reviewing

18 the ‘812 Patent, the prosecution history of the ‘812
19 Patent, and a sample of the Accused Products, both
20 attorneys concluded that there was a viable claim for
21 infringement.
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Id. ¶¶ 16-17.

Defendants essentially argue that these two

23 attorneys were unable to provide an objective analysis
24 of potential infringement because of their connections
25 to the ‘812 Patent and this litigation.

First, while

26 Mr. Cheng may have prosecuted the ‘812 Patent, there is
27 no evidence that he would gain anything by giving an
28 opinion that the Accused Products infringed the ‘812
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1 Patent.

Because Mr. Cheng prosecuted the ‘812 Patent,

2 he is more knowledgeable about its claims, the
3 potential construction of the claim terms, and the
4 viability of an infringement claim.

Second, while

5 Plaintiff retained Mr. Lee to litigate this matter,
6 there is no evidence to suggest that Mr. Lee would
7 purposely prosecute a frivolous lawsuit.

With no

8 evidence to suggest otherwise, the Court assumes that
9 Mr. Lee, as Plaintiff’s attorney, would review the ‘812
10 Patent and Accused Products and only pursue litigation
11 if Mr. Lee believed there was merit to Plaintiff’s
12 claims.

See also Fujinomaki v. Google, LLC, No.

13 3:16-CV-03137-JD, 2018 WL 3632104, at *2 (N.D. Cal.
14 July 31, 2018) (finding case not exceptional when the
15 plaintiff’s counsel investigated the accused products
16 and there was no evidence the firm litigated in bad
17 faith).

It is improper for Defendants to, without

18 evidence, imply that Mr. Lee would pursue meritless
19 claims just to appease his client.

Ultimately, because

20 two separate attorneys reviewed the ‘812 Patent and the
21 Accused Products and determined there was a viable
22 claim for infringement, Plaintiff conducted a
23 sufficient pre-filing investigation.

See Q-Pharma, 360

24 F.3d at 1303 (finding “claim of infringement was
25 supported by a sufficient factual basis” when the
26 plaintiff obtained a sample of the accused product and
27 compared it to the claims of the patent); cf.
28 ThermoLife Int’l, LLC v. Myogenix Corp., No. 13CV651
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1 JLS (MDD), 2017 WL 1235766, at *5 (S.D. Cal. Apr. 4,
2 2017) (finding pre-filing investigation was
3 insufficient when the plaintiff did not rely on
4 anything other than advertisements and failed to obtain
5 a sample of the readily-available accused product).
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b.

Claim Construction Arguments

Defendants repeatedly argue that Plaintiff’s claim

8 construction arguments regarding the term “water
9 chamber” were meritless and Plaintiff knew from the
10 beginning of the litigation that the claimed “water
11 chamber” could only hold water.

Importantly, in

12 determining whether a case is exceptional, the court
13 looks to the strength of the arguments, not their
14 correctness.

SFA Sys., LLC v. Newegg Inc., 793 F.3d

15 1344, 1348 (Fed. Cir. 2015) (quoting Octane Fitness,
16 134 S. Ct. at 1756).

Claim construction is a customary

17 step of patent litigation, and because it “is not an
18 exact science, [] it is not unusual for parties to
19 offer competing definitions of even the simplest claim
20 language.”
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Q-Pharma, 360 F.3d at 1301.

Defendants point to several quotes from this

22 Court’s Claim Construction Order to show that
23 Plaintiff’s claim construction arguments were
24 unreasonable.
25 ECF No. 69.

See Defs.’ Mot. for Att’ys’ Fees 10:3-8,
While the Court made clear in its Claim

26 Construction Order that the intrinsic evidence strongly
27 rebutted Plaintiff’s construction of the term “water
28 chamber,” Plaintiff’s arguments were not so extreme to
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1 make this case “exceptional” for the purpose of
2 attorneys’ fees.

In the Markman hearing, Plaintiff

3 relied on the prosecution history, which showed the
4 patent examiners’ broad search terms when researching
5 the ‘812 Patent, as well as the claim’s lack of
6 guidance regarding the liquid that is held in the
7 “water chamber.”

While the Court may have disagreed

8 with Plaintiff’s arguments and ultimately ruled against
9 Plaintiff, Plaintiff’s arguments did not “contravene[]
10 well-established law.”

Iris Connex, LLC v. Dell, Inc.,

11 235 F. Supp. 3d 826, 847 (E.D. Tex. 2017) (finding case
12 was exceptional when, among other things, the plaintiff
13 proposed construction that went against clear claim
14 construction jurisprudence).

Ultimately, while

15 Plaintiff’s arguments may have been unconvincing, they
16 were not so frivolous to make this case stand out from
17 others, which would make this Action “exceptional.”
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2.

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Defendants also argue that Plaintiff’s conduct

Manner of Litigation

20 during the litigation was unreasonable,2 and the only
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In addition to the conduct discussed below, Defendants
also argue that Plaintiff’s Opposition to Defendants’ Motion for
Partial Summary Judgment relied on mere conclusory arguments.
However, “[m]erely losing at summary judgment is not a basis for
an exceptional case finding.” Cambrian Science Corp. v. Cox
Commc’n, Inc., 79 F. Supp. 3d 1111, 1114 (C.D. Cal. 2015). While
Plaintiff did offer a half-hearted opposition to Defendants’
Motion for Partial Summary Judgment with little evidence to
support his arguments, the Court finds that this alone is
insufficient to determine this case is exceptional. This is
especially true given that Plaintiff was trying to dismiss his
claim simultaneously.
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1 possible motivation for this Action was retaliation for
2 Defendants filing an action against Plaintiff in state
3 court.

Defendants focus on Plaintiff’s actions

4 following the Court’s Claim Construction Order.
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After the Court issued its Claim Construction Order

6 on January 25, 2018, Plaintiff’s counsel contacted
7 Defendants’ counsel on February 6, 2018 to inform
8 Defendants that Plaintiff intended to dismiss his claim
9 against Defendants.

See Lee Att’ys’ Fees Decl., Ex. 2.

10 Defendants argue that while Plaintiff may have stated
11 that he intended to dismiss his claim shortly after the
12 Claim Construction Order, he did not move to do so
13 until after Defendants filed their Motion for Partial
14 Summary Judgment on April 23, 2018.

Both parties blame

15 each other for the delay in Plaintiff’s attempt to
16 dismiss his claim, but Defendants’ desire for
17 attorneys’ fees appears to be the reason for the delay.
18 See Lee Mot. to Dismiss Decl., Ex. A.

Because

19 Defendants filed counterclaims against Plaintiff,
20 Plaintiff could not dismiss the Action over Defendants’
21 objection.

See Fed. R. Civ. P. 41(a)(2).

Defendants

22 were only willing to dismiss the Action if Plaintiff
23 offered to pay Defendants’ counsel’s fees.
24 Mot. to Dismiss Decl., Ex. A.

See Lee

It is reasonable for

25 Plaintiff to not agree to pay Defendants’ counsel’s
26 fees when such fees are only recoverable in
27 “exceptional” cases.

Both parties were adversarial

28 during this litigation, but ultimately, Plaintiff
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1 sought to dismiss his claim shortly after the Court’s
2 Claim Construction Order.

Such conduct prevents a

3 finding that this case is exceptional.

Compare Joao

4 Control & Monitoring Sys., LLC v. Chrysler Grp. LLC,
5 No. 13-cv-13957, 2017 U.S. Dist. LEXIS 130405, at *21
6 (E.D. Mich. Aug. 16, 2017) (noting cases can be
7 exceptional where the plaintiff continues to litigate
8 after the plaintiff suffers an adverse claim
9 construction), with In re Protegrity Corp., No.
10 3:15-MD-02600-JD, 2017 WL 747329, at *4 (N.D. Cal. Feb.
11 27, 2017) (denying motion for attorneys’ fees when the
12 plaintiff sought to dismiss its claims after suffering
13 an adverse ruling).
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With regard to Defendants’ accusation that

15 Plaintiff filed this Action in retaliation for
16 Defendants filing an action against Plaintiff in state
17 court, there is nothing in the record to suggest this
18 is true.

Defendants argue that because Plaintiff’s

19 infringement arguments were objectively unreasonable,
20 retaliation is the only possible motive.

Even if this

21 Court found that Plaintiff’s arguments were objectively
22 unreasonable, Defendants have not provided any
23 evidence, other than the timing of the two lawsuits, to
24 suggest a retaliatory motive.

Accordingly, this

25 argument is not well taken.
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Defendants have thus failed to show that

27 Plaintiff’s conduct in this Action was objectively
28 unreasonable enough to categorize this Action as
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1 exceptional.

Because this case is not “exceptional”

2 under 35 U.S.C. § 285, Defendants are not entitled to
3 recover their attorneys’ fees.
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III. CONCLUSION
Based on the foregoing, the Court DENIES

6 Defendants’ Motion.
7 IT IS SO ORDERED.
8
9 DATED: August 14, 2018
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s/ RONALD S.W. LEW
HONORABLE RONALD S.W. LEW
Senior U.S. District Judge

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