Brilliant Instruments, Inc. v. GuideTech, Inc.

Filing 197

ORDER by Judge Claudia Wilken denying 147 Motion for Attorney Fees and Non-Taxable Costs. (hlkS, COURT STAFF) (Filed on 9/28/2012)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 BRILLIANT INSTRUMENTS, INC., 5 6 7 8 9 United States District Court For the Northern District of California 10 No. C 09-5517 CW Plaintiff, ORDER DENYING BRILLIANT’S MOTION FOR ATTORNEYS’ FEES AND NONTAXABLE COSTS v. GUIDETECH, INC., Defendant. ________________________________ AND ALL RELATED COUNTERCLAIMS 11 / 12 Plaintiff and Counterclaim-Defendant Brilliant Instruments, 13 Inc. moves for an award of attorneys’ fees pursuant to 28 U.S.C. 14 § 285, and an award of expert witness fees pursuant to the Court’s 15 inherent authority. 16 formerly GuideTech Inc., opposes the motion. 17 forth below, Brilliant’s motion is denied. For the reasons set BACKGROUND 18 19 Defendant and Counter-Claimant GuideTech LLC, In 1998, Shalom Kattan founded Guide Technology, Inc., the 20 predecessor entity to GuideTech. 21 claimed by the patents-in-suit, which he assigned to Guide 22 Technology. 23 Technology, but remained on its board of directors. 24 year, Kattan established Brilliant. 25 position on Guide Technology’s board. 26 Technology sold its assets, which included the patents-in-suit, to 27 Ronen Sigura, who founded GuideTech. 28 Kattan invented the technology In 2004, Kattan left his employment with Guide That same In 2005, Kattan left his On May 23, 2008, Guide 1 Brilliant filed this declaratory relief action on November 2 20, 2009, alleging that its accused products, such as the BI200 3 and BI220, do not infringe GuideTech’s U.S. Patent Nos. 6,091,671 4 (’671 patent); 6,181,649 (’649 patent); 6,226,231 (’231 patent); 5 6,456,959; 6,621,767; 6,999,382; and 7,203,610. 6 suit concern time interval analyzers, which are testing 7 instruments used in the semiconductor industry to detect timing 8 errors in integrated circuits. 9 filed its answer and counterclaim, asserting that Brilliant’s The patents-in- On December 14, 2009, GuideTech United States District Court For the Northern District of California 10 products infringe the ’671, ’649 and ’231 patents. 11 filed a motion to strike the background section of GuideTech’s 12 counterclaim, which the Court denied by order entered March 24, 13 2010. 14 counterclaim and a counterclaim for a declaratory judgment of 15 invalidity of the asserted patents. 16 amended its complaint to add GuideTech’s president, Ronen Sigura, 17 as a Defendant, charging him with intentional interference with 18 prospective economic advantage, intentional interference with 19 contractual relations and violation of California’s Unfair 20 Competition Law, Cal. Bus. Code §§ 17200, et seq. 21 Brilliant On April 7, 2010, Brilliant filed an answer to GuideTech’s On June 3, 2010, Brilliant On November 12, 2010, GuideTech filed a complaint in Santa 22 Clara County Superior Court alleging claims for tortious 23 interference with prospective economic advantage and slander 24 against Brilliant and Kattan and breach of contract against 25 Kattan. 26 On December 13, 2010, Brilliant removed the state court action, 27 and it was related to the instant action by order entered January 28 18, 2011. GuideTech filed an amended complaint on December 8, 2010. See GuideTech LLC v. Brilliant Instruments, Inc., et 2 1 al., Case No. C10-5669 CW. 2 which the Court granted by order entered March 14, 2011. 3 Court also granted GuideTech’s motion for attorneys’ fees incurred 4 as a result of the improper removal. 5 GuideTech filed a motion to remand, The The Court referred the case to a Magistrate Judge for resolution of all discovery disputes. 7 discovery hearings on January 11, 2011, to resolve Brilliant’s 8 motion to compel production of documents, and on January 13, 2011, 9 to resolve the parties’ dispute over GuideTech’s objections to 10 United States District Court For the Northern District of California 6 questions posed by Brilliant at the deposition of Oren Rajuan, 11 GuideTech’s president. 12 January 28, 2011, Brilliant filed a motion to compel concerning 13 the parties’ dispute over GuideTech’s privilege-based objections, 14 then withdrew the motion on February 25, 2011. 15 The Magistrate Judge held On the last day to file discovery motions, On December 30, 2010, GuideTech filed a motion for leave to 16 amend its infringement contentions, which the Court granted by 17 order entered January 3, 2011. 18 moved to strike prior art references from Brilliant’s expert 19 report on the ground that they were not disclosed in Brilliant’s 20 invalidity contentions. 21 GuideTech’s motion to strike references from Dr. Kaliski’s report 22 to the extent that they were relied upon as prior art that 23 allegedly anticipated the claims asserted in this action or 24 rendered such claims obvious. 25 On February 10, 2011, GuideTech On March 15, 2011, the Court granted Docket no. 85. On March 16, 2011, Brilliant filed a motion to amend its 26 preliminary invalidity contentions to add a prior art reference. 27 Brilliant also filed a motion for leave to file a Daubert motion 28 to exclude the reports and testimony of GuideTech’s expert 3 1 witness, Dr. West, on April 16, 2011, fifteen days after the 2 deadline adopted by the Court. 3 order entered April 29, 2011. The Court denied both motions by The parties sought the Court’s construction of the disputed 4 5 claim terms used in the ’671, ’649 and ’231 patents. Brilliant 6 also moved for summary judgment of non-infringement of the 7 patents-in-suit. 8 adjudication on the equitable issue of assignor estoppel. GuideTech filed a motion for summary By order entered August 11, 2011, the Court construed the 9 United States District Court For the Northern District of California 10 disputed claim terms, granted Brilliant’s motion for summary 11 judgment of non-infringement, and denied as moot GuideTech’s 12 motion for summary adjudication on the issue of assignor estoppel. 13 Docket no. 137. On August 16, 2011, the parties stipulated to dismissal of 14 15 Brilliant’s state law claims in this action without prejudice and 16 agreed to consolidate their state law claims in the action in 17 Santa Clara County Superior Court. Docket no. 139. On September 20, 2011, Brilliant filed the instant motion for 18 19 attorneys’ fees. 20 briefed and submitted on the papers. 21 GuideTech filed an appeal to the Federal Circuit from the order 22 and judgment entered by the Court in favor of Brilliant. 23 appeal is currently pending. 26 27 On October 4, 2011, The DISCUSSION 24 25 GuideTech opposes the motion, which is fully I. Brilliant’s Motion for Award of Attorneys’ Fees for Exceptional Case In patent infringement actions, courts “may award reasonable attorney fees to the prevailing party” in “exceptional cases.” 28 4 35 1 U.S.C. § 285. GuideTech does not dispute that Brilliant was the 2 prevailing party on its non-infringement claims in this action, 3 but contends that Brilliant is not entitled to fees related to 4 claims on which it did not prevail. 5 all attorneys’ fees incurred in this proceeding, not only fees 6 related to non-infringement, in the amount of $834,678.60. 7 Brilliant’s fee request thus includes fees incurred in the removal 8 of GuideTech’s state court action, which the Court remanded, and 9 in litigating its own business interference claims which have been Brilliant seeks an award of United States District Court For the Northern District of California 10 dismissed from this action and consolidated in the state court 11 action. 12 the record does not support an exceptional case finding, it is not 13 necessary to determine whether to award fees incurred for the 14 entire litigation or only for part of it. 15 Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1553 (Fed. 16 Cir. 1989) (recognizing that the litigation misconduct would not 17 justify an award of attorney fees for the entire litigation and 18 remanding § 285 award of fees to consider extent to which party 19 actually prevailed). 20 Reply at 2-3 and n.1. Because the Court determines that Cf. Beckman To determine whether attorneys’ fees are warranted, a court 21 undertakes a two-step process: (1) the court considers whether 22 clear and convincing evidence supports a finding that a case is 23 exceptional and, if so, (2) the court then decides whether it 24 should exercise its discretion to award attorneys’ fees. 25 Wedgetail Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302, 1304 26 (Fed. Cir. 2009). 27 court must consider “the totality of the circumstances.” In evaluating whether a case is exceptional, a 28 5 1 Yamanouchi Pharm. Co. Ltd. v. Danbury Pharmacal, Inc., 231 F.3d 2 1339, 1347 (Fed. Cir. 2000). 3 A. Exceptionality 4 “A case may be deemed exceptional when there has been some 5 material inappropriate conduct related to the matter in 6 litigation, such as willful infringement, fraud or inequitable 7 conduct in procuring the patent, misconduct during litigation, 8 vexatious or unjustified litigation, conduct that violates Fed. R. 9 Civ. P. 11, or like infractions.” Brooks Furniture Mfg., Inc. v. United States District Court For the Northern District of California 10 Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). 11 “Absent misconduct in conduct of the litigation or in securing the 12 patent, sanctions may be imposed against the patentee only if both 13 (1) the litigation is brought in subjective bad faith, and (2) the 14 litigation is objectively baseless.” 15 Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 16 508 U.S. 49, 60-61 (1993); Forest Labs., Inc. v. Abbott Labs., 339 17 F.3d 1324, 1329-31 (Fed. Cir. 2003)). 18 Id. (citing Professional There is a presumption that the assertion of infringement of 19 a duly granted patent is made in good faith. Id. (citing Springs 20 Window Fashions LP v. Novo Industries, L.P., 323 F.3d 989, 999 21 (Fed. Cir. 2003)). 22 unreasonable in terms of § 285 if the infringement can reasonably 23 be disputed. 24 patentee’s ultimately incorrect view of how a court will find does 25 not of itself establish bad faith.’” 26 631 F.3d 1372, 1377 (Fed. Cir. 2011) (quoting Brooks Furniture, 27 393 F.3d at 1384). 28 [patentee’s] case must have no objective foundation, and the 6 “An infringement action ‘does not become Infringement is often difficult to determine, and a iLOR, LLC v. Google, Inc., “Under this exacting standard, the 1 [patentee] must actually know this. Both the objective and 2 subjective prongs of Brooks Furniture ‘must be established by 3 clear and convincing evidence.’” 4 at 1304). Id. (citing Wedgetail, 576 F.3d 5 Here, Brilliant seeks an award of attorneys’ fees for an 6 exceptional case on the grounds that GuideTech failed to perform a 7 reasonable pre-filing investigation before filing its infringement 8 counterclaim and engaged in other litigation misconduct. 9 discussed below, the Court finds that Brilliant has not As United States District Court For the Northern District of California 10 established by clear and convincing evidence that this case is 11 exceptional under § 285 so as to warrant an award of attorneys’ 12 fees. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 B. Objective Baselessness and Subjective Bad Faith Requirements Before making a discretionary determination whether to award fees pursuant to § 285, the Court must find subjective bad faith and objective baselessness to find this case exceptional. Furniture, 393 F.3d at 1381. Brooks The Federal Circuit has articulated that “[t]he objective baselessness standard for enhanced damages and attorneys’ fees against a non-prevailing plaintiff under Brooks Furniture is identical to the objective recklessness standard for enhanced damages and attorneys’ fees against an accused infringer for § 284 willful infringement actions under In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).” iLOR, 631 F.3d at 1377. In Seagate, the court held that “‘to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted 28 7 1 infringement of a valid patent. . . . 2 accused infringer is not relevant to this objective inquiry.’” 3 Id. (quoting Seagate, 497 F.3d at 1371) (emphasis added in 4 original)). 5 The court in iLOR stated, Under both Brooks Furniture and Seagate, objective baselessness “does not depend on the plaintiff's state of mind at the time the action was commenced, but rather requires an objective assessment of the merits.” [Citation omitted.] State of mind is irrelevant to the objective baselessness inquiry. [Citations omitted.] 6 7 8 9 The state of mind of the iLOR, 631 F.3d at 1377-78 (citing Brooks Furniture, 393 F.3d at United States District Court For the Northern District of California 10 1382; Seagate, 497 F.3d at 1371). 11 baselessness is to be determined by the record made in the 12 infringement proceedings. 13 A finding of objective Id. at 1380. Applying the objective baselessness test to GuideTech’s 14 unsuccessful infringement claims, the Court determines that 15 GuideTech’s position on claim construction was not “so 16 unreasonable that no reasonable litigant could believe it would 17 succeed.” 18 Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008)). 19 Having construed the disputed claim terms and decided Brilliant’s 20 motion for summary judgment of non-infringement, after holding a 21 hearing on the matters, and being familiar with the record, the 22 Court finds that this action presented a “routine question of 23 claim construction in which the issues are often complex and the 24 resolutions not always predictable.” 25 undertook construction of five disputed claim terms and phrases, 26 in particular, the phrase “defined within a signal channel” from 27 the abstract of the ’231 patent. 28 Construction, Granting Brilliant’s Motion for Summary Judgment at 8 iLOR, 631 F.3d at 1378 (citing Dominant Semiconductors Id. at 1379. The Court See Aug. 11, 2011 Order on Claim 1 6-8. The Court found that Brilliant’s proposed construction was 2 more accurate because it captured the notion that measurement 3 circuits are contained within a particular signal channel, whereas 4 GuideTech’s proposed construction was too broad and would capture 5 an embodiment that has a measurement circuit that was present in 6 more than one channel, which the Court determined was not 7 supported by the claim language or specification. 8 The Court therefore construed the phrase to mean “contained within 9 a signal channel.” Id. at 8. Id. at 7-8. Having so construed the disputed United States District Court For the Northern District of California 10 phrase, the Court found that the accused products did not infringe 11 the ’231 patent. 12 terms of the ’671 and ’649 patents and granted Brilliant’s motion 13 for summary judgment of non-infringement as to those patents. 14 Id. at 15-17. The Court also construed claim Although the Court rejected GuideTech’s proposed 15 construction, GuideTech’s infringement claims were grounded in a 16 reasonable interpretation of the patents and are not deemed 17 baseless in hindsight. 18 where patent disputes present difficult issues of claim 19 construction, “simply being wrong about claim construction should 20 not subject a party to sanctions where the construction is not 21 objectively baseless.” 22 23 24 25 26 27 The Federal Circuit has recognized that iLOR, 631 F.3d at 1380. Claim interpretation is not always an exact science, and it is not unusual for parties to offer competing definitions of even the simplest claim language. In this case, however, it is not for us to determine whether [plaintiff's] pre-filing interpretation of the asserted claims was correct, but only whether it was frivolous. We conclude that it was not, for [plaintiff's] claim interpretation, while broad, followed the standard canons of claim construction and was reasonably supported by the intrinsic record. 28 9 1 Q–Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1301 (Fed. 2 Cir. 2004) (affirming denial of Rule 11 sanctions where pre-filing 3 infringement analysis was supported by a sufficient evidentiary 4 basis). 5 claims were not objectively baseless, it is not necessary to reach 6 the issue of subjective bad faith. 7 Because the Court concludes that GuideTech’s infringement See iLOR, 631 F.3d at 1378. Brilliant does not address the question of whether 8 GuideTech’s infringement claims were objectively baseless, based 9 on the record made in the infringement proceedings. Rather, United States District Court For the Northern District of California 10 Brilliant’s exceptional case motion focuses on the reasonableness 11 of GuideTech investigation before filing its infringement claims. 12 “A claim is brought in subjective bad faith if the objective 13 unreasonableness of the claim ‘was either known or so obvious that 14 it should have been known’ by the patentee.” 15 Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1312 (Fed. Cir. 16 2012) (citing Seagate, 497 F.3d at 1371). 17 against an attorney may form a basis for an exceptional case 18 finding[, b]ut the absence of Rule 11 sanctions does not mandate 19 the opposite conclusion.” 20 393 F.3d at 1381). Highmark, Inc. v. “Rule 11 sanctions Id. at 1313 (citing Brooks Furniture, 21 Although Brilliant has not brought a Rule 11 motion, it 22 contends that the Court should determine whether GuideTech’s pre- 23 filing infringement investigation was inadequate under Rule 11 24 standards to find this to be an exceptional case. 25 citing Judin v. United States, 110 F.3d 780, 784-85 (Fed. Cir. 26 1997) (Rule 11 requires a patentee and its attorney to compare the 27 accused devices with the patent claim prior to filing the 28 infringement claims). Mot. at 5-6, As the Federal Circuit has made clear, 10 1 however, where the Court has determined that the infringement 2 claims were not objectively baseless, the Court need not reach the 3 subjective question whether GuideTech acted in bad faith. 4 Highmark, 687 F.3d at 1315. 5 C. Litigation Misconduct 6 As a separate ground for seeking an award of fees pursuant to 7 § 285, Brilliant contends that this case is exceptional because 8 GuideTech engaged in litigation efforts to complicate the case 9 through motion practice and discovery tactics. “Litigation United States District Court For the Northern District of California 10 misconduct and unprofessional behavior are relevant to the award 11 of attorney fees, and may suffice to make a case exceptional.” 12 Taltech Ltd. v. Esquel Enters. Ltd., 604 F.3d 1324, 1329 (Fed. 13 Cir. 2010) (citation and internal quotation marks omitted). 14 Having reviewed the litigation history of this action, including 15 the discovery disputes raised before the Magistrate Judge, the 16 Court concludes that both parties aggressively litigated this 17 patent dispute. 18 convincing evidence that GuideTech engaged in abusive litigation 19 tactics. Brilliant has not demonstrated by clear and 20 Brilliant further contends that GuideTech intimidated 21 Brilliant’s customers into refusing to buy Brilliant’s competing 22 products, and that this misconduct supports an award of fees 23 pursuant to § 285. 24 these allegations are the subject of business tort claims being 25 litigated in state court. 26 allegations of tortious interference are properly before the state 27 court and are not relevant to a finding of misconduct in this 28 proceeding. Mot. at 20-21. As Brilliant acknowledges, Reply at 14. 11 The merits of Brilliant’s 1 On this record, Brilliant has not met its burden to show by 2 clear and convincing evidence that GuideTech pursued objectively 3 baseless infringement counterclaims against Brilliant or engaged 4 in abusive litigation tactics. 5 attorneys’ fees pursuant to § 285 is therefore denied. 6 II. Brilliant’s motion for an award of Motion for Expert Fees Brilliant also seeks an award of its expert witness fees in 7 8 the amount of $69,552.86, pursuant to the Court’s inherent 9 sanction authority. Because § 285 does not authorize an award of United States District Court For the Northern District of California 10 expert witness fees, reimbursement of expert witness fees is 11 governed by the general cost statute, 28 U.S.C. § 1920, and is 12 limited by § 1821(b) governing witness attendance fees. 13 Industries Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 376–77 14 (Fed. Cir. 1994). 15 impose sanctions in the form of a reasonable expert fee award when 16 a party has “acted in bad faith, vexatiously, wantonly, or for 17 oppressive reasons.” 18 501 U.S. 32, 45–46 (1991)). 19 trial court must make a finding of fraud or abuse of the judicial 20 process before invoking its inherent sanctioning power to impose 21 expert witness fees in excess of the § 1821(b) cap. 22 F.3d at 378. 23 GuideTech has engaged in fraud or abusive litigation conduct, 24 sanctions are not warranted against GuideTech. 25 for award of expert fees is therefore denied. 26 \\ 27 \\ Amsted Federal courts have the inherent power to Id. at 378 (citing Chambers v. NASCO, Inc., See also iLOR, 631 F.3d at 1380. A Amsted, 23 Because Brilliant has not demonstrated that 28 12 Brilliant’s motion CONCLUSION 1 2 For the foregoing reasons, the Court DENIES Brilliant’s 3 motion for an award of attorneys’ fees and expert fees, Docket No. 4 147. 5 IT IS SO ORDERED. 6 7 8 Dated: September 28, 2012 CLAUDIA WILKEN United States District Judge 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13

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