Papst Licensing GmbH & Co. KG v. Xilinx Inc.

Filing 116

ORDER by Judge Lucy H. Koh denying 102 Motion for Attorney Fees. (lhklc1, COURT STAFF) (Filed on 8/18/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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PAPST LICENSING GMBH & CO. KG,
Plaintiff,

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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR
ATTORNEY'S FEES

v.

Re: Dkt. No. 102
XILINX INC,

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Defendant.

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Plaintiff Papst Licensing GmbH & Co. KG (“Papst” or “Plaintiff”) filed a patent

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infringement suit against Defendant Xilinx, Inc. (“Xilinx” or “Defendant”) and alleged that

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Defendant infringed claims of U.S. Patent Nos. 6,574,759 and 6,704,891 (collectively, the “Papst

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Patents”). Following this Court’s order granting judgment on the pleadings to Defendant on the

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basis that the asserted patent claims were invalid for failure to claim patent-eligible subject matter

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under 35 U.S.C. § 101, Defendant filed the instant motion for attorney’s fees pursuant to 35

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U.S.C. § 285.

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Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution

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without oral argument and VACATES the motion hearing set for August 25, 2016, at 1:30 p.m.

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Having considered the submissions of the parties, the relevant law, and the record in this case, the

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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR ATTORNEY’S FEES

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Court DENIES the motion for attorney’s fees.

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I.

BACKGROUND
Plaintiff Papst is a German patent licensing company with its principal place of business in

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St. Georgen, Germany. ECF No. 1 ¶¶ 1, 6. Papst is the assignee of the two patents at issue in the

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instant case, which Papst acquired through Papst’s predecessor-in-interest, Rambus, Inc. Id. ¶¶ 7,

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13, 19. Defendant Xilinx is a Delaware corporation that supplies programmable logic devices and

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software. Id. ¶¶ 2, 13–15.1
On November 7, 2014, Papst sued Xilinx in the United States District Court for the District

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of Delaware for alleged infringement of the Papst Patents. Papst Licensing GmbH & Co. KG v.
Xilinx, Inc., No. 14-CV-01376-LPS, ECF No. 1 (D. Del. Nov. 7, 2014).
Also on November 7, 2014, Xilinx filed a declaratory judgment action against Papst in the

United States District Court
Northern District of California

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Northern District of California. Xilinx, Inc. v. Papst Licensing GMBH & Co. KG, No. 14-CV-

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04963-LHK, ECF No. 1 (N.D. Cal. Nov. 7, 2014). Xilinx sought a declaration that the Papst

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Patents were neither valid nor infringed. See id. Xilinx’s declaratory judgment action was

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reassigned to the undersigned judge on February 23, 2015.
On February 6, 2015, Papst moved to dismiss Xilinx’s declaratory judgment action in the

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Northern District of California for lack of personal jurisdiction, or, in the alternative, to transfer

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the case to the United States District Court for the District of Delaware. See No. 14-CV-04963-

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LHK, ECF No. 18. Xilinx took discovery on Papst’s motion to dismiss, and thereafter filed an

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opposition on April 15, 2015. No. 14-CV-04963-LHK, ECF No. 52. On July 9, 2015, this Court

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granted Papst’s motion to dismiss the California actions for lack of personal jurisdiction over

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Papst, ending Xilinx’s declaratory judgment action. No. 14-CV-4963-LHK, ECF No. 62. Xilinx

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appealed to the United States Court of Appeals for the Federal Circuit, and Xilinx’s appeal

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For much of its procedural history, the instant case proceeded in tandem with Papst’s parallel
litigation against Altera Corporation, Papst Licensing GmbH & Co. KG v. Altera Corp., No. 16CV-00926-LHK, and Altera’s parallel declaratory judgment action against Papst, Altera Corp. v.
Papst Licensing GmbH & Co. KG, No. 14-CV-04794-LHK. Papst and Altera have settled and
dismissed both actions. Accordingly, this background section discusses solely the litigation
between Papst and Xilinx.
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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR ATTORNEY’S FEES

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remains pending. See Appeal No. 2015-1919.

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Meanwhile, in the District of Delaware, Xilinx moved on February 2, 2015 to transfer the

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Delaware action to the Northern District of California. No. 14-CV-01376-LPS, ECF Nos. 13–14.

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Papst filed an opposition on February 20, 2015. Id., ECF No. 18. Xilinx filed a reply on March 2,

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2015. Id., ECF No. 22.
On September 1, 2015, a magistrate judge in Delaware issued a Memorandum Order that

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granted Xilinx’s motion to transfer to the Northern District of California. No. 14-CV-01376-LPS,

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ECF No. 49. Papst filed objections, which a district judge orally overruled on February 23, 2016.

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No. 14-CV-01376-LPS, ECF No. 54. On February 24, 2016, the case was transferred to the

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Northern District of California and docketed as the instant action, No. 16-CV-00925-LHK.
On March 22, 2016, this Court issued an order relating the case transferred from Delaware

United States District Court
Northern District of California

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and the dismissed California action involving Defendant and Papst. See ECF No. 66. The case

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transferred from Delaware was accordingly reassigned to this Court’s docket that same day.

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On May 11, 2016, Defendant filed a motion for judgment on the pleadings for failure to

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claim patent-eligible subject matter under 35 U.S.C. § 101. On May 25, 2016, Plaintiff filed an

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opposition. On May 30, 2016, Defendant filed a reply. See ECF Nos. 88, 92, 94. The Court

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granted Defendant’s motion and entered judgment for Defendant on June 9, 2016. ECF Nos. 99,

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100. Papst appealed the Court’s judgment to the Federal Circuit, and Papst’s appeal remains

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pending. See Appeal No. 2016-2323.
Defendant filed the instant motion for attorney’s fees on June 23, 2016. ECF No. 102.

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Plaintiff filed an opposition on July 7, 2016, and Defendant replied on July 14, 2016. ECF Nos.

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106, 113.

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II.

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LEGAL STANDARD
Pursuant to 35 U.S.C. § 285, “[t]he court in exceptional cases may award reasonable

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attorney fees to the prevailing party” in patent litigation. The U.S. Supreme Court established the

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governing standard for determining whether an award of attorney’s fees is appropriate in Octane

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Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). In Octane, the U.S.

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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR ATTORNEY’S FEES

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Supreme Court held that an exceptional case under § 284 is “simply one that stands out from

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others with respect to the substantive strength of a party’s litigating position (considering both the

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governing law and the facts of the case) or the unreasonable manner in which the case was

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litigated.” Id. at 1751. District courts “may determine whether a case is ‘exceptional’ in the case-

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by-case exercise of their discretion, considering the totality of the circumstances.” Id. “[A] case

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presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself

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apart from mine-run cases to warrant a fee award.” Id. at 1757. Ultimately, the decision of

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whether to award attorney’s fees is left to the Court’s discretion and is reviewed on appeal only for

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abuse of discretion. Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748
(2014).

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United States District Court
Northern District of California

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III.

DISCUSSION

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Xilinx argues that the instant case is exceptional both because of the substantive weakness

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of Papst’s litigating position and because Papst pursued this litigation in an unreasonable manner.

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The Court concludes that neither argument is persuasive.

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First, as to the substantive strength of Papst’s litigating position, Papst concedes that Xilinx

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was the prevailing party based on the Court’s grant of Xilinx’s motion for judgment on the

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pleadings. However, this Court’s rejection of Papst’s arguments in opposition to the motion for

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judgment on the pleadings is insufficient to merit finding the instant case exceptional. “[A]s the

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Supreme Court made clear in Octane, fee awards are not to be used ‘as a penalty for failure to win

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a patent infringement suit.’” Gaymar Indus., Inc. v. Cincinnati Sub-Zero Products, Inc., 790 F.3d

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1369, 1373 (quoting Octane, 134 S. Ct. at 1753).

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Undertaking the required case-by-case analysis in the instant case, the Court finds that its

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order granting judgment to Xilinx required significant analysis of Papst’s patents and recent U.S.

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Supreme Court and Federal Circuit case law in a complex and developing area of law. See Papst

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Licensing GmbH & Co. KG v. Xilinx Inc., --- F. Supp. 3d ----, 2016 WL 3196657 (N.D. Cal. June

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9, 2016). Specifically, the Court granted judgment to Xilinx for the Papst Patents’ failure to claim

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patent-eligible subject matter under 35 U.S.C. § 101. Id. The U.S. Supreme Court’s ruling in

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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR ATTORNEY’S FEES

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Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), significantly changed the law on

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patentable subject matter under Section 101. Of course, there is no categorical rule that attorney’s

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fees are unavailable in cases resolved under Section 101 because whether a case is exceptional

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must be determined on a case-by-case basis considering the totality of the circumstances. Octane,

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134 S. Ct. at 1756.

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Nonetheless, in its order granting judgment for Xilinx, this Court relied primarily upon
case law developed after Papst filed its lawsuit in 2014 and developed even during the briefing on

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Xilinx’s motion for judgment on the pleadings. For example, the Court’s order resolving Xilinx’s

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motion for judgment on the pleadings required the Court to distinguish the instant case from

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Enfish, LLC v. Microsoft Corp., 822, F.3d 1327 (Fed. Cir. 2016), which was decided by the

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United States District Court
Northern District of California

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Federal Circuit during briefing on Xilinx’s motion for judgment on the pleadings. Because this is

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a complex and developing area of the law, although the Court found Papst’s arguments

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unpersuasive, Papst’s position was not so baseless as to make this case exceptional. See Synopsys,

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Inc. v. Mentor Graphics Corp., No. , 2015 WL 4365494 (N.D. Cal. July 16, 2015) (denying

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motion for attorney’s fees and noting that summary judgment under Section 101 was granted “in

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the context of a developing area of the law, namely, when a patent claiming an otherwise

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ineligible abstract idea or mental process includes in addition what has been characterized as an

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‘inventive concept’”).

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Xilinx additionally argues that the substantive weakness of Papst’s litigating position is

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heightened by the alleged weakness of Papst’s litigating positions on novelty and obviousness.

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However, the Court never ruled on novelty and obviousness because Xilinx did not raise these

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issues in its motion for judgment on the pleadings. Accordingly, the Court declines to speculate

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on the substantive strength of Papst’s litigating position as to novelty and obviousness.

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As to the manner in which Papst pursued this litigation, Xilinx argues that Papst engaged

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in “procedural gamesmanship” by filing suit in Delaware and then opposing Xilinx’s motion to

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transfer venue. The Court does not find that Papst’s decision to file suit in Delaware and oppose

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transfer to California makes this case exceptional. Although Xilinx’s motion to transfer venue to

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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR ATTORNEY’S FEES

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California was granted based on the convenience of the parties, Xilinx is incorporated in

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Delaware, so venue was proper in Delaware under 28 U.S.C. § 1391. As the District of Delaware

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held in ruling on Xilinx’s motion to transfer venue, the District of Delaware “has repeatedly found

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that it is plainly rational and legitimate for a plaintiff to choose to sue a defendant in that

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defendant’s state of incorporation—a district where a plaintiff can have some certainty that there

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will be personal jurisdiction over the defendant.” Papst Licensing GmbH & Co. KG v. Lattice

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Semiconductor Corp., 126 F. Supp. 3d 430, 438 (D. Del. 2015). The District of Delaware further

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found that “there are clear, legitimate reasons why Plaintiff chose [the District of Delaware] for

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suit.” Id. Thus, it was not an improper litigation tactic for Plaintiff to file suit in Delaware.
Additionally, the Court notes that to the extent Papst attempted to file suit in its venue of

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United States District Court
Northern District of California

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choice, the same can be said of Xilinx. Xilinx filed suit against Papst in California the same day

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Papst filed suit against Xilinx in Delaware, and Papst successfully obtained dismissal of Xilinx’s

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California action because this Court determined that Papst was not subject to personal jurisdiction

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in California under binding Federal Circuit law. Xilinx, Inc. v. Papst Licensing GMBH & Co. KG,

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113 F. Supp. 3d 1027, 1045 (N.D. Cal. 2015) (applying the Federal Circuit’s standard for

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assessing personal jurisdiction as set forth in Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt,

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Inc., 148 F.3d 1355 (Fed. Cir. 1998), and its progeny). Therefore, in the course of this litigation,

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Papst’s litigation tactics regarding choice of forum is not exceptional.
Considering the totality of the circumstances, the Court concludes that the instant case is

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not exceptional under 35 U.S.C. § 285. Accordingly, the Court declines to exercise its discretion

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to award attorney’s fees to Xilinx.

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IV.

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CONCLUSION
For the foregoing reasons, Xilinx’s motion for attorney’s fees is DENIED.

IT IS SO ORDERED.

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Dated: August 18, 2016

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Case No. 16-CV-00925-LHK
ORDER DENYING MOTION FOR ATTORNEY’S FEES

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______________________________________
LUCY H. KOH
United States District Judge

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United States District Court
Northern District of California

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Case No. 16-CV-00925-LHK
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