Sentegra, LLC v. ASUS Computer International

Filing 55

OPINION AND ORDER denying 42 Motion for Sanctions and 44 Motion to Restrict by Chief Judge Marcia S. Krieger on 8/6/17. (dkals, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Marcia S. Krieger
Civil Action No. 16-cv-00132-MSK
SENTEGRA, LLC,
Plaintiff,
v.
ASUS COMPUTER INTERNATIONAL,
Defendant.
______________________________________________________________________________
OPINION AND ORDER DENYING MOTION FOR SANCTIONS AND MOTION TO
RESTRICT
______________________________________________________________________________
THIS MATTER comes before the Court pursuant to the Defendant’s (“Asus”) Motion
for Sanctions (# 42), the Plaintiff’s (“Sentgra”) response (# 46), and Asus’ reply (# 48); and
Asus’ Motion to Restrict (# 44) public access to certain attorney billing records that it submitted
in conjunction with the Motion for Sanctions, Sentegra’s response (# 47), and Asus’ reply (# 49).
The Court assumes the reader’s familiarity with the proceedings to date. Greatly
summarized, Sentegra commenced this action alleging that Asus had infringed on a patent owned
by Sentegra. The case was pending for a period of only nine months when Sentegra voluntarily
dismissed it. In that time, only two significant events occurred in the case. Asus moved (# 17)
moved to transfer the case to the Northern District of California, and Sentegra opposed that
request. The case was dismissed before the Court could rule upon the motion to transfer.
Second, at a hearing before the Court, Sentegra made certain representations about the particular
patent claims it was alleging were infringed; later, it moved (# 31) to modify those

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representations, intending instead to pursue certain substitute patent claims. The Court denied
(#37) that motion. Thereafter, Sentegra voluntarily dismissed (# 38) its claims in this case.
Asus then filed the instant Motion for Sanctions (# 42), arguing that Sentegra “was using
the courts to compel a litigation-induced settlement.” Invoking 35 U.S.C. § 285 (allowing
awards of fees to the prevailing party in “exceptional” patent cases) and 28 U.S.C. § 1927
(allowing the court to award fees and other sanctions against counsel who “unreasonably and
vexatiously” multiply proceedings), Asus argued that it was entitled to an award of its attorney
fees in the amount of approximately $ 190,000.
Asus’ motion is premised on several allegedly vexatious acts that Sentegra took in this
action. First, Asus accuses Sentegra of “forum shopping” in this and other cases it has filed
against Asus in various judicial districts. This Court declines the invitation to review and
evaluate the parties’ litigation efforts in other Districts; if the courts of those Districts believe
that Sentegra has acted vexatiously there, they are free to impose whatever sanctions they deem
appropriate. This Court will limit its focus to the brief proceedings that occurred here.
The arguments in Asus’ Motion to Transfer notwithstanding, the Court cannot say that
Sentegra’s decision to commence the instant suit in this District manifests the type of conduct
warranting sanctions. Sentegra’s justification for commencing the action here – that it
maintained an office in Colorado and that the officer who acquired the patent at issue was
located here – is thin but colorable. Whether Asus would ultimately have prevailed on its
Motion to Transfer1 is a matter this Court need not consider here; it is sufficient to observe that

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The Court notes that Asus was requesting that the case be transferred not to the Southern
District of New York, where these same parties were already engaged in patent litigation over an
entirely unrelated patent, but to the Northern District of California, where, at the time, there was
no pre-existing litigation between them. Thus, Asus would have been fighting two patent
lawsuits against Sentegra simultaneously, regardless of whether this Court kept or transferred the
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Sentegra’s decision to commence this suit here may have been strategic, but it was not so
frivolous or vexatious as to support an award of sanctions.
Second, Asus argues that Sentegra filed the instant action “to pressure [Asus] into
settlement negotiations” concerning the New York suit. It also argues that Sentegra has filed
numerous patent lawsuits against numerous defendants, only to settle or dismiss them. But once
again, this Court’s fleeting association with the parties here does not justify a detailed
investigation into their collateral activities in other jurisdictions; those jurisdictions are free to
police their own cases.
Looking solely at the record in this District, the Court cannot say that Sentegra’s claims
were facially deficient or that its conduct was so patently vexatious that an award of fees to Asus
is required. Asus complains that “litigation is not a poker game, and the court system is not the
plaything of litigants.” The Court quite agrees, but at the same time, there nothing in the federal
rules compels a party to make litigation decisions solely for its adversary’s benefit. Short of an
allegation that Sentegra was required to litigate its instant infringement claims in the existing
case in the Southern District of New York – an argument Asus does not and cannot make –
Sentegra was free to choose to bring those claims in whatever permissible forum it deemed most
favorable, even if that choice worked to Asus’ detriment.
Asus also argues that the patent Sentegra invoked here “likely cannot survive a validity
challenge.” Although the parties had some discussions on that matter, the full merits of that
argument were not, and have not been, presented to this Court, and thus, the Court declines the
invitation to sanction Sentegra based on a legal argument the Court has not evaluated.

case. (The fact that the Southern District of New York later granted Asus’ request to transfer
that lawsuit to the Northern District of California does not alter this analysis.)
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Asus takes issue with Sentegra’s request in this action to modify the infringement
contentions it first announced at the hearing, then later reconsidered. Although the Court denied
that motion – forcefully, even – it cannot say that Sentegra’s actions in that regard reflect the
type of litigation conduct that warrants sanctions. By all appearances, once the Court denied
Sentegra’s motion to modify its oral representations, Sentegra quickly dismissed the lawsuit. If
Asus could point to Sentegra prolonging the litigation vexatiously after the Court’s ruling, the
Court might be disposed to award sanctions. But by all appearances, Sentegra took its defeat on
that critical motion with aplomb and quickly folded its hand in this case.
However, while Sentegra’s motion to modify was pending, it apparently insisted that the
parties prepare a claims chart (# 36) consistent with the claims it had identified at the hearing,
despite arguing to the Court that some of those claims were already “irrelevant.” See: Docket #
31 at 5 (“there is a strong likelihood that both parties would need to chart irrelevant claims if
Sentegra were held to its preliminary position expressed at the hearing”). This conduct is
troubling to the Court, and Sentegra’s response to Asus’ motion fails to justify it. Sentegra
merely argues now that it “reserved the right to assert those claims if the Court denied its
request” to modify its contentions. But a party cannot “reserve the right” to continue to assert
claims it knows and admits are irrelevant.
This is the type of conduct that could very well justify an award of sanctions against
Sentegra. But such an award would be complicated by the fact that it is impossible to ascertain
which fees Asus might have incurred in charting irrelevant claims, when the parties were also
charting claims that would be relevant regardless of whether Sentegra’s motion had been granted
or denied. The billing records that Asus has provided reflect time entries that read, simply,
“prepare claim charts” and “identification of potential claim terms for construction,” without

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identifying which claim terms are being described.2 Because some of that work would have been
performed regardless of whether Sentegra had properly surrendered its admittedly irrelevant
claims, and because it is impossible for the Court to quantify the amount of work that was caused
by Sentegra failing to do so, the Court is not inclined to impose an imprecise sanction.
Finally, Asus makes a broad argument that Sentegra made various misrepresentations to
the Court throughout this action. The Court need not address whether Asus’ characterizations of
those statements are correct; it is sufficient to observe that such misrepresentations, even if made,
did not materially affect the course or scope of this action, such that sanctions on that basis
would be appropriate.
Accordingly, the Court denies Asus’ Motion for Sanctions.
Asus also moves to restrict public access to Docket # 43. That docket entry consists of
the affidavit of Li Chen, which recounts the attorney fees incurred by Asus in this action, and
Asus’ counsel’s billing records. Asus argues that such material should be shielded from public
disclosure because “the invoices and rate information of [Asus’] attorneys and their staff are not
public” and that “the public is unlikely to have an interest in this information.” It further argues
that disclosure of this information “may put [Asus’] law firms at a competitive disadvantage.”
The Court denies Asus’ request to restrict. The public has a broad interest in having
access to materials that are submitted to the Court for consideration, particularly those that are
directly considered by the Court in performing its adjudicative function. See United States v.
McVeigh, 119 F.3d 806, 811-14 (10th Cir. 1997). D.C. Colo. L. Civ. R. 7.2 seeks to balance that
public interest against any legitimate privacy concerns that parties may have, but it properly
places the burden on the party seeking restriction to overcome the presumption of public access
2

This is not intended as a criticism of Asus’ counsel’s recordkeeping, but merely an
observation that billing records will rarely contain the degree of granularity that would allow an
appropriate sanction to be crafted on an issue as narrow as this one.
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with specific factual showings. Here, Asus has offered only general invocations of privacy
interests and hypothetical concerns of vague “competitive disadvantage” that might result if its
billing rates were disclosed. This is insufficient to carry its burden under Local Rule 7.2.
Accordingly, its motion to restrict is denied.
For the foregoing reasons, Asus’ Motion for Sanctions (#42) and Motion to Restrict (#44)
are denied. The Clerk of the Court shall lift the provisional restriction on access to Docket # 43.
Dated this 6th day of August, 2017.
BY THE COURT:

Marcia S. Krieger
Chief United States District Judge

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