Safety Braking Corporation et al v. Six Flags Inc. et al

Filing 477

REPORT AND RECOMMENDATIONS re 463 MOTION for Attorney Fees filed by Riverside Park Enterprises, Inc., Kings Island Company, Universal City Development Partners, LTD, Magic Mountain, LLC, Cedar Fair LP, SF Partnership, Walt Disney Parks and Resor ts LLC, Blackstone Group LP, Knott's Berry Farm, Astroworld, L.P., Universal City Studios LLLP, Park Management Corp., Six Flags Over Georgia II, L.P., Tierco Maryland Inc., Texas Flags, LTD, Six Flags St. Louis, LLC, Six Flags Inc., NBC Unive rsal Inc., Busch Entertainment Corp., Walt Disney Co., Elitch Gardens, L.P., Darien Lake Theme Park and Camping Resort, Inc., Paramount Parks Inc., Universal Studios Inc., Great America LLC, KKI, LLC, Six Flags Theme Parks Inc., Cedar Fair. Please note that when filing Objections pursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 3/30/2017. Signed by Judge Mary Pat Thynge on 3/13/17. (cak)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MAGNETAR TECHNOLOGIES CORP.
and G&T CONVEYOR CO.,
Plaintiffs,
v.
SIX FLAGS THEME PARKS, INC.,
et al.,
Defendants.

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C. A. No. 07-127-LPS-MPT

REPORT AND RECOMMENDATION
I.

INTRODUCTION
On March 1, 2007, plaintiffs Magnetar Technologies Corp. (“Magnetar”) and G&T

Conveyor Co. (“G&T”) (collectively, “plaintiffs”) sued multiple theme park operators
(“defendants”), alleging infringement of U.S. Patent Nos. 5,277,125 (“the ‘125 patent”)
and 6,659,237 (“the ‘237 patent”).1 On February 7, 2014, this court issued Reports and
Recommendations (the “February 7, 2014 R&Rs”) finding the ‘125 patent and the ‘237
patent invalid and/or not infringed on multiple grounds.2 On July 29, 2014, the court
adopted those Reports and Recommendations and entered judgment for defendants
and against plaintiffs.3 On April 17, 2015, the United States Court of Appeals for the
Federal Circuit affirmed the court’s rulings4 and the Federal Circuit’s mandate issued on
May 26, 2015.5 Currently before the court is defendants’ Renewed Motion for Attorneys’
1

D.I. 1. Plaintiffs filed an amended complaint on August 9, 2007. D.I. 56.
D.I. 404, 405, 407.
3
D.I. 425.
4
Magnetar Techs. Corp. v. Six Flags Theme Parks Inc., 599 F. App’x 960 (Fed.
Cir. 2015).
5
D.I. 450.
2

Fees pursuant to 35 U.S.C. § 285.6
II.

FACTUAL AND PROCEDURAL BACKGROUND
The record details the extensive factual and procedural background in this case.

For the purposes of this motion, only a brief recitation of pertinent facts is necessary.
Plaintiffs are assignees and/or exclusive licensees of the ’125 and ’237 patents.7
Plaintiffs acquired the ’125 patent from BAE Automated Systems, Inc. (“BAE”). The
’125 patent claims a car and track assembly with wheels rolling on a two-rail track and a
metal fin extending down from the car and passing between linear motors.8 Joel L.
Staehs (“Staehs”) and Gene DiFonso (“DiFonso”) are the named inventors. The ’237
patent claims an eddy current brake. Edward M. Pribonic (“Pribonic”) is the sole named
inventor.9 Defendants are amusement park operators.10
In 2006, plaintiffs licensed the ’125 and ’237 patents to Acacia Research Group
LLC (“Acacia”).11 Acacia and its subsidiaries acquire and then assert patents through
litigation.12 Plaintiffs assigned control over the enforcement, litigation, settlement and
licensing of the ’125 and ’237 patents to Acacia. Subsequently, Acacia formed Safety
Braking Corporation (“SBC”) as a special purpose entity to hold and enforce the patents

6

D.I. 463.
Magnetar Techs. Corp. v. Six Flags Theme Parks Inc., C.A. No.07-127-LPSMPT, 2014 WL 530241, at *1 n.1 (D. Del. Feb. 7, 2014) (“Magnetar is the assignee of
the ‘237 patent and holds an exclusive field-limited license for the ’125 patent.”); id. at 1
n.2 (“G&T is the assignee of the ’125 patent.”).
8
Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A. No. 07-127-LPSMPT, 2014 WL 547712, at *1 (D. Del. Feb. 7, 2014).
9
Id. at *11.
10
Id. at *1.
11
D.I. 1 at 6-7.
12
D.I. 428, Ex. 17 at 4.
7

2

in suit.13
On March 1, 2007, SBC and plaintiffs instituted the present matter, alleging
braking systems and assemblies in defendants’ amusement park rides infringe claim 3
of the ’125 patent and/or claims 1 and 10 of the ’237 patent.14 SBC retained Connolly
Bove Lodge & Hutz (“Connolly Bove”) to represent both SBC and plaintiffs.
In September 2007, Jeffrey Zelley (“Zelley”), an associate at Connolly Bove,
reviewed BAE’s archival records in G&T’s possession to identify privileged documents
not subject to production.15 Thereafter, Zelley submitted a memorandum (the
“Memorandum”) to Connolly Bove and Acacia. The Memorandum flagged several
dates, including (1) October 28, 1991, the critical date of the’125 patent; (2) August 7,
1991, the date when BAE prepared a “detailed engineering proposal” for United
Airways, explaining the construction of a telecar system for the Denver International
Airport (the “Denver Prototype”); and (3) November 12, 1991, when DiFonso advised
Bechtel Corporation that commercial negotiations to install the Denver Prototype had
begun.16 The Memorandum also noted a prototype covered by the ’125 patent
constructed for American Airlines may have been publicly available before the critical
date.
The Memorandum was intended for internal circulation. Zelley and Connolly
Bove did not disclose its contents in their responses to defendants’ interrogatories.
They also failed to share the Memorandum with Niro, Haller, & Niro (the “Niro Firm”)
13

See D.I. 1 at 6-7.
Id. at 1-8.
15
D.I. 428, Ex. 1.
16
Id.
14

3

when it assumed representation of plaintiffs. On February 29, 2012, however,
defendants obtained a copy of the Memorandum in response to production in related
litigation in another jurisdiction.17
Before BAE went out of business in 2001, it established a record retention
schedule for disposal of its archival records.18 That schedule continued after the filing of
this matter. Subsequently, this court found plaintiffs liable for negligent spoliation of
archival records relating to the prosecution of the ’125 patent and sanctioned them by
finding factual parts of the Memorandum and certain other documents discoverable.19
Subsequently, the Honorable Leonard P. Stark adopted those findings.20
In February 2008, Acacia and SBC withdrew from this matter and advised
plaintiffs that the potential public use of the Denver Prototype threatened their patent
portfolio and chances to prevail in this action.21 Connolly Bove withdrew as plaintiffs’
counsel in July 2008.22 Plaintiffs continued this action with the representation of the
Niro Firm.23
In March 2011, this court denied24 defendants’ motion for leave to file a
supplemental Markman brief to add a new term, “between,” of the ’125 patent to be

17

D.I. 427 at 3.
D.I. 428, Ex. 5.
19
Magnetar Techs. Corp. v. Six Flags Theme Park Inc., 886 F. Supp. 2d 466,
491-92 (D. Del. 2012), aff’d sub nom. Magnetar Techs. Corp. v. Six Flags Theme Parks
Inc., C.A. No. 07-127-LPS-MPT, 2014 WL 545440 (D. Del. Feb. 7, 2014).
20
Magnetar, 2014 WL 545440, at *3.
21
See D.I. 427 at 5.
22
See id. at 4.
23
D.I. 84.
24
D.I. 213 at 1.
18

4

construed.25 In February and March 2012, defendants forwarded two letters to the Niro
Firm, enumerating the weaknesses of plaintiffs’ claims and threatening to raise
inequitable conduct and move for attorneys’ fees under § 285 unless dismissal with
prejudice followed.26 The Niro Firm disputed defendants’ position and explained an
alternative interpretation of the record existed.27
In February 2014, this court struck the testimony of Mark T. Hanlon (“Hanlon”),
plaintiffs’ expert witness,28 but allowed the testimony of Pribonic, a lay witness.29 This
court also recommended that defendants’ motion for summary judgment of invalidity of
the ’125 patent be granted; plaintiffs’ motion for summary judgment of infringement of
claim 3 be denied; defendants’ motion for summary judgment of non-infringement of the
’125 patent be granted as to certain accused amusement park rides; defendants’ motion
for summary judgment of invalidity and non-infringement of the ’237 patent be denied as
to invalidity and granted as to non-infringement; and plaintiffs’ motion for summary
judgment of infringement of the ’237 patent be denied.30
Judge Stark adopted the recommendations in October 2014 and invalidated the
’125 patent due to indefiniteness, incorrect inventorship, on-sale bar, and obviousness,
determined most of the accused amusement park rides did not infringe the ’125 patent

25

D.I. 211 at 1. Plaintiffs opposed the motion as contrary to the scheduling order
and unduly prejudicial. D.I. 212 at 1-2.
26
D.I. 428, Ex. 18 at 1-5.
27
Id., Ex. 5.
28
Magnetar Techs. Corp. v. Six Flags Theme Parks Inc., C.A. No. 07-127-LPSMPT, 2014 WL 529983, at *12 (D. Del. Feb. 7, 2014).
29
Magnetar, 2014 WL 530241, at *1.
30
Magnetar, 2014 WL 547712, at *11.
5

and found the ’237 patent valid and not infringed.31
On August 12, 2014, following the court’s Memorandum Order adopting the
February 7, 2014 R&Rs and entering judgment, defendants moved for an award of
attorneys’ fees.32 On July 21, 2015, this court issued a Report and Recommendation
(the “Fee Award R&R”) finding that, in view of the totality of the circumstances, the case
is exceptional based on plaintiffs’ objectively unreasonable position on inventorship of
the ‘125 patent and plaintiffs’ reliance on Hanlon’s expert report with respect to
infringement of the ‘125 patent.33 This court concluded defendants were entitled to
attorneys’ fees pursuant to 35 U.S.C. § 285 related to the incorrect inventorship issue
since July 29, 2011, and related to Hanlon’s expert report since it was served.34
On August 7, 2015, plaintiffs filed objections to the Fee Award R&R to the extent
it recommended granting defendants’ motion for attorneys’ fees in any respect
(“Objections”).35 On August 24, 2015, defendants filed a response to plaintiffs’
Objections (“Response”).36 On September 30, 2015, after a review of the Fee Award
R&R, Objections, and Response, the court issued an Memorandum Order denying
defendants’ motion for attorneys’ fees without prejudice to renew, and returned the
matter to this judge for further proceedings consistent with the instructions provided in
that order.37 On November 13, 2015, defendants filed a Renewed Motion for Attorneys’

31

Magnetar, 2014 WL 3748999, at *1.
D.I. 426.
33
D.I. 451 at 25.
34
Id. at 26.
35
D.I. 452.
36
D.I. 454.
37
D.I. 457 at 5-7.
32

6

Fees (“Renewed Motion”).38
III.

LEGAL STANDARDS
Under the principle known as the American Rule, each litigant is responsible for

its attorneys’ fees and costs. This principle applies equally to prevailing and losing
parties unless a specific statute authorizes the shifting of attorneys’ fees.39
In patent litigation, 35 U.S.C. § 285 authorizes an award of reasonable attorneys’
fees to prevailing parties “in exceptional cases.”40 “When deciding whether to award
attorney[s’] fees under § 285, [the] court engages in a two-step inquiry.”41 In step one,
the court “determines whether the case is exceptional.”42 If the case is exceptional, step
two requires an evaluation of “whether an award of attorneys’ fees to the prevailing
party is justified.”43
The United States Supreme Court recently clarified “[a]n ‘exceptional’ case is
simply one that stands out from others with respect to the substantive strength of a
party’s litigating position (considering both the governing law and the facts of the case)
or the unreasonable manner in which the case was litigated.”44 “District courts may
determine whether a case is ‘exceptional’ in the case-by-case exercise of their

38

D.I. 463.
Octane Fitness, LLC v. ICON Health & Fitness, Inc ., 134 S. Ct. 1749, 1753
(2014) (quoting Marx v. Gen. Revenue Corp., 133 S. Ct. 1166, 1175 (2013)) (under the
American Rule, each litigant pays “his own attorney[s’] fees, win or lose”).
40
35 U.S.C. § 285 .
41
Gevo, Inc. v. Butamax Advanced Biofuels LLC, C.A. No. 13–576–SLR, 2014
WL 4247735, at *1 (D. Del. Aug. 26, 2014) (quoting MarcTec, LLC v. Johnson &
Johnson, 664 F.3d 907, 915 (Fed. Cir. 2012)) (internal quotation marks omitted).
42
Id.
43
Id.
44
Octane, 134 S. Ct. at 1756.
39

7

discretion, considering the totality of the circumstances.”45 Courts may use such nonexclusive factors as frivolousness, motivation, and objective unreasonableness in
analyzing the factual or legal components, and the need in particular circumstances to
advance considerations of compensation and deterrence.46
In step two, courts in the Third Circuit use the “lodestar” approach to calculate
attorneys’ fees, i.e., they “multiply[] the amount of time reasonably expended by
reasonable hourly rates.”47 A court may reduce hourly rates and/or exclude
“unnecessary hours” from the lodestar calculation.48
A party must obtain at least some relief on the merits to qualify as “prevailing.”49
This qualification, however, does not entitle prevailing parties to automatically recover
attorneys’ fees.50 A court’s inquiry into shifting attorneys’ fees is not warranted unless
relief on the merits has altered the legal relationship of the parties.51
The party seeking attorneys’ fees must prove its contentions by a preponderance
of evidence,52 but it is not required to show subjective bad faith.53 It also bears the
45

Id.
Id. n.6.
47
Tech. Innovations, LLC v. Amazon.com, Inc., C.A. No. 11-690-SLR, 2014 WL
3703582, at *2 (D. Del. July 23, 2014).
48
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see also Homeland
Housewares, LLC v. Hastie2Market, LLC, 2013-1537, 2014 WL 4400184, at *2 (Fed.
Cir. Sept. 8, 2014) (affirming both the award of attorneys’ fees in connection with the
non-infringement defense and the denial to award fees for the defendant’s subsequent
pursuit of invalidity claims); Tech. Innovations, 2014 WL 3703582, at *2 (declining to
award fees for hours “expended as part of a reasonable defense effort”).
49
Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1320 (Fed. Cir. 2004).
50
Id.
51
Id.; Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Hum. Res.,
532 U.S. 598, 605 (2001).
52
Octane, 134 S. Ct. at 1758.
53
Id. at 1757.
46

8

burden of establishing the reasonableness of its fees.54
IV.

DISCUSSION
On review of the Fee Award R&R, the court returned the matter to this judge for

clarification and to address certain additional issues.55 The court directed that it be
made clear whether an order is being entered or is instead proposing findings of fact
and/or conclusions of law.56 An error in the Fee Award R&R is also to be addressed.
That report states plaintiff obtained an assignment of the rights of the unidentified
inventor,57 where the parties agree it was a former defendant who obtained the
assignment of this inventor’s rights during the course of the litigation.58 Finally, a
conclusion on three points is required:
First, are attorney fees warranted here because certain of Plaintiffs’ litigation conduct is
conduct the court should be trying to deter? Second, are attorneys fees warranted here
because Defendants are deserving of compensation? Third, and most importantly, in
light of the “totality of the circumstances,” after giving appropriate weight to all of the
pertinent factors, is this case as a whole “exceptional” under § 285 in light of the specific
instances of behavior deemed to be objectively unreasonable or otherwise improper?59
The court first addresses whether it is issuing an order or, instead, proposing
findings of fact and/or conclusions of law. The order returning the matter of attorneys’
fees under § 285 for further proceedings instructed the parties to “make clear whether
they request that the Magistrate Judge enter an Order . . . or instead they request that
she again provide a report and recommendation.”60 Only plaintiffs addressed the issue,
54

See Hensley, 461 U.S. at 433.
D.I. 457 at 5-7.
56
Id. at 5.
57
D.I. 451 at 13, 20.
58
D.I. 457 at 6 & 6 n.8.
59
Id. at 7 (emphasis in original).
60
Id. at 5-6.
55

9

asserting defendants’ motion falls under Rule 72(b).61
Federal Rule of Civil Procedure 54(d)(2) applies to a request for attorneys’ fees.62
Pursuant to FED. R. CIV. P. 54(d)(2)(D), “the court . . . may refer a motion for attorney’s
fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter.”63
The advisory committee’s note explains:
The district judge . . . may refer a motion for attorneys’ fees to a
magistrate judge for proposed findings and recommendations under Rule
72(b). This authorization eliminates any controversy as to . . . whether
motions for attorneys’ fees can be treated as the equivalent of a
dispositive pretrial matter that can be referred to a magistrate judge.64
“[I]t would seem that posttrial awards of attorneys’ fees, where authorized by a statute
or pursuant to an agreement, represent a claim for relief. Accordingly, . . . they should
be considered dispositive, a categorization confirmed by the 1993 adoption of Rule
54(d)(2)(D).”65
The court’s determination of defendants’ motion, therefore, will be in form of a
report and recommendation pursuant to FED. R. CIV. P. 72(b)(1).66
61

D.I. 468 at 1. The court stated that in plaintiffs’ Objections to the Fee Award
R&R, and defendants’ Response to those Objections, the parties all agreed the
standard of review the court should apply to plaintiffs’ Objections is de novo review but
that “[n]either side . . . explains why it believes this is the applicable standard of review,
nor do they cite any pertinent authority.” D.I. 457 at 5.
62
IPXL Holdings L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1286 (Fed. Cir.
2005) (“[A]ny claim to attorney fees must be processed in compliance with Rule
54(d)(2)(B). No provision in section 285 exempts requests for attorney fees thereunder
from compliance with Rule 54(d)(2)(B).”).
63
FED. R. CIV. P. 54(d)(2)(D).
64
FED. R. CIV. P. 54 advisory committee’s note, 1993 amendment (footnotes
omitted).
65
12 CHARLES ALAN WRIGHT, et al., FEDERAL PRACTICE AND PROCEDURE § 3068.2
(2d ed. 2016) (footnotes omitted).
66
Also, pursuant to Rule 72(b)(3), this court has previously conducted a de novo
review of a magistrate judge’s recommendations concerning a motion for attorneys’ fees
10

Defendants’ Renewed Motion again requests the court find the case
“exceptional” and exercise its discretion to award the defendants their reasonable
attorneys’ fees pursuant to 35 U.S.C. § 28567 which provides that “in exceptional cases
[the court] may award reasonable attorney fees to the prevailing party.”68 Therefore, a
party requesting fees under § 285 must show (1) that it is a prevailing party, and (2) that
the case is “exceptional.”69
Federal Circuit law governs the determination of which party has prevailed.70 To
be a “prevailing party,” that party must have received at least some relief on the merits
and that relief must materially alter the legal relationship between the parties by
modifying one party’s behavior in a way that “directly benefits” the opposing party.71
Defendants are the prevailing party in this case. This court entered judgment in
defendants’ favor on July 29, 2014 and the Federal Circuit affirmed that judgment on
April 17, 2015. Therefore, defendants received some relief on the merits that materially
altered the legal relationship between the parties that directly benefitted defendants.72

in a patent case . See, e.g., Bayer Cropscience AG v. Dow AgroScience LLC, C.A. No.
12-256 (RMB/JS), 2015 WL 108415 (D. Del. Jan. 5, 2015) (Amended Report and
Recommendation Regarding Defendant’s Motion for Fees and Costs as Prevailing
Party); Bayer Cropscience AG v. Dow AgroScience LLC, C.A. No. 12-256 (RMB/JS),
2015 WL 1197436 (D. Del. Mar. 13, 2015) (performing a de novo review of the Report
and Recommendation and adopting the recommendation to grant defendant’s motion).
67
D.I. 463, D.I. 464 at 1.
68
35 U.S.C. § 285.
69
See, e.g., Integrated Tech. Corp. v. Rudolph Techs., Inc., 734 F.3d 1352, 1360
(Fed. Cir. 2013).
70
SSL Servs., LLC v. Citrix Sys, Inc., 769 F.3d 1073, 1086 (Fed. Cir. 2014).
71
Id.; see also D. Del. LR 54.1(c) (“The defendant is the prevailing party upon a
dismissal or summary judgment or other termination of the case without judgment for
the plaintiff on the merits.”).
72
Plaintiffs do not dispute defendants are the prevailing party.
11

“An ‘exceptional’ case is simply one that stands out from others with respect to
the substantive strength of a party’s litigating position (considering both the governing
law and the facts of the case) or the unreasonable manner in which the case was
litigated.”73 “District courts may determine whether a case is ‘exceptional’ in the caseby-case exercise of their discretion, considering the totality of the circumstances.”74
Defendants assert this case is exceptional in because plaintiffs were objectively
unreasonable: (1) in their position on inventorship; (2) their reliance on Hanlon’s expert
report; (3) as a result of discovery misconduct and spoliation; (4) their position on the
indefiniteness of the ‘125 patent; (5) their position on the obviousness of the ‘125
patent; and (6) their continued litigation after the “kiss of death” email.75
The losing party’s litigation position is objectively unreasonable if it proffers
arguments so inadequate that success likely will not occur under any circumstance.76 A
party’s handling of litigation may be unreasonable if the party “shift[s] its theories of
infringement late in the litigation and without following the proper procedures for
amendment of contentions”77 or submits unsolicited court filings.78 An unsuccessful
argument on summary judgment does not necessarily demonstrate objective
baselessness.79 Octane obviated the need to show bad faith, and good faith arguments
73

Octane, 134 S. Ct. at 1756.
Id.
75
D.I. 464 at 11-20.
76
See Gevo, 2014 WL 4247735, at *2; Small, 2014 WL 5463621, at *3.
77
Kilopass Tech. Inc. v. Sidense Corp., CA. No. 10-2066 SI, 2014 WL 3956703,
at *14 (N.D. Ca. Aug. 12, 2014).
78
Homeland, 2014 WL 4400184, at *1, 3 (affirming a case may be exceptional if
a plaintiff files unsolicited briefs and meritless motions for reconsideration).
79
See MarcTec, 664 F.3d at 918; see also H-W Tech., 2014 WL 4378750, at *7
(denying attorneys’ fees where the losing party did not prevail on weak legal
74

12

are not unreasonable.80
A.

Step One

In determining whether a case is “exceptional,” factors such as frivolousness,
motivation, and objective unreasonableness may be considered.81 The court should
also consider the need in particular circumstances to advance considerations of
compensation and deterrence.82 In their current motion, defendants rely solely on
plaintiffs’ alleged objective unreasonableness.83
1.

Objective Unreasonableness

Defendants’ argument that this case is exceptional rests on their contentions that
plaintiffs were objectively unreasonable in continued litigation after they should have
realized the ‘125 patent did not properly identify an inventor and reliance on Hanlon’s
expert report.
Defendants contend plaintiffs were objectively unreasonable because they had
no colorable basis for proceeding with the case since the evidence establishes that

arguments); Wiley, 2014 WL 4929447, at *7 (dismissal of a motion for summary
judgment does not mean the losing party’s claim was objectively unreasonable).
80
See, e.g., EON Corp. IP Holdings LLC v. Cisco Sys. Inc., C.A. No. 12-1011JST, 2014 WL 3726170, at *5 (N.D. Cal. July 25, 2014) (even where plaintiff’s argument
was “quite stretched” and its conduct “difficult to explain,” the court could not “quite
conclude that no reasonable patentee could see an opening . . . through which the
argument could be squeezed”) (emphasis omitted); Gametek LLC v. Zynga, Inc., C.A.
No. 13-2546 RS, 2014 WL 4351414, at *3 (N.D. Cal. Sept. 2, 2014) (finding plaintiff’s
briefing, which “consisted of granular parsing of the claimed steps rather than any
substantive explanation of how [the invention] differed from the underlying abstract
idea,” was inadequate but “did not . . . descend to the level of frivolous argument or
objective unreasonableness”).
81
Octane, 134 S. Ct. at 1756 n.6.
82
Id.
83
D.I. 464 at 11-20.
13

Kwangho Chung’s idea was the improvement over the prior art that was being claimed
in the ‘125 patent.84
The Federal Circuit has explained that:
All that is required of a joint inventor is that he or she (1) contribute in
some significant manner to the conception or reduction to practice of the
invention, (2) make a contribution to the claimed invention that is not
insignificant in quality, when that contribution is measured against the
dimension of the full invention, and (3) do more than merely explain to the
real inventors well known concepts and/or the current state of the art.85
At deposition, Chung testified it was his idea to use the double-sided motor, the
primary inventive concept of the claimed invention, and he had to persuade the
company to accept the idea:
Q. Whose idea was it to use the double-sided motor in the Denver
project?
A. I have. It was carryover from the–the prototypes that we set up for
demonstration in–on behalf of American. So American has double-sided,
the prototype and stuff. We just–transferring the double-sided after seeing
how it works and all that. So we went on ahead with the Denver. But still
somebody has to stick neck out that double-sided works. And in my
opinion, that’s–that’s my neck.
***
Q. And so where did you get the idea to use the double-sided motor?
A. Well, it’s in the books in here and there, I guess. So I cannot pin down
exactly who is my–who is my source of information on that, but I assume
that all along it’s more of a prior art–prior art, nothing more than that. I
don’t claim I invented it, but what I did was to commit myself to–to go to
double sided. . . . So it is–it is my decision to–to go use double-sided.
And then also prove that you can live with double-sided as I presented.
So you don’t have to worry about excess heat. . . .
84

Id. at 12.
Pannu v. Iolab Corp., 155 F.3d 1344, 1351 (Fed. Cir. 1998) (citing Fina Oil &
Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997)).
85

14

Q. Did you have to persuade the company to use the double-sided
approach?
A. Oh, yeah. That was my–that was–wasn’t my opinion. That was a
huge decision. Can you imagine that you make about a thousand or so
linear motors and then go ahead and get the contract and started, find that
everything is getting very hot and burning up and all this stuff. That’s
going to be a huge mess. And I’m the only guy advocated, and then–not
only advocated but proved, showed by testing any other means at the
time, this is doable. . . . Somebody says, Well, how do you know it will do
the job? I said, You just said to trust me.86
Joel Staehs, the only living named inventor of the ‘125 patent, corroborated
Chung’s testimony:
Q. Stepping back to the prototype in the warehouse, did that have the
same structural set up as the–
A. No, it was completely–
Q. How did that differ from the other systems?
A. Well, the–the chassis–the chassis was a steel–steel frame. And the
big–the–well, in order to run that many cars, 60 cars a minute, the
motors–the motors would overheat. So we just–we–we talked about it.
What are we going to do about this and that? Mr. Chung come [sic] up
with the idea. He said, look, if you put two stators in there–he had done
this once before in the–way back in the ‘60's, as a test. He ran a test for
it. You put two stators in facing like this (indicates) with a small gap
between them, you don’t have to turn the motors off. They won’t burn up
that way, so therefore, we can eliminate the switches. Oh, that’s a great
idea. . . .
Q. Do you know where Mr. Chung got that idea originally?
A. No, I have no idea where he got it. I know he used it, though. I know
he tried it many years ago, back in the ‘60's, when they were running
thrust test. In other words, design a motor, see how much thrust you can
get and they think they can get this much. You know, they were just
running tests, experimenting, see how much they can get out of a motor.

86

D.I. 465, Ex. F (Chung Dep., July 28, 2011) at 42:12-46:1.
15

And he ran face-to-face with the vertical slider unit on their test bed.87
Chung’s “great idea” was then claimed by BAE in the ‘125 patent:
Q. Well, if you look at Claim 1 for example, on–in Column 6, down on line
6 it says “linear induction motors mounted between said rails in an
opposed configuration.”
A. Yes.
Q. So that’s–that was Mr. Chung’s idea?
[objection]
A. Was it? I don’t–I–he–he was the one that suggested we do that, yes.
Or he said that would be the advantage of doing that.88
In the Fee Award R&R, the court found this testimony was sufficient to establish
plaintiffs were objectively unreasonable in continuing to litigate the ‘125 patent due to
the inventorship problem.
Defendants, however, also direct the court to the first document produced in this
case by defendant Busch Entertainment (“Busch”) on November 18, 2008, the transcript
of a June 7, 2007 interview of Staehs who testified as to Chung’s involvement in the
invention:
Q. (By Mr. King) Who came up with the idea of going from flat to–
A. Well Mr. Chung said that we wouldn’t have–we wouldn’t burn up the
motors if we left them on. That was the big key because you had to get a
solid state switch to turn the motors off and turn the motors back on every
time a car came by, and as many cars was going by, a regular switch
would have worn out in maybe two months.
So it had to be–it had to be a solid state switch, which we did use in San
Francisco, solid state switches; and they’re expensive, and they didn’t
87
88

Id., Ex. D (Staehs Dep., July 29, 2011) at 38:21-40:3.
Id., Ex. D at 62:18-63:2.
16

even think that even that would save the motors because it would be so
hot. So he said, well, now, if we put them face to face, we won’t have to
do that. We said, Bingo, that’s the answer. Let’s do that.
Q. Tell me his name again.
A. Kwang[h]o Chung.89
Based on Staehs’ testimony, defendants argue plaintiffs had no excuse for
ignorance of the inventorship problem as early as 2008, when the transcript was
produced, thereby extending the period damages should be awarded to that date rather
than the date of the 2011 depositions.90 The court disagrees and finds that testimony
does not provide sufficient evidence regarding Chung’s testing, which demonstrated the
efficacy of his idea, or that he was the only advocate for the use of double-sided motors,
“sticking [his] neck out” in support of the “huge decision” to proceed with that use which,
along with Staehs’ 2011 corroborating testimony, clearly demonstrates his inventorship.
The Federal Circuit also commented on Staehs’ deposition testimony. During
oral argument before that court Federal Circuit Judge Lourie observed, before affirming
this court’s decision, “Mr. Chung . . . obviously contributed something; the only living
inventor testified that Mr. Chung was the inventor of–was a co-inventor, because of the
double-side–double sided motor.”91
The court, therefore, reaffirms its conclusion that plaintiffs’ position on the issue
of inventorship was objectively unreasonable and defendants are entitled to fees

89

Id., Ex. B (Sworn Statement of Joel Staehs, June 7, 2007) at 23:15-24:6.
D.I. 464 at 4.
91
D.I. 465, Ex. A (Tr. of Oral Argument before the Federal Circuit, April 10, 2015)
at 4:5-9.
90

17

incurred following the depositions in late July 2011.92
Defendants contend plaintiffs were objectively unreasonable in relying on the
Hanlon’s expert report.93 Plaintiffs contend the court should reconsider its previous
conclusion that the excluded Hanlon expert report on infringement provides support for
an award of fees because defendants did not raise that issue in either their previous
opening or reply briefs in support of their fee request.94 Plaintiffs argue the flaws in
Hanlon’s report were already punished by exclusion of Hanlon’s infringement opinions.95
Under Octane Fitness, when exercising its discretion in determining whether a
case is “exceptional” the court is to consider the “totality of the circumstances” of the
case.96 Following the Federal Circuit’s guidance, the court again considers whether
continued litigation following service of Hanlon’s report in determining whether reliance
on that report makes this case “one that stands out from others with respect to the
substantive strength of a party’s litigation position . . . or the unreasonable manner in
which the case was litigated.”97 The court also finds plaintiffs’ argument that they had
already been punished unpersuasive as they continued the ‘125 patent litigation after

92

In the Fee Award R&R, the court erroneously stated plaintiffs acquired Chung’s
rights to the ‘125 patent. In fact, it was defendant Busch that acquired those rights.
See D.I. 465, Ex. J (Quitclaim Deed and Assignment of Rights). Ultimately, however,
that error does not change the court’s determination. The identity of the party that
discovered the inventorship error does not affect the court’s conclusion that it was
objectively unreasonable to continue litigating the ‘125 patent after the depositions of
Chung and Staehs made clear the inventorship error.
93
D.I. 464 at 15.
94
D.I. 468 at 6.
95
Id.
96
Octane Fitness, 134 S. Ct. 1756.
97
Id.
18

serving Hanlon’s completely inadequate report.98 For the reasons set forth in the Fee
Award R&R,99 the court again finds plaintiffs’ reliance on Hanlon’s expert report was
objectively unreasonable.100
Defendants also contend additional circumstances support a finding of objective
unreasonableness: discovery misconduct and spoliation; plaintiffs’ position on the
indefiniteness of the ‘125 patent; plaintiffs’ position on the obviousness of the ‘125
patent; and plaintiffs’ continued litigation after the “kiss of death” email.101 Although
defendants acknowledge the Fee Award R&R found these additional circumstances did
not support a fee award, they request the court take each of them into account in
considering the totality of the circumstances in coming to its decision.102
Defendants argue plaintiffs’ purported discovery misconduct and spoliation
98

Indeed, during oral argument before the Federal Circuit, Judge O’Malley
characterized Hanlon’s infringement report as “a joke. It violated every rule of civil
procedure.” D.I. 465, Ex. A at 39:11-12. Judge O’Malley also stated “You have the
burden of proof. You have zero evidence; you have no expert. It has been excluded.”
Id., Ex. A at 37:13-14.
99
D.I. 451 at 21-22.
100
The court also rejects plaintiffs’ contention that the “inadequacies of the
Hanlon Report were not a big part of this case, and were not the subject of any
improper conduct by the plaintiffs.” D.I. 468 at 7. With the exclusion of Hanlon’s report,
plaintiffs had “zero evidence” in support of the core issue in a patent case, infringement,
for which plaintiffs had the burden of proof. Although the Federal Circuit has stated
“exclusion of expert testimony under Daubert does not automatically trigger a finding of
litigation misconduct, and in most cases likely would not do so,” MarcTec LLC v.
Johnson & Johnson, 664 F.3d 907, 920 (Fed. Cir. 2012) (emphasis added), the court
finds reliance on an expert report so utterly inadequate to have been called “a joke [that]
. . . violated every rule of civil procedure” by the Federal Circuit was objectively
unreasonable.
101
D.I. 464 at 15-20.
102
D.I. 472 at 8 (citing Octane, 134 S. Ct. at 1756)). The court notes that after
rejecting each of these issues as a basis for a fee award in the Fee Award R&R,
defendants did not file objections to any of the court’s recommendations. See D.I. 457
at 1.
19

support a finding of plaintiffs’ objective unreasonableness.103 Defendants contend that
even though plaintiffs discovered the activity that would form the basis for the on-sale
bar when Zelley visited G&T shortly after the suit was filed, they withheld the factual
information he had uncovered, just one week later, in response to an interrogatory
specifically asking for information about conception and reduction to practice,
confidential and non-confidential disclosures, and public uses, disclosures, and offers
for sale.104 Defendants maintain the failure to disclose such information prevented them
from pursuing that issue earlier, and likely contributed to loss of additional evidence due
to the destruction of documents by G&T.105
In the Fee Award R&R, the court concluded “[t]he primary evidence resulting in
the finding of on-sale bar was a video tape dated before the ‘125 patent’s critical date”
and that “[t]he record is devoid of any evidence that plaintiffs knew of this tape before
Pockrus’s deposition.”106 Defendants argue, however, that the issue is not whether they
knew of the tape, but instead, whether plaintiffs conducted a proper pre-filing
investigation and whether they made appropriate efforts to prevent the loss of
documents relevant to the claims they were bringing.107
The court previously found a basic pre-trial investigation would not have
confirmed the invalidity of the ‘125 patent:
103

D.I. 464 at 15.
Id.
105
Id.
106
Id. at 16 (quoting D.I. 451 at 12-13).
107
Id. (citing Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216-18 (S.D.N.Y.
2003) (“Once a party reasonably anticipates litigation it must suspend its routine
document retention/destruction policy and put in place a ‘litigation hold’ to ensure
preservation of relevant documents.”)).
104

20

Here, despite the subsequent invalidation of the ‘125 patent, plaintiffs’
claims were not frivolous. Plaintiffs had reason to rely on the prima facie
evidence of the patent’s validity arising from the grant by the U.S. Patent
and Trademark Office (“PTO”). A basic pre-trial investigation would not
have confirmed that claim 3 was indefinite or the subject matter of the ‘125
patent obvious. Those findings of invalidity by the court occurred after
seven years of the litigation, following extensive discovery, depositions,
claim construction, and expert testimony. That defendants were
successful in their arguments does not constitute frivolousness.108
The court also previously addressed production of the video tape:
The record is devoid of any evidence plaintiffs knew of this tape before
Pockrus’s deposition. Contrary to defendants’ argument, the requisite
knowledge cannot be inferred from G&T’s failure to halt the routine
disposal of BAE’s archives. BAE deposited its archives with a disposal
facility and designated disposal dates before it went out of business.
G&T’s e-mails to the disposal facility show it never attempted to accelerate
the destruction of records potentially relevant to this action. When
defendants deposed Pockrus, who supervised the disposal of BAE’s
archives, he denied G&T intentionally “went through the archive and . . .
thinned it out.”109
Nevertheless, this court previously found plaintiffs liable for negligent spoliation of
archival records relating to the prosecution of the ’125 patent and sanctioned them by
finding factual parts of the Zelley Memorandum and certain other documents
discoverable.110 The court, therefore, finds defendants’ contentions regarding a prefiling investigation and plaintiffs’ efforts to prevent the loss of documents relevant to the
claims they were bringing do not support an award of fees.
The evidence also does not support defendants’ assertion that a litigation hold

108

D.I. 451 at 11-12.
Id.
110
Magnetar Techs. Corp. v. Six Flags Theme Park Inc., 886 F. Supp. 2d 466,
491-92 (D. Del. 2012), aff’d sub nom. Magnetar Techs. Corp. v. Six Flags Theme Parks
Inc., C.A. No. 07-127-LPS-MPT, 2014 WL 545440 (D. Del. Feb. 7, 2014).
109

21

was not put in place.111
In a March 5, 2007 email from Frank DiGiovanni, an attorney at Connolly
Bove–plaintiffs’ original counsel, DiGiovanni wrote:
I will follow up with Darrin Ramsey of G&T and try to get the relevant BAE
documents. We have an obligation to preserve the docs if they are in
control of G&T.112
When writing to Ramsey, DiGiovanni advised:
In addition we need to make sure there is a “DOCUMENT HOLD” in place
at G&T such that any documents (including electronic documents) relating
to the above or otherwise relating to the case are preserved, and are not
destroyed, while this litigation is pending.113
DiGiovanni also wrote to the original counsel for defendants stating:
All three plaintiffs have been informed of their duty to preserve potentially
discoverable and relevant documents, including electronic documents.114
DiGiovanni identified Bruce Page as the custodian of discoverable documents for
G&T.115 Page forwarded documents to DiGiovanni on June 13, 2007 and promised to
forward more as he found them.116 Page declared there was no intentional destruction
and that, to the best of his knowledge, no documents pertaining to ongoing litigation
were destroyed.117
Based on the forgoing, the court rejects defendants’ contention that plaintiffs did
111

D.I. 472 at 8.
D.I. 280, Ex. 27-A. The court subsequently ordered that email to be produced
by plaintiffs. D.I. 312 at 38.
113
D.I. 284, Ex. B (June 12, 2007 email from DiGiovanni to Ramsey re “SBC v.
Six Flags–Collection of Documents”).
114
Id., Ex. S at 1 (Sept. 13, 2007 letter from DiGiovanni to Amr Aly and Terrell
Miller).
115
Id.
116
Id., Ex. C (June 13, 2007 letter from Page to DiGiovanni).
117
D.I. 285.
112

22

not act to preserve documents and determines that plaintiffs’ arguments concerning
discovery misconduct and spoliation do not support an award of fees.
Defendants allege indefiniteness is another circumstance that justifies granting
their renewed motion. The court granted defendants’ summary judgment that claim 3 of
the ‘125 patent was invalid as indefinite on the grounds there was a clear error in the
claim’s use of the term “tracks,” and it was unclear whether the proper construction was
“rails” or “wheels.”118 Although, in the Fee Award R&R, the court concluded earlier that
“[a] basic pre-trial investigation would not have confirmed that claim 3 was indefinite,”119
defendants disagree and contend a basic pre-suit patent infringement investigation
would have involved carefully reviewing the language of the single claim being asserted
and comparing it to the accused products.120 They argue such a review necessarily
would have revealed the error to a competent patent practitioner, as the term “tracks”
lacks an antecedent basis in the claim, a basic claim drafting error.121
Defendants also note not only did the plaintiffs not identify the error before filing
this action, they continued to assert the patent despite being unable to articulate a
colorable position in defense of the claim.122 According to defendants, plaintiffs sole
argument was that one of skill in the art would understand “tracks” to mean “rails.”123
Defendants argue that cannot be correct because since a “track” is two “rails” in the

118

D.I. 407 at 4-9.
D.I. 451 at 11.
120
D.I. 464 at 17.
121
Id.
122
Id. at 17-18.
123
Id. at 18.
119

23

patent,124 “tracks” is necessarily at least four “rails.”125 At the time, the governing test
was whether the error was susceptible to more than one plausible correction.126
Defendants identified two that were supported in the specification; plaintiffs did not
argue there was only one way the error could be fixed.127
The court is not persuaded that defendants’ argument on this issue supports their
motion. As noted above, the court previously determined:
Here, despite the subsequent invalidation of the ’125 patent, plaintiffs’
claims were not frivolous. Plaintiffs had reason to rely on the prima facie
evidence of the ’125 patent’s validity arising from the patent grant by the
U.S. Patent and Trademark Office (“PTO”). A basic pre-trial investigation
would not have confirmed that claim 3 was indefinite or the subject matter
of the ’125 patent obvious. Those findings of invalidity by the court
occurred after seven years of the litigation, following extensive discovery,
depositions, claim construction, and expert testimony. That defendants
were successful in their arguments does not constitute frivolousness.128
Although that portion of the Fee Award R&R analyzed whether plaintiffs’ claims were
frivolous, the determination they were not frivolous also supports a determination that
plaintiffs’ position on indefiniteness was not objectively unreasonable.
The court also stated:
Defendants also contend plaintiffs unreasonably refused to address
indefiniteness during the Markman proceedings. This argument is
misplaced. During claim construction, defendants filed an emergency
motion to add the new term “between” to the list of disputed terms, which
plaintiffs opposed. The motion was denied. The subsequent finding of
indefiniteness related to the term “tracks” not “between,” and was first
raised by defendants during case dispositive motions, long after the
Markman proceedings. In light of the denials of defendants’ emergency
124

‘125 patent, 2:23-34 (“a track having two parallel rails”).
D.I. 464 at 18.
126
Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348 (Fed. Cir. 2003).
127
D.I. 407 at 5-6, 9.
128
D.I. 451 at 11.
125

24

motion, plaintiffs’ opposition was not unreasonable. Plaintiffs also raised a
plausible argument that the term “tracks” in the ‘125 patent was a
correctable error as evidenced from the intrinsic evidence and the prior art
cited and relied on by defendants’ expert.129
The court remains unconvinced that plaintiffs’ positions with regard to
indefiniteness was objectively unreasonable.
Defendants also allege plaintiffs’ positions on the issue of obviousness support
granting their fee request. The court granted summary judgment that claim 3 of the ‘125
patent was invalid as obvious.130 Defendants maintain plaintiffs made objectively
unreasonable arguments in opposition to the motion.131
First, defendants contend the argument that the patent examiner was presumed
to have done his job was frivolous because the examiner did not have the prior art
defendants relied on in their motion for summary judgment.132 Defendants maintain for
that argument to make sense plaintiffs had to establish the prior art they were citing was
no different than the art that was before the examiner.133 Because plaintiffs’ expert did
not address the issue, their entire position was unsupported attorney argument.134
Second, defendants contend the argument there was no motivation to combine
because magnetic brakes could only slow, not stop a car was based on the false
premise that the combination would only be made if magnetic brakes could bring a car

129

Id. at 18 (footnotes omitted).
D.I. 407 at 29-38.
131
D.I. 464 at 18.
132
Id.
133
Id.
134
Id.; D.I. 472 at 8 (Plaintiffs “could not rebut certain obviousness arguments,
instead relying on the patent examiner rather than their own expert.”).
130

25

to a stop.135 Defendants state plaintiffs’ primary attack on the combination was explicitly
contradicted by the prior art itself, noting the court observed the Miller prior art
described using breaks to slow, rather than fully stop a car.136
In the Fee Award R&R, the court rejected defendants’ contention that plaintiffs
“unreasonably failed to address obviousness”:
In their opposition to defendants’ motion for summary judgment of
invalidity of the ‘125 patent, they argued Kirtley ignored the prosecution
history and relied on dramatically different prior art references including an
assembly with mechanical friction brakes. Since undermining Kirtley’s
expert opinion may have resulted in a denial of defendants’ motion,
plaintiffs’ approach was not unreasonable.137
The court also finds that plaintiffs’ arguments regarding the Miller reference, for
instance, do not support the award of attorneys’ fees. Here, that the court ultimately
rejected plaintiffs’ position does not support a finding that this case “stands out from
others.” The court, therefore, determines plaintiffs’ positions on obviousness were not
objectively unreasonable.
Defendants also contend it was objectively unreasonable to continue the litigation
after the “kiss of death” email. A February 24, 2008 e-mail correspondence between
Edward Pribonic, Magnetar’s President, and Paul Ryan, a former CEO of Acacia,
135

D.I. 464 at 19
Id. (citing D.I. 407 at 33).
137
D.I. 451 at 22-23 (footnote omitted). In response to defendants’ argument that
reliance on a presumption that the examiner did his job was frivolous, the court notes
the Federal Circuit has stated “[t]he clear and convincing evidence standard in the
litigation context stems from our suggestion that the party challenging a patent in court
bears the added burden of overcoming the deference that is due to a qualified
government agency presumed to have done its job.” Dome Patent L.P. v. Lee, 799
F.3d 1372, 1379 (Fed. Cir. 2015) (emphasis added) (internal quotation marks and
citation omitted). Although perhaps not the strongest argument to make, it was not
frivolous or objectively unreasonable.
136

26

Pribonic, confirms Acacia had informed him of witness recollections of the on-sale bar,
due to the possible display of a prototype prior to filing of the ‘125 patent, were the “‘kiss
of death’ to our [patent] portfolio and the litigation.”138 Earlier, in a December 12, 2007
email, David White of Acacia informed Pribonic that “[g]iven all of the developments in
this case, we have determined the enforcement of your patents is no longer
commercially reasonable or practicable.”139 SBC then terminated its agreement with
Magnetar and exited the case.140
Defendants maintain it was objectively unreasonable for plaintiff to continue to
litigate after they became aware of the “kiss of death” email, particularly as the evidence
purportedly showed they made no effort to get to the bottom of the issue.141 Moreover,
defendants argued plaintiffs should have at least timely divulged, in response to
pending discovery requests, that there were “‘witnesses’ that think there may have been
a prototype of the ‘125 patent displayed before patent filing.”142
The court determines continuing to litigate after the “kiss of death” e-mail was not
objectively unreasonable. That e-mail does not suggest Pribonic believed his patents
were invalid. In his e-mail, Pribonic complained to Acacia’s CEO about the handling of
the litigation.143 One of his complaints was that White dismissed the idea of SBC putting
the referenced “witnesses” under contract to “investigate the veracity” of the suggestion

138

D.I. 428, Ex. 2 at 3.
Id., Ex. 15. Defendants speculate that the “developments” White referenced
included the discovery of the on-sale bar. D.I. 427 at 5.
140
D.I. 428, Ex. 14; D.I. 86.
141
D.I. 464 at 19.
142
Id. at 19-20.
143
D.I. 428, Ex. 2.
139

27

that a prototype was displayed prior to the filing of the ‘125 patent.144 Also, Pribonic did
not originate the “kiss of death” statement; he was repeating what White said to him:
“White . . . stated that [the witnesses] recollection was the ‘kiss of death’ to our portfolio
and the litigation.”145 Pribonic stated “there is no documentation of any such event” and
relayed his belief in the strength of the patents: “I . . . have some pretty good
patents.”146 Moreover, the purported display of a prototype would implicate invalidity
due to a public use under 35 U.S.C. § 102(b), but, as plaintiffs point out, defendants
never even asserted a public use defense.147 Thus, the evidence does not support a
finding of objective unreasonableness on this issue.
The court has determined that none of the “additional factors” supports a finding
of objective unreasonableness. Even taking each of those factors into account in the
totality of the circumstances presented in defendants’ motion, the court disagrees they
provide further support for a fee award.
2.

Considerations of Compensation and Deterrence

In considering defendants’ current motion, this court was instructed to articulate
its conclusions as to whether any attorneys’ fees are warranted because certain of
plaintiffs’ litigation conduct is conduct that the court should be trying to deter, and
whether any attorneys’ fees are warranted because defendants are deserving of
compensation.148 Defendants maintain fees are warranted for both reasons.149
144

Id., Ex. 2 at 3.
Id., Ex. 2 at 3.
146
Id., Ex. 2 at 1, 3.
147
D.I. 468 at 14.
148
D.I. 457 at 7.
149
D.I. 464 at 20.
145

28

The need to compensate and deter arises when the accused party’s misconduct
unfairly prejudices the opposition and improperly increases litigation expense.150
Shifting attorneys’ fees as a sanction or a penalty for merely being unsuccessful is not
warranted. Courts will decline to assess attorneys’ fees against the losing party where
the record demonstrates both sides engaged in aggressive litigation conduct.151 A
plaintiff who is a hyper-litigious, non-practicing entity is not prevented from asserting
non-frivolous claims.152
The court finds attorneys’ fees are warranted to deter parties from continuing to
maintain claims based on objectively unreasonable positions. Here, awarding fees
where a party continues litigation when the evidence clearly demonstrates the invalidity
of the asserted patent, e.g., for improper inventorship, or continues to litigate while
failing to provide sufficient evidence of infringement, e.g., proceeding with a wholly
inadequate expert report purporting to show infringement, should deter other parties
from continuing to litigate in similar circumstances.
Likewise, the court finds attorneys’ fees are also warranted to compensate the
defendants in this case for the expenses in defending claims that should not have been
maintained. Plaintiffs’ continued litigation of the ‘125 patent after the Chung and Staehs
depositions revealed the inventorship issue with that patent improperly increased
defendants’ litigation expenses by forcing them to continue to defend against the
150

Lumen, 2014 WL 5389215, at *4 (noting the importance of deterring
“predatory strateg[ies]” and “threats to make the litigation expensive”).
151
See CreAgri, Inc. v. Pinnaclife, Inc., No. 11-CV-6635-LHK, 2014 WL 2508386,
at *13 (N.D. Cal. June 3, 2014) (denying § 285 motion).
152
Rates Tech. Inc. v. Broadvox Holding Co., LLC, 13 Civ. 0152 (SAS), 2014 WL
5023354, at *10 (S.D.N.Y. Oct. 7, 2014).
29

infringement claim and pursuing a ruling that the patent was invalid.
Lastly, this court was also instructed to determine whether, “in light of the ‘totality
of circumstances,’ after giving appropriate weight to all of the pertinent factors, is this
case as a whole “exceptional” under § 285 in light of the specific instances of behavior
deemed to be objectively unreasonable or otherwise improper?”153 The court
determines the case as a whole is not exceptional under § 285. No fees should be
awarded with regard to defendants’ litigation expenses related to the ‘237 patent as
plaintiffs’ litigation positions with respect to that patent were not alleged to have been
objectively unreasonable. Also, the court determined it was objectively unreasonable
for plaintiffs to continue asserting infringement of the ‘125 patent after the Chung and
Staehs depositions revealed the inventorship issue, defendants’ litigation expenses
related to the ‘125 patent prior to that time should not be awarded.
B.

Step Two

In step two, district courts analyze whether the amount of attorneys’ fees is
justified. District courts have “considerable discretion in determining the amount of
reasonable attorney[s’] fees under § 285 . . . [because of their] superior understanding
of the litigation and the desirability of avoiding frequent appellate review of what
essentially are factual matters.”154 The Federal Circuit requires that district courts be
“reasonably careful” in calculating the amount of attorneys’ fees, independently review
the prevailing party’s billing entries, and decline an award of fees and costs that were

153
154

D.I. 457 at 7 (emphasis in original).
Homeland, 581 F. App’x at 881.
30

unnecessary to prevail in a litigation.155
Defendants maintain they are entitled to their fees and expenses for the entire
case, as it would be inappropriate to parse based on issues.156 They calculate those
amounts as $1,789,460 in fees and $316,354 of expenses.157 In the alternative,
defendants suggest if an award is to be made for the portion of the case relating to the
‘125 patent subsequent to the Chung and Staehs depositions, their best estimate of
those amounts is $1,139,366 in fees and $234,283 of expenses.158
Plaintiffs contend any award should be severely limited in scope and amount
because nothing in the Fee Award R&R, or defendants’ papers, merits a finding that this
case as a whole is exceptional.159 They note the Fee Award R&R stated defendants
“are only entitled to reasonable attorneys’ [fees] and costs regarding the ‘125 patent
related to incorrect inventorship since July 29, 2011 (when Staehs and Chung’s
depositions occurred) and Hanlon’s expert report when issued.”160 Plaintiffs maintain,
therefore, if there is any award, it should be limited to fees on those issues only, and not
all fees from a certain time as argued by defendants.161
The court determined, above, defendants are only entitled to a fee award
subsequent to the Chung and Staehs depositions at the end of July 2011 that revealed
the inventorship issue. Defendants submitted a chart of their billing records from

155

Id.
D.I. 464 at 20.
157
Id.
158
Id.
159
D.I. 468 at 16.
160
Id. (quoting D.I. 451 at 26).
161
Id.
156

31

August 2011 until the end of the case.162 The chart includes the following columns:
Month; Total Fees; ‘125 Patent %; ‘125 Patent Fees; Total Expenses; ‘125 Patent
Expenses; and Activities. Plaintiffs do not argue defendants fees and expenses are
unreasonable, nor do they challenge the percentage of the activities defendants aver
was related to the ‘125 patent. Rather, they urge the court to limit any award to only
activities related to the issues of the incorrect inventorship and Hanlon’s expert report.
Despite the court’s statement regarding fees and expenses in the Fee Award
R&R, the court now concludes defendants are entitled to all of their fees and expenses
related to the ‘125 patent from August 2011 through the end of the case. The court
reaches this conclusion because defendants would have incurred none of those fees
and expenses had plaintiffs not acted objectively unreasonably in continuing to assert
the ‘125 patent after the inventorship issue became apparent. Consequently, the court
recommends defendants be awarded $1,139,366 in fees and $234,283 in expenses.
RECOMMENDED DISPOSITION
Consistent with the findings contained in the Report and Recommendation,
IT IS RECOMMENDED that defendants’ motion (D.I. 463) be GRANTED.

Pursuant to 28 U.S.C. § 636(b)(1)(B), FED. R. CIV. P. 2(b)(1), and D. DEL. LR
72.1, any objections to the Report and Recommendation shall be filed within fourteen
(14) days limited to ten (10) pages after being served with the same. Any response
shall be limited to ten (10) pages.

162

D.I. 465 (Moore Declaration), Ex 2.
32

The parties are directed to the Court’s Standing Order in Non-Pro Se Matters for
Objections Filed under FED. R. CIV. P. 72 dated November 16, 2009, a copy of which is
found on the Court’s website (www.ded.uscourts.gov.)

Dated: March 13, 2017

/s/ Mary Pat Thynge
Chief U.S. Magistrate Judge

33