Route1 Inc. v. AirWatch LLC

Filing 334

REDACTED version of 312 MEMORANDUM OPINION. Signed by Judge Kent A. Jordan on 4/23/2020. (lak)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
)
)
Plaintiff /Counterclaim )
)
Defendant,
)
)
v.
)
)
AIRWATCH LLC,
)
Defendant/Counterclaim )
)
Plaintiff.
ROUTE1 INC.,

Civil Action No. 17-cv-331 (KAJ)
REDACTED PUBLIC VERSION

_______________
MEMORANDUM OPINION
_______________
Dominick T. Gattuso, Heyman Enerio Gattuso & Hirzel LLP, 300 Delaware Avenue,
Ste. 200, Wilmington, DE 19801, Counsel for Plaintiff and Counterclaim Defendant
Of Counsel: Michael J. Garvin, Marcel C. Duhamel, Aaron M. Williams, Vorys,
Sater, Seymour and Pease, LLP, 200 Public Square, Ste. 1400,
Cleveland, OH 44114
William H. Oldach III, Vorys, Sater, Seymour and Pease, LLP, 1909
K Street N.W., 9th Fl., Washington, DC 20006
Rex M. Miller, II, Vorys, Sater, Seymour and Pease, LLP, 52 E. Gay
Street, Columbus, OH 43215
Elena C. Norman, Anne Shea Gaza, Samantha G. Wilson, Young Conaway Stargatt &
Taylor, LLP, 1000 North King Street, Wilmington, DE 198011, Counsel for Defendant
and Counterclaim Plaintiff
Of Counsel: Michael A. Jacobs, Richard S.J. Hung, Christopher J. Wiener,
Morrison & Foerster LLP, 425 Market Street, San Francisco, CA
94105
Bita Rahebi, Morrison & Foerster LLP, 707 Wilshire Boulevard, Los
Angeles, CA 90017
_______________
March 31, 2020
Wilmington, Delaware

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s/ Kent A. Jordan
JORDAN, Circuit Judge sitting by designation.
This suit by Route1 Inc. (“Route1”) against AirWatch LLC (“AirWatch”) asserted
infringement of U.S. Patent No. 7,814,216 (the “’216 patent”). After I construed
disputed claim language, I granted summary judgment in favor of AirWatch on the
question of infringement. Though I denied summary judgment on AirWatch’s invalidity
counterclaim, the parties subsequently agreed to the dismissal of that counterclaim. (D.I.
274.) Presently before me is AirWatch’s motion for attorneys’ fees (D.I. 289), which I
will grant in part.
I.

BACKGROUND
The parties are well aware of the background of this case, so I recite only those

facts relevant to the motion at hand. As I explained in my August 7, 2019 memorandum
opinion disposing of the infringement claim, “the technology described in the ’216 patent
is directed to a means for remote computing access, ‘enabling peer-to-peer
communication’ between a host computer and remote device over a communication
network. (’216 Pat. 1:7-10.) The ’216 patent claims a method by which users of ‘remote
devices’ can connect to ‘hosts’ through an interfacing component, a ‘controller.’ (’216
Pat. 1:46-56.)” (D.I. 274 at 2-3.)
Relevant to this motion and the motion for summary judgment that I granted is
Step 1g, or the “instruction limitation,” of claim 1 of the patent. That limitation states
that the controller sends “an instruction from the controller to the selected host, to
establish a connection to the remote device.” (’216 Pat. 10:19-20.) From the filing of the
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complaint until the motions for summary judgment were filed, Route 1 alleged several
different infringement theories. The ones it finally settled on involved a remote-initiated
connection to a host computer. (D.I. 274 at 17-18.) In support of those theories, Route1
served an expert report opining that the instruction limitation “may include a hostinitiated connection, or a remote-initiated and host-accepted connection.” (D.I. 218-3 ¶
31.) Because the parties had conflicting views about the construction of the instruction
limitation, I heard argument and considered the parties’ briefing on that issue.
Ultimately, I rejected Route1’s proposed construction and concluded that the
instruction limitation “encompasses only host-initiated, not remote-initiated
connections.” (D.I. 274 at 9.) I based my conclusion on the claim language, the
specification, and the prosecution history of the ’216 patent. With respect to the claim
language, I said that Route1’s construction “that an instruction sent from the controller to
the host somehow instructs the remote to establish the connection, when the remote has
received no instruction” was “illogical[.]” (Id. at 11.) I then noted language from the
specification stating that the “host … send[s] a handshake to [the] remote” (’216 Pat. 7:57), and the “remote … receives the handshake from [the] host” (’216 Pat. 7:14-15). With
respect to the prosecution history, I stated that “Route1 cannot have it both ways. It is
improper to secure issuance of claims by arguing that they are limited to host-initiated
connections, only to turn around and argue in litigation that those claims are not so
limited and to assert broad infringement theories.” (Id. at 15.) Based on my construction
of the instruction limitation, I granted summary judgment against Route1 because its

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theories of infringement relied on remote-initiated, not host-initiated, connections. (Id. at
17-18.)
As detailed in my opinion granting summary judgment against Route1, I believe
that, particularly by the time claim construction issues were being settled, Route1 had a
weak case for infringement, and I am particularly troubled by the contradictory positions
Route1 ultimately took at the PTO and before me. Route1 said one thing to secure
issuance of the claims and then, later, said the reverse in litigation. Route1 secured
patentability by arguing that, “unlike the ’216 parent, [the prior art reference] ‘Kiwimagi
teaches that the remote takes the initiative[.]’” (Id. at 15.) Then, in litigation, Route1
argued the opposite, saying that the “prosecution says nothing about how the host
establishes a connection to the remote, nor does the prosecution state—or suggest—that
the host must somehow initiate a connection to the remote.”
II.

LEGAL STANDARD
Under § 285 of title 35 of the United States Code, “[t]he court in exceptional cases

may award reasonable attorney fees to the prevailing party.” In Octane Fitness, LLC v.
ICON Health & Fitness, Inc., 572 U.S. 545 (2014), the Supreme Court rejected the view
that an “exceptional case” finding required that the losing litigant have either engaged in
“some material inappropriate conduct related to the matter in litigation” or that “the
litigation is brought in subjective bad faith, and … the litigation is objectively baseless.”
572 U.S. at 550. The Court explained that “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
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unreasonable manner in which the case was litigated. District courts may determine
whether a case is ‘exceptional’ in the case-by-case exercise of their discretion,
considering the totality of the circumstances.” Id. at 554. The Supreme Court also
clarified that the standard of proof to demonstrate that a case is “exceptional” is a
preponderance of the evidence. Id. at 554, 557.
There are several ways in which litigants have shown that a case is
“exceptional[.]” Those ways include:
(1) establishing that the plaintiff failed to conduct an adequate pre-filing
investigation or to exercise due diligence before filing suit; (2) showing the
plaintiff should have known its claim was meritless and/or lacked
substantive strength; (3) evidencing the plaintiff initiated litigation to
extract settlements from defendants who want to avoid costly litigation;
(4) showing a party proceeded in bad faith; and (5) litigation misconduct.
Bayer CropScience AG v. Dow AgroSciences LLC, No. 12-256(RMB.JS), 2015 WL
108415, at *3 (D. Del. 2015) (citations omitted).
The Federal Circuit has explained that the “purpose behind § 285 is to prevent a
party from suffering a ‘gross injustice’” and that “[t]he exercise of discretion in favor of
awarding attorney fees should be bottomed upon a finding of unfairness or bad faith in
the conduct of the losing party, or some other equitable consideration ... which makes it
grossly unjust that the winner ... be left to bear the burden of his own counsel
fees.” Checkpoint Sys., Inc. v. All–Tag Security S.A., 858 F.3d 1371, 1376 (Fed. Cir.
2017) (alterations and quotations omitted). A court should not award fees “as a penalty
for failure to win a patent infringement suit.” Octane Fitness, 572 U.S. at 549.

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III.

DISCUSSION
In light of the totality of the circumstances, Route1’s conduct over the final course

of this case qualifies, in my judgment, as exceptional.
First, Route1’s proposed construction of the instruction limitation was
contradicted by the claim language and specification of the instruction limitation.
Although “a strong or even correct litigation position is not the standard by which we
assess exceptionality,” Stone Basket Innovations, LLC v. Cook Med. LLC, 892 F.3d 1175,
1180 (Fed. Cir. 2018), Route1’s construction was more than just weak. It was illogical,
as I described in my order on granting summary judgment against Route1. (D.I. 274 at
11.)
Although that illogical claim construction might be insufficient alone to establish
that this is an exceptional case, what does tip Route1’s case into the exceptional category
is the contradictory positions it took before the PTO in prosecution and then before me in
litigation. As explained in the summary judgment opinion, Route1 secured patentability
by arguing that, “unlike the ’216 parent, [the prior art reference] ‘Kiwimagi teaches that
the remote takes the initiative[.]’” (Id. at 15.) Then, in litigation, Route1 made the
“remarkable argument” that the “prosecution says nothing about how the host establishes
a connection to the remote, nor does the prosecution state—or suggest—that the host
must somehow initiate a connection to the remote.” (Id. at 14-15 (internal quotation
marks and citations omitted).) Litigants should be deterred from arguing one thing to
secure issuance of the claims and then turning around and arguing a position clearly to

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the contrary in litigation. Accordingly, when reviewing the totality of the circumstances
in this case, I am persuaded that this case warrants the label “exceptional.”
Route1 also argues that AirWatch’s fee request is unsupported because (1)
AirWatch relies on surveys to establish the reasonableness of its attorneys’ rates, and (2)
AirWatch submitted fully redacted time entries. Although I disagree as to the first point,
I agree as to the second and so will reserve decision as to the amount to be awarded.
Route1 argues that AirWatch has not established that its attorneys’ rates are
reasonable. AirWatch relies on the 2019 American Intellectual Property Law Association
Economic Survey Report (“AIPLA Report”) and the Valeo 2018 IP Litigation Hourly
Report (“Valeo Report”) to demonstrate that its attorneys’ rates were reasonable.
Reliance on those surveys has been held to be an appropriate way to demonstrate that the
attorneys’ rates “are in line with those prevailing in the community for similar services of
lawyers of reasonably comparable skill and reputation.” View Eng’g, Inc. v. Robotic
Vision Sys., Inc., 208 F.3d 981, 987 (Fed. Cir. 2000). The AIPLA Report provides that,
for partners in the “Other East” region, which includes Delaware, the median rate is $461
and the 90th percentile is $691; for firms with more than 150 intellectual property lawyers
and agents, the median rate for partners is $467 and the 75th percentile is $768. As for
associates, the AIPLA Report provides that in the “Other East” region, the median rate is
$300 and the 75th percentile is $343. The Valeo Report provides rates for the AmLaw 50
firms with intellectual property practices. According to that report, the 2018 hourly rate
was $1,145 for senior partners, $979 for partners, $905 for counsel, $729 for senior
associates, and $642 for associates.
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As to the rates charged by Morrison & Forester, I find that the rates charged by
partners are reasonable, whereas the rates charged by associates are not. Morrison &

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Forester charged a flat hourly rate for all attorneys of $695 in 2018 and $722 in 2019.
That is a reasonable rate for partners and counsel based on the AIPLA Report and the
Valeo Report. As for the associates at that firm, an hourly rate of $500 is more
reasonable in this district. I find that the paralegal rates are reasonable.
As to the rates charged by WilmerHale, I find the rates unreasonable for this
district. I find that a rate of $691 for partners, the high end of the AIPLA Report, is
reasonable. And again, an hourly rate for associates at that firm of $500 is reasonable in
this district.
I find that the rates charged by Young Conway are reasonable. The Young

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Conway partner charged a rate of $562.50 from April 2017 to April 2019 and a rate of

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$590.60 from April 2019 to August 2019. The Young Conway associate charged a rate

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of $328.50 from April 2017 to August 2019 and a rate of $344.90 since August 2019.
Route1 objected that to the documentation AirWatch submitted in support of its

request for attorneys’ fees. In support of its motion, AirWatch filed attorney declarations
explaining the timekeepers for whom AirWatch seeks to recover fees and their roles in
the case. Attached to the declarations are copies of the invoices that include the date, the
timekeeper, the hours billed, and the amount billed, but the services performed are
redacted. AirWatch offered to submit unredacted copies of the invoices for in camera
review by the Court upon request. That is insufficient to demonstrate that the requested
fees are reasonable. Route1 should be given an opportunity to appraise the
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reasonableness of the amount of fees AirWatch requests and present the Court with any
legitimate objections to AirWatch’s fee request. In order to afford Route1 that
opportunity, AirWatch shall turn over to Route1 billing statements that contain sufficient
information for Route1 to determine if it has any objections to AirWatch’s fee request.
AirWatch must submit documentation in support of its request within 14 days, with
Route1 having 14 days to comment thereon, and I will then determine whether the fees
requested are reasonable and to what extent they should be awarded. The burden of proof
is, of course, on those seeking fees.
IV.

CONCLUSION
For the foregoing reasons, AirWatch’s motion for attorneys’ fees (D.I. 289) is

granted in part. I reserve decision, however, on the amount of fees to be awarded.

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