Rembrandt Gaming Technologies, LP v. Boyd Gaming Corporation et al

Filing 245

ORDER denying Defendants' ECF Nos. 203 , 206 , 239 Motion and Renewed Motion for Attorney Fees. Signed by Judge Miranda M. Du on 3/31/2017. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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REMBRANDT GAMING TECHNOLOGIES, Case No. 2:12-cv-00775-MMD-GWF
LP,

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Plaintiff,

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ORDER

v.
BOYD GAMING CORPORATION, et al.,
Defendants.

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The Court issued a claim construction order construing two disputed terms in

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claim 32 of the United States Patent No. 6,641,477 (“the Patent’”). (ECF No. 185.)

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Plaintiff Rembrandt Gaming Technologies, LP (“Rembrandt”) acknowledged that the

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Court’s construction is dispositive of the infringement issue and moved for an entry of a

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Judgment of Non-Infringement, which the Court granted. (ECF Nos. 200, 233.)

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Rembrandt appealed, and the Federal Circuit Court of Appeals subsequently granted

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Rembrandt’s unopposed motion to dismiss. (ECF No. 241.) Defendants filed a motion for

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an award of attorneys’ fees and costs before Rembrandt’s appeal and filed a renewed

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motion after appeal was dismissed. (ECF Nos. 203, 206, 239.) The Court has reviewed

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Plaintiff’s responses and Defendants’ replies1. (ECF Nos. 211, 213, 216, 220, 242 and

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244.)

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briefs relating to Defendants’ initial motion were also filed under seal. (ECF
Nos. 206, 213, 220.)

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Defendants claim entitlement to their reasonable attorneys’ fees as the prevailing

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party under 35 U.S.C. § 285. Section 285 of the Patent Act allows for courts to award

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reasonable fees in “exceptional cases.” 35 U.S.C. § 285. In Octane Fitness, LLC v.

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ICON Health & Fitness, Inc. 134 S. Ct. 1749 11749, 1756-58 (2014), rejected the

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Federal Circuit’s construction of “exceptional cases” as overly rigid and too demanding.

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Instead, the court holds that “an ‘exceptional case’ 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

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

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the case was litigated.” Id. at 1756. It further urges “[d]istrict courts [to] determine

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whether a case is “exceptional” in the case-by-case exercise of their discretion,

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considering the totality of the circumstances.” Id. In addition, the Court rejected the

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Federal Circuit’s application of the heightened burden of proof of entitlement to fees by

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clear and convincing evidence. Id. at 175. The Court found that “Section 285 demands a

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simple discretionary inquiry; it imposes no specific evidentiary burden.” Id. The Court

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then noted that a preponderance of the evidence standard has always applied to patent-

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litigation. Id.

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Defendants argue that this case is “exceptional” because (1) Plaintiff gave a fact

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witness contingent interests in the outcome of this case in violation of Nevada’s Rules of

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Professional Conduct, (2) Plaintiff knew its patent is invalid because of the existing of the

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prior art but pursued this litigation anyways, and (3) Plaintiff took unreasonable position

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in this case to avoid the prior art. (ECF No. 203 at 6.) Plaintiff counters that the

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challenged compensation scheme is contained in a Patent Acquisition Agreement (“the

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Agreement”) and not an agreement to pay a witness directly to testify. (ECF No. 211 at

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20-23.) Plaintiff also argues that the Patent is not invalid and it did not take unreasonable

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positions in this case. (Id. at 11-17, 23-24.)

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Defendants rely on the compensation arrangement in the Agreement with Infinity

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Group, coupled with Plaintiff’s initial disclosures identifying certain principals from Infinity

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Group as fact witnesses, to argue that Plaintiff has agreed to pay fact witnesses to testify
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and the payment is contingent on the outcome of the case. However, the Agreement

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involves assignment of the Patent, not an agreement to pay fact witnesses to testify, and

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the witnesses identified included the inventor.

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As the Federal Circuit has observed, “[a] patent license agreement that binds the

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inventor to participate in subsequent litigation is very common. [] This sort of agreement

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simply assures the licensee that it will be able to defend the property in which it has

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purchased an interest.” Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1465 (Fed.

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Cir. 1998). In that case, the license agreement provides for the inventor (who the district

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court found to be the co-inventor) to receive future payments over time that are

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contingent on U.S. Surgical’s success in the patent infringement action and required the

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inventor to testify and to provide reasonable assistance in the case. The Federal Circuit

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found that a “witness’s pecuniary interest in the outcome of a case goes to the probative

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weight of the testimony, not its admissibility.” Id.

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Similarly here, the Agreement provides for Infinity Group to be compensated

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based on the outcome of a patent infringement lawsuit and requires cooperation from

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Infinity Group. The Agreement’s compensation arrangement is not so out of the ordinary

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to make this case exceptional.

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As for Defendants’ argument that Plaintiff knew the existence of the prior art

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renders the Patent invalid and therefore took unreasonable positions in this litigation, the

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Court agrees with Plaintiff that the Patent has not been found to be invalid. Plaintiff

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further points out that the Patent survived reexamination. Nor does the Court find that

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Plaintiff took unreasonable positions in the claim construction.

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For these reasons, Defendants’ motion and renewed motion for attorneys’ fees
(ECF No. 203, 206, 239) are denied.
DATED THIS 31st day of March 2017.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE
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