WI-LAN Inc. v. Alcatel-Lucent USA Inc. et al
RESPONSE in Opposition re 475 MOTION for Attorney Fees filed by WI-LAN Inc.. (Attachments: # 1 Exhibit A - July 9 PM Tr, # 2 Exhibit B - 2013-03-21 Pre-Trial Hearing Transcript, # 3 Exhibit C - July 10 AM Tr, # 4 Exhibit D - Lanning report excerpt, # 5 Exhibit E - Email from Justin Cohen to Ajeet Pai (June 23, 2013), # 6 Exhibit F - July 12 AM Tr, # 7 Text of Proposed Order)(Weaver, David)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
ALCATEL-LUCENT USA INC.; et al.,
Civil Action No. 6:10-cv-521-LED
Civil Action No. 6:13-cv-252-LED
CASES CONSOLIDATED FOR
JURY TRIAL DEMANDED
WI-LAN’S OPPOSITION TO DEFENDANTS’ MOTION
TO RECOVER ATTORNEYS’ FEES
TABLE OF CONTENTS
Introduction and Summary of Argument .............................................................................1
Standard For Attorneys’ Fees Under 35 U.S.C. § 285.........................................................3
Wi-LAN Did Not Engage in Vexatious Litigation Misconduct. .............................4
Defendants cannot prove litigation misconduct by pointing to the
expert testimony of Dr. Wells or Mr. Jarosz. ...............................................9
Defendants cannot rely on mischaracterizations about Wi-LAN’s
licensing business model to obtain fees in this case. ...................................4
Wi-LAN did not unnecessarily multiply the costs of this lawsuit. ............12
Wi-LAN’s Claims Are Not Frivolous....................................................................15
TABLE OF AUTHORITIES
Aspex Eyewear Inc. v. Clariti Eyewear, Inc.,
605 F.3d 1305 (Fed. Cir. 2010) ............................................................................................. 1
Badalamenti v. Dunham’s,
896 F.2d 1359 (Fed. Cir. 1990) ............................................................................................. 4
Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc.,
393 F.3d 1378 (Fed. Cir. 2005) ............................................................................... 3, 4, 6, 15
Browning v. Kramer,
931 F.2d 340 (5th Cir. 1991) ............................................................................................... 15
Daubert v. Merrell Dow Pharmaceuticals,
509 U.S. 579 (1993) .................................................................................................. 2, 10, 11
Eon-Net LP v. Flagstar Bancorp,
653 F.3d 1314 (Fed. Cir. 2011) ......................................................................................... 8, 9
FDIC v. Maxxam, Inc.,
523 F.3d 566 (5th Cir. 2008) ................................................................................................. 6
Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc.,
687 F.3d 1300 (Fed. Cir. 2012) ................................................................................... 4, 6, 15
i4i Limited Partnership v Microsoft Corp.,
670 F. Supp.2d 568 (E.D. Tex. 2009) (Davis, J.) .................................................................. 5
iLOR, LLC v. Google, Inc.,
631 F.3d 1372 (Fed. Cir. 2011) ............................................................................................. 3
IP Innovation L.L.C. v. Red Hat, Inc. et al.,
No. 2:07-cv-447-RRR, Dkt. 273 (E.D. Tex. Oct. 13, 2010) ............................................. 3, 4
Leviton Mfg. Co. v. Universal Sec. Instruments, Inc.,
606 F.3d 1353 (Fed. Cir. 2010) ........................................................................................... 13
MarcTec, LLC. v. Johnson & Johnson,
664 F.3d 907 (Fed. Cir. 2012) ......................................................................................... 9, 10
Markman v. Westview Instruments, Inc.,
517 U.S. 370 (1996) ........................................................................................................ 2, 11
Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersysteme GmbH,
603 F.3d 943 (Fed. Cir. 2010) ....................................................................................... 12, 15
Soverain Software LLC v. J.C. Penney Corp.,
899 F. Supp. 2d 574 (E.D. Tex. 2012) (Davis, J.) ............................................................... 11
VirnetX Inc. v. Apple Inc,
No. 6:10-CV-417, 2013 WL 692652 (E.D. Tex. Feb. 26, 2013) ........................................ 12
35 U.S.C. § 285 ........................................................................................................................... 1, 3
INTRODUCTION AND SUMMARY OF ARGUMENT
In their motion for fees, Defendants argue that this is an exceptional case under 35 U.S.C.
§ 285 because the jury found, after a week-long-trial, that the asserted claims of the patents in
suit were not infringed and invalid and that “Wi-LAN was entitled to no damages.” (Dkt. 475
(10-cv-521) (“Mtn.”) at 1; Dkt. 433 (13-cv-252) at 1.1) Defendants thus argue that the jury’s
verdict establishes “this case should never have been brought.” Id. Even assuming the jury’s
verdict could be sustained (and Wi-LAN contends it cannot),2 Defendants cite no case for the
proposition that an adverse jury verdict is enough to support an award of attorneys’ fees. To the
contrary, the Federal Circuit has made clear that “[d]efeat of a litigation position, even on
summary judgment, does not warrant an automatic finding that the suit was objectively
baseless.” Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305, 1315 (Fed. Cir. 2010). A
party who prevails only after a full jury trial on the merits cannot credibly argue, retrospectively
and based on the jury’s verdict, that the suit was frivolous; such a rule would turn the
“exceptional case” statute on its head. Yet that is the overarching thrust of Defendants’ motion.
Nor can Defendants reasonably argue that this is an exceptional case merely because WiLAN lawfully resorts to litigation to enforce its patents. Defendants’ references to other lawsuits
filed against some of the defendants in this case, especially lawsuits that are ongoing and that
have not been resolved, is not a basis for holding that Wi-LAN engaged in vexatious conduct in
Hereinafter, unless otherwise indicated, citations to docket numbers will be from Case
For the reasons explained in Wi-LAN’s Rule 50(b) Motion for Judgment as a Matter of
Law and Wi-LAN’s Motion for New Trial (Dkts. 481, 482), the jury’s findings of no
infringement and invalidity are not supported by legally sufficient evidence and are contrary to
the Court’s charge and the great weight and preponderance of the evidence. At a minimum, a
new trial on all issues, including damages, is warranted.
this case (or any other).3 Equally meritless is Defendants’ suggestion that Wi-LAN can be
sanctioned for offering expert testimony that (a) in the case of Dr. Wells, was never even
challenged as unreliable or inadmissible, or (b) in the case of Mr. Jarosz, was revised in
response to the Court’s rulings on Defendants’ Daubert motions and ultimately admitted into
evidence as revised. Nor can Defendants even come close to proving vexatious conduct by
relying on Wi-LAN’s narrowing of its claims (an event that occurs in virtually every patent case,
and that is actively encouraged by courts), or on a privilege dispute that resulted in Wi-LAN
producing additional redacted documents (many of which were duplicates of documents already
produced) that in no way proved critical to Defendants’ ability to defend against the claims
asserted by Wi-LAN. This is especially so where the core of the privilege dispute involved the
establishment of new precedent in the District regarding the production of redacted e-mail.
This is not a case where the patentee lost as a matter of law at the Markman, stage based
on an obviously unreasonable claim construction. To the contrary, Wi-LAN’s claim construction
positions were largely adopted by this Court. (See Dkt. 200.) Nor is this a case where Defendants
prevailed on summary judgment with respect to the asserted claims.4 Neither did Defendants
move to exclude (much less successfully exclude) the technical opinions proffered by Wi-LAN’s
expert, who explained in detail why the asserted claims are valid and infringed. And there simply
is no evidence, let alone clear and convincing evidence, that Wi-LAN acted with subjective bad
faith, or that this litigation was objectively baseless. Wi-LAN firmly believed that it would
Wi-LAN has licensed its patents to hundreds of licensees without litigation. But when
companies Wi-LAN believes infringe ignore good faith efforts to reach business agreements,
Wi-LAN is left with no recourse but litigation to protect its intellectual property.
Indeed, the only patent summary judgment motion was filed by two Defendants (HTC
and Alcatel-Lucent) and was directed at invalidity of a small number of claims. That motion was
denied as moot as the case was narrowed for trial. (Dkt. 419.) In contrast, Wi-LAN prevailed on
a summary judgment regarding Ericsson and Sony Mobile’s contract claims, eliminating a
complex issue from the case and avoiding the need for a jury trial on that matter. (Dkt. 410.)
prevail on the infringement, validity, and damages issued that were to be tried.
Defendants’ motion for fees should be denied.
STANDARD FOR ATTORNEYS’ FEES UNDER 35 U.S.C. § 285.
Section 285 provides: “The court in exceptional cases may award reasonable attorney
fees to the prevailing party.” 35 U.S.C. § 285. As the Federal Circuit has recognized, “sanctions
imposed under § 285 carry serious economic and reputational consequences for both litigants
and counsel,” and implicate a patent owner’s fundamental Constitutional right to bring litigation
to enforce its patent rights. iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1376 (Fed. Cir. 2011).
Thus, “[t]here is a presumption that the assertion of infringement of a duly granted patent is
made in good faith.” Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1382
(Fed. Cir. 2005). To overcome this presumption, an accused infringer who prevails must show
that the case is “exceptional” by clear and convincing evidence. Id. “A case may be deemed
exceptional when there has been some material inappropriate conduct related to the matter in
litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent,
misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R.
Civ. P. 11, or like infractions.” Id. at 1381 (emphasis added). But “[a]bsent misconduct in
conduct of the litigation or in securing the patent, sanctions may be imposed against the patentee
only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is
objectively baseless.” Id. Again, clear and convincing evidence is required. Id. at 1382.
As Judge Rader has observed, a case must be “truly unusual” to justify an award of
attorney fees. IP Innovation L.L.C. v. Red Hat, Inc. et al., No. 2:07-cv-447-RRR, Dkt. 273 at 2
(E.D. Tex. Oct. 13, 2010) (denying motion for fees and noting § 285 serves to “provide
discretion where it would be grossly unjust that the winner be left to bear the burden of his own
counsel which prevailing litigants normally bear” (quoting Badalamenti v. Dunham’s, 896 F.2d
1359, 1364 (Fed. Cir. 1990))).5 Even in the rare times where a court finds clear and convincing
evidence that a case is exceptional, “the decision to award attorney fees and the amount thereof
are within the district court’s sound discretion.” Brooks Furniture, 393 F.3d at 1382.
Defendants contend that this case exceptional on two grounds. First, Defendants argue
that Wi-LAN engaged in vexatious litigation misconduct. But the instances of “vexatious
litigation conduct” alleged by Defendants, even if proved, would fall woefully short of the sort of
the egregious misconduct necessary for an award of fees. Second, Defendants argue, without
support, that Wi-LAN’s lawsuit was frivolous. However, Defendants’ “evidence” of frivolity
amounts to little more than conclusory assertions that because the jury found in Defendants’
favor, “this case should never have been brought.” Mtn. at 1, 12–15. A favorable verdict for one
party after a hard-fought trial, however, is hardly a basis for sanctions, much less clear and
convincing evidence supporting the same. See IP Innovation, Dkt. 273, slip op. at 2–3.
Wi-LAN Did Not Engage in Vexatious Litigation Misconduct.
Defendants spend the bulk of their motion accusing Wi-LAN of litigation misconduct,
which the Federal Circuit defines as generally involving “unethical or unprofessional conduct by
a party or his attorneys during the course of adjudicative proceedings,” including “advancing
frivolous arguments during the course of the litigation or otherwise prolonging litigation in bad
faith.” Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1315–16 (Fed. Cir.
2012). Defendants cannot demonstrate any such litigation misconduct here.
Defendants cannot rely on mischaracterizations about Wi-LAN’s
licensing business model to obtain fees in this case.
The IP Innovation court denied the motion for fees where, as here, the jury returned a
verdict of non-infringement and invalidity following exclusion of certain of plaintiff’s damages
theories. See No. 2:07-cv-447-RRR, Dkt. 273 at 3; see also No. 2:07-cv-447-RRR, Dkt. 225.
Continuing their assault on Wi-LAN’s licensing business, Defendants first argue that
because Wi-LAN is a non-practicing entity, and because Wi-LAN was forced, in the case of
these particular Defendants, to file one or more lawsuits in an effort to protect its patent rights,
Wi-LAN should be declared a vexatious litigant who is automatically subject to an award of
attorneys’ fees in this case. There is no legal or factual basis for such a finding.
Defendants cannot obtain sanctions against Wi-LAN for being in the business of
licensing intellectual property—or for being a patent owner that files suit against a much larger
manufacturer to protect its rights and obtain reasonable damages for infringement.6 The law does
not relegate some patent owners to second-class citizenship, and Defendants’ attempts to do so
are improper. Indeed, in i4i Limited Partnership v Microsoft Corp., 670 F. Supp.2d 568 (E.D.
Tex. 2009) (Davis, J.), this Court chastised counsel for Microsoft for repeatedly suggesting that it
was somehow improper for a non-practicing patent owner to sue a defendant “not to protect a
valuable product” but “to try to get money out of them.” Id. at 595. The Court explained in i4i
that the “law recognizes no distinction among types of patent owners,” and that the
“characterization of a patent lawsuit as good or bad or as misuse of the patent laws based upon
the status of the patent owner is inappropriate.” Id. at 596. In view of established law,
Defendants cannot credibly argue that because Wi-LAN does not practice the patents in suit, WiLAN’s decision to sue was somehow inappropriate, let alone vexatious.7
Defendants also mischaracterize Wi-LAN’s overall business. While Wi-LAN does not
practice the patents-in-suit, it develops and licenses technology for wireless systems in addition
to intellectual property. (Ex. A, July 9 PM Tr. 81:13–17.)
Indeed, the evidence shows that both Alcatel-Lucent and Ericsson participate in patent
licensing businesses that are really no different from the business for which they now attack WiLAN. Ericsson has provided 2,000 patents to a non-practicing entity called “Unwired Planet” for
purposes of obtaining licensing revenue. (See, e.g., Ex. A, July 9 PM Tr. 182:12–183:22.) And
Alcatel-Lucent is the beneficiary of the Multimedia Patent Trust, which has repeatedly filed
lawsuits against practicing companies. (See, e.g., id. at 184:2–185:13.)
Defendants’ related and equally misguided attempt to argue that this Court should
sanction Wi-LAN for filing other lawsuits on different patents against some of these Defendants
likewise fails. In Highmark, Inc. v. Allcare Health Management Systems, Inc., 687 F.3d 1300
(Fed. Cir. 2012), one of the cases cited in Defendants’ motion, the Federal Circuit held that a
district court generally cannot sanction a party for conduct that occurs before another tribunal,
unless the party at issue “engages in bad-faith conduct which is in direct defiance of the
sanctioning court.” Id. at 1319 (quoting FDIC v. Maxxam, Inc., 523 F.3d 566, 591 (5th Cir.
2008)); see also Brooks Furniture, 393 F.3d at 1384 (fact that patent holder had sued others was
not indicative of bad faith). Defendants here offer no authority for the issuance of sanctions for
alleged conduct that occurs solely before another tribunal, much less for a party’s good-faith
efforts to enforce its patent rights in such other tribunal. Nor is there any evidence, only the bare
assertions of Defendants, that the other lawsuits filed by Wi-LAN are somehow baseless.8 The
fact that Wi-LAN has sued some of the Defendants on different patents than the ones involved
here between October 2012 and June 2013 is not grounds for holding that Wi-LAN has engaged
in vexatious litigation conduct in this case.9
Defendants continue to mischaracterize Wi-LAN’s core “licensing” policy as being based
Defendants complain that Wi-LAN did not put them on notice before filing suit. (Mtn.
at 3.) Leaving aside that there is no requirement that a patentee provide notice, Defendants fail to
mention that Wi-LAN had attempted to engage with Alcatel-Lucent and HTC for years
regarding other patents and its patent portfolio. (Ex. A, July 9 PM Tr. 157:7–20.) Having been
subject to several declaratory judgment actions, Wi-LAN chose to file suit to protect its rights.
(Id. at 179:5–181:8.) And as the Court is aware, Wi-LAN was required to file suit against
Ericsson and Sony Mobile under the PCR Agreement to begin the accrual of damages.
Although Defendants note that a Florida district court granted summary judgment in
favor of Ericsson on June 20, 2013, Defendants carefully fail to mention that the Florida court’s
ruling was based on the meaning of the PCR Agreement and is directly contrary to the ruling
made by this Court on the same issue as a matter of law. (Dkt. 410.) And, astonishingly,
Defendants argue that Wi-LAN has acted vexatiously by engaging in a Canadian arbitration
hearing with Ericsson, while failing to note that the parties agree that under the contract at issue
there the only forum available to address Ericsson’s claim is arbitration in Canada. (Dkt. 422.)
on serial patent lawsuits designed to extract license fees that bear no relation to actual damages.
But this allegation has no basis in fact. Mr. Parolin explained in detail how Wi-LAN’s licensing
business operates and noted repeatedly that Wi-LAN is flexible in dealing with those it believes
may be selling products that infringe Wi-LAN’s patents. (Ex. A, July 9 PM Tr. 81:18–82:9,
90:18–22.) Mr. Parolin also explained that many sophisticated smart phone manufacturers and
members of the 3GPP standards-setting body, including Nokia, Samsung, Motorola, Panasonic,
LG, Fujitsu, RIM, and Sharp, have taken licenses to Wi-LAN’s wireless portfolio, including the
patents in suit in this case. (Id. at 82:22–85:22.) In all, some seventy companies have entered into
licenses that include rights to the patents in suit. (Id. at 85:6–10, 23–25.)
Moreover, contrary to Defendants’ baseless assertion, the vast majority of the more than
270 companies who have taken licenses from Wi-LAN for one or more of its patents were not
the result of litigation at all (much less “serial” litigation). Mr. Parolin testified that 90% of the
licenses Wi-LAN has obtained were voluntary and “were done without litigation.” (Id. at 90:2–
14, 127:6–128:2.) Mr. Parolin testified that Wi-LAN does not file many lawsuits, or seek to
abuse the system, but only files suit when “we have to.” Id. at 86:12–14. He correctly observed
that, if Wi-LAN believes that a third party is “infringing our property rights,” and the third party
continues to disagree, then the only way Wi-LAN can enforce its rights is to file suit because
there are no “patent enforcement police” that can protect Wi-LAN’s patent rights. (Id. at 86:17–
24, 87:21–89:1.) And although Wi-LAN did, in past negotiations years ago, discuss with some
potential licensees (such as Airspan) the potential cost of litigation as one of many factors in the
negotiation (id. at 86:25–87:20, 140:1–141:20), Mr. Parolin explained that Wi-LAN stopped
including such costs in its presentations because “people already understood” how the cost of
litigation could affect a licensing decision. Id. at 143:13–24. In addition, Defendants fail to note
that Wi-LAN is not a special-purpose entity with no risk in litigation; to the contrary, it is a
publicly traded company that incurs substantial litigation expenses, including millions of dollars
in attorneys’ fees to pursue a case and substantial discovery expenses. In this case, for example,
such expenses included production of tens of thousands of Wi-LAN documents and costs
associated with taking Defendants’ depositions in foreign locations (including, for example,
England, Taiwan, and Sweden). For Defendants to suggest that Wi-LAN somehow relies upon
some imaginary asymmetry in litigation to induce meritless settlements is simply false.10
In their motion, Defendants seek to make much about a Wi-LAN document (DX-434)
that provided an illustrative example of how a timeline that leads to litigation might play out—
with Wi-LAN first seeking to negotiate with an accused infringer, then filing one or more
lawsuits if necessary. Ex. A, July 9 PM Tr. 153:17–155:14. However, Mr. Parolin explained that
if Wi-LAN believes a company “is infringing our property rights” for years and “they haven’t
really engaged with us and we feel strongly about it . . . our only recourse is to . . . put our money
where our mouth is and litigate on those patents.” Id. at 156:1–6. And it is rare that Wi-LAN has
had to file multiple lawsuits against one company. Mr. Parolin explained that the number of
accused infringers that Wi-LAN has had to sue more than once is very small—“maybe four or
five companies”—three of which were defendants in this case. Id. at 181:9–182:5. Thus, that WiLAN has had to file multiple suits to enforce its various patent rights is no basis to conclude that
Wi-LAN somehow engaged in vexatious litigation conduct.
This case bears no resemblance to Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed.
Cir. 2011), where the Federal Circuit affirmed an award of attorneys’ fees after the district court
Defendants’ position basically amounts to the untenable argument that unless potential
damages are greater than the cost of litigation—a cost that Wi-LAN must also bear in attempting
to secure a recovery—then Wi-LAN must permit the infringement to continue, despite the
estoppel and laches issues that Defendants no doubt would argue could result.
granted a summary judgment of no infringement for the defendant and concluded, among other
things, that the patent owner had (a) destroyed relevant documents prior to filing suit, (b) failed
to engage in the claim construction process in good faith, and (c) displayed a “lack of regard for
the judicial system” and the litigation process as a whole, including by responding in a snide
fashion to an interrogatory answer that “the skill in the art required is that sufficient to converse
meaningfully with [the named inventor].” Id. at 1324–26. The court in Eon went on to cite, as
evidence of subjective bad faith, settlement offers indicating that the patent owner’s case had
“indicia of extortion”—namely, that it had filed “nearly identical patent infringement complaints
against a plethora of diverse defendants, [and] . . . followed each filing with a demand for a quick
settlement at a price [ranging from $25,000 to $75,000] far lower than the cost to defend the
litigation.” Id. at 1326–27. But there is no evidence (much less clear and convincing evidence)
that Wi-LAN followed any such pattern in filing this lawsuit—or any other—against these
Defendants. The damages that Wi-LAN sought against these Defendants, which were orders of
magnitude above the “nuisance value” settlements at issue in Eon, were directly tied to the extent
of each defendant’s use of the patents-in-suit. Indeed, Wi-LAN’s conduct is directly contrary to
Defendants’ attempt to suggest that Wi-LAN is in any way similar to the Eon plaintiff.
Defendants cannot prove litigation misconduct by pointing to the
expert testimony of Dr. Wells or Mr. Jarosz.
Remarkably, Defendants further argue that this Court should award fees because, in their
view, “Wi-LAN relied on the untenable testimony of experts who were not credible.” (Mtn. at 5.)
But Defendants cite no authority for their novel theory: namely, that after a full trial, in the face
of competing expert testimony, a court can sanction a litigant—plaintiff or defendant—for
testimony that the prevailing party claims, in hindsight, was “unbelievable.” (Id. at 10.)
In MarcTec, LLC. v. Johnson & Johnson, 664 F.3d 907 (Fed. Cir. 2012), the Federal
Circuit affirmed an award of attorneys’ fees, based in part on litigation misconduct in which the
plaintiff “introduced and relied on expert testimony that failed to meet even minimal standards of
reliability.” Id. at 920.11 But there, the Federal Circuit found that the testimony was “sufficiently
egregious” to rise to the level of litigation misconduct because of extreme facts showing
unreliability of the opinion. Id.12 The Federal Circuit recognized, however, that “exclusion of
expert testimony under Daubert does not automatically trigger a finding of litigation misconduct,
and in most cases likely would not do so.” Id. (emphasis added).
In this case, Defendants never challenged Dr. Wells’ opinions—either on infringement or
on validity—on the grounds that they were unreliable or irrelevant under Daubert. Having not
even challenged the reliability of Dr. Wells’ opinions, there is no basis for Defendants to now
argue, in essence, that because the jury allegedly believed the testimony from their technical
experts (which, in fact, was contrary to the Court’s claim construction), this case is exceptional.
Such “logic” would turn every patent infringement case that is tried to verdict with competing
experts into an exceptional case. And contrary to Defendants’ baseless assertions, Dr. Wells did
not attempt to circumvent the Court’s claim constructions. Rather, just the opposite occurred. As
explained in Wi-LAN’s post-verdict motions for JMOL and for new trial, it was Defendants’
technical experts who changed the Court’s claim construction to require a completely separate
overlay code and a completely separate orthogonal code, when this Court rejected that
The misconduct at issue in MarcTec also included “misrepresent[ing] both the law of
claim construction and the constructions ultimately adopted by the court.” 664 F.3d at 920. The
Federal Circuit held that the plaintiff’s misrepresentation of the law, “when coupled with [the
plaintiff’s] decision to advance frivolous and unsupported allegations of infringement premised
on mischaracterizations of the claim constructions adopted by the trial court” was sufficient to
support the district court’s finding of litigation misconduct. Id.
For example, the plaintiff’s expert’s theory was so farfetched that it relied on spraying
droplets “at an unrealistic speed, approaching the speed of sound (and unrelated to anything that
happens in the [defendant’s] coating process)” to “increase the temperature of the droplets—in
ways that cannot be measured—for 5 millionths of a second.” Id. at 913.
interpretation in its Markman ruling. (See Dkt. 481 at 2–5; Dkt. 200 at 13–14.) Defendants
cannot transform Dr. Wells’ unchallenged expert opinions into litigation misconduct.
Defendants fare no better in their attack on Mr. Jarosz. Although Defendants were
successful in challenging, in part, the expert testimony of Mr. Jarosz, the Court at no point struck
or excluded Mr. Jarosz’s damages opinions in toto. In its first Daubert ruling, the Court had two
criticisms of Mr. Jarosz’s damages opinions that are relevant for present purposes. First, the
Court held that Mr. Jarosz could not, under the EMVR, use running royalty license agreements in
which royalties were computed as a percentage of base station revenues to compute implied
lump sum royalties for the base station defendants. (Dkt. 421 at 6.) In his supplemental report,
Mr. Jarosz eliminated that part of his analysis. Second, the Court held that Mr. Jarosz needed to
perform an explicit apportionment of licenses he considered “to account for the difference
between the worldwide portfolio licenses and a license to the patents-in-suit for U.S. sales of
Defendants’ accused products.” (Dkt. 421 at 7.) In his supplemental report, Mr. Jarosz sought to
make the apportionment through two quantitative calculations.
Despite Mr. Jarosz’s scrupulous attempt to respond to the Court’s criticism, and his
careful testimony at trial to avoid matters ruled upon, Defendants baselessly claim that Mr.
Jarosz “[f]lout[ed]” the Court’s instructions. (Mtn. at 5.) He did no such thing. He attempted to
make all of the adjustments called for by the Court’s first Daubert ruling. The only part of Mr.
Jarosz’s supplemental opinion excluded by the Court was his 92% adjustment to account for the
U.S. versus worldwide nature of the licenses. But “[l]osing on an evidentiary ruling is not a basis
for finding a case exceptional.” Soverain Software LLC v. J.C. Penney Corp., 899 F. Supp. 2d
574, 586 (E.D. Tex. 2012) (Davis, J.). Moreover, even though the Court excluded this one aspect
of Mr. Jarosz’s opinion, the Court permitted him to testify at trial. Mr. Jarosz properly testified
about the contours for the hypothetical negotiations, the licenses and data he considered, and
about the adjustments he made for the specific circumstances of each defendant. (See Ex. C, July
10 AM Tr. 19:24–109:2.) Consistent with the Court’s ruling, the only adjustment that Mr. Jarosz
did not make to his figures at trial was the final adjustment to account for the U.S. versus
worldwide apportionment. (Id. at 108:10–109:2.) However, since there was other record
evidence from which the jury could have made the necessary apportionment (including Mr.
Parolin’s testimony), Mr. Jarosz’s testimony was not even improper, let alone the sort of
egregious misconduct that would warrant a finding that this is an exceptional case.
Wi-LAN did not unnecessarily multiply the costs of this lawsuit.
Defendants next complain that Wi-LAN engaged in litigation misconduct by narrowing
its claims in connection with the submission of its expert report. Mtn. at 10. Again, however,
Defendants cite no authority for the remarkable argument that a party who narrows its claims (or
defenses) is guilty of misconduct; indeed, such a rule would encourage parties to wastefully
maintain every claim. In fact, a “decision by a party to narrow its case for presentation to a jury
does not generally suggest manipulation of the litigation process.” Medtronic Navigation, Inc. v.
BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943, 959 (Fed. Cir. 2010). As this
Court well knows, parties are encouraged to narrow their claims and defenses, and in VirnetX
Inc. v. Apple Inc, No. 6:10-CV-417, 2013 WL 692652 (E.D. Tex. Feb. 26, 2013), this Court
declined to award fees to a prevailing plaintiff even where the defendant allegedly “concealed its
primary infringement defense until the eve of trial.” Id. at *24 (emphasis added). Defendants
cannot seriously argue that Wi-LAN engaged in misconduct by narrowing the asserted claims at
the expert report deadline—more than six months before trial was then set to begin.13
Defendants complain that Wi-LAN narrowed its asserted claims at the expert report
deadline, but fail to mention that it was not until two days before the pre-trial conference that
Defendants also suggest, as a last ditch effort, that the privilege dispute resulting from
HTC’s motion to compel warrants sanctions against Wi-LAN. Of course, this Court declined to
award sanctions sought by HTC at the time the privilege dispute was ongoing, and recognized in
its March 15, 2013 Order that it was resolving an open question concerning privilege redactions.
(Dkt. 362 at 5 & n.1 (collecting conflicting authorities and stating that “[t]here is no real
consensus in the case law on how to treat e-mail strings that contain both privileged and nonprivileged communications”)); see also Leviton Mfg. Co. v. Universal Sec. Instruments, Inc., 606
F.3d 1353, 1365 (Fed. Cir. 2010) (clear error in finding vexatious litigation where litigant’s
objections were not frivolous). At HTC’s request (from a motion also not joined by the other
Defendants), however, the Court granted a three month continuance to guard against any
possible prejudice to Defendants. (Dkt. 382.)
Because of the cumulative nature of the materials in dispute, Defendants have not in their
motion for fees identified a single “critical” document that Wi-LAN supposedly withheld on
Defendants agreed to narrow their prior art for the asserted claims from 16 references in nearly
40 configurations, to 8 references in 18 configurations. Compare Ex. D (Lanning Expert Rpt.
143–162 (listing prior art)), with Ex. E (8 references). Defendants then presented only four
references at trial. (See Ex. F, July 12 AM Tr. 14:15–75:22.) Defendants’ own eve-of-trial
narrowing belies their contention that Wi-LAN’s much earlier narrowing constitutes misconduct.
Likewise, HTC and Sony Mobile’s strained attempt to suggest misconduct because WiLAN’s infringement expert offered an opinion on only the claims that Wi-LAN was still
asserting borders on the absurd. (Mtn. at 10.) Obviously, its expert had no reason to discuss or
opine on claims no longer in the litigation when he later served his report. In addition, HTC and
Sony Mobile’s complaint of prejudice from Wi-LAN’s narrowing of claims as to them does not
withstand scrutiny. First, because the elements of the claims of the ’819 patent that were
dropped as to HTC and Sony Mobile are largely similar (and in many cases identical) to those
found in the asserted claims of ’211 patent, HTC and Sony Mobile’s validity expert—who was
shared by all Defendants—was required to conduct his basic analysis regardless of Wi-LAN’s
narrowed ’819 claims. Second, as evidenced by the nearly identical invalidity charts attached to
Defendants’ invalidity report, the bulk of the analysis in that report was performed much earlier,
at the time of Defendants’ PR 3-3 invalidity contentions. That analysis clearly was not affected
by Wi-LAN’s later narrowing of claims. HTC and Sony Mobile’s complaint thus rings hollow.
privilege grounds.14 Thousands of pages of the approximately 8,000 documents produced were
cumulative of, or duplicates of, previously produced documents. (See Ex. B at 17–18.)
Moreover, Defendants cannot credibly dispute that Wi-LAN worked diligently and cooperatively
to advance the case to trial, including promptly attempting to schedule any additional discovery
Defendants felt they required following the Court’s ruling. That the whole dispute was collateral
is evidenced by the fact that, despite their demands for additional depositions, Defendants never
even responded to Wi-LAN’s offers of its witness for additional discovery, and in fact, took no
discovery following Wi-LAN’s production. Moreover, from the documents produced pursuant to
the March 15 Order, Defendants listed fewer than 20 potential trial exhibits—out of a list
containing over 430 exhibits—and actually introduced only 2 such exhibits at trial.
In addition, the expenses that were incurred as a result of the privilege dispute fell
overwhelmingly on Wi-LAN, not Defendants. When the Court granted HTC’s motion to compel,
Wi-LAN effectively had fewer than 72 hours to re-review an entire privilege log, redact
thousands of documents, export documents for production, and prepare a new privilege log. (See
Dkt. 395 at 3, 8–10.) Thirty attorneys amassed more than 500 hours complying with the Court’s
order. (See Dkt. 385, Ex. J, at 1.) When Wi-LAN recognized shortly thereafter that some clearly
privileged documents had been inadvertently produced, it sent a letter seeking to claw back the
documents and laying out a reasonable solution to proceed to trial in an orderly manner. (See,
e.g., Dkt. 395, Ex. F.) But because Defendants refused to honor the Court’s discovery order and
return the inadvertently produced documents, it was Wi-LAN that had to incur substantial
As just one clear example to the contrary, the April 2009 accounting memo
prominently featured in HTC’s Motion for Continuance (No. 6:13-CV-252, Dkt. 373 at 5) as a
supposed “smoking gun” had been previously produced multiple times and, in fact, had already
been considered and relied upon by Defendants’ experts. (See Dkt. 395 at 13 & n.7.) Yet HTC
has never corrected its misrepresentation to the Court that this document was not produced.
expenses in its successful effort to claw them back. (See Dkt. 404.)
For all of the reasons explained above, Defendants are not entitled to recover any fees for
any so-called litigation misconduct.15
Wi-LAN’s Claims Are Not Frivolous.
Finally, Defendants argue in passing that they are entitled to fees on the ground that WiLAN’s claims were “frivolous” (Mtn. at 12–15), which requires clear and convincing evidence
that the litigation was (1) not only brought in subjective bad faith, but also (2) objectively
baseless. Brooks Furniture, 393 F.3d at 1381–82. As supposed “proof” of these elements
however, Defendants merely point to the same alleged misconduct and expert testimony cited
above. (Mtn. at 13.) But for the same reasons that the conduct was not improper and does not rise
to the level of sanctionable misconduct, it simply does not constitute clear and convincing
evidence that this litigation was brought in subjective bad faith, nor objectively baseless.
The Federal Circuit has explained that a party is entitled to rely on the course of
proceedings leading up to trial and verdict, including rulings on motions that test the legal
sufficiency of a party’s claims, “as an indication that the party’s claims were objectively
reasonable and suitable for resolution at trial.” Medtronic Navigation, 603 F.3d at 954. In other
words, if a case has “sufficient merit to get to trial”—as this case clearly did—it cannot fairly be
considered frivolous. Id. (quoting Browning v. Kramer, 931 F.2d 340, 345 (5th Cir. 1991)).
Defendants’ motion for attorneys’ fees should be denied.
In any event, it bears noting that a “finding of exceptionality based on litigation
misconduct . . . usually does not support a full award of attorneys’ fees,” as Defendants seek
here. Highmark, 687 F.3d at 1316. Instead, any fee awarded for litigation misconduct “must bear
some relation to the extent of the misconduct.” Id. Defendants do not even attempt to point to
what portion of their alleged fees incurred in a two-and-a-half year litigation would be
attributable to any particular alleged litigation misconduct by Wi-LAN.
Dated: August 16, 2013
By: /s/ David B. Weaver
David B. Weaver (TX Bar 00798576)
Avelyn M. Ross (TX Bar 24027817)
Ajeet P. Pai (TX Bar 24060376)
Syed K. Fareed (TX Bar 24065216)
Jeffrey T. Han (TX Bar 24069870)
Seth A. Lindner (TX Bar 24078862)
VINSON & ELKINS LLP
2801 Via Fortuna, Suite 100
Austin, TX 78746
Tel: (512) 542-8400
Fax: (512) 236-3476
Steve R. Borgman (TX Bar 02670300)
Gwendolyn Johnson Samora
(TX Bar 00784899)
VINSON & ELKINS LLP
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
Tel: (713) 758-2222
Fax: (713) 758-2346
Johnny Ward (TX Bar No. 00794818)
Wesley Hill (TX Bar No. 24032294)
Claire Abernathy Henry
(TX Bar No. 24053063)
Ward & Smith Law Firm
P.O. Box 1231
1127 Judson Rd., Ste. 220
Longview, TX 75606-1231
Tel: (903) 757-6400
Fax: (903) 757-2323
Attorneys for Plaintiff Wi-LAN Inc.
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was filed electronically in
compliance with Local Rule CV-5(a). As such, this document was served on all counsel who are
deemed to have consented to electronic service on this the 16th day of August, 2013.
/s/ David B. Weaver
David B. Weaver
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