Uniloc USA, Inc. et al v. Blackboard, Inc.

Filing 50

ORDER DENYING 17 Motion for Attorney Fees; DENYING 17 Motion to Stay Case; GRANTING 18 Motion for Leave to File Sealed Document; DISMISSING 22 Motion for Extension of Time to File Response/Reply. Signed by Judge Lee Yeakel. (dl)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS

SE

1

AUSTIN DIVISION
,

UNILOC USA, INC. AND UNILOC
LUXEMBOURG, S.A.,
PLAINTIFFS,

2

P!

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3

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§

V.

§

CAUSE NO. 1:1 7-CV-753-LY

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BLACKBOARD, INC.,
DEFENDANT.

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MEMORANDUM OPINION AND ORDER
Before the court in the above-styled and numbered cause are Blackboard's [Opposed]
Motion for Costs and Attorneys' Fees and for a Stay Under Fed. R. Civ. P. 4 1(d) filed September
27, 2017 (Dkt. No. 17), Blackboard's Opposed Motion to Seal the Following: Declaration of

Michael S. Nadel in Support of Blackboard's Opposed Motion for Costs and Attorneys' Fees and

for a Stay Under Fed. R. Civ. P. 4 1(d) and Exhibits 2-14 to the Declaration

of Michael

S. Nadel

filed September 27, 2017 (Dkt. No. 18), Plaintiffs' Unopposed Motion for Extension of Time to
File Opposition to Blackboard's Motion for Costs and Attorney's Fees and for a Stay Under Fed.
R. Civ. P. 41(d) and Blackboard's Motion to Seal the Declaration

of Michael

S. Nadel filed

October 3, 2017 (Dkt. No. 22), Memorandum of Plaintiffs Regarding Blackboard's [Opposed]
Motion for Costs and Attorneys' Fees filed October 5, 2017 (Dkt. No. 24).'

I.

BACKGROUND AND ARGUMENTS

This case is a refiling of a case that Uniloc USA, Inc. and Uniloc Luxembourg, S.A.

("Uniloc") filed against Blackboard, Inc. ("Blackboard") in the United States District Court for
the Eastern District of Texas in August

2016.

02

-.'

See Uniloc USA, Inc.

v.

Blackboard

Inc.,

No.

Both "attorney's fees" and "attorneys' fees" are used in this order; the latter where
dictated by the quoted material and the former by this court's practice.

2:16-cv-859 (E.D. Tex. filed Aug. 2, 2016). It was one of a series of cases
filed by Uniloc
against several defendants involving similar patents.

The case against Blackboard was

consolidated with other cases brought by Uniloc. Uniloc USA, Inc.

v.

ADP, LLC, No. 2:16-cv-

741 (E.D. Tex.) (consolidated case in which claims against Blackboard
were litigated).

The

Eastern District court held a claim-construction hearing on August 10, 2017, and
rendered a
preliminary claim-construction order that was unfavorable to Uniloc.

Uniloc immediately

voluntarily dismissed the Eastern District action. Uniloc then filed this suit against Blackboard
in the Western District

of Texas. Blackboard immediately moved for costs and attorney's fees

under Federal Rule of Procedure 4 1(d) against Uniloc (Dkt. No. 17) for the costs it incurred in
the previous

action.2

See

Fed. R. Civ. P. 41(d). Because Blackboard does not seek attorney's

fees under the Patent Act, the only question before the court is whether an award of attorney's
fees is proper under Rule 41(d).

"If a plaintiff who previously dismissed an action in any court files an action based on or
including the same claim against the same defendant, the court.
all or part

. .

may order the plaintiff to pay

of the costs of that previous action." Fed. R. Civ. P. 41(d). Blackboard seeks costs

and attorney's fees it incurred while defending itself in the Eastern District case, "only to have

Uniloc voluntarily dismiss the case when Uniloc faced the prospect of the Eastern District of
Texas court's claim construction order, which Uniloc believedcorrectlywould be damaging
to Uniloc's case." Blackboard argues that "Uniloc's conduct in dismissing the Eastern District

of Texas case and re-filing on the same Asserted Patents is 'abusive per Se."

2

Blackboard's request for attorney's fees is identical to the one made in Uniloc USA,
inc. v. Box Inc., No. 1:17-cv-755, which this court denied on June 5, 2018. Dkt. No.
31.
Because the facts are the same, the court's opinion is also the same.

II.

LEGAL AUTHORITY FOR AWARDING ATTORNEY'S FEES AS COSTS

May a court award attorney's fees incurred in a previous action as "part of the costs of
that previous action"? Fed. R. Civ. P. 4 1(d). Federal Circuit law governs an award of
attorney's
fees in a case brought under the Patent Act. See ICU Med., Inc.

v.

Alaris Med. Sys., Inc., 558

F.3d 1368, 1379 (Fed. Cir. 2009). The Federal Circuit hasn't considered whether attorney's fees
are recoverable as costs under 41(d). With no direct authority on point, this court looks to the

reasoning of the Supreme Court when it considered whether attorney's fees are recoverable as
costs, as well as the reasoning of the regional circuits that have considered whether Rule 41(d)

permits an award of attorney's fees as "costs" to determine whether attorney's fees are properly
awardable under Rule 4 1(d) in a case brought under the Patent Act.3
In Marek

v.

Chesny, the Supreme Court considered whether awarding "costs" under

Federal Rule of Procedure 68 included an award of attorney's fees for the prevailing plaintiff in a

civil-rights case.

473 U.S. 1, 8-9 (1985).

The Court began its analysis by contrasting the

"English Rule," which awards attorney's fees as costs, and the "American Rule," which does not.
Id. at 8. The Court recognized certain exceptions to the American Rule, most

of which "were

found in federal statutes that directed courts to award attorney's fees as part of costs in particular
cases."

Id. (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc 'y, 421 U.S. 240,

260-62

See Evans v. Safeway Stores, Inc., 623 F.2d 121, 122 (8th Cir. 1980) (per curiam)
(holding without analysis that "the district court did not abuse its discretion in awarding
defendant-appellee $200 attorney fees" under Rule 4 1(d)); Rogers v. Wal-Mart Stores, Inc., 230
F.3d 868, 874 (6th Cir. 2000) (holding that attorney's fees are never available under 41(d)
because "the rule does not explicitly provide for them"); Meredith v. Stovall, No. 99-3350, 216
F.3d 1087 (10th Cir. 2000) (unpublished table decision) (stating that "[u}nder the language of
Rule 41(d), the decision whether to impose costs and attorney's fees is within the discretion of
the trial court"); Esposito v. Piatrowski, 223 F.3d 497, 501 (7th Cir. 2000) (holding that fees are
available under 41 (d)"only where the underlying statute defines costs to include attorneys'
fees"); Andrews v. America's Living Ctrs., LLC, 827 F.3d 306, 309-12 (4th Cir. 2016) (same);
Portillo v. Cunningham, 872 F.3d 728, 739 (5th Cir. 2017) (same).
3

(1975)). The Court went on to list several statutes that define costs to include attorney's
fees,

either by directing that reasonable attorney's fees were allowable as costs or by
phrasally

defining costs to include attorney's fees. Id. As an example of the former, the Court
noted
section 407 of the Communications Act of 1934, which provides that "[i]f the petitioner
shall
finally prevail, he shall be allowed a reasonable attorney's fee, to be taxed and collected as a part

of the costs of the suit." Id. (citing 47 U.S.C.

§

407).

Likewise, the Court considered the

Clayton Act, the Securities Act of 1933, and the Securities Exchange Act of 1934, all of which
include attorney's fees as part of awardable "costs."4
The Court considered such statutes to be "exceptions to the American Rule," of which the

Rules Advisory Committee was fully aware of when drafting the Federal Rules of Civil
Procedure. Id. at 8-9. The Court concluded that "where the underlying statute defines 'costs' to
include attorney's fees, we are satisfied such fees are to be included as costs for the purposes of
Rule 68." Id. at 9. In other words, "the term 'costs' in Rule 68 was intended to refer to all costs
properly awardable under the relevant substantive statute."

Id.

Accordingly, the Court

determined that an award of attorney's fees was appropriate under the Civil Rights Attorney's
Fees Awards Act of 1976, that declares "the court, in its discretion, may allow the prevailing
party, other than the United States, a reasonable attorney's fee as part of the costs." Id.

In step with Marek, the Fifth, Fourth, and Seventh Circuits have concluded that "a party

may recover reasonable attorneys' fees as part of its 'costs' under Rule 41(d) only where the
'

473 U.S. at 8 (citing to the Clayton Act, 15 U.S.C. § 15 ("and shall recover threefold
the damages by him sustained, and the cost of suit, including a reasonable attorney's fee"); the
Securities Act of 1933, 15 U.S.C. § 77k(e) ("In any suit under this or any other section of this
subchapter the court may, in its discretion, require an undertaking for the payment of the costs of
such suit, including reasonable attorney's fees"); and the Securities Exchange Act of 1934, 15
U.S.C. § 78i(e), 78r(a) ("In any such suit the court may, in its discretion, require an undertaking
for the payment of the costs of such suit, and assess reasonable costs, including reasonable
attorneys' fees, against either party litigant.")).
4

underlying statute defines costs to include attorneys' fees." See Portillo

v.

Cunningham, 872

F.3d 728, 739 (5th Cir. 2017) ("Fee awards are permitted under Rule 41(d) only

statute defines 'costs' to include fees."); see also Andrews

v.

if the underlying

Am. 's Living Centers, LLC, 827

F.3d 306, 311(4th Cir. 2016) ("Rule 4 1(d) does not provide for an award of attorneys' fees as a

matter of right; instead, a district court may award attorneys' fees under this rule only where the
underlying statute provides for attorneys' fees."); Esposito
Cir. 2000). It is the view

v.

Piatrowski, 223 F.3d 497, 501 (7th

of this court that attorney's fees are permitted under Rule 41(d) only if

the underlying statute defines 'costs' to include attorney's fees.
III.

ANALYSIS

The Patent Act provides distinct remedies tailored to the particular mode or method of
patent infringement with some providing costs, others providing no costs, and still others
providing for attorney's fees. The general damages provision for patent infringement provides
that, "upon finding for the claimant the court shall award the claimant damages.

interest and costs as fixed by the court." 35 U.S.C.

may only be awarded in "exceptional cases." 35

§

. .

together with

284. Attorney's fees, in contrast to costs,

u.s.c. §

285.

Other parts of the Patent Act do provide for an award of attorney's fees or distinguish

between attorney's fees and costs. For example, an individual who brings a claim of improper or
deceptive invention promotion "may recover in a civil action against the invention promoter (or

the officers, directors, or partners of such invention promoter), in addition to reasonable costs

and attorneys' fees

.

.

."

Id. at

§

297 (emphasis added).

Another provision explicitly

distinguishes between "damages, interest, costs and treble damages under section 284" and

"attorney's fees under section 285." 35 U.S.C.

§

5

296.

Nowhere does the Patent Act define costs to include attorney's fees. Because the Act
does not define costs to include attorney's fees, the court concludes that attorney's fees are not

available to Blackboard under Rule 4 1(d).

IV.

INHERENT SANCTIONING AUTHORITY

Blackboard asserts that attorney's fees are also available "because courts retain the
inherent authority to award attorneys' fees under Rule 4 1(d) 'where a party has acted in bad faith
or inflicted unnecessary costs on the court or the defendant." Uniloc did not act in bad faith or
inflict unnecessary costs on the court or on Blackboard. Uniloc's original filing in the Eastern

District complied with venue law being applied at the time. Uniloc's actions in dismissing its
Eastern District case in the face of an unfavorable claim-construction order and refihing in this
court are arguably questionable. The court concludes Uniloc's actions do not rise to the level of

bad faith that would justify awarding attorney's fees.
V.

CONCLUSION

IT IS ORDERED that Blackboard's [Opposed] Motion for Costs and Attorneys' Fees
and for a Stay Under Fed. R. Civ. P. 41(d) filed September 27, 2017 (Dkt. No. 17) is DENIED.

IT IS FURTHER ORDERED that Blackboard's Opposed Motion to Seal the
Following: Declaration of Michael S. Nadel in Support of Blackboard's Opposed Motion for
Costs and Attorneys' Fees and for a Stay Under Fed. R. Civ. P. 41(d) and Exhibits 2-14 to the

Declaration of Michael S. Nadel filed September 27, 2017 (Dkt. No. 18) is GRANTED.

IT IS FURTHER ORDERED that Plaintiffs' Unopposed Motion for Extension of Time
to File Opposition to Blackboard's Motion for Costs and Attorney's Fees and for a Stay Under

Fed. R. Civ. P. 4 1(d) and Blackboard's Motion to Seal the Declaration

October 3, 2017 (Dkt. No. 22) is DISMISSED.

SIGNED this

day of September, 2018.

7

of Michael S. Nadel filed