Humanscale Corporation v. CompX International Inc, et al

Filing 332

MEMORANDUM AND OPINION. Signed by District Judge James R. Spencer on 8/16/10. (lsal)

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION HUMANSCALE CORP., Plaintiff/Counterclaim Defendant, v. COMPX INTERNATIONAL INC. and WATERLOO FURNITURE COMPONENTS LTD., Defendants/Counterclaim Plaintiffs. MEMORANDUM OPINION This matter is before the Court on CompX's Motion for Attorneys' Fees. For the reasons stated below, the Motion will be DENIED. I. BACKGROUND In February 2009, Humanscale Corp. initiated this suit when it filed a Complaint a g a i n s t C o m p X I n t e r n a t i o n a l I n c . and CompX Waterloo (collective l y " C o m p X " ) r e g a r d i n g H u m a n s c a l e ' s U . S . P a t e n t N o . 5 , 2 9 2 , 0 9 7 ( " t h e ` 0 9 7 P a t e n t ) . I n March, CompX filed a counterclaim, alleging that Humanscale infringes on two of CompX's patents, specifically U.S. Patent Nos. 5,037,054 ("the `054 Patent") and 5,257,767 (" t h e ` 7 6 7 P a t e n t " ) (collectively "CompX Patents"). B o t h t h e ` 0 5 4 a n d t h e ` 7 6 7 P a t e n t s a r e e n t i t l e d " A d j u s t a b l e Support Mechanism for a Keyboard P l a t f o r m . " A s t h e t i t l e s s u g g e s t , t h e P a t e n t s r e l a t e t o keyboard support mechanisms that a t t a c h t o t h e u n d e r s i d e o f a d e s k a n d p i v o t t o a l l o w users to store their keyboards under the desk when not in use. By order of this Court, Humanscale's suit regarding the `097 Patent was stayed, 1 Action No. 3:09­CV­86

however, CompX's counterclaims were not stayed. Humanscale responded to CompX's c l a i m s b y a s s e r t i n g v a r i o u s a f f ir m a t i v e d e f e n s e s , i n c l u d i n g p a t e n t m i s u s e , f a l s e m a r k i n g , and unclean hands (Dock. No. 17). After holding a pretrial con f e r e n c e , t h e C o u r t e n t e r e d a Scheduling and Pretrial Order, setting the trial to begin on February 16, 2010, the expert report deadline as November 18, 2009, the discovery cutoff date as January 6, 2010, and the due date for dispositive motions as January 7, 2010 (Dock. No. 35). The Scheduling Order also required the parties to meet and confer on potential fact stipulations for presentation to the Court at least ten days before trial. In the summer of 2009, as the parties worked to sharpen their c l a i m s a n d d e f e n s e s , Humanscale sent CompX a proposed amended answer and amended complaint, which included claims for false marking and inequitable conduct. On September 2, CompX consented to the proposed pleadi n g a n d t h e n e x t d a y H u m a n s c a l e f i l e d i t s a m e n d e d complaint with the Court (Dock. No. 39). After the amended complaint was filed, CompX a p p a r e n t l y f o r t h e f i r s t t i m e r e alized that the document contai n e d a f a l s e m a r k i n g c l a i m and contacted Humanscale in protest because CompX thought the p a r t i e s h a d b o t h a g r e e d t h a t n e i t h e r p a r t y w o u l d a s s e r t a false marking claim. To resol v e t h e i s s u e , t h e p a r t i e s briefed it to the Court, which then denied the request to add the false marking claim, but granted the request as to the inequitable conduct claim (Dock. No. 69). Beginning in the summer of 2009, discovery also proceeded in earnest, with CompX seeking information to support i t s c l a i m o f i n f r i n g e m e n t a n d f i n a n c i a l i n f o r m a t i o n a n d o n e of Humanscale's prior licensing agreements to support its damages claim. CompX served its first set of interrogatories and document requests on Human scale in June of 2009.

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Humanscale responded in July and several additional times over the following months, however, CompX remains unhappy with the responses.1 I n O c t o b e r , H u m a n s c a l e s e n t C o m p X a l e t t e r a l l e g i n g v i o l a t i o n s of Rule 11 based on t h e a l l e g e d w i t h h o l d i n g o f e v i d e nce on Humanscale's onsale bar d e f e n s e . N o f o r m a l R u l e 11 motion was ever made and Humanscale's Motion to Compel in connection with that e v i d e n c e w a s d e n i e d a s m o o t a f t e r t h e p a r t i e s e s s e n t i a l l y a g r e e d that CompX had provided all the relevant existing documents on that topic (Dock. No. 112). In November, CompX filed a Motion to Compel (Dock. No. 77), which sought the financial and nonfinancial information that it had already asked for, but not received. The C o u r t g r a n t e d t h e m o t i o n , r e q u i r i n g H u m a n s c a l e t o p r o d u c e t h e re q u e s t e d f i n a n c i a l i n f o r m a t i o n a n d t o m a k e a v a i l a b l e properly prepared 30(b)(6) de s i g n e e s o n t h e n o n financial topics (Dock. No. 113). The Court also ordered Human s c a l e t o p a y C o m p X ' s f e e s expended in connection with that motion (Dock. No. 139). CompX a s s e r t s t h a t Humanscale's delay in providing the financial information required it to file several s u p p l e m e n t a l e x p e r t r e p o r t s l e a d i ng up to trial. It also repor ts that Humanscale has not paid the fees the Court awarded to it yet. Over the following months leadin g up to trial, the parties held s e v e r a l d e p o s i t i o n s , which depending on which party y ou ask, were timely and respons i v e o r w e r e i n t e n t i o n a l l y d e l a y e d a n d s u b s t a n t i v e l y w e a k . Humanscale's CEO Robert King w a s d e p o s e d f o r a s e c o n d time on January 7, 2010. Humanscale's designer, George Mileos, was scheduled to be

A more indepth review of the background of this discovery dispute appears in the Court's Memorandum Opinion on the parties' motions to compel (Dock. No. 112). 3

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deposed the next day, however on January 4, Humanscale informed CompX that Mileos was no longer available for that day and he would have to do it on J a n u a r y 1 5 , 2 0 1 0 , w h i c h i s when it eventually occurred. Hum a n s c a l e e x p l a i n e d t h e r e a s o n f o r t h e c a n c e l l a t i o n t o CompX on January 12. Humanscale's General Counsel, Patrick Hoeffner, was deposed on January 11, 2010. The parties disagree over whether Hoeffner and his counsel properly asserted the attorneyclient privilege when not answering quest ions regarding the H a w o r t h L i c e n s i n g A g r e e m e n t t h a t H u m a n s c a l e h a d n e g o t i a t e d a n d t h e i n f o r m a t i o n Humanscale had provided to its infringement expert, Dr. Pratt. Humanscale employee Scott Barry, who measured the tilt magnitude on the Humanscale devices, was deposed on January 12, 2010. Finally, on January 22, Michelle Gerards, Humanscale's VicePresident of Finance, was deposed on the financial topics. The discovery period eventually gave way to the jury trial held on February 16 until February 22, 2010. Prior to the case going to the jury, the Court granted CompX's motion f o r j u d g m e n t a s a m a t t e r o f l a w o n Humanscale's unclean hands d e f e n s e . F o r i t s p a r t , t h e jury concluded that each of Humanscale's accused devices infringed the patentsinsuit and awarded CompX $19,372,500 in damages. CompX has now filed this Motion, alleging that these facts make this an exceptional case under 35 U.S.C. § 285 warranting an award of a t t o r n e y s ' f e e s o r a l t e r n a t i v e l y that the Court should award at t o r n e y s ' f e e s u n d e r e i t h e r 2 8 U.S.C. § 1927 or using its inherent power. Humanscale opposes the motion in all respects. II. LEGAL STANDARD A c o u r t m a y a w a r d a t t o r n e y f e e s t o a p a r t y i n " e x c e p t i o n a l " c a ses pursuant to 35 U.S.C. § 285. A trial court undertakes a twostep inquiry when adjudicating a request for

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attorney fees. The court examines first whether there is clear and convincing evidence that the case is exceptional, and second, whether an award of attorn e y f e e s t o t h e p r e v a i l i n g party is warranted. Cybor Corp. v. FAS Techs., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc).2 The decision to award attorney fees is one committed to the discretion of the trial court, 35 U.S.C. § 285 (2000), and is thus reviewed for an abus e o f d i s c r e t i o n , M o l i n s P L C v . T e x t r o n , I n c . , 48 F.3d 1172, 1178 (Fed. Cir. 1995). The court also has the authority to award statutory attorneys' f e e s u n d e r 2 8 U . S . C . § 1927 which provides: Any attorney or other person admitted to conduct cases in any court of the United States . . . who so m u l t i p l i e s t h e p r o c e e d i n g s i n a n y case u n r e a s o n a b l y a n d v e x a t i o u s l y m a y be required by the court to sa t i s f y personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct. 28 U.S.C. § 1927. This provision "focuses on the conduct of the litigation and not on its m e r i t s . " D e B a u c h e v . T r a n i, 1 9 1 F . 3 d 4 9 9 , 5 1 1 ( 4 t h C i r . 1 9 9 9 ) . M e r e l y n e g l i g e n t c o n d u c t will not support an imposition of sanctions under 28 U.S.C. § 1 9 2 7 . S e e U n i t e d S t a t e s v . Wallace, 964 F.2d 1214, 1219 (D.C. Cir. 1992). Instead, § 1927 requires "a finding of counsel's bad faith as a precondition to the imposition of fees." See Chaudhry v. Gallerizzo, 174 F.3d 394, 411 n. 14 (4th Cir. 1999) (internal quotations omitted). Thus, § 1927 authorizes sanctions only when counsel's bad faith conduct multiplies the proceedings, resulting in excess costs for the opposing party. In re Gould , 77 F. App'x 155, 161 (4th Cir. 2003).

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"Federal Circuit caselaw [applies] to the § 285 analysis, as it is unique to patent law." Digeo, Inc. v. Audible, Inc. , 5 0 5 F . 3 d 1 3 6 2 , 1 3 6 6 ( F e d . C i r . 2 0 0 7 ) . 5

In addition to those statutory grants of power, federal courts also have some inherent power to impose sanctions. Sanford v. Commonwealth of Va., 689 F. Supp. 2d 802, 813 (E.D. Va. 2010). This power allows a court to sanction an attorney's actions taken in bad faith, wantonly, oppressively, or vexatiously. Royal Ins. v . L y n n h a v e n M a r i n e B o a t e l , Inc., 216 F. Supp. 2d 562, 567 (E.D. Va. 2002). It is a power that "ought to be exercised with great caution," in circumstances such as those involving "the v ery temple of justice [being] defiled." Id. (citations omitted). In Sanford, Judge Payne explained the scope of the court's inherent power as follows: The Court's inherent power to impose sanctions is in some respects broader, and in other respects narrower, than its authority to impose sanctions pursuant to § 1927. It is broader, in that it covers every type of litigation misconduct, unlike rulebased and statutory authorities such as Rule 11, Rule 37, and § 1927, which concern themselves with specific types of misconduct. But, the Court's inherent power is narrower in that the misconduct required is almost always something more egregious than that required for other types of sanctions. Sanford, 689 F. Supp. 2d at 813. III. DISCUSSION A. Parties' Arguments CompX contends that Humanscale and its counsel committed several acts of m i s c o n d u c t t h a t w a r r a n t a n a w a r d o f a t t o r n e y s ' f e e s . F i r s t , C o mpX states that Humanscale withheld discovery in key areas even after the Court ordered Humanscale to produce certain information. Discovery on infringement was withheld, CompX says, because Humanscale did not produce its 30(b)(6) deposition witness, Scott Barry, until after the discovery and dispositive motions deadlines had passed. Financial discovery was withheld in several ways. CompX claims Humanscale's quarterly sales data was withheld until mid 6

J a n u a r y a n d w a s o n l y p r o d u c e d a f t e r C o m p X n o t e s i t f i l e d a m o t i on to compel, and then, only a month after the Court granted the motion. By producing this information late, C o m p X s a y s i t s d a m a g e s e x p e r t h a d to file multiple supplemental r e p o r t s a n d C o m p X w a s h i n d e r e d i n p r e p a r i n g f o r t r i a l . C o m p X a l s o t a k e s i s s u e w i t h t he fact that Humanscale did n o t m a k e t h e i r f i n a n c i a l w i t n e s s M i c h e l l e G e r a r d a v a i l a b l e u n t i l January. CompX says that a t G e r a r d ' s d e p o s i t i o n , i t l e a r ne d t h a t H u m a n s c a l e ' s a t t o r n e y , A n d r e w P r a t t , h a d a p p a r e n t l y f a l s e l y r e p r e s e n t e d t h a t c e r t a i n f i n a n c i a l d a t a w a s difficult to obtain because Gerard testified that the quarterly sales data could be availab l e w i t h i n t e n d a y s o f t h e e n d of any quarter. CompX further c omplains that Humanscale gave i t s o w n e x p e r t s e a r l y access to Gerard and was thus not unavailable despite Humanscale ' s r e p r e s e n t a t i o n s otherwise. Humanscale also withheld the Haworth Agreement by f a i l i n g t o p r o d u c e i t a n d directing its witnesses to assert privilege over the document even though, CompX says, the Court's order granting its motion to compel required Humanscale to produce the document. CompX next claims that Humanscale e n g a g e d i n v e x a t i o u s t a c t i c s b y s e n d i n g C o m p X a Rule 11 letter seeking information on Humanscale's onsale bar defense. CompX says that this letter, which was never filed as a motion with the co urt, had no merit and was intended to merely disrupt CompX's trial preparations. CompX notes that the Court denied Humanscale's motion to compel in connection with this issue. Lastly, CompX claims that Humanscale engaged in other misconduct by advancing frivolous claims and defenses that were not supported by any evidence. CompX recalls that Humanscale initially asserted patent misuse, false marking, and unclean hands as

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affirmative defenses. Later, Humanscale abandoned its misuse defense and then, CompX says, after agreeing to drop the false marking claim, filed an amended complaint that made such a claim. The unclean hands defense, CompX observes, was later dismissed by the Court only after CompX prepared and moved for judgment as a matter of law. As trial a p p r o a c h e d , C o m p X m a i n t a i n s t h a t i t a t t e m p t e d t o c o n f e r w i t h H um a n s c a l e o n f a c t s t i p u l a t i o n s , a s w a s r e q u i r e d b y t h e S c h e d u l i n g O r d e r , h o w e v e r , CompX contends, Humanscale completely ignored its request and therefore no stipulations were entered. CompX alleges that these actions t a k e n t o g e t h e r f o r c e d i t t o i n c u r a d d i t i o n a l e x p e n s e s t o file multiple supplemental expert reports and prepare discovery dispute motions, and prevented it from moving for summary judgment. Humanscale takes issue with each of CompX's contentions. First , c o n c e r n i n g CompX's claim that infringement discovery was withheld, Humanscale contends that CompX has failed to reveal the entire chronology of events that resulted in Scott Barry's deposition occurring in January. Humanscale points out the following: · On November 8, 2009, CompX's expert Dr. Wood filed his initial expert report on infringement · The companion proceeding before the ITC was tried on December 1 to December 4, 2009 · · O n December 18, 2009, Dr. Pratt filed his rebuttal noninfring e m e n t r e p o r t . On December 29, 2009, the parties held a deposition scheduling conference, during which they attempted to coordinate sixteen depositions occurring in seven cities. During this conference, Humanscale says the parties agreed that some of the

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depositions would have to occur after the discovery cutoff. Humanscale also stated that it would be willing to extend the deadline for filing dispositive motions, h o w e v e r , C o m p X s a i d i t w o u l d t a k e t h e p r o p o s a l " u n d e r a d v i s e m e nt " a n d i n a l a t e r email CompX stated that the deadline need not be extended. · On January 4, 2010, Dr. Wood filed his surrebuttal infringement report. That same day, CompX proposed that Dr. Wood's deposition occur on January 13, 2010. CompX also asked for a Humanscale 30(b)(6) witness on the infringement topics and Humanscale responded that Barry was available for a deposit i o n o n J a n u a r y 1 2 , 2010 in New Jersey. The next day CompX confirmed those dates for those depositions. · On January 14, 2010, CompX deposed Humanscale's Dr. Pratt. Thus, Humanscale notes CompX's characterization of how discovery proceeded as to t h e i n f r i n g e m e n t i s s u e s i s i n c o r r e c t a n d m i s l e a d i n g . I t a l s o s ays the delays were the result of the ITC proceeding and occurred with consent of both parties. CompX could have still filed a summary judgment motion, Humanscale reports, but CompX simply rejected Humanscale's offer to extend the dispositive motions deadline. As to CompX's assertions regarding the discovery of Humanscale's financial information, Humanscale believes that it did not withhold any d i s c o v e r y t h a t w a s c r i t i c a l t o CompX's damages claim. Humanscale thinks that CompX's complaints are overblown. In Humanscale's view, CompX's receipt of the third and fourth quarter sales data from 2009 on January 14, 2010 and the January 22, 2010 deposition of Gerard did not frustrate CompX's ability to prepare its case. Humanscale notes that although CompX's expert Troxel

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had to file supplemental reports b e c a u s e o f t h e a d d i t i o n a l s a l e s data provided by Humanscale, it could not have provided the fourth quarter data any earlier than it did and, in any event, Troxel did not do new complex analyses, but simpl y applied the same 8% reasonable royalty that he had used from his very first report. In response to CompX's suggestion that Humanscale delayed in producing its productbyproduct sales figures, Humanscale explains that like t h e q u a r t e r l y s a l e s d a t a , i t w a s u n a b l e t o p r o v i d e a l l o f t h e s a l e s d a t a u n t i l t h e y e a r a c t ua l l y e n d e d . H u m a n s c a l e a l s o a s s e r t s , a s i t h a s a l l a l o n g , t h a t i t d o e s n o t k e e p s a l e s d a t a on a per product basis and thus CompX's request required a significant amount of analysis and work to produce that information. Humanscale addition ally states that it has not pr ovided the Haworth Agreement for the same reason that CompX was unable to provide additional documents on the onsale bar issue--it has been unable to locate it. CompX's complaint about Humanscale's Rule 11 letter is misplaced, Humanscale suggests, because the request was supported by the discovery record. Humanscale notes t h a t t h e a d d i t i o n a l i n v e s t i g a t i o n CompX undertook after receivi n g t h e l e t t e r i n f a c t t u r n e d up additional documents relevan t to the onsale bar defense. H u m a n s c a l e n e x t r e p r e s e n t s t h a t i t d i d a t t e m p t t o w o r k w i t h C o m pX to establish f a c t s t i p u l a t i o n s b e f o r e t r i a l a n d t h a t w h e n i t r e c e i v e d C o m p X 's i n s t a n t m o t i o n i t c o n t a c t e d CompX to inform it of the mistake. Humanscale says that CompX s a i d i t w o u l d f i l e a n amended brief, however, no amended brief has been filed. Lastly, Humanscale rejects CompX ' s a r g u m e n t t h a t H u m a n s c a l e e n g a g e d i n misconduct by asserting frivolous claims and defenses. Humanscale comments that it

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w i t h d r e w i t s p a t e n t m i s u s e d e f e n s e a t a n e a r l y s t a g e i n t h i s c a se, just as, Humanscale notes, CompX did with its false marking claim. As to Humanscale's false marking claim that was i n c l u d e d i n t h e a m e n d e d c o m p l a i n t a n d t h e n w i t h d r a w n a f t e r t h e court rejected the a m e n d m e n t , H u m a n s c a l e n o t e s t h a t it submitted the proposed amen ded complaint to C o m p X b e f o r e i t s u b m i t t e d i t t o t h e C o u r t a n d t h e n o n c e t h e d i sc r e p a n c y b e t w e e n t h e parties arose Humanscale notes it agreed to brief the issue to the Court so that it may resolve the issue. As to the unclean hands defense that was dismissed during trial after CompX filed for judgment as a ma t t e r o f l a w , H u m a n s c a l e n o t e s t h a t t h i s w a s n o t t h e o n l y claim or defense the parties had in play that was then not pursued at trial. It observes that CompX dropped some of its infringement claims on the eve of trial, all of which, H u m a n s c a l e r e c a l l s , i n v o l v e d e x t e n s i v e d i s c o v e r y , e x p e r t r e p o r t s, claim construction briefing, and trial preparation. Humanscale also points out that the Court dismissed CompX's claims for willful infringement, induced infringement, and contributory infringement because of lack of evidence. B a s e d o n i t s r e v i e w o f t h e c o n d u c t in this case, Humanscale con cludes that this case i s n o t e x c e p t i o n a l b e c a u s e i t d i d n o t e n g a g e i n g r o s s l y n e g l i g e nt or badfaith behavior that would warrant such a finding under any standard that CompX prop oses. B. Analysis Under 35 U.S.C. § 285, "[t]he cour t i n e x c e p t i o n a l c a s e s m a y a w a r d r e a s o n a b l e a t t o r n e y f e e s t o t h e p r e v a i l i n g p a r t y . " T h e p r e v a i l i n g p a r t y m ust prove an exceptional case by clear and convincing evidence. Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1327 (Fed. Cir. 2003). The existence of an exceptional case may be proven by showing:

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inequitable conduct before the P T O ; l i t i g a t i o n m i s c o n d u c t ; v e x a t i o u s , u n j u s t i f i e d , a n d otherwise bad faith litigation; a frivolous suit or willful infringement. Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed. Cir. 2002)(citing HoffmannLa Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed Cir. 2000)). Litigation misconduct and u n p r o f e s s i o n a l b e h a v i o r a r e r e l e v a n t t o t h e a w a r d o f a t t o r n e y f ees, and may suffice, by themselves, to make a case exceptional. Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574 (Fed. Cir. 1996). The Federal Circuit has cautioned that an award of attorney fees under § 285 is not intended to be an "ordinary thing in patent cases," and that it should be limited to circumstances in which it is necessary to prevent "a gross injustice" or bad faith litigation. Forest Labs. , 3 3 9 F . 3 d a t 1 3 2 9 . CompX claims that the Court should award it attorneys' fees because Humanscale w i t h h e l d d i s c o v e r y m a t e r i a l i n c o n n e c t i o n w i t h i t s i n f r i n g e m e n t claim and damages evaluation, brought claims and defenses that were frivolous, an d u n n e c e s s a r i l y t h r e a t e n e d a Rule 11 motion without any basis. The majority of CompX's contentions are largely e x a g g e r a t e d a n d o n l y p r e s e n t h a l f t h e s t o r y . A f u l l r e v i e w o f those issues reveals a contentious litigation waged between two market competitors, bu t n o t a c t i o n s characterized by badfaith or frivolity. CompX's assertions concerning the infringement discovery are incomplete. The parties agreed to depose Humanscale employee Scott Barry after the discovery and dispositive motions deadlines had passed. Humanscale offered to extend the dispositive motions deadline so that CompX could seek summary judgment, however, CompX declined to do so.

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S i m i l a r l y , a s t o t h e f i n a n c i a l d i s c o v e r y , i t i s c l e a r t h a t H u m a nscale could not have p r o v i d e d t h e f o u r t h q u a r t e r s a l e s d a t a m u c h e a r l i e r t h a n i t d i d. C o m p X ' s a s s e r t i o n t h a t Humanscale's counsel improperly represented that this sales data was difficult to obtain conflates the two types of sales data CompX requested. Humanscale told CompX that the productbyproduct sales data was difficult to obtain because it did not keep that information. Humanscale did not state that the quarterly sales data was difficult to obtain. Although it appears that the third quarter sales data, which wa s provided in January of 2010, was provided somewhat late, in the end, it caused no harm to CompX because it would have had to update its damages calculations anyway once it received the fourth quarter data. Moreover, Humanscale is correct that it appears CompX's expert Troxel merely had to rerun the calculation with additional sales data, but did not have to do new complex analyses, because throughout the litigation Troxel has maintained that the reasonable royalty rate should be 8%. The Rule 11 letter Humanscale sen t to CompX was not unjustified n o r i s t h e r e a n y evidence of bad faith. As is made clear by Humanscale's laches motion, Humanscale has maintained throughout this litigation that CompX's claims should be barred because the patents in suit were on sale or offered for sale before the critical date of June 13, 1989. Indeed, the letter Humanscale sent resulted in more investigation by CompX which in turn l e d t o t h e d i s c o v e r y o f a d d i t i o na l e v i d e n c e r e l e v a n t t o H u m a n s c a l e ' s d e f e n s e . Although Humanscale asserted several claims and defenses that were either abandoned or dismissed for lack of proof, this fact alone does not show clear and convincing evidence of bad faith or misconduct. The patent misuse and unclean hands

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claims were simply unsuccessful. The false marking"gate" appears to have been the result of a miscommunication. Humanscale thought CompX had consented, CompX apparently d i d n ' t r e a l i z e f a l s e m a r k i n g h a d b e e n a d d e d t o t h e c o m p l a i n t . T h e i s s u e w a s r e s o l v e d b y the Court and that should be the end of the issue. T h e r e i s o n e i s s u e t h a t g i v e s t h i s Court pause. Humanscale doe s a p p e a r t o h a v e been slow to comply with this Court's directive entered in connection with CompX's motion to compel. Humanscale was direct e d b y C o u r t o r d e r t o p r o v i d e C ompX with the quarterly s a l e s d a t a o n D e c e m b e r 2 4 , b u t t h e t h i r d q u a r t e r d a t a w a s n o t pr o d u c e d u n t i l m i d J a n u a r y even though it surely already existed. Also, despite the Court's order requiring Humanscale to pay $6,890 on January 22, 2010 in connection with the motion to compel, Humanscale has apparently not complied. D e s p i t e t h i s c o n c e r n , t h e M o t i o n is DENIED. CompX has failed t o show by clear and convincing evidence that this case is exceptional under 35 U.S.C. § 285, see Forest Labs., 339 F.3d at 1327, or warrants invocation of 28 U.S.C. § 1927, or this Court's inherent a u t h o r i t y t o i m p o s e s a n c t i o n s . A s i s e v i d e n t f r o m t h e a b o v e d i scussion, this case has been a hardfought and close litigation , n e c e s s i t a t i n g a l e n g t h y t r i a l involving a voluminous record. Simply put, however, CompX has not shown that there was bad faith, inequitable c o n d u c t , o r v e x a t i o u s a c t i v i t y o n t h e p a r t o f H u m a n s c a l e . S e e Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed. Cir. 2000). Humanscale's failure to pay the ordered fees in connection with CompX's motion to compel is not to be condoned, but that fact alone or in combination with the other facts of this case does not make it exceptional for purposes of attorneys' fees.

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IV. CONCLUSION For the foregoing reasons, the Motion for Attorneys' Fees is DENIED. An appropriate order will issue. Let the Clerk send a copy of this Memorandum Opinion to all counsel of record. It is SO ORDERED.

/s/ James R. Spencer Chief United States District Judge

ENTERED this 16th day of August 2010

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