Dnt Llc v. Spectrum

750 F.Supp.2d 616

DNT, LLC, Plaintiff,

v.SPRINT SPECTRUM, LP and Nextel Operations, Ind., et al., Defendants.

Civil Action No. 3:09CV21.

United States District Court, E.D. Virginia,Richmond Division.

Aug. 30, 2010.

Rowland Braxton Hill, IV, Nichole Buck Vanderslice, Christian & Barton LLP, Roman Lifson, Samuel Perry Coburn, Richmond, VA, Adam Vincent Floyd, Chad Phillip Ennis, Howard Kenneth Prol, Joseph Daniel Gray, Matthew Stuart Wermager, Nicholas Alfred Schuneman, Reese Patrick McKnight, F&B LLP, Austin, TX, for Plaintiff.Kenneth John Nichols, Nixon Peabody LLP, Washington, DC, Christopher Lee Ogden, Robert Edward Krebs, Nixon Peabody LLP, Palo Alto, CA, Edward F. McCormack, Nixon Peabody LLP, Chicago, IL, Maia Hehmeyer Harris, Nixon Peabody LLP, Boston, MA, Ronald Frank Lopez, Nixon Peabody LLP, San Francisco, CA, Brian Charles Riopelle, David Evan Finkelson, McGuirewoods LLP, Richmond, VA, Andrew Gerald McBride, Floyd Brantley Chapman, Wiley Rein & Fielding LLP, Washington, DC, Bertram Walter Rein, James Harold Wallace, Jr., John Benedict Wyss, Karen Hessler, Kevin Paul Anderson, Wiley Rein LLP, Washington, DC, Dana Duane McDaniel, Edward Everett Bagnell, Jr., Maurice Francis Mullins, Spotts Fain PC, Richmond, VA, Autumn Noelle Nero, Perkins Coie LLP, Madison, WI, Ramsey Maxwell Al-Salam, Ryan James McBrayer, Perkins Coie LLP, Seattle, WA, Dabney Jefferson Carr, IV, Robert Armistead Angle, Troutman Sanders LLP, Richmond, VA, Anthony J. Dain, Frederick Keith Taylor, Lisel M. Ferguson, Victor Manuel Felix, Procopio Cory Hargreaves & Savitch LLP, San Diego, CA, for Defendants.

MEMORANDUM OPINION

JAMES R. SPENCER, Chief Judge.

THIS MATTER comes before the Court on a number of post-trial Motions filed in the above action. Defendants Sprint Spectrum, LP and Nextel Operations, Inc., et al. (“Defendants”) Motion to Declare Case Exceptional (Doc. No. 538), Non–Party Qualcomm's Motion for Costs and Fees Pursuant to Federal Rule of Civil Procedure 45 (Doc. No. 546), Defendants' Joint Renewed Motion for Judgment as a Matter of Law of Invalidity Under 35 U.S.C. § 251 (Doc. No. 554), DNT's Motion for a New Trial or to Amend the Judgment (Doc. Nos. 555 & 556), and DNT's Motion to Strike Defendants' Reply in Support of Bill of Costs (Doc. No. 572). For the reasons expressed below, the Court DENIES all of the above Motions.

I. BACKGROUND

This case concerns allegations of patent infringement. The patent at issue is U.S. Patent No. RE 37, 660 (“'660 Patent”). The '660 Patent constitutes a reissue of U.S. Patent No. 5,452,352 (“'352 Patent”). The inventor, David Talton, applied for the '352 Patent on March 20, 1990. The U.S. Patent and Trademark Office (“PTO”) issued the '352 Patent on September 19, 1995. Two years thereafter, on September 19, 1997, Talton filed a reissue application. The resulting '660 Patent, issued April 16, 2002, mirrors the '352 Patent and contained identical abstract language and description, but included one new independent claim (Claim No. 21), and five new dependent claims (Claim Nos. 22–26). ( See '660 Patent, at 8:21–50.)

The '660 patent was assigned to Acacia Patent Acquisition LLC (“Acacia” or “APA”) in 2008. Taltwell, LLC (“Taltwell”) was the assignee of the patent prior to Acacia. Taltwell was involved in patent litigation in this District relating to the '660 patent from September 4, 2007 until May 23, 2008 with Zonet USA Corp., et al. (“Zonet”), which settled in May of 2008. On January 9, 2009, DNT commenced this lawsuit alleging that various wireless modem cards offered or sold by Sprint Spectrum, LP and Operations, Inc. (“Sprint”), Cellco Partnership d/b/a Verizon Wireless (“Verizon”), T–Mobile USA, Inc. (“T–Mobile”), Alltell Corporation (“Alltell”), United States Cellular Corporation (“U.S. Cellular”), and Cricket Communications, Inc. (“Cricket”) infringed the ' 660 patent.¹ On March 31, 2009, the Court granted a Motion to Intervene filed by Novatel Wireless, Inc. (“Novatel”), which sought to intervene by virtue of its designing and producing several products sold and offered by Sprint which were accused of infringement within DNT's Complaint.

The Court held a jury trial in this case from December 3 to December 14, 2009. The Defendants raised a defense of invalidity based on a lack of enablement under 35 U.S.C. § 112, that the invention was anticipated under 35 U.S.C. § 102, that the invention was obvious under 35 U.S.C. § 103, and that the patent contained an inadequate written description under 35 U.S.C. § 112. In its verdict, the jury found that the asserted patent claims were invalid for three reasons: (1) the full scope of the invention was not enabled; (2) the invention as claimed in Claim Nos. 21, 23–25 was obvious in view of the prior art; and (3) written description did not support the full scope of the invention.

Accordingly, on January 15, 2010, the Court entered a Judgment reflecting the jury's verdict dismissing DNT's action on the merits. The Judgment directed Defendants to recover costs, finding that none of Defendants' wireless network adapter products infringe Claims 21, 23, 24 or 25 of the ' 660 patent for the reasons found by the jury.

Pursuant to the Court's briefing schedule, the parties filed several post-trial Motions, including those listed above. Presently before the Court are Defendants' Motion to Declare Case Exceptional, Defendants' Joint Renewed Motion for Judgment as a Matter of Law, DNT's Motion for a New Trial, or in the Alternative, to Amend the Judgment, DNT's Motion to Strike Defendants' Reply, and Non–Party Qualcomm's Motion for Costs and Fees Pursuant to Federal Rule of Civil Procedure 45.

II. DEFENDANTS' MOTION TO DECLARE CASE EXCEPTIONAL

Section 285 of the Patent Act states that “the court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. An award of attorneys' fees under section 285 involves a two-part determination. “First, a district court must determine whether the prevailing party has proven an exceptional case by clear and convincing evidence ... Second, if the district court finds the case exceptional, it must then determine whether an award of attorney fees is appropriate.” Perricone v. Medicis Pharm. Corp., 432 F.3d 1368, 1380 (Fed.Cir.2005).

The existence of an exceptional case may be proven by showing: inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and 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 Hoffmann–La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed.Cir.2000)). “[L]itigation misconduct and unprofessional behavior may suffice, by themselves, to make a case exceptional under § 285.” Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1106 (Fed.Cir.2003). Awarding attorneys fees pursuant to § 285 should be limited to circumstances in which it is necessary to prevent “a gross injustice” or bad faith litigation. Forest Labs., 339 F.3d at 1329.

To award attorneys' fees, the Court must find that Defendants have demonstrated by clear and convincing evidence that DNT's litigation conduct was so egregious that attorneys' fees are warranted. Defendants assert several arguments relating to DNT's conduct prior to its filing of the Complaint which they argue demonstrate that the case is exceptional and warrants attorneys' fees:

(1) DNT lacked sufficient justification for its infringement allegations against Defendants;

(2) DNT failed to exercise reasonable care in assessing infringement allegations prior to bringing suit;

(3) DNT failed to adequately examine and test accused devices;

(4) DNT possessed sufficient information indicating an absence of infringement and its failure to act upon it deprives DNT of good faith; and

(5) DNT had no reasonable basis for believing the asserted claims were valid.

Defendants also assert that DNT engaged in multiple acts of misconduct throughout the litigation, forcing Defendants to incur substantial litigation fees and expenses, and subjecting them to increased litigation expenses. This includes:

(1) DNT's responses in answering requests for admissions;

(2) DNT's alleged failure to disclose the Radio Shack device in the inventor's deposition or in response to interrogatories;

(3) the delay of over six years in instituting its patent infringement action;

(4) DNT's assertion of an allegedly invalid claim added in reissue that was not disclosed in the specification, claims, or drawings as originally filed.

The Court does not find that Defendants have presented clear and convincing evidence that DNT's Complaint was frivolous, and thus have not met their burden to show that the case is exceptional. Although the litigation in this matter was hard fought and Defendants prevailed, that does not mandate a finding that DNT's case against Defendants was frivolous. Several factors advise against this finding, including the fact that DNT's Reissue Patent was granted by the PTO, giving DNT a reasonable belief that the Patent was valid and enforceable.

Additionally, Defendants filed several Motions for Summary Judgment, which DNT survived, meaning that the Court considered DNT's claim and found that DNT presented enough evidence for the case to move forward and go to the jury. Although the jury ultimately decided against DNT, this does not necessarily mean that the case was brought in bad faith. Therefore, the Court finds that an exceptional case declaration is not warranted in this instance. Additionally, DNT's requests for attorneys' fees associated with this Motion are DENIED.

III. DNT's MOTION FOR A NEW TRIAL OR TO AMEND THE JUDGMENT

A new trial under Federal Rule of Civil Procedure 59 should be granted if: “(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even though there may be...