Judge Andrews Denies Defendants’ Motions for Fees

February 9, 2017

Publication| Intellectual Property

In Acceleration Bay LLC v. Activision Blizzard Inc., C.A. No. 15-228-RGA (D. Del. Jan. 10, 2017), Judge Andrews denied from the bench a motion for fees brought by a number of defendants in related actions after the Court dismissed the patent infringement actions filed by Acceleration Bay LLC (“Acceleration Bay”) for lack of standing. The defendants argued that, as the prevailing parties, they were entitled to fees under Section 285 because the positions taken Acceleration Bay regarding standing, as well as its decision to file the lawsuits, were objectively unreasonable. Although Acceleration Bay purported to own the rights to the asserted patent based on an assignment from Boeing, the patent purchase agreement did not reflect that Acceleration Bay had actually acquired the right to practice the patents. The defendants further argued that Acceleration Bay failed to timely produce the patent purchase agreement, and pursued the case even after being notified of the standing problem.

Acceleration Bay countered that the Court’s decision on standing was close, as Boeing intended to assign ownership of the patents to Acceleration Bay. After dismissal, Acceleration Bay amended the patent purchase agreement and re-filed the lawsuit against the same parties. Acceleration Bay also argued that the defendants were not prevailing parties, and that the patent purchase agreement was produced shortly after a confidentiality order was entered.

Because the dismissal did not result in a change in the parties’ legal relations, Judge Andrews found that the defendants were not prevailing parties; the merits would still be determined at trial. But even assuming that the defendants prevailed, the Court held that the case was not exceptional and Acceleration Bay’s standing arguments were neither frivolous nor objectively unreasonable. Rather, Acceleration Bay amended the patent purchase agreement, quickly re-filed the action, and refrained from acts that could indicate bad faith, such as trying to settle its claims to extract itself from the litigations despite a belief that standing was in doubt.

Key Points:  A successful motion to dismiss does not necessarily make one a “prevailing party” for the purpose of recovering fees.

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