Judge Andrews Grants Defendant’s Motion for Costs but Not Attorneys’ Fees, Finding the Case “Unexceptional”

March 1, 2016

Publication| Intellectual Property

In Pragmatus Telecom LLC v. Newegg Inc., C.A. No. 12-1533-RGA (D. Del. Feb. 18, 2016), Judge Andrews granted defendant Newegg Inc.’s (“Newegg”) request for costs but not attorneys’ fees. Plaintiff Pragmatus Telecom LLC (“Pragmatus”) had brought suit against Newegg, a customer of the suppliers of the allegedly infringing technology. After the suppliers settled with Pragmatus, Pragmatus dismissed its claims against Newegg. Newegg then moved for costs and attorneys’ fees, but Judge Andrews denied the requests on the basis that Newegg was not a prevailing party.

The Federal Circuit reversed and remanded the case for a determination of whether, as the prevailing party, Newegg would be entitled to attorneys’ fees and costs. On remand, Judge Andrews additionally reached the question, earlier unaddressed, of whether Pragmatus’ conduct was exceptional under Section 285. Newegg claimed that Pragmatus pursued a vexatious litigation strategy to extract nuisance settlements by suing customers rather than the suppliers, serving deficient infringement contentions, and withdrawing its initial opposition to a motion to transfer. Judge Andrews rejected these arguments, since Newegg could not “persuasively point to any recurring patterns in Pragmatus’ litigation conduct, nor to any other aggravating factors—such as false testimony, destruction of evidence, or offensive conduct” that other courts had found justified findings of exceptional conduct. According to the Court, the evidence Newegg presented “would require the Court to make speculative inferences from behavior that could conceivably indicate a plethora of motivations.”

Newegg also argued that Pragmatus’ positions so lacked substantive merit as to make the case exceptional under the statute. Judge Andrews found these allegations general and conclusory, explaining in a footnote that it is “certainly difficult . . . to prove that a case is exceptionally meritless without such guideposts [e.g., claim construction, substantive briefing of merits issues, or expert testimony], especially one where the plaintiff has obtained numerous significant settlements.” For these reasons, Judge Andrews denied Newegg’s motion for attorneys’ fees (but granted costs).

Analysis: Throughout this decision, Judge Andrews repeatedly stated that the allegations of wrongful conduct were too conclusory and general and that the Court was unable to determine the strength of the parties’ positions at this stage of the case. Motions such as this may require more of a record and narrower focus.

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