Judge Jordan Denies Request for Attorneys’ Fees
December 1, 2015
Publication| Intellectual Property
In St. Clair Intellectual Property Consultants, Inc. v. Toshiba Corp., C.A. No. 09-354-KAJ (Nov. 23, 2015), Judge Jordan denied a motion for attorneys’ fees filed by the defendants, Toshiba Corporation, Toshiba America Information Systems, Inc., and Toshiba America, Inc. (“Toshiba”), against the plaintiff, St. Clair Intellectual Property Consultants, Inc. (“St. Clair”).
Toshiba first argued that St. Clair’s conduct was “exceptional” under 35 U.S.C. § 285 and the Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). Toshiba argued that St. Clair failed to present evidence that Toshiba’s laptops used an “HD Audio link” that was required for infringement; rather, St. Clair offered “abstract” testimony that hardware components in laptops would generally be connected to an HD Audio link. Judge Jordan found that this argument, although a “weaker litigation position,” did not rise to the level of “exceptional” under Section 285. Judge Jordan also rejected Toshiba’s argument that St. Clair shifted its litigation position during the case and presented false royalty calculations. According to Judge Jordan, royalty calculations inherently have a “degree of imperfection,” and Toshiba’s success in exploiting these imperfections did not make St. Clair’s conduct exceptional. Similarly, Judge Jordan found that Toshiba’s success in forcing St. Clair to change its litigation position did not make the case exceptional. Judge Jordan stated that punishing a party for changing a litigation position due to the Court’s rulings is not a precedent that he wanted to set.
Judge Jordan also rejected Toshiba’s argument that St. Clair’s conduct rose to the standard of bad faith and intentional misconduct under 28 U.S.C. § 1927. Noting that Toshiba’s arguments for sanctions were similar to those it made under Section 285, Judge Jordan found that, after balancing the need to deter attorney misconduct with the lawyer’s ethical obligation to represent their clients zealously, St. Clair had not acted in bad faith by continuing to litigate its case despite evidentiary rulings that weakened the case.
Analysis: Octane notwithstanding, an exceptional case must truly be exceptional, not just weak on the merits. Having a less-than-perfect case is not misconduct.