Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Intellectual Ventures II LLC v. Commerce Bancshares, Inc.

United States District Court, W.D. Missouri, Central Division

September 29, 2017

INTELLECTUAL VENTURES II LLC, Plaintiff,
v.
COMMERCE BANCSHARES, INC. and COMMERCE BANK, Defendants.

          ORDER

          NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE

         Defendants Commerce Bancshares, Inc. and Commerce Bank (together, “Commerce”) move for an order awarding Commerce attorney fees and non-taxable costs pursuant to 35 U.S.C. § 285. Commerce also has submitted a bill of costs to which plaintiff Intellectual Ventures II LLC (“IV”) objects in part. For the reasons set forth below, the Court denies the motion for attorney fees but awards to Commerce most of the requested costs.

         I. BACKGROUND

         IV is managed by Intellectual Ventures Management, LLC (“Intellectual Ventures”), which is “deeply involved in the business of invention.” Intellectual Ventures files patents for its own inventions, collaborates with others to develop and patent inventions, and acquires and licenses patents from inventors. As of June 2013, Intellectual Ventures had earned more than $3 billion by licensing its patents to third parties.

         Since 2009, Intellectual Ventures, IV, and related companies have filed more than 80 patent lawsuits. In 2013, IV began to sue dozens of banks, alleging infringement of the patents at issue in this case.

         On June 19, 2013, IV sent Commerce a letter accusing it of infringement. IV invited Commerce to compensate IV and advised that IV would file suit for patent infringement. IV had not previously contacted Commerce to discuss the purported infringement. The next day, June 20, 2013, IV filed this action, alleging that defendant Commerce was infringing one or more claims of five patents that IV owns.[1] IV alleged that Commerce infringed multiple claims of United States Patent No. 5, 745, 574 (the “'574 Patent”) through its compliance with the Payment Card Industry (“PCI”) Data Security Standard for encrypting data during communication sessions. IV alleged that Commerce infringed at least one claim of United States Patent No. 6, 826, 694 (the “'694 Patent”) and at least one claim of United States Patent No. 6, 715, 084 (the “'084 Patent”) through “its Security Practices.” IV alleged that Commerce infringed at least one claim of United States Patent No. 6, 314, 409 (the “'409 Patent”) through its ROAMPay Mobile Payment product or services that use PCI Data Security Standard technology to protect customer information and account data. IV alleged that Commerce infringed at least one claim of United States Patent No. 7, 634, 666 (the “'666 Patent”) through use of the IBM System z10 Business Class Server.

         On September 4, 2013, Commerce advised IV that Commerce has not used and does not use the crypto card of the IBM System z10 mainframe computer, which IV had accused of infringing the '666 Patent. Following court-supervised mediation efforts in November 2013, IV asked Commerce for a declaration substantiating the claim that the zSeries mainframes do not use the crypto card. On November 22, 2013, Commerce's counsel supplied the requested declarations. On November 25, 2013, IV served infringement contentions that did not include any allegations with respect to the '666 Patent. In May 12, 2014, after negotiations over a joint stipulation and a covenant not to sue that Commerce requested, the parties signed a covenant not to sue and filed a stipulation of dismissal of the claims respecting the '666 Patent.

         Pursuant to the Court's Scheduling Order, the infringement contentions that IV filed were supposed to contain, inter alia, a “specific identification of each accused apparatus, product, device, process, method, act or other instrumentality of which IV is aware” for each asserted claim, and a “chart identifying specifically where each element of each asserted claim is found within each Accused Instrumentality . . . .” IV's preliminary contentions exceeded 400 pages.

         On March 28, 2014, the parties filed a Joint Prehearing Statement and Claim Construction Chart that set forth constructions proposed by the parties-both those upon which they agreed and those with respect to which they disagreed. Each party cited intrinsic and extrinsic evidence that purportedly supported the constructions for which they advocated. On April 23, 2014, the parties filed a Revised Joint Prehearing Statement and Claim Construction Chart.

         On April 25, 2014, Commerce moved to stay this action because the patents at issue were at that time the subjects of Inter Partes Review (“IPR”) petitions filed with the PTO to invalidate the patents. In its motion, Commerce explained that IPR “is an expedited procedure . . . that determines the validity of a patent within 18 months of the date of the petition.” Commerce also stated, “Despite being filed nearly 11 months ago, this case remains in its infancy. Very little discovery has been conducted, no depositions have been taken, and no substantive motions have been filed.” On April 28, 2014, the parties filed opening claim construction briefs with the Court. On May 19, 2014, the parties filed responsive claim construction briefs with the Court.

         On June 4, 2014, the Court granted Commerce's motion to stay this action pending IPR and further ordered that the case be dismissed without prejudice, subject to being reopened upon the completion of the IPR process.

         As a result of the IPR petitions and challenges in the United States District Court for the Southern District of New York to the patents at issue, every asserted claim of the patents that were at issue has been found unpatentable or invalid under 35 U.S.C. §§ 101, 102, and/or 103. See Intellectual Ventures II LLC v. JP Morgan Chase & Co., No. 13-cv-03777 (AKH), 2015 U.S. Dist. LEXIS 56092 (S.D.N.Y. Apr. 28, 2015); (2) IPR2014-00786; (3) IPR2014-00682; (4) IPR2014-00801; and (5) CBM2014-00157. IV appealed the PTAB's findings of unpatentability relating to the ‘694 and ‘084 patents, but the Federal Circuit affirmed the PTAB decisions. Intellectual Ventures II LLC v. Compass Bank, No. 16-1416, 671 Fed. App'x 788, 788 (Fed. Cir. 2016); Intellectual Ventures II LLC v. Commerce Bancshares, Inc., No. 2016-1519, 682 Fed.Appx. 891, 895 (Fed. Cir. 2017). The judgment of the Southern District of New York became final only on July 12, 2017, and IV's time to appeal that court's decision therefore has not yet elapsed.

         On May 31, 2017, Commerce moved the Court to reopen the case and enter final judgment in favor of Commerce on each of the remaining claims. The Court then entered final judgment in favor of Commerce as to the patents that had been in dispute.

         Commerce thereafter filed the instant motion seeking attorneys' fees and filed a bill of costs. IV opposes the motion for fees and objects to certain costs.

         II. MOTION FOR ATTORNEY FEES

         a. Standard

         Section 285 of the Patent Act permits the Court, in “exceptional cases, ” to “award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. The United State Supreme Court has held that “an ‘exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014).

         The purpose of a fee award under Section 285 is to prevent “‘gross injustice, '” and an award of attorney fees “should be bottomed upon a finding of unfairness or bad faith in the conduct of the losing party, or some other equitable consideration of similar force, which makes it grossly unjust that the winner of the particular law suit be left to bear the burden of his own counsel fees.” Checkpoint Sys., Inc. v. All-Tag Sec. S.A., 858 F.3d 1371, 1376 (Fed. Cir. 2017) (quoting S. Rep. No. 1503, 79th Cong., 2d Sess. (1946)); see also Octane Fitness, 134 S.Ct. at 1753 (“The provision enabled [district courts] to address ‘unfairness or bad faith in the conduct of the losing party, or some other equitable consideration of similar force, ' which made a case so unusual as to warrant fee-shifting.”) (citation omitted). Thus, although the Supreme Court's decision in Octane lowered the standard for fee-shifting in patent cases, even in its wake, courts generally award fees pursuant to Section 285 only in cases involving “egregious behavior.” Gametek LLC v. Zynga, Inc., No. CV 13-2546 RS, 2014 WL 4351414, at *3 (N.D. Cal. Sept. 2, 2014) (citing Intellect Wireless, Inc. v. Sharp Corp., No. 10-6763, 2014 WL 2443871, at *6 (N.D. Ill. May 30, 2014) (awarding fees because of false declarations before the PTO); Cognex Corp. v. Microscan Sys., Inc., No. 13-2027, 2014 WL 2989975, at *4 (S.D.N.Y. June 30, 2014) (criticizing plaintiff for attempting to re-litigate issues previously decided and awarding fees as to duplicative motions); Precision Links Inc. v. USA Products Group, Inc., No. 08-576, 2014 WL 2861759, at *3 (W.D. N.C. June 24, 2014) (criticizing plaintiff for seeking preliminary injunction on the basis of an already-rejected theory of liability and for filing frivolous post-dismissal motions)); Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1319-20 (Fed. Cir. 2013) (affirming district court award of fees that cited, inter alia, plaintiff's filing of “repetitive motions” and “witness tampering”). Moreover, “for a case dismissed before trial to be designated exceptional, evidence of the frivolity of the claims must be reasonably clear without requiring a ‘mini-trial' on the merits for attorneys' fees purposes.” Trover Grp., Inc. v. Dedicated Micros USA, No. 13-1047, 2015 WL 4910875, at *3 (E.D. Tex. Aug. 17, 2015) (quotation marks and citations omitted); see also TainoApp, Inc. v. Amazon.com Inc., No. 15-00101, 2015 WL 13404107, at *3 (N.D. Cal. Sept. 22, 2015) (“[T]he Court . . . has not had the benefit of an in depth analysis of the arguments, especially on issues of non-infringement. On this record, even if [plaintiff]'s claim construction arguments are weak, the Court cannot say that they are objectively unreasonable.”).

         The Court must consider “the totality of the circumstances” and exercise “equitable discretion” in determining whether a case is “exceptional.” Octane, 134 S.Ct. at 1758. “This is ‘a simple discretionary inquiry; it imposes no specific evidentiary burden, much less . . . a high one.” University of Utah v. Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V., 851 F.3d 1317, 1322 (Fed. Cir. 2017) (quoting Octane, 134 S.Ct. at 1758); see also Integrated Tech. Corp. v. Rudolph Techs., Inc., 629 F. App'x 972, 976 (Fed. Cir. 2015) (“In determining the amount of reasonable attorneys' fees to award under federal fee-shifting statutes, the district court is afforded considerable discretion.”) (quotation marks and citation omitted).

         b. Discussion

         There is “no precise rule or formula” for determining whether a case is exceptional. University of Utah, 851 F.3d at 1322 (quoting Octane, 134 S.Ct. at 1756). “A case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.” University of Utah, 851 F.3d at 1322 (quoting Octane, 134 S.Ct. at 1757). Among the factors courts consider in determining whether a case is exceptional are: “failure to conduct an adequate pre-suit investigation, vexatious or unduly burdensome litigation tactics, misconduct in procuring the patent, or an oppressive purpose . . . .” Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 1311 (Fed. Cir. 2013).

         A movant must establish entitlement to fees “by a preponderance of the evidence . . . .” Octane, 134 S.Ct. at 1756.

         i. Whether IV's ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.