United States District Court, W.D. Missouri, Central Division
NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE
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.
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.
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.
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. 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.
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.
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.
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.
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.
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.
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.
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.
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.
MOTION FOR ATTORNEY FEES
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).
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
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
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).
movant must establish entitlement to fees “by a
preponderance of the evidence . . . .” Octane,
134 S.Ct. at 1756.
Whether IV's ...