Judge Andrews denies motion for attorneys’ fees in meritless suit.
Judge Richard G. Andrews recently denied a defendant’s motion for attorneys’ fees under 35 U.S.C. § 285, finding no evidence of subjective bad faith on the part of the plaintiff. Parallel Iron LLC v. Adknowledge Inc., et al., C.A. No. 11-799-RGA (D. Del. Nov. 2, 2012). The plaintiff’s case, the Court explained, was meritless because the patent at issue was unenforceable as a result of a terminal disclaimer requiring that it have common ownership with another patent that the plaintiff did not own. The plaintiff's parent company (through what the Court characterized as a costly mistake) had assigned to the plaintiff only the patent at issue, and not that other related patent. Id. at 2, 4. When the plaintiff learned of this flaw in its case, it promptly dismissed its claims against all defendants. Id. at 2.
One of the defendants, EMC Corporation, moved for attorneys’ fees. The Court explained that an award of fees under § 285 requires a showing by clear and convincing evidence that “(1) the litigation [was] brought in subjective bad faith, and (2) the litigation [was] objectively baseless.” Id. at 3 (quoting Old Reliable Wholesale, Inc. v. Cornell Corp., 635 F.3d 539, 543-44 (Fed. Cir. 2011)); see also Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1327 (Fed. Cir. 2003)). The plaintiff submitted declarations that the Court accepted as showing that the plaintiff believed (until it was informed to the contrary by one of the defendants) that it “possessed all necessary intellectual property rights for its suit.” Id. The Court explained, “[w]hile I am quite convinced that the litigation was, or became, objectively baseless, the question of subjective bad faith is much less obvious.” Id. at 3-4 (footnote omitted). “While I agree with EMC that Parallel Iron should have known that it needed both patents to bring (or to continue to prosecute) the suit, the evidence does not persuade me that Parallel Iron consciously knew that it did not have them both.” Id. at 4. Finding no evidence of subjective bad faith on the part of the plaintiff, and believing the most likely explanation was that the plaintiff was guilty of a costly and careless mistake, the Court denied the defendant’s motion for attorneys’ fees. Id.