Published on:

Judge Sleet finds case exceptional due to Rembrandt improperly compensating fact witnesses, spoliation, and assertion of fraudulently revived patents

In the multi-district litigation, In Re: Rembrandt Technologies Patent Litigation, Judge Gregory M. Sleet recently considered defendants’ motion to declare case exceptional and for an award of fees and costs.  In Re: Rembrandt Technologies Patent Litigation, C.A. No. 07-md-1848-GMS (D. Del. Aug. 20, 2015).  Judge Sleet granted the motion and ordered defendants to submit their documentation in support of the requested attorneys’ and experts’ fees, and costs.  In support of the Court’s decision, Judge Sleet found that Rembrandt improperly compensated its fact witnesses, in violation of Model Rule of Professional Conduct 3.4(b) (“A lawyer shall not … offer an inducement to a witness that is prohibited by law.”). Id. at 3 n.4.  In particular, Judge Sleet found that “the fee structure for Rembrandt’s fact witnesses was unreasonable and improperly linked to the outcome of the case, giving rise to a considerable risk of tainted testimony.”  Id.  Judge Sleet also found that “Rembrandt engaged in (or failed to prevent) widespread document spoliation, over a number of years.”  Id.  Last, Judge Sleet found that Rembrandt should have known that it was enforcing fraudulently revived patents.  Id.  Although the fraud was perpetrated by the third-party from which Rembrandt bought the patents, Judge Sleet determined that “Rembrandt had sufficient knowledge to learn of the fraud.”  Id.   In opposition to the motion, Rembrandt denied wrongdoing and “point[ed] the finger at third parties.”  Id.  Judge Sleet disagreed:

Rembrandt must take responsibility for its own massive litigation. If it had only been a single issue, perhaps the court’s view would be different. But the “totality of the circumstances”– the wrongful inducements, the spoliation, and the assertion of fraudulently revived patents — supports [defendants’] characterization of this case as “exceptional” — it “stands out.”

Id. (citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).

Contact Information