Chief Judge Leonard P. Stark recently denied a motion for sanctions under 35 U.S.C. § 285 in a series of cases presenting a “difficult, close call.” Princeton Digital Image Corp. v. Office Depot Inc., C.A. No. 13-239-LPS (D. Del. Mar. 28, 2016) (and related cases). Although the Court denied the motion, it found a number of factors weighed in favor of finding the case to be “exceptional” for purposes of § 285, while others weighed against such a finding or were neutral. As Judge Stark explained:
The Court makes this finding not due to the lack of merit to PDIC’s case, nor due to bad faith litigation. Instead, these cases “stand out from the rest” due to a combination of: an adequate but far from ideal pre-suit investigation, conducted with haste due to decreasing damages availability based on an expired, but seemingly strong and broad, patent; somewhat careless, dilatory litigation conduct by the patentee; an attempt by the patentee to shift some substantial portion of the costs of identifying the line between licensed and non-licensed conduct to Defendants and Adobe; intervention, permitted by the Court, by an aggressive intervenor, despite PDIC’s repeated (though at times hard-to-believe) protestations that PDIC had no intent to accuse any licensed conduct of infringement; PDIC’s unexplained delay in dismissing at least one of the above-captioned cases; and PDIC’s failure to carefully, consistently, and thoroughly respond to Adobe’s reasonable inquiries as well the Court’s questions. The overall balance, therefore, leads the Court to find that these cases are “exceptional.”
However, the Court decided that under the circumstances the “appropriate exercise of its discretion” was “not to award attorney fees.” In part that was based on the aggressive intervenor, Adobe, itself causing increased attorney fees. Additionally, Judge Stark explained, “[w]ith respect to considerations of deterrence, although PDIC could have done more to advance the litigation much more efficiently, there is no singular category of conduct that rises to a level that would warrant deterrence by way of an award of attorney fees. There is no evidence of bad faith or otherwise sanctionable conduct.” The Court added, “[i]n many ways, PDIC’s somewhat careless and dilatory conduct was a result of the unique circumstances of these cases, involving an aggressive third-party intervenor, two motions for sanctions before the case even got to the discovery phase, and a flurry of motion practice based on wholly-undeveloped theories of license interpretation and patent infringement. Id. at 41 (emphasis in original). For the same reasons, the Court found that Rule 11 sanctions were not warranted, and the lack of bad faith precluded an award of sanctions under 28 U.S.C. § 1927.