E.D. Texas imposes 285 Liability on Lawyer, Client, Others, Jointly.

I’d written about the potential for 285 to be used to shift fees, not onto the losing party, but onto the losing party’s lawyer, here.  Ya’ll told me I was nuts.

In an unusual order dated January 25, 2017 in Iris Connex v. Dell (E.D. Tex 2:15-cv-1915-JRGJ) (here), after finding no infringement, Judge Gilstrap allowed post-judgment discovery and concluded that the case was exceptional. Stripping it way down, because the infringement contention was frivolous (and other things), Judge Gilstrap imposed joint and several liability among the corporate plaintiff, its parent company and the plaintiff’s sole officer (a lawyer) (in effective, piercing the corporate veil) for the fees awarded under 285.

The case may, as a result, be useful tool to combat shell patentees run by lawyers to shake down legitimate businesses through nuisance settlements.  This is of course, when claims are frivolous, in need of policing. Then-Chief Judge Rader, Professor Chien and I, wrote about that a while back, and I wrote about the need to police this, and also to watch out for strategic behavior by defense lawyers, well before then!

There are a lot of questions I have about this order that are to the side of the primary issue, but nonetheless may mean it is wrong. For example,  why on earth joinder of the lawyer was required by Rule 19 is a  mystery to me. But, with any luck, at least we’ll know whether this is a viable strategy.

 

2 thoughts on “E.D. Texas imposes 285 Liability on Lawyer, Client, Others, Jointly.

  1. The ultimate argument, in my 2009 article I wrote that he cited, wasn’t piercing the veil. It’s that Section 285 is more closely characterized as a tort and as such, officers should be held liable for their individual actions. The same argument is regularly used in environmental law, it just hadn’t been applied here.

    See here: link to baylor.edu

    Dan
    link to linkedin.com

  2. Hmm… I read it as saying that the Section 285 liability is on the shell company and its true owner, who happens to be a lawyer. Counsel was sanctioned under Rule 11, but was not jointly liable for the fee-shifting under Section 285 or for the sanction on the previously hidden true owner/lawyer.

    So I still think you’re nuts… :)

    Awesome case, though!

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