Patent Plaintiffs May Welcome More Fee Shifting

By Dennis Crouch

Semcon Tech LLC v. Micron Tech (D. Del. 2014)

A few days ago Judge Richard Andrews wrote the following order in this case:

The request for oral arguments is denied. Micron’s position is meritless, and I am surprised that micron’s distinguished Delaware counsel did not talk lead counsel out of its opposition to the motion.

[Order Lifting Stay]. Semcon’s case against Micron involves the chemical-mechanical polishing and planarization used in semiconductor wafer manufacturing. U.S. Patent No. 7,156,717. Earlier in the litigation, the parties in the action agreed to a stay of the litigation pending outcome of parallel cases involving the same patent against Applied Materials. In December 2013 that case was voluntarily dismissed as part of a settlement agreement between Semcon and Applied Materials. Semcon then repeatedly sought to meet and confer with Micron’s opposing counsel from Weil Gotshal regarding re-opening of the case, and then eventually filed a motion to lift the stay.

In its opposition to the motion, Micron‘s attorneys argued that the stay should never be lifted and never be reopened. That tidy conclusion was a simple matter of logic: (1) The stay order set in place by Judge Andrews stated that it would be in place “until such time as a final, non-appealable judgment is entered in the Semcon v. Applied Materials Suit.” And, (2) no final judgment was entered in the Applied Materials case but rather the case was merely subject to a voluntary dismissal without prejudice by Semcon. According to Micron’s attorneys, for the stay to be lifted, Semcon must re-file its lawsuit against Applied Materials and litigate that case “to a final, nonappealable judgment. . . . Until that occurs, however, the stay should remain in place to preserve efficiency and economy.”

Of course, the court saw Micron’s argument as too clever and has ordered the case reopened. I suspect that Semcon will next move for some amount of Rule 11 fees.

Micron has an interesting reputation in the patent sphere. In 2011, the company stopped hiring University of Illinois engineers because the university had sued Micron for patent infringement.  The company also has an (apparently) ongoing back-end deal with Round Rock to enforce more than 1,000 of its patents.

A few days ago, I wrote about defendants behaving badly and whether there are clear examples of that occurring. Although admittedly biased, patent plaintiff IP Nav (Erich Spangenberg) has an put together an interesting essay on the topic of fee shifting. See Patent Lawsuit Defendants Behaving Badly. The essay explains why IP Nav can be happy with a fee shifting rule – as long as it is balanced so that he can collect fees against defendants who engage in willful infringement, make meritless arguments in court, and needlessly drag-out litigation. The essay also highlights a few examples such as Takeda Chemical v. Mylan Laboratories (attorney fee award of $16.8 million to the patentee Takeda because Mylan’s obviousness argument was “so devoid of merit and so completely fail[ed] to establish a prima facie case of invalidity that it must be described as `baseless.’”) and Beckman Instruments, Inc. V. Lkb Produkter Ab. (Attorney fees for the patentee Beckman for defendant’s vexatious litigation).

On Wednesday of this week, the Supreme Court will be hearing oral arguments in the two pending fee shifting cases Highmark and Octane Fitness.

51 thoughts on “Patent Plaintiffs May Welcome More Fee Shifting

  1. Something from today’s oral arguments in Octane, for those who enjoy Extreme Tea-Leaf Reading:

    Justice Breyer: “I patent the following:  For a computer, enter somebody’s name.  Ask phone number.  And they’ll give you the phone number if you put in the right city.  That puts a list in the computer.  They can patent that? Well, you add a couple of things and they apparently ­­ you can have an argument that they can patent it.  Okay?  Because it’ll be very abstract language.  It will be able to patent almost anything. No, you can’t finally, but objectively baseless?”

  2. Sorry, Dennis, there is actually nothing legally sanctionable about Micron’s actions. They were too cute, too clever, and in some ways, made in bad faith.

    Everyone in the industry knows your pro-patent owner biases (as your anti-Cisco bias at times confirms this), but I hardly believe this is a good example of “defendants behaving badly.” At the time Micron filed its opposition, the order was clear — the case was stayed until a final and non-appealable order issued. Micron opposed the motion on the ground that the express condition precedent to the lifting of the stay never occurred. The case law is clear that litigants are allowed to rely on the literal terms of a court order. You cannot be sanctioned for that, even though everyone in the case understood the “spirit” of the order.

    Now were Micron’s actions, from a practical standpoint, justified? No way, Jose. It was ludicrous to argue that the previous case had to be refiled and litigated all the way to judgment, or otherwise, the case could never be unstayed. Everyone knew what the judge “meant,” even if the order was too narrow on the conditions of reopening. So Micron should have just caved to a stipulation reopening the case, rather than having made the decision to oppose the motion.

    But sanctionable? Nah… And the only harm caused by Micron’s decision to oppose lifting of the stay was the other side had to bring an opposed rather than a stipulated motion.

    You say, “I suspect that Semcon will next move for some amount of Rule 11 fees.” Obviously the author of that didn’t understand the rules, since Rule 11 wouldn’t be applicable here, and the only fees they’d recover are the fees for having to file the motion to reopen the case — which is perhaps a few hundred dollars, at most.

    I realize you are quick to point out any instance of “infringers behaving badly,” but the fact us, fee shifting won’t work against defendants. That’s because their actions are episodic, like this one, so you can’t significantly fee shift against them. In this example, you cannot compare the damage to the system of Micron filing an ill-conceived opposition to a single motion to reopen, to the most considerable damage from a plaintiff bringing an unwarranted claim and invoking the federal judicial system for years of wasteful litigation.

    1. LOL – bad faith actions are not legally sanctionable…?

      Prof Crouch has a pro-patent owner bias…?

      you are quick to point out any instance of “infringers behaving badly,”“…?

      That’s some load there Lode.

      (yes, Prof. Crouch, it does appear that you cannot please anyone – ;-) )

  3. Re this, RH writes:

    In the absence of authorization for this from Congress, what should the PTO have done here? Should the PTO take the position that someone who has committed fraud will never have a persuasive declaration?

    There used to be some very reasonable guidelines in the MPEP regarding the presumptive failure of self-serving inventor declarations. Given that presumption and the fact that this guy’s unethical behavior in this technological area is acknowledged around the world, it doesn’t seem like asking much to require a dec from a non-invested third party.

    In addition, I’ll add that I don’t see any problem whatsoever with a lifetime ban from access to the patent system in cases such as Woo-suk’s or Schon’s, or when a pattern of sanction-incurring patent enforcement activities is documented. It’s a simple cost-benefit analysis. Just get the human scum out of the patent system. There will be zero negative effect on “progress.”.

    1. Agreed on the lifetime ban.

      The PTO really screwed up here.

      May I suggest they turn the issue of the affidavit over to the Justice department? A suit by the government for fraudulent procurement was authorized by the Supreme Court in the Telephone cases.

      1. “Agreed on the lifetime ban”.

        “Agreed on Three Strikes.”

        “Agreed on Hammurabi’s Code”.

        “Off with their heads”.

        We 21st century metrosexuals are TOTALLY nuanced and elegant.

    2. A life time ban. Lulz. Only an examiner like you would propose something so ridiculous. And only somebody as silly as Ned would agree with you.

      Here’s a take on the patent from somebody who’s not an examiner.

      link to ipbiz.blogspot.com

      1. The best part is the absolute hypocrisy of Malcolm Mooney when it comes to serving up self-serving swill and misrepresentations of law and fact in the name of his policy agendas.

        But what would you expect from someone who believes that intellectual honesty is simply not required because this is merely a blog and not a court?

  4. If I were a judge, not only would I say that the position of the infringer here was lacking any merit whatsoever, I would immediately add that they should forthwith pay the patent owner’s costs and attorneys fees.

    But I would also like them to pay a significant court fine of some sort for wasting valuable judicial resources. Is this at all possible under the rules?

  5. Dennis,

    Not sure the Plaintiff here can actually move for Rule 11 sanctions since has the 21-day safe harbor provision. Title 28 U.S. Code § 1927 might be the better statute to request fees under.

    1. That guy reminds me a lot of you anon, what with his ta rd quotient being particularly high. None of what he says there waters down anything. Adding settlements into the mix just makes things look worse for trolliwollies.

      1. “Tard” quotient”? “Trolliewollies”? Got up on the nasty snarky side of bed again, eh 6? “No patent for you!”

          1. Honestly, you need to stop the usage of these cutesty little phrases like “Tard quotient” and “Trolliewollies”. They’re not incisive, they’re not cute, they’re not even remotely intelligent, and they instantly reduce your credibility to zero and make it easy to skip any and all of your postings (at least for those other than the 5 or so people who dominate these comment boards and ruin it for the rest of us).

            1. Well instead of worrying about being too cutesy, rather than being worried about being too humorless (which is probably worse), maybe its better to consider that humor is an effective way to deal with people afraid to use their real names in the trivial context of a patent chat board.

              Also, the absurdity of the system in the real world demands some balancing levity.

              On the topic of balance, Anon is obviously a disturbed individual so it’s probably therapeutic to tweak her from time to time, perhaps helping to stimulate a more normal balance of aggression v. amity.

              I’m here to continue my righteous jihad against IBM for behaving like the lowest of trolls, and maybe to learn some things along the way- the contrast between this site and the Quinnbot’s is illustrative in itself….

            2. effective way to deal with people afraid to use their real names

              LOL – look around you Marty – less than one third of distinct posters here use their ‘real names’** (per a recent crawl), and outside of Ned and Prof. Crouch, the volume of posts by those who use their ‘real name’ is less than 5% of the discussions.

              **anything looking like a full real name was counted to give you the benefit of the doubt

              But please, keep on fighting that strawman while basking in your ignorance of the law. It’s ‘real effective’ for your ‘righteous jihad… (because clueless lawless communistic jihads really really really ‘make me afraid’)

              /eyeroll

            3. And I would also add Marty, that Ned Heller proves the opposite of what you would wish to say regarding ‘fear.’

              Ned freely uses his real name – and constantly spins in fear of having a full conversation on key legal matters. Note how often he runs away and refuses to discuss the points of law and fact that I present.

              Your ploy about posting with a real name is merely a shameless and vapid ‘boogeyman’ tactic that uses a false sense of righteousness and an emotional rhetorical tool.

              You should pay more attention to what is said and far less attention to who is saying it. Pay attention to the important stuff. That – more than anything else – will help you in your so-called ‘righteous’ jihad.

            4. Ned,

              You have not answered my questions related to the Nazomi case.

              You have not answered my questions related to the Grand Hall experiment.

              You have not answered my questions related to controlling law and the exceptions to the printed matter doctrine.

              Running away is not an answer.

            5. Martin, I agree that IBM’s business model included monetization of patents. My basic problem with IBM is their hypocrisy. They accuse others of being trolls who also seek monetization, while suggesting that IBM is only protecting products.

              We both know that is pure spin.

            6. And on the Prof. Hricik side of the blog, you have not answered my questions on the treatment (non-first in line) of patents as simply personal property and how a recognized patent expert (Chisum) indicates that state by state law has very real implications to ownership (not inventorship) issues.

            7. Since the questions are not in fact answered, we are all but guaranteed another Merry-Go-Round of CRP-Counterpoint-Run away from the counterpoints and CRP again.

              C’est La Vie.

    2. anon, good article. I can see why you earlier said that the statistics supporting the anti-troll coalitions is suspect – they do not provide raw data or other metrics that would allow independent review of their results. Essentially because their data is unreviewable, it is a totally unreliable and amounts to little more than propaganda.

  6. Speaking of bad behavior, this is just pathetic:

    link to arstechnica.com

    Last weekend, The New York Times discovered that the US Patent Office had issued a patent for a procedure to generate human stem cells. This, by itself, isn’t especially surprising. What is surprising is the recipient: Hwang Woo-suk, the Korean researcher who is widely considered to have faked his data in the paper that claimed derivation of the first cloned human stem cells.

    Astonishingly, the patent was for the work that’s now regarded by almost everyone other than Hwang as being fraudulent.

    The award came despite the fact that the USPTO originally had decided not to award the patent because the patent application did not contain a proper description of the work. A signed affidavit from Hwang himself was apparently all that was needed to clear this hurdle and allow the patent to go forward.

    Unbelievable.

    1. The PTO does not conduct experiments, so it cannot verify the accuracy of experimental evidence in declarations. How is the PTO to know if an applicant submits fraudulent work to the PTO?

      None of the news stories on the topic have clearly addressed what parts of his work were fraudulent and why the patent’s validity would depend on these aspects of his work. Is it possible that he did in fact invent what he’s claimed despite the past fraud? His claim 1 is drawn to a cell line which required the deposit of a sample – this ought to be available to researchers to verify whether it is legitimate or not.

      It seems to me that the PTO did its job here, and also that some of the stories’ authors would prefer the PTO to have more investigatory authority. In the absence of authorization for this from Congress, what should the PTO have done here? Should the PTO take the position that someone who has committed fraud will never have a persuasive declaration?

    2. A better line of attack would be the AIA’s prohibition against granting certain patents:

      Sec 33. Limitation on issuance of patents
      (a)Limitation
      Notwithstanding any other provision of law, no patent may issue on a claim
      directed to or encompassing a human organism.

      (a reminder: we should not forget that the congressional record for this gem does NOT include the records from past Congresses detailing the negotiations of terms used)

      While clearly human stem cells do not encompass a human organism, it is arguable that human stem cells are directed to a human organism.

      1. I will posit that my post depends more on the unknown reaches of the term I put in bold (“directed to”) as opposed to the “encompassing” term.

        Much of the record focuses on the “encompassing” term to the exclusion of the (admittedly undefined) “directed to” term.

        I will also acknowledge that if the congressional record does come into play, methods of making stem cells specifically appear safe under this provision. Whether they are safe from the reach of the Myriad case would depend on the claims. Claims as to a method might survive.

          1. Nice 6 – you need to actually read the entire post.

            “are not” is only captured by the phrase “encompassing.” You still have to contend with the phrase “directed to” which cannot mean the same thing as “encompassing” and that means that the law must cover more than just human organisms alone.

            1. I know all about your attempted wordsmithing tomtardery, people have been talking about it since the AIA passed. I’m not impressed, and neither is any judges or examiners that I know of. And neither will they ever be.

              Funny you should bring that tomtardish too clever argument up in a thread all about arguments that are too clever though.

            2. Gosh I should have kept reading! “Tardface”! “Tomtardery”! You have a thing about coining words derived from “retarded”. Is it just your throbbing hangover this morning or does a reason exist for your peculiar obsession?

            3. I agree with you that “directed to” and “encompassing” must mean something different. “Encompassing a human organism” seems to me to apply to compositions of matter that are human organisms. Perhaps “directed to” applies to methods for making a human organism? That’s one interpretation under which stem cells and body parts aren’t reached by the statute.

          2. Despite being aware of all Internet traditions, I have fallen into the trolling trolltardary of Anon myself, but I will attempt to avoid it in the future. Doubtless she will surprise me one day by agreeing with something someone says….just to show me I imagine…

            1. I agree with you: you have fallen into the trolling trolltardary.

              However, I disagree on a number of factors.
              1) I am not involved in any such ‘trolling trolltardary
              2) You do not measure up to me
              3) I have yet to see any spark of imagination from you
              4) I am not a woman

              But please feel free to share your lawless, communistic views anytime you want to be set straight Marty

            2. Malcolm serves up a softball:

              Q: “what in heck does Dennis find appealing

              A: The truth.

              Is it really ‘red-baiting’ if the characteristics are communistic?

    3. “Unbelievable.”

      How is that unbelievable? That’s precisely the awesome patent system patent maximalists have set up at work for you.

      And of course this likely isn’t the only case of this happening, it is just the folks that got caught and publicized in a field still clinging to the popularity it had from being controversial back in the day.

    4. Malcolm, I agree. The examiner should have cited the published material indicating that the author was producing fraudulent data. Based upon this, the examiner should have said that the author’s own affidavit could not be relied upon. The examiner should have demanded corroboration by an independent third party.

      1. “The examiner should have cited the published material indicating that the author was producing fraudulent data.”

        Which dropped into his lap via … magic.

  7. chemical-mechanical polishing and planarization used in semiconductor wafer manufacturing

    Wow. Actual computer-related technology.

    How many bottom-feeder patent attorneys are out there “innovating” in this space, I wonder?

    The essay also highlights a few examples such as Takeda Chemical v. Mylan Laboratories (attorney fee award of $16.8 million to the patentee Takeda because Mylan’s obviousness argument was “so devoid of merit and so completely fail[ed] to establish a prima facie case of invalidity that it must be described as `baseless.’”) and Beckman Instruments, Inc. V. Lkb Produkter Ab. (Attorney fees for the patentee Beckman for defendant’s vexatious litigation).

    Erich Spangenberg has less in common with Takeda Chemical or Beckman Instruments than a cockroach has with a St. Bernard.

    1. Malcolm needs to join the Amish with “Wow. Actual computer-related technology.

      Hint: look around and notice that almost everything in the modern world is touched with and affected by ‘computer-related technology.’

    2. “How many bottom-feeder patent attorneys are out there “innovating” in this space, I wonder?”

      I’m going to go out on a limb here and say ~0.

  8. “In its opposition to the motion, Micron‘s attorneys argued that the stay should never be lifted and never be reopened. That tidy conclusion was a simple matter of logic: (1) The stay order set in place by Judge Andrews stated that it would be in place “until such time as a final, non-appealable judgment is entered in the Semcon v. Applied Materials Suit.” And, (2) no final judgment was entered in the Applied Materials case but rather the case was merely subject to a voluntary dismissal without prejudice by Semcon. According to Micron’s attorneys, for the stay to be lifted, Semcon must re-file its lawsuit against Applied Materials and litigate that case “to a final, nonappealable judgment. . . . Until that occurs, however, the stay should remain in place to preserve efficiency and economy.” ”

    HAHAAHAHAHAHAHAHA

    Micron. You so funny.

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