NewEgg Denied its Fees Again

Site Update v. CBS Corp and NewEgg (Fed Cir. 2016)

Back in 2010, Site Update sued a broad set of companies for infringing its Reissued Patent No. RE40,683. The patent claims appear to broadly cover a method of using an XML Sitemap to update search engine data.  As is its policy, NewEgg refused to settle the case and, following a claim construction decision favoring the defendant, the district court entered a stipulated dismissal with prejudice.  At that point, however, NewEgg requested that the case be deemed “exceptional” and that it be compensated its reasonable attorney fees under 35 U.S.C. § 285.

The district court originally rejected the fee request. However, that decision was prior to Octane Fitness and, on appeal, the Federal Circuit previously remanded and asked for reconsideration under the Supreme Court’s new precedent.  On remand, N.D. California Magistrate Judge Grewal* again denied a fee award — listing eight reasons:

(1) Site Update’s proposed claim constructions were not “so weak that this case stands out from others because [Site Update] abandoned its reliance on these constructions when it was given the opportunity to do so”;

(2) Site Update’s argument that its means-plus-function terms should be given a broad construction did not make the case exceptional;

(3) Site Update’s positions on necessary structures were “unartful,” but not so frivolous to be exceptional;

(4) Site Update’s position on structures “strains credibility,” but was not so unreasonable as to warrant fees;

(5) an incorrect proposed claim construction is not exceptional;

(6) Site Update’s infringement theories had flaws, but losing does not compel fees;

(7) Site Update’s willingness to settle does not make the case exceptional; and

(8) deterrent policy considerations are inapposite in this case

On appeal, the Federal Circuit directly followed Supreme Court precedent giving a district court discretional authority to determine fee awards and requiring deference on appeal.

Although reasonable minds may differ, the district court ruled from a position of great familiarity with the case and the conduct of the parties, and it determined that Site Update’s tactical blunders and mistakes do not warrant fees under 35 U.S.C. § 285. The district court noted that Site Update tried and failed, but losing a case does not make it exceptional. . . . [U]nder the circumstances of this case, our review authority is limited to whether a district court’s findings are supported by evidence and sound reasoning. . . . In this case, because we do not believe that the district court based its ruling on an erroneous view of the law and we are not left with a definite and firm conviction that the district court erred in its assessment of the evidence or otherwise abused its discretion, we cannot say that the district court erred. For these reasons, we affirm.

In the appeal, the Federal Circuit noted that – this time, NewEgg was the one with an unreasonable position — demanding a “de novo review of the district court’s findings” despite recent Supreme Court precedent to the contrary.   However, the Federal Circuit followed its usual practice of requiring each party to bear its own costs of the appeal.

= = = = =

* I assume that the parties agreed that these issued could be properly decided by the Magistrate Judge.

96 thoughts on “NewEgg Denied its Fees Again

  1. <i.SmartMetric v. Mastercard

    The CAFC will have yet another chance today to encourage the filing of meritless cases that are so awful no reasonable person can dispute the lack of merit but, hey, it’s a fine line between “almost frivolous” and “frivolous” and it wouldn’t be prudent to question a district court judge on that count. Never mind that the odds of the Supreme Court reversing a CAFC decision to shift fees in a case that the district court judge found “meritless” is precisely zero.

    link to

    In a March order denying the card companies’ renewed motion for attorneys’ fees, U.S. District Judge Michael W. Fitzgerald held that while some of SmartMetric’s positions were exceptionally weak and potentially frivolous, he didn’t believe the litigation was undertaken in bad faith and that the dispute wasn’t exceptional under the U.S. Supreme Court’s Octane Fitness ruling.

    SmartMetric’s “aggressive litigating position, combined with disorganized and ineffective case management, lengthened and complicated the case.”

    “Certainly it was not a case that SmartMetric was going to win,” the judge said. “The court does not conclude, however, that the actions of counsel were taken frivolously or in an attempt to harass. Rather … many of the problems faced by plaintiff’s counsel stem from his relative lack of resources compared to defendants and his aggressive determination to pursue weak legal positions.”

    So who are the incompetent attorneys representing this patent tr0ll? Are they the same incompetent attorneys who filed the “meritless” motion to take the fee shifting isuse out of the judge’s hands in the first place?

    Let’s not even bother looking at the junk claims. All we need to know about them is that SmartMetric asserted that it’s claims protected the use of “information” that was “necessary” to manage the processing of automatic credit card payments. Might as well just scream “my patent is junk!” from the rooftop.

    1. >>The CAFC will have yet another chance today to encourage the filing of meritless cases that are so awful no reasonable person can dispute the lack of merit but,

      And, you know this because of what? Oh yeah, you are the smartest little boy/girl on the block. I keep forgetting.

      >> the use of “information” that was “necessary”

      For someone that makes his/her living from processing information, you sure are down on machines that can/will replace your paid blogging position.

      1. NWPA machines that can/will replace you

        When you present this awesome argument to the Federal Circuit or the Supreme Court, be sure to wear camo and carry a gun. They’ll be very impressed!

    2. With respect to the oral argument, the CAFC panel here (Prost, Newman and Stoll) seemed relatively inclined to remand the case to the district court judge to reconsider the refusal to shift fees (making this an “exceptional” oral argument, pardon the pun).

      The defendant’s attorney appeared to gain traction with evidence suggesting that the district court made errors of law in its decision. The most interesting legal error alleged, I thought, was the district court judge’s reliance on his finding that the plaintiff’s infringement contentions were not “implausible on their face”. The defendant’s position was that it can’t be the case that meeting the Twombly standard for pleading can bulletproof a losing party against a finding of “exceptionality.”

      The larger issue is really what this term “exceptionality” means. Given the numerous h0rr0rshow aspects of contemporary patent assertion, it can’t be the case that fees in meritless cases are only awarded when the lack of merit is somehow “shocking” or only when the case is “even more meritless than the usual meritless patent case.” Ceaselessly hammering on a meritless position that has no other purpose other than to drive up an innocent defendant’s costs is exactly the sort of activity that the statute is intended to prevent. When judges continue to sit on their hands, it only encourages the worst behavior, which in turn leads to that worse behavior being seen as “normal” and not “exceptional.”

      1. Sort of the same problem with Alice cases. No two district courts are applying the test the same way, or can even agree on the right auspices for the test (before or after claim construction or expert reports, etc.), and in some instances the same courts are coming to opposite conclusions on what appear to be very similar facts.

        Pity an innocent defendant who then has to spend a million bucks and four+ years to put the precise question to the CAFC.


        1. Martin,

          Law should be clear and definite.

          Equity deals in the balancing of factors so that no one can really predict reliably what an answer is.

          Scalia has made this point numbers of times where his colleagues, like Kennedy, like to fuzz it up.

          It remains my view, and I have said this many times, that Bilski is the worst patent case ever decided because of its indefiniteness, because of its misuse of the term “abstract” in a way that is not understandable to ordinary human beings. The words one uses to describe the law need to be at least clear and well understood. It never has been clear to me how the claims in Bilski were abstract given that they claimed a very specific implementation of the idea of balancing risk.

          It remains obvious that the problem with the Bilski claims was that balancing risk is non statutory no matter how much detail ones adds. Stevens was right, and its a shame that Scalia joined Kennedy and not Stevens.

          What a FUBAR.

          1. State Street Bank was the granddaddy, but the real problem is a dysfunctional Congress. Operating under that constraint, the next problem is a lack of judicial understanding of what information inventions really are and what they really mean.

            The next problem after that is civil procedure and patent bar economics (esp. experts and unlimited discovery) that stacks the deck so heavily in favor of patentees that abuse is inevitable. The next problem is a single appellate court which for all purposes IS the ballgame, which means the costly district litigation has all the value of NFL pre-season games.

            And yes, Bilski was terribly flawed in not construing “process” to at least require a finding of law as to the result of a method.

            FUBAR indeed. I’m going to do my share to try fix it, by whatever limited means I may possess….

            1. Martin, Congress showed what it was made of when it did not legislatively overrule State Street Bank, a case that itself had overrule case law of extreme vintage to hold that business methods were patentable subject matter.

              We have had chaos since State Street Bank. Bilski did not help. All Alice did was provide partial clarification of Bilski — that the recitation of conventional computer hardware, something that Bilski did not recite, was not enough.

              Now the courts are set loose to reinvent the wheel, and they have. Perhaps this is what Kennedy wanted. But Bilski violates the golden rule that law itself must be clear and well understood.

          1. MM, compare Voxathon LLC v. Alpine Electronics of America, Inc.
            with Advanced Marketing Systems, LLC v. CVS Pharmacy.

            Same court, similar subject matter, different result, apparently by whim.

            You really want to argue that the Alice test is being evenly applied?

              1. “anon” there was NO limit provided to the “Gist/Abstract” sword.

                This “gist/abstract sword” is a strawman that you and your cohorts made up out of whole cloth so who really cares?

                As you’ve been informed already, screeching that “everything is abstract” from the rooftops as opposed to screeching it from the rock from under which you crawled doesn’t make your screeching more coherent or persuasive.

                You’re going to keep l0sing until you learn how to make an argument like a grown up. And yes you’ve been l0sing for many years now so there’s little hope for you.

            1. Martin You really want to argue that the Alice test is being evenly applied?

              Martin, I’m not some cl0wn over at Q’s miserable blog. If you’re going to move the goalpost so transparently, do everyone a favor and admit it.

              Your original assertion was that “no two district courts are applying the Alice test the same way.” That’s baloney.

              Now you’re saying that the test isn’t being applied “evenly” across all the district courts. Gee, what a shocker. How is that different from any other test in patent law? Answer: it’s not. Also, importantly, it’s a completely different assertion from your original assertion. Step it up, please.

              All that said, I’ve seen no evidence — certainly not from you — suggesting that most district courts are not applying the Alice test in “the same way” (more or less, anyway — this is the law, after all, and not science; judges may phrase these differently or approach the facts from different angles but that doesn’t mean the test or the result being applied is “different” in a material way).

              1. Martin, I’m not some cl0wn over at Q’s miserable blog. If you’re going to move the goalpost so transparently, do everyone a favor and admit it.

                LOL – no, you are this site’s cl0wn.

                Including (yet again) the AccuseOthersOfThatWhichMalcolmDoes, as you more than any one else “move the goalposts” MOST here.

                What an arse.

            2. Martin: MM, compare Voxathon LLC v. Alpine Electronics of America, Inc.
              with Advanced Marketing Systems, LLC v. CVS Pharmacy.

              Same court, similar subject matter, different result, apparently by whim.

              Judges make mistakes. Which one made the mistake in these two cases, Martin? Explain it to everyone.

              1. MM, the ability to find a “mistake” is inherent in the Alice test.

                Judge Robinson in Delaware, IMO a most experienced and even-handed patent jurist, just wrote this in Motivation Innovations, LLC v. Petsmart, Inc.:

                “Moreover, it is less than clear how a §101 inquiry that is focused through the lens of specificity can be harmonized with the roles given to other aspects of the patent law (such as enablement under §112 and non-obviousness under §103), especially in light of the Federal Circuit’s past characterization of §101 eligibility as a “coarse” gauge of the suitability of broad subject matter categories for patent protection. Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed. Cir. 2010). Given the evolving state of the law, the §101 analysis should be, and is, a difficult exercise. At their broadest, the various decisions of the Federal Circuit would likely ring the death-knell for patent protection of computer-implemented inventions, a result not clearly mandated (at least not yet). On the other hand, to recognize and articulate the requisite degree of specificity – either in the equipment used or the steps claimed – that transforms an abstract idea into patent-eligible subject matter is a challenging task”.

                Its by no means even a sure thing that 101 demands an inventive concept- Stewart’s dissent in Flook was crisp on that point:

                “The Court today says it does not turn its back on these well-settled precedents, but it strikes what seems to me an equally damaging blow at basic principles of patent law by importing into its inquiry under 35 U.S.C. §101 the criteria of novelty and inventiveness. Section 101 is concerned only with subject matter patentability. Whether a patent will actually issue depends upon the criteria of §§102 and 103, which include novelty and inventiveness, among many others. It may well be that under the criteria of §§102 and 103 no patent should issue on the process claimed in this case, because of anticipation, abandonment, obviousness, or for some other reason. But in my view the claimed process clearly meets the standards of subject matter patentability of §101.”

                I certainly do want to move the goalposts.

                I want “abstract” defined at eligibility so firmly that it would be hard to get a “mistake” past a district judge or patent examiner, let alone the CAFC. To me, human consumption of information creates instant, unequivocal abstraction.

                Once that big step is handled, defining “abstract” at patentability would have to be handled by a subjective test- there is simply no way around it. KSR acknowledged that no matter how we cut it, obviousness in many instances cannot be objectively determined. Information inventions are vastly more difficult to narrow to a field of endeavor, and the ease and speed with which they can be iterated and applied is magnitudes beyond the possibilities of the physical world, meaning that finding an inventive concept is even more subjective.

                That’s a fact of life, and if we are going to have a working IP system, the “common sense” calls need to be made by judges early in cases, but with at least some adversarial exchange and construction of terms, and for processes, construction of results.

                The current Alice test is utterly random in the context its being applied. Sometimes claim construction is seen as needed, sometimes not. Sometimes simple assertions of non-generic computing(!) kill motions, sometimes they don’t. Some judges don’t think 12(b)6 motions should virtually ever fly, on principle. Sometimes very similar fact patterns end up with very different results. It happens, as I pointed out. Intra-court or inter courts, it makes no difference to the weakness of the current application.

                You can cheerlead all you wish because the policy goal of fixing the messed up system is incrementally served, but really, lawyers are already figuring out ways to game it (have any two judges ever had more impact on patent law than DDR?)

                You can also save the ad homein with me- its fun with anon but my motivation is pure, white-hot hate for the status quo.

                1. Martin, regarding the dissent by Stewart, how do you think he would handle a claim having mixed subject matter, where the new part was non statutory?

                2. He could either find the claim ineligible under 101, ignoring the old elements, or he could find it unpatentable under 102, ignoring the new elements. I think it would depend on the weights of the elements within the invention. The interesting question is one of procedure- at what point in cases were 101 questions raised between 1952 and the modern era?

                3. Well, Martin, the printed matter doctrine is handled today under 102/103, but with the clear understanding that the printed matter is given no weight.

                  But the point here is that Stewart was and remain wrong. The invention, if any, has to be in statutory subject matter. If non statutory subject matter is present, it is ignored unless it is applied functionally — the court in Alice/Mayo talked of transformation. But really, functionality is what they are looking for, where, for example, the program modifies the computer that in turn improves the car.

                4. Ned you know that I also think the printed matter doctrine should is obsolete in the Information Age.

                  The problem of non-eligible elements in claims is not actually an eligibility issue if the non-statutory matter is not the invention- it should simply be ignored as ineligible and the claim defeated under 102. If the non-statutory matter is the claimed invention, it should go out on a 101 finding.

                  In litigation, there should be a formal eligibility inquiry stage, just as there is now a formal claim construction stage, at which to make the determination.

                  I suspect Stewart was correct. It seems that eligibility and patentability should be bifurcated since that’s the scheme of the patent act… the problem is two kinds of abstraction for the two kinds of inquiry.

                5. Tooo funny – Ned talking about only a part of the printed matter doctrine….

                  Mr.Snyder, beware of those that refuse to acknowledge the full doctrines of law, purposefully omitting those portions that they find “inconvenient.”

    3. MM, what is the main problem here, the weak case or the disorganized trial management. Could the weak case have been won by competent counsel? I think that is the implication.

      1. Ned: Could the weak case have been won by competent counsel? I think that is the implication.

        Thankfully nobody (that I’m aware of anyway) has suggested a “different-counsel might have managed to get this dog of a case past summary judgment” test for exceptionality.

        The only way to lose this case was if the defendant’s counsel was incompetent (they weren’t). Do defendant’s occasionally hire incompetent counsel? Absolutely they do. And I haven’t detected much sympathy from judges when that happens.

          1. He “sniffed” the case – and that was his usual “enough.”

            (it does not matter to Malcolm anyway – his short script is all that he uses no matter what the case may have actually said)

          2. Martin : Care to distinguish the rhyme or reason for the different outcomes ?

            That would seem to be your job, Martin, as you’re the one making the assertions. Provide the claims to everyone so we can see how identical they are, then summarize the reasoning in the two cases and explain where the fundamental differences lie. Then tell everyone which jurist was correct and why.


  2. The reluctance of Federal courts to acknowledge the games being played by patentees in the so-called computer-implemented arts — the lowest form of “innovation” that any patent system has ever encountered — is just a symptom of the decades-long coddling of patentees, particularly in those oh-so-shiny “tech” fields.

    Here’s the district court’s write-up in BARRON v. SCVNGR (oral arguments today) where the patentee’s claim was chucked on summary judgment:

    Although this Court found Plaintiff’s claim to be meritless, it was not so far-fetched that no reasonable patent-holder would file suit.

    Got that? Because — apparently — “reasonable patent holders” file meritless lawsuits, this meritless lawsuit is not “exceptional” and so we’re not going to shift fees. Tough luck, public! Get ready to be hauled into Federal court on meritless claims and pay your lawyers.

    Indeed, Plaintiff and his counsel continued to assert that the mobile app infringed the `873 Patent on appeal to the Federal Circuit, arguing that a LevelUp user’s phone functions as a “transaction terminal.” Consequently, the Court finds that Plaintiff’s claim was not objectively baseless.

    Got that? The patentee with the meritless claim dug its heels into a d.o.a. argument that it pulled out of its behind only after the summary judgment motion was granted. Therefore … what? Somehow this “meritless case” is not “objectively baseless”? Because if you pretend you were born yesterday and you squint real hard you can kinda see like where maybe the patentee sort of has a point but really doesn’t? Good grief, what a farce.

    At around 13:30 in the oral argument, the defendant’s attorney does an excellent job of explaining to the CAFC that if they refuse to encourage fee shifting in the worst cases because of some absurd level of “deference” to the district court, they might as well chuck the fee shifting statute out the window. They are completely undermining the purpose of the statute.

    1. There’s no way for those of us who cannot listen to these (since we don’t have time to do so) transcripts to know if what you are saying is true or to determine the all important context for the statements. If you can provide an official transcript of these, please do. Otherwise, I’ll continue to ignore them.

      1. In fairness to MM:
        First, the court doesn’t release official transcripts. The only thing they release is a recording.

        Second, the majority of them are not actually that long. ~30-45 minutes. I often listen on my drive to work. Not only are they interesting, but they provide a good opportunity for litigation professionals to learn what is (and what is not) effective oral advocacy.

        Finally, I appreciate that MM listens and points to ones (s)he has found interesting. It allows me to then more effectively prioritize them to listen to. You don’t have to accept what MM says as gospel, but instead read her/his summary with a critical eye. It has always seemed a bit foolish to ignore what someone else is saying just because one may disagree. Especially where in litigation, that can lead to a losing position.

        1. Jurisdiction nerds may find today’s arguments in Microsoft Corporation v. GeoTag, Inc. interesting (the case was actually argued by Google’s counsel). Buried amidst all the other nonsense (and the junk claims) is the occasionally sticky question about when counterclaims give rise to subject matter jurisdiction (and whether Fed Cir law or the local circuit law applies in a patent case).

          Here, GeoTag brought a counterclaim against Google after Google sought a declaratory judgment of non-infringement. GeoTag now argues that becasue the court never had subject matter jurisdiction over the declaratory judgment action (which settled in 2013) the court never had jurisdiction over their counterclaim, which was (they allege) compulsory.

          District court (Del) decision (finding against GeoTag) here:

          link to

          1. MM, according to the facts, as I understand them, Geo-Tag sued Microsoft/Google customers of a mapping service for direct infringement. Microsoft sued Geo-Tag for declaration of noninfringement of the its service. Geo-tag then counterclaimed for for direct infringement. Geo-Tag then granted MS/Goog a convent not to sue based on its services to the customers.

            The district court decided that it retained jurisdiction over the allegation of MS/Google direct infringement because that was separate controversy — a permissive counter claim — whose controversy was not mooted by mooting the controversy involved in the complaint.

    2. >>the lowest form of “innovation” that any patent system has ever encountered

      Right. 15% of our GDP is from the lowest form ever. Sure. The lowest form ever drives cars, is the best chess player, etc. Sure.

      Maybe the lowest form of “innovation” is the paid blogger.

    3. MM >>Got that? Because — apparently — “reasonable patent holders” file meritless lawsuits, this meritless lawsuit is not “exceptional” and so we’re not going to shift fees.

      MM nonsense. You are not accounting for the difference in how a plaintiff may view a case prior to litigation vs. how the court may view the litigation after trail. Big difference.

      I agree with Jane there is some interesting things that MM brings out, but the problem is that you can’t trust anything he says.

      1. But I agree that it is easy to see through the anti-patent judicial activist arguments and it is nice to see them on display knowing that Google has hired many judges and lawyers to spout them out.

      2. MM You are not accounting for the difference in how a plaintiff may view a case prior to litigation vs. how the court may view the litigation after trail.

        This case was dismissed on SJ on the basis of undisputed facts.

        Evidently in order to qualify as “exceptionally” meritless these days, patentees need to actually wear their colorful superhero underparts in open court when they file their cases.

  3. Would this qualify as an “exceptional” case? Or is this just another example of “credulity straining” behavior by patentees that we have to learn to embrace?

    Oral arguments this morning.

    link to

    The primary patent at issue was U.S. Patent No. 7,003,500 (“the ’500 patent”), which described a system of purchasing downloadable media content or merchandise over the Internet through a retail point of sale transaction. …

    In an earlier proposed claim construction order, construing the term “means for storing and retrieving a record on or in a physical medium,” the court opined that the “function” of claim 1 was a “means for storing and retrieving a record.”…. [The patentee argued that the corresponding structure was shown in] a Figure which pictured a physical ticket bearing a password or code …. [<–gee, that sounds like a total b.s. "argument" if I ever heard one — does the ticket retrieve the information from itself?]

    The defendants also moved for invalidity for lack of written description, based on three terms from claim 10: “payment message,” “selling message,” and “authorization message.” The application did not contain any written description of the three challenged terms…. The first time these terms were mentioned with respect to any of the patents-in-suit was in June 2005, when Driessen made a further amendment to his claims in the prosecution process.

    Why on earth should a defendant have to pay its own fees to invalidate a claim that includes multiple terms that aren’t supported in the spec? Some commenters here would seem to accept the answer that “patentees do this all the time”, therefore it’s not “exceptional.” Even if the behavior is barely believable, as long as you can write a list with five or six redundant/irrelevant observations (“merely being wrong doesnt require fee shifting” <– deep stuff) apparently the lower court's finding is bulletproofed.

  4. If this case had gone to trial, the outcome may have been different. Site Update’s decision to settle gained favor with the district court. NewEgg’s decision to continue the litigation for fees lost favor with the district court, which was underscored after appeal and remand.

    1. I don’t get why a “generous” offer to settle should make the case less exceptional. The defendant believed they weren’t infringing, and it appears they were correct, so they owed the plaintiff zero dollars. Why should the defendant be penalized for their refusal to accede to a shakedown?

      1. exceptionality is not so tied to merely winning the case, Apotu.

        As such, your use of the word “penalize” is not appropriate.

        1. exceptionality is not so tied to merely winning the case, Apotu.

          No doubt. But presumably Apotu is aware of the other facts in this case, e.g., the patentee’s infringement contentions which “strain credulity” and their clueless attempts at claim construction.

          1. You “presume” too much, as any of those other items simply are not in the comment that I was responding to.

            Apotu is free to make his own comments, and to include whatever he wants to include (and not include anything he does not want to include) quite apart from what you may have wanted him to say, Malcolm.

            Had he made a different comment, my reply would also likely have been different.


            1. “anon” Had he made a different comment, my reply would also likely have been different.

              I doubt that. But keep going! You were just getting started and it’s truly fascinating to learn about how your brain “works.”

        2. Steve’s comment indicated that the defendant was treated unfavorably because they refused to settle, which sounds like a penalty to me. “Be a good little boy, Defendant, and pay your protection money.”

          1. “Be a good little boy, Defendant, and pay your protection money.”

            This. This is what the CAFC is encouraging defendants to do. “Hey, we lowered the costs for you by making it easier to get summary judgment. Isn’t that enough?”

          2. Except Aputo, you over read the “unfavorable” part into some type of “fairness” evaluation.

            That was not a part of Steve’s comment, and comes instead from you and what you think is fair and based on that, you made the jump to a “penalty.”

            As I indicated, there is no such “penalty” aspect present. The error is in you and your “to me” view.

          3. Except Aputo, you over read the “unfavorable” part into some type of “fa1rness” evaluation.

            That was not a part of Steve’s comment, and comes instead from you and what you think is fa1r and based on that, you made the jump to a “penalty.”

            As I indicated, there is no such “penalty” aspect present. The error is in you and your “” view.

      2. I got the impression the ‘generous offer’ was made by the patent owner, it was low – so newEgg attempted to use that as evidence that the patent owner never believed in its own case merits.

  5. Dennis, on the bit about a magistrate judge, do you know when a dissatisfied party must appeal to the district court rather than to a court of appeals? Does it depend on the form of consent to have the case heard by a magistrate?

    1. The usual approach is that parties are thought to have a right to have their dispute decided by an Article III judge rather than a magistrate judge. Thus, in the usual case, when a magistrate judge makes a decision, it does not become fully binding until endorsed by the associated district court judge. When both parties consent, a magistrate judge can make decisions that are binding and that can be appealed directly.

      1. Dennis, ?. Really…. Unless a judge signs a judgment, there is no judgment. I am really missing something here. Really.

        To me, it makes no difference whether the parties agree to be bound without appeal to a judge. A judge must still sign the final judgment.

        1. Ned, the default case assignment in many districts, including the Northern District of California, is to a magistrate judge. The parties are given the opportunity to accept that assignment, or to have the case reassigned to an Article III judge. If both parties consent to the magistrate assignment, that magistrate judge has all of the powers an Article III judge would have, and any appeal goes directly to the regional court of appeals (or Federal Circuit in patent cases). Otherwise, the magistrate issues orders that are only recommendations — the assigned Article III judge can give the recommendations as much or as little as he/she wishes.

          Here in the N.D. Cal., the magistrate judges have a great deal of patent litigation experience. Parties often consent to give them Article III powers in their cases.

          1. Andrew, I know the procedure. I question its validity.

            In Glidden Co. v. Zdanok, 370 US 530 – Supreme Court 1962, link to,

            the Supreme Court recognized that if a non-Article III judge was deciding vote in a Court of Appeals decision that there was a violation of Article III.

            I do not see how allowing non-Ariticle III judges to report to enter judgments are actually judgments within the meaning of the Constitution. This is not a statutory question, it is a constitutional question. Recently in dissent in Wellness v. Sharif, Justice Thomas raised the issue again about whether the decisions of bankruptcy judges are in fact judgments even if they are consented to by the parties. In fact, it was the holding of Stern v. Marshall that the judgment of a bankruptcy judge was not a judgment that had collateral estoppel effect because the bankruptcy judge was not an Article III judge.

            So regardless of the statutory authority, and regardless of procedure, there remains a substantial constitutional question involved with allowing magistrates to enter judgments.

            1. While the Supreme Court has not definitively resolved the question, I think it has come pretty close to saying that consent to have a magistrate judge decide your case is a valid and enforceable waiver of your right to go before an Article III judge at the trial level. The key is that you still have appellate review by Article III judges.

              Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1944 (2015):

              The lesson of Schor, Peretz, and the history that preceded them is plain: The entitlement to an Article III adjudicator is “a personal right” and thus ordinarily “subject to waiver,” Schor, 478 U.S., at 848, 106 S. Ct. 3245, 92 L. Ed. 2d 675. Article III also serves a structural purpose, “barring congressional attempts ‘to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating’ constitutional courts and thereby prevent[ing] ‘the encroachment or aggrandizement of one branch at the expense of the other.’” Id., at 850, 106 S. Ct. 3245, 92 L. Ed. 2d 675 (citations omitted). But allowing Article I adjudicators to decide claims submitted to them by consent does not offend the separation of powers so long as Article III courts retain supervisory authority over the process.

              1. Also, Ned, the whole debate between the majority and the dissenting justices in Roell v. Withrow, 538 U.S. 580 (2003) over express/implied consent to go before a magistrate would have been superfluous if even express, written consent does not do the constitutional trick.

                1. Regarding Roell, no doubt Congress can provide appeals from binding arbitration to which the parties consent, from magistrate judges, from Kangaroo Courts, from State Courts where judges sit at the pleasure of the mob, etc.

                  But the that does not make what the magistrate signs, the mediator signs, etc., a judgment.

                  Now, Stern’s holding is that the “bankruptcy judge” had statutory authority just as does the magistrates act in question here. But the Supreme Court held that the bankruptcy judge could not enter a “judgment” on a state called law cause of action, particularly of the kind that had a right to a jury trial. Because the bankruptcy judge did not have constitutional authority, and the so-called judgment of the magistrate was not a judgment within the meaning of the Constitution. It was not entitled to collateral estoppel effect.

                  I note that in B&B Hardware, Thomas and Scalia again raised the issue of whether there some problem with giving collateral estoppel effect to agency decisions when those decisions essentially strip parties of their rights to a day in court and to a right to a trial by jury. Administrative agencies, and administrative judges, are not Article III judges. They do not have the power to enter judgments within the meaning of the Constitution, even though they may have the power by contract to deal with a dispute of the parties before them.

              2. Andrew, apparently the issue still up in the air even though I think it was resolved by Stern v. Marshall. Again the holding of that case was that the judgment of the magistrate, even though consented to by the parties, was not a judgment by an Article III court and, for that reason, was not entitled to collateral estoppel effect. I am not talking about whether one can waive their personal right. The issue is whether something purported to be a judgment signed by somebody who is not an Article III is nevertheless a judgment.

                I think it is not.

                Now if the statutes require a final judgment of a court before there is an appeal, there is not a final judgment of the court if only a magistrate signs an order purporting to be a judgment.

                Also how was the Supreme Court coined to distinguish Stern v. Marshall from judgments issued by magistrates. What about binding arbitration judgments. Are they judgments? Where does this end? Kangaroo court?

  6. JNG What’s amusing about NewEgg is that they’ve let their own lawyers turn them into the entity they profess to hate, someone that just uses litigation as a negotiating tactic.


    Because Newegg actively seeks to be sued by patent tr0lls. Nice try.

    They recently sued Minero in California, demonstrating that they’ve gone from anti-patent “champ” to spendthrift “chump,” blithely lining the pockets of their outside lawyers with frivolous lawsuits.

    What’s frivolous about their lawsuit against Minero? Tell everybody. You seem to be following Newegg very closely.

    Its a win-win across the board for lawyers again.

    Are you ready to champion the mandatory disclosure of the controlling interests behind patent monetizing shell companies? After all, lawyers make plenty of money helping people hide behind those shells.

  7. (1) Site Update’s proposed claim constructions were not “so weak that this case stands out from others

    Is that really the standard? The claim construction proposed by the patentee needs to be so bad that it stands out from the ridiculously bad constructions that other patentees have proposed? That would seem to defeat the purpose of the fee shifting.

    As for this:

    Site Update’s position on structures “strains credibility,” but was not so unreasonable as to warrant fees

    Give everybody a break already. This is just another example of crediting a patentee’s incompetence because patentee incompetence is the norm. Good grief.

    And what about the money the defendant had wasted addressing the crxppy constructions that the patentee abandoned “when given the opportunity to do so”?

    A more reasonable issue to decide would simply be to determine how well the patentees proposed claim construction stands up agains the accused infringers construction and/or common sense. Loser pays.

    1. Yes, that’s the standard, MM. “Exceptional” is a relative term. If you would prefer an objectively baseless standard, or the like, tell your elected representatives in Washington.

      1. “Exceptional” is a relative term. If you would prefer an objectively baseless standard

        “Objectively baseless”? I think the term that you’re looking for is “subjective”. But that’s not at all what I’d prefer.

        I’d prefer a standard that makes sense in view of what the statute is trying to achieve. When a patentee floats some objectively junky claim construction and infringement theories that achieve nothing except expenses for the defendant then the patentee should pay for that.

        The silly list of “reasons” presented by the judge is a joke. What’s objective is that the patentee had a cr@p claim construction, a cr@p infringement theory, and it’s willingness to be paid off belied a transparent and objective lack of belief in the credibility of its own position.

        But go ahead, Andrew, and argue that an abysmal lack of understanding of patent law and a willingness to drag litigants into court on the thinnest basis if there’s a chance that you can get paid of is de rigueur for patent attorneys these days. That kind of candor is always refreshing, particularly when it comes from a patent attorney.

        The microphone is all yours. Go ahead and tell everyone what kind of behavior is deemed “exceptional” by professionals like you and what isn’t.

        1. So, you want clarity for this, but you’d prefer no clarity for an “abstract idea” and “significantly more than the abstract idea itself”? I mean, obviously that’s a standard that makes sense in view of what the statute is trying to achieve:

          “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

          It’s obvious in 35 USC 101 that Congress really meant that “abstract ideas” shouldn’t be patented unless the claim has “something significantly more than the abstract idea itself”, right? Congress really meant to achieve this with 35 USC 101.

          1. But, PatentBob, that fits Malcolm’s desired Ends.

            Why are you bothering with looking for some justifiable Means?

            /off sardonic bemusement

          1. Andrew: Read Octane Fitness and Highmark, MM.

            I did.

            You’ll better understand this latest Newegg decision once you do.

            I understand that the Federal Circuit isn’t inclined to reverse district judges who “differ” from other “reasonable minds”. I also understand by adopting that stance given this particular set of facts and this magistrate’s ridiculous list of reasons (he couldn’t stretch it out to twenty “different” reasons? Maybe he ran out of time before Wheel of Fortune) the CAFC is doing its best to undermine the Supreme Court on behalf of some of the worst attorneys who ever practiced. In other words: business as usual.

            1. With Octane Fitness and Highmark, the Supreme Court has mandated two layers of appellate deference. Whoever loses on a 285 motion at the district court has a mountain to climb at the Federal Circuit.

          2. Judge Grewal observed at the hearing that Octane Fitness had loosened the belt a notch or two on fee shifting. I think it could be argued that after he ruled, the Supreme Court loosened it one more notch with the “authority and responsibility” comments in Commil v. Cisco. In the end that didn’t tip the scales in what I think could be fairly described as a close case.

            1. Scott, Grewal is not an Article III judge, which raises and issue to Dennis and to me just how Grewal can validly enter a judgment from which an appeal might be taken?

              How is Grewal any different that a patent attorney both sides pick to mediate their dispute on a binding basis? The mediator’s decision is not a judgment, and failure to abide by his ruling is merely a breach of contract.

              I was under the impression that Grewal’s decisions had to be forwarded to a supervising judge for entry of judgment. If that was not done, I wonder how the Federal Circuit even has jurisdiction as there is no judgment.

          1. don’t get into it with Andrew Dhuey

            Oh, Andrew’s smart but he’s been on the learning curve before and he will be again. Happens to everyone.

  8. What’s amusing about NewEgg is that they’ve let their own lawyers turn them into the entity they profess to hate, someone that just uses litigation as a negotiating tactic. They recently sued Minero in California, demonstrating that they’ve gone from anti-patent “champ” to spendthrift “chump,” blithely lining the pockets of their outside lawyers with frivolous lawsuits. I love it when people talk about patent “reform” with no clue that it not only does not reduce fees, the only real purpose of such legislative shenanigans is to increase billable hours.

    The recent “reform” for Form 18 is a prime example, with proponents claiming it would “eliminate” bad patent suits. It does nothing of the sort; it takes a P’s lawyer a few more hours to write the Complaint, which in turn gives D attys license to spend a couple dozen more hours writing an “Answer.” Its a win-win across the board for lawyers again.

    1. They recently sued Minero in California, demonstrating that they’ve gone from anti-patent “champ” to spendthrift “chump,” blithely lining the pockets of their outside lawyers with frivolous lawsuits.

      This story was much funnier as reported here.

    2. JNG,

      It appears from both above (Malcolm at 3) and the reply here at 1.1 that people are only seeing NewEgg being sued – but your comment would have it the other way around.

      Is there a case of NewEgg doing the suing that either of these people should be aware of? Or do you have it backwards?

      1. See the link above your comment, Plurality nailed it.

        Basically, thumbnail version, someone sued Rosewill, which is a wholly owned subsidiary of NewEgg. It’s their ‘store brand’.

        The day after NewEgg contacted them notifying them that they had actually sued NewEgg, the plaintiff dropped them (Rosewill) without prejudice from the lawsuite.

        NewEgg then turned around and filed for a declaratory non-infringement (And invalidity if I remember correctly, but I can’t be 100% certain without going and reading the story again) suit in California against the ‘patent assertion entity’, on the grounds that, since the PAE had dropped them without prejudice, they were unable to go forward with confidence that the PAE wouldn’t renew it at a later date, so they were pre-emptively reopening the lawsuit in a different area (California instead of East Texas).

          1. I would say that NewEgg is perfectly justified to go after the PAE if they dropped the lawsuit without prejudice. The most likely course of action would have been they sue the ones who cave, then re-open the lawsuit using the the loss against the others as ammo against NewEgg. Better to pre-empt that and sue the PAE before it can use easy uncontested wins to bolster it’s case.

            1. I agree – it appears that JNG was trying to spin the action of NewEgg into something other than a legitimate action.

              It is a reach too far (and reminiscent of those who would whine about the “unfairness” of being brought into court for alleged infringement in the first place) to say that because NewEgg even “dared” to use the court system, that they must be a “bad egg.”

              The court system is designed to be used.

              ANY attempt to portray someone as “bad,” just because the choice is made to pursue court action should be seen as nothing more than a “bad” emotive ploy.

              This “bad” emotive ploy does go both ways.

      2. Newegg filed suit after the patent troll dismissed its own case

        General Counsel quote in below linked article: That brings us up to this week, when Newegg announced it wasn’t done with Minero Digital just yet. “We just don’t believe Rosewill’s products and customers infringed on valid patent claims,” says Newegg’s chief legal officer, Lee Cheng. “Minero’s case does not have merit, and its patent is not only expired but would suck even if it wasn’t expired. Now that they have started the litigation, it would be irresponsible for Newegg to not finish it.”


    3. The recent “reform” for Form 18 is a prime example, with proponents claiming it would “eliminate” bad patent suits.

      Can you identify one proponent who has claimed that the reformed Form 18 would eliminate bad patent suits?

      I didn’t think so.

      1. I don’t think that giving a name makes the point you want to make, DanH.

        Why – if not eliminating some bad patent suits, would the change have been undertaken?

          1. You’re defending…,


            You should disabuse yourself of that Malcolm habit of responding with an accusation of “defending” someone.

            It does not work for him, and surely does not work for you.

            Here, in particular, you should notice post

            On the other hand, your immediate post here at 1.3 is equally as weak. To see this, just answer my follow-up question to you.

Comments are closed.