Raniere v. Microsoft and AT&T (Fed. Cir. 2018)
Chain of Title problem. Keith Raniere is one of the listed inventors of U.S. Patent Nos. 7,215,752 and 7,844,041. Back in 1995, all the inventors, including Raniere, assigned their rights and interests to Global Technologies Inc. (GTI). However in 1996, GTI was administratively dissolved. 18 years later, in 2014 Raniere executed a document purportedly on GTI’s behalf transferring the patents from GTI to Raniere. He then sued Microsoft and AT&T for infringement. Unfortunately for Raniere – he could not provide sufficient evidence that he had authority to effect the transfer by GTI (he was never an officer of the company, rather it was substantially owned by his ex-gf).
Rubens’s documents showed the GTI shareholders’ consent to a transfer of shares from Raniere’s ex-girlfriend — who owned 75% of GTI’s shares — to Raniere. The documents Raniere proffered did not indicate that any such transfer was ever completed, however, and did not establish that Raniere owned the patents at issue.
The district court then dismissed the case with prejudice — finding that it was highly unlikely that Raniere would be able to cure his standing defect. In addition, the court found that Raniere’s testimony absolutely lacked credibility and his conduct involved “a clear history of delay and contumacious conduct.” Raniere appealed that decision, which was affirmed by the Federal Circuit without opinion (“summary affirmance”).
The district court noted that Raniere promised repeatedly that he could produce evidence that would cure the standing defect identified by Appellees and the district court. Id. Raniere failed to satisfy these promises, according to the district court, as “[d]espite numerous representations, [Raniere] failed to produce any written document or other credible evidence that he had an interest in GTI that would allow him to transfer the patents to himself.” Id. Raniere’s conduct required Appellees “to expend significant resources to oppose [Raniere]’s arguments, which the Court now finds were made in bad faith to vexatiously multiply these proceedings and avoid early dismissal.”
The subject of this appeal is the subsequent award of attorney fees and costs under 35 U.S.C. 285. And here, the Federal Circuit found it an easy case —
Raniere challenges the district court’s decision on four grounds. First, he contends that the district court erred in finding that Appellees are prevailing parties under § 285. Second, he argues that the district court abused its discretion in finding this case “exceptional.” Third, he asserts that the district court erred in sanctioning Raniere under its inherent authority, in the alternative to a fee award under § 285. Finally, he argues that the district court abused its discretion in determining the amount of the fee award. We conclude that Appellees are prevailing parties, and that the district court did not abuse its discretion in finding this case exceptional under § 285 or in its fee award. We, thus, need not reach the district court’s sanction under its inherent authority in the alternative.
Following Octane Fitness and Highmark, we know that attorney fee awards are within the discretion of district court judges and are reviewed with deference on appeal. Easy judgment here:
The district court specifically found that Raniere’s behavior throughout the litigation employed “a pattern of obfuscation and bad faith,” and that this behavior caused Appellees to incur significant fees and costs to oppose Raniere’s positions. These positions, in the district court’s view, “were made in bad faith to vexatiously multiply these proceedings and avoid early dismissal”—in effect, to stall the termination of the proceedings. Fees Decision, 2016 WL 4626584, at *5. “Because the district court lives with the case over a prolonged period of time, it is in a better position to determine whether a case is exceptional and it has discretion to evaluate the facts on a case-by-case basis.” SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344 (Fed. Cir. 2015). The district court properly examined the totality of the circumstances in this case and found the case to be exceptional. We see no reason to disturb the district court’s well-reasoned determination.
Here, those costs add up — $450,000 in attorney fees for the defendants win at the ultra-preliminary stage for lack-of-standing. Let me note – this is ridiculous $450k to win on standing grounds. OMG! Note – the bill submitted was greater, but the Judge reduced it by 20%.
To put this dollar figure into perspective — excellent lawyer for the defendant Constantine Trela from Sidley argued the appeal and explained the case with the following analogy:
[This case is akin to someone] throwing together a set of documents that says ‘I own a controlling interest in Apple, I hereby name myself chairman, and hereby assign all of Apple’s patents to me.”
I would hope that defendants could win that case for less than $450,000.