April 16, 2015

Here’s a recently articulated “rule” by the Federal Circuit Court of Appeals. This rule will seem rather “basic” and “obvious” to my non-lawyer friends. Unfortunately for the reputations of us patent lawyers, this “new” rule was pronounced on April 10, 2015, in a patent infringement lawsuit. Here’s the rule:

When a lawyer “misbehaves” during a lawsuit, then, at the end of the lawsuit, if the judge follows the law, the judge should usually make the party represented by the misbehaving lawyer pay all of the legal fees of the other party.

So, you will probably say, “Of course!” But, you might ask, what was the misconduct?

Before I list all the misconduct, here’s the history of the case. It all started when Oplus Technologies, Ltd. sued Vizio, Inc. and Sears Holding Corp. in Chicago for patent infringement. Then, the federal court in Chicago granted defendants’ motion to transfer the case to the federal court in the Central District of California. Sometime later, that California federal court granted summary judgment of non-infringement of the asserted patents. Vizio then asked the court to make Oplus pay Vizio’s attorneys’ fees. Despite the court’s specific findings regarding Oplus’s attorney’s misconduct, and the court’s ultimate finding that the case was “exceptional” (meaning “bad”), the court still denied Vizio’s request for fees. So, Vizio appealed that denial to the Federal Circuit. The Federal Circuit then ruled as follows: “We hold that the district court abused its discretion in denying fees, and thus vacate and remand.” That means that the California federal court must now order Oplus to pay Vizio’s attorneys’ fees.

So, I list the misconduct below, merely quoting from the Federal Circuit’s opinion. When you see the name “Oplus” in the following quotes taken by the Federal Circuit from the California court’s opinion, the California court is actually referring to the lawyers that represented Oplus, and specifically to the following lawyers: Raymond Niro, Arthur Gasey, Paul Gibbons, and Gabriel Opatken.

So, here’s a list of the misconduct, in the order listed in the Federal Circuit’s opinion, in which it was quoting the findings of the California court. These are direct quotes from the Federal Circuit’s order:
1. “Oplus misused the discovery process to harass Vizio by ignoring necessary discovery, flouting its own obligations, and repeatedly attempting to obtain damages information to which it was not entitled.”
2. Oplus implemented an “abusive discovery strategy” that involved “avoid[ing] its own litigation and discovery obligations while forcing its opponent to provide as much information as possible about Vizio’s products, sales, and finances.”
3. The [California] court noted that its “greatest concern . . . was Oplus’s counsel’s subpoena for documents counsel had accessed under a prior protective order.”
4. “Oplus blatantly misinterpreted its own prior discovery requests in an attempt to obtain the same information the Court had previously refused to compel.”
5. “Oplus used improper litigation tactics including presenting contradictory expert evidence and infringement contentions as well as misrepresenting legal and factual support.”
6. It found that Oplus’s response to Vizio’s complaint about contradictory expert opinions—where Oplus disavowed “its own expert’s statement when Vizio cited the paragraph, rather than the paragraph heading” of its expert’s report—was “merely one example of Oplus’s strategic manipulation of the facts and evidence provided to the Court.”
7. In another example, it noted that whereas “Oplus’s infringement contentions cite[d] a patent to show infringement” of Oplus’s patents, its “expert testifie[d] that the same patent did not disclose the methods of Oplus’s patents.”
8. It found that “Oplus consistently twisted the Court’s instructions and decisions” and attempted “to mislead the Court.” 
9. It complained that when “Oplus had no evidence of infringement of one element of a claim, it simply ignored that element and argued another.”
10. It found that “Oplus regularly cited to exhibits that failed to support the propositions for which they were cited” and that “Oplus’s malleable expert testimony and infringement contentions left Vizio in a frustrating game of Whac-A-Mole throughout the litigation.”
The following quotes from the Federal Circuit are summaries of the misconduct:
11. The district court found the case exceptional under 35 U.S.C. § 285 and that Oplus and its counsel were vexatious litigants and engaged in litigation misconduct.
12. Even Oplus’s counsel “agree[s] that [the misconduct was] quite severe.”
13. Although an award of fees is within the discretion of the district court, nothing in the opinion or in the record substantiates the court’s decision not to award fees. The court’s opinion details Oplus’s misconduct. Given that the district court found counsel’s behavior “inappropriate,” “unprofessional,” “vexatious,” and “harassing,” it is difficult to imagine how Vizio had not incurred additional expenses defending against such filings.
14. The Federal Circuit then quoted this statement by the Oplus lawyer during oral argument: “Oplus has not challenged any finding by the district court” or “any single thing that [the district court judge] said.”

In conclusion, the Federal Circuit stated, “We have reviewed the record and cannot find a basis to support the court’s refusal to award fees.” I would call that a polite “understatement”.

About timheadley

For almost 30 years, as a lawyer, Tim Headley has been helping clients protect their intellectual property, according to the laws of patents, trademarks, copyrights, and trade secrets, not only in the United States, but in various countries around the world. Before that, he worked as an electrical engineer. Before that, he taught theology, in Spanish, to adult students, in the evenings, in a school in La Paz, Bolivia. You can contact him at tim@headleyiplaw.com, or his office phone, 713-467-8500, or his cell phone, 713-398-1045. His website is www.headleyiplaw.com.
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