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Fleming v. Escort, Inc.

United States District Court, D. Idaho

February 21, 2014

HOYT A. FLEMING, Plaintiff,
v.
ESCORT, INC., et al., Defendants.

MEMORANDUM DECISION AND ORDER

B. LYNN WINMILL, Chief District Judge.

INTRODUCTION

The Court has before it nine post-trial motions. The motions are fully briefed and at issue. In summary, the Court will (1) uphold the jury verdict; (2) award Fleming attorney fees as the prevailing party; (3) award pre-judgment and post-judgment interest to Fleming; (4) award sanctions against Escort's counsel for violating a Court Order; and (5) deny Escort's motion to declare Fleming's patents invalid due to his inequitable conduct before the Patent and Trademark Office. The Court's analysis is set forth below.

ANALYSIS

In this action, plaintiff Fleming claimed that defendant Escort manufactured and sold radar detectors that infringed Fleming's 038 and 653 patents. A jury found that Escort had infringed a number of Claims of both patents, and awarded Fleming $750, 000. See Special Verdict Form (Dkt. No. 304). Specifically the jury found that the following Escort products were infringing: GX65, Passport 9500, Passport 9500i, and Passport IQ. The jury also found that other Claims of the two patents were invalid because they were anticipated by the prior art. The Court directed Escort to place the $750, 000 sum in escrow, and Escort has now complied with that direction.

Motion for Attorney Fees & Motion To Award Prevailing Party Status to Defendants

Plaintiff Fleming seeks an award of attorney fees under 35 U.S.C. § 285. That statute states that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party."

Escort responds that Fleming was not a prevailing party and hence cannot seek fees under § 285. To be a "prevailing party, " Fleming must obtain "at least some relief on the merits... [and] [t]hat relief must materially alter the legal relationship between the parties by modifying [Escort's] behavior in a way that "directly benefits" [Fleming]. Shum v. Intel, 629 F.3d 1360 (Fed.Cir. 2010) (quoting Farrar v. Hobby, 506 U.S. 103, 111-13 (1992)).

Fleming meets that test here. The jury found that Escort infringed both patents at issue and awarded Fleming $750, 000. Escort points out that it prevailed on some issues and convinced the jury to award far less than Fleming demanded. But Farrar held that "[a] judgment for damages in any amount, whether compensatory or nominal, modifies the defendant's behavior for the plaintiff's benefit by forcing the defendant to pay an amount of money he otherwise would not pay." Farrar, 506 U.S. at 113. Here, Escort must pay Fleming $750, 000 for the right to make and sell the infringing products. That is relief that materially alters Escort's behavior in a way that directly benefits Fleming. Hence Fleming is a prevailing party.

With that issue resolved, the remaining analysis under § 285 involves a two-step process. First, the Court must determine whether Fleming has proved by clear and convincing evidence that the case is "exceptional." Second, if the Court finds the case to be exceptional, it must then determine whether an award of attorney fees is appropriate. Forest Laboratories v. Abbott Laboratories, 339 F.3d 1323 (Fed.Cir. 2003).

Section 285 is an exception to the "American Rule" concerning attorney fees, and is limited to circumstances in which the award of fees is necessary "to prevent a gross injustice." Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305 (Fed.Cir. 2010). In light of this high standard, recovery of attorney fees under § 285 "clearly was never contemplated to become an ordinary thing in patent suits." Forest Labs., 339 F.3d at 1329. At the same time, "litigation misconduct and unprofessional behavior may suffice, by themselves, to make a case exceptional under § 285." Monolithic Power Systems, Inc. v. O2 Micro Intern., 726 F.3d 1359, 1366-67 (Fed.Cir. 2013). "[T]he aim of § 285 is to compensate a [party] for attorneys' fees it should not have been forced to incur." Kilopass Technology, Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed.Cir. 2013).

In the present case, there is clear and convincing evidence that Escort's counsel pursued a strategy in this litigation that vexatiously increased the fees incurred by Fleming. There were numerous discovery disputes caused by Escort's meritless refusals to turn over discoverable information. Escort forced further litigation over its unsuccessful attempt to add 286 new patent invalidity contentions over 18 months after the deadline for those to be exchanged. On another occasion, Escort vehemently objected to turning over sensitive trade secrets in discovery only to later allow those same "secrets" to be publically disclosed at trial.

This is just a small sample of Escort's vexatious conduct. While it is true that most of Escort's legal work was within the bounds of zealous advocacy, about 10% of the litigation costs incurred by Fleming were caused directly by this vexatious conduct by Escort's counsel. To that degree, the Court finds this an exceptional case under § 285.

An exceptional case finding based on litigation misconduct "usually does not support a full award of attorney's fees." Monolithic Power Systems, 726 F.3d at 1369. Instead, the fee award "must bear some relation to the extent of the misconduct, and compensate a party for the extra legal effort to counteract the misconduct." Id.

Fleming estimates that his total fees would be $1.2 million. This would result in a fee award of about $120, 000 under the Court's calculation.

Fleming asks for an opportunity to submit a detailed statement of attorney fees and the Court will grant him that opportunity. The Court will grant this motion for an award of fees under 35 U.S.C. § 285. Assuming the final figure is about $1.2 million, the Court will award 10% of that figure as attorney fees to Fleming under § 285.

Motion for Pre-judgment & Post-judgment Interest

Fleming seeks an award of pre-judgment and post-judgment interest. In calculating pre-judgment interest, Fleming alleges that the infringement started on January 8, 2007, and that pre-judgment interest should run from that date at the rate of 12% (under Idaho law) until the date the Judgment was entered (March 27, 2013) in the sum of $750, 000. The pre-judgment interest calculated in this manner comes to $559, 479.45.

Escort does not dispute the dates or mathematical computations, but argues that Fleming is not entitled to an award because he could have accepted Escort's settlement offer of $1.3 million and received his money long ago. This argument violates the Court's Order that anything related to the settlement process "may not be used in any way against any party." See Order (Dkt. No. 92). Because of that Order, there is nothing in the record detailing the settlement offer and so the Court cannot evaluate the role it played in this litigation. That was the entire point: The Court-ordered confidentiality was intended to promote a full and frank discussion during the settlement conference. Consequently, the Court rejects Escort's attempt to use its settlement offer to its advantage, and will take up this issue in more detail below in ruling on Fleming's motion for sanctions.

Escort also argues that Fleming delayed filing this suit and cannot benefit from that delay with an award of pre-judgment interest. But Escort raised these same arguments earlier and they were rejected. See Memorandum Decisions (Dkt. Nos. 169 & 336). The Court finds no reason to reconsider that ruling.

The award of pre-judgment interest is "the rule, not the exception." Sanofi-Aventis v. Apotex, Inc., 659 F.3d 1171, 1177 (Fed.Cir.2011). An award of pre-judgment interest carries out Congress's "overriding purpose of affording patent owners complete compensation" since a patentee's damages also include the "forgone use of the money between the time of infringement and the date of judgment." Whitserve, LLC v. Computer Packages, Inc. 694 F.3d 10, 36 (Fed.Cir. 2012). An award of pre-judgment interest - starting from the date of infringement, which is when royalty payments should have started - "merely serves to make the patent owner whole, since his damages consist not only of the value of the royalty payments but also of the forgone use of the money between the time of infringement and the date of judgment." Sanofi-Aventis v. Apotex Inc., 659 F.3d 1171, 1179 (Fed.Cir. 2011) (quoting Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 655-56 (1983)).

The Court shall therefore award pre-judgment interest calculated on the Judgment sum of $750, 000, starting on January 8, 2007, and running at the rate of 12% until the date the Judgment was entered (March 27, 2013). These figures and dates are not disputed by Escort. The ...


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