United States District Court, D. Delaware
before the Court is Defendant's Motion for an Award of
Fees. (D.I. 174). The issues have been fully briefed. (D.I.
175, 181, 185). For the reasons stated herein,
Defendant's motion is DENIED.
9, 2013, Plaintiff filed suit against Blizzard and numerous
other entities for infringement of U.S. Patent Nos. 7,
188, 145 ("the '145 patent") and 7, 730, 262
("the '262 patent) owned by Plaintiff. (D.I. 1).
After hearing oral argument, I denied Plaintiffs motion for
partial summary judgment and granted Defendant's motion
for summary judgment on August 31, 2016. (D.I. 151, 163).
Final judgment was entered on September 21, 2016, and the
pending motion was timely filed two weeks later. (D.I. 170,
174). The grant of summary judgment was affirmed by the
Federal Circuit. (D.I. 190).
contends that this case merits an award of fees because
Plaintiff was unreasonable in litigating its case. According
to Defendant, Plaintiffs refusal to stipulate to
noninfringement after being on notice that its case was
meritless and Plaintiffs unnecessary spoliation motions
practice make this case exceptional. (D.I. 175, pp. 2-3).
Defendant requests that I award fees from August 17, 2015,
the date of the Markman hearing. (D.I. 175, pp.
18-19). Plaintiff counters that this case is not exceptional
and does not merit a fees award, because proceeding with its
infringement case was reasonable, and Plaintiffs spoliation
motions practice was necessitated by Defendant's
unreasonable conduct. (D.I. 181, p. 2).
parties' briefing identifies three broad issues as
relevant to the reasonableness of Plaintiffs continued
litigation of this case after the Markman hearing:
(1) Defendant's destruction of Tracker Log data relevant
to Plaintiffs damages theory, (2) Plaintiff s behavior after
the Markman hearing, and (3) Plaintiffs review of
Defendant's source code.
February 2015, Plaintiff began seeking Tracker Log data from
Defendant in order to develop Plaintiffs damages theory,
which involved calculating the amount of data served using
peer-to-peer technology. (D.I. 181, p. 13; D.I. 182-1 at 5).
During Plaintiff s 30(b)(6) deposition of Defendant on August
5, 2015 regarding peer-to-peer efficiency and data issues,
Defendant admitted that prior to litigation, Defendant purged
Tracker Log files after 30 days as a standard business
practice. (D.I. 182-6 at 59 (Lauffer Dep.
32:12-20)). On August 31, 2015, Plaintiff sought agreement
from Defendant to stipulate as to the efficiency rate of
Blizzard's peer-to-peer data usage and the amount of data
served during the relevant time period. (Id. at
147-49). The parties could not agree on an appropriate
efficiency rate, and did not reach a stipulation. (See
Id. at 142-45). Seven weeks before the close of fact
discovery, Plaintiff requested a discovery conference
regarding the Tracker Log data, and the Court scheduled a
conference for October 19, 2015. (D.I. 121).
August 17, 2015, I held a Markman hearing, during
which I identified the parties' primary dispute about the
"re-allocating" term as "whether each peer can
cache 100 percent of the content." (D.I. 111 at
115:4-9). I stated that I did "not think that each peer
can pursuant to the claims." (Id.). One week
later, I entered a claim construction order construing
"reallocating/reallocate the cache storage of the
content among the peers in the cache community" to mean,
"re-allocating/re-allocate the portions of the content
to be stored by each peer's cache storage." (D.I.
August 28, 2015, Defendant wrote a letter to Plaintiff
stating that the accused products could not infringe,
"given the Court's ruling that a new client does not
satisfy the asserted claims when it receives 100 percent of
the content in response to joining the community." (D.I.
176 at 73). Five days later, Plaintiff responded,
acknowledging receipt of Defendant's letter, providing
Defendant with amended infringement contentions, and
proposing a stipulation for the parties to pursue early
summary judgment. (D.I. 182-1 at 2-3). Plaintiffs proposed
stipulation would bifurcate discovery, staying damages
discovery and moving forward with discovery relating to
liability only. (Id. at 2). Plaintiff also indicated
its "willing[ness] to work with [Defendant] on some
basic stipulations in an effort to avoid unnecessary
depositions." (Id.). On September 21, 2015,
Plaintiff and several defendants had agreed to a modified
version of Plaintiffs proposed stipulation. (D.I. 182-6 at
119). The agreed -upon stipulation stayed damages discovery
pending the results of early and expedited summary judgment
on liability. (Id.). Blizzard did not join the other
defendants in agreeing to this stipulation. (Id. at
121). Four days later, Plaintiff renewed its request that
Defendant enter into a stipulation that would expedite
briefing for early summary judgment as to the
"associating" and "re-allocating"
limitations only and stay all discovery except technical
discovery necessary to the limited summary judgment
proceedings. (Id. at 124). On October 29, 2015,
Plaintiff and Defendant filed a stipulation agreeing to file
early summary judgment motions limited to the
"associating" and "reallocating"
limitations, and agreeing to stay activity on all remaining
issues pending the resolution of the early summary judgment
motions. (D.I. 139). Fact discovery closed the same day.
(D.I. 44, p. 4).
review of Defendant's source code proceeded in tandem
with Plaintiffs efforts to reach a stipulation with Defendant
that would expedite resolution of the case. In September
2015, Plaintiff and Defendant spent three weeks negotiating
the details of Plaintiff s second review of Defendant's
source code. (D.I. 182-1 at 164-71). Plaintiff completed
review of Defendant's source code on October 7, 2015, and
deposed one of Defendant's corporate representatives
eight days later to clarify remaining issues related to
Defendant's source code. (D.I. 181, pp. 8, 10-11). On
October 26, 2015, Plaintiff served supplemental infringement
contentions, which identified "the Blizzard Downloader
(and any 'flavors' thereof)" as accused
products. (D.I. 138; D.I. 176 at 84). In summary judgment
briefing filed on February 23, 2016, Defendant stated that it
accused only "Blizzard Downloader major versions 1.0 and
2.0 and all related minor versions and patches" of
infringement, "but d[id] not accuse Blizzard Downloader
major version 3.0 or its minor versions or patches."
(D.I. 151 at 48-49).
oral argument on the parties' early summary judgment
motions on May 3, 2016. (D.I. 161). On August 31, 2016, 1
granted Plaintiffs motion for summary judgment, stating that
"the problem with Parallel's [infringement]
theory" was that "the '145 patent does not
require a reallocation 'of the order the [p]ieces will be
downloaded;' it requires a reallocation of the
'portions of content to be stored' among the
peers." (D.I. 162, p. 14 (brackets in original)).
Patent Act provides that the court "in exceptional cases
may award reasonable attorney fees to the prevailing
party." 35 U.S.C. § 285. The Supreme Court has
defined an "exceptional" case as "simply one
that stands out from others with respect to the substantive
strength of a party's litigating position (considering
both the governing law and the facts of the case) or the
unreasonable manner in which the case was litigated."
Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 134 S.Ct. 1749, 1756 (2014). When considering
whether a case is exceptional, district courts are to
exercise their discretion on a case-by-case basis,
considering the totality of the circumstances. Id.
Relevant factors for consideration include
"frivolousness, motivation, objective unreasonableness
(both in the factual and legal components of the case) and
the need in particular circumstances to advance
considerations of compensation and deterrence."
Id. at 1756 n. 6 (citation omitted). A movant must
establish its entitlement to attorney fees under § 285
by a preponderance of the evidence. Id. at 1758.
advances two primary arguments that this case is exceptional.
First, Defendant asserts that Plaintiffs refusal to stipulate
to non-infringement after the Markman hearing was
unreasonable because my oral ruling and subsequent claim
construction order clarified that Plaintiffs infringement
theory was baseless. (D.I. 175, p. 2). Second, Defendant
argues that Plaintiffs spoliation motions practice was