United States District Court, D. Delaware
Rothschild Mobile Imaging Innovations, LLC ("RMII")
filed a patent infringement suit against defendant Mitek
Systems, Inc. ("Mitek"); JPMorgan Chase & Co.
and JPMorgan Chase Bank, N.A. (collectively,
"JPMC"); Bank of America Corporation and Bank of
America, N.A. ("BoA"); Citigroup Inc. and Citibank,
N.A. ("Citi"); Wells Fargo & Company and Wells
Fargo Bank, N.A. ("Wells Fargo"); NCR Corporation
("NCR"); and Fiserv, Inc. ("Fiserv")
alleging infringement of U.S. Patent Nos. 7, 450, 163 (the
"'163 patent"), 7, 456, 872 (the '"872
patent"), 7, 991, 792 (the '"792 patent"),
and 7, 995, 118 (the '"118 patent")
(collectively, the "patents-in-suit"). (D.I.
C.A. No. 14-1142, D.I. 1, 55; C.A. No. 14-1143, D.I. 1, 60;
C.A. No. 14-1144, D.I. 1, 58.) The U.S. Patent and Trademark
Office's Patent Trial and Appeal Board ("PTAB")
instituted inter partes review ("IPR") on
all of the asserted claims of the '163, '792,
'872, and '118 patents. The PTAB found that the
asserted claims of the '163, '792, and '118
patents were unpatentable and entered an adverse judgment
against the '872 patent upon RMII's request.
Subsequent to the PTAB's decisions, RMII moved to dismiss
its case against Mitek. (D.I. 81.) The court granted
dismissal with prejudice. (D.I. 90.) Mitek's motion now
seeks an award of attorney's fees and expenses pursuant
to 35 U.S.C. § 285, 28 U.S.C. § 1927, and the
court's inherent power. (D.I. 92.) Also before the court
is RMII's motion to strike Mitek's motion for
attorney's fees and expenses and to strike certain
evidence submitted in support of Mitek's motion. (D.I.
102.) For the following reasons, the court will deny
Mitek's motion for attorney's fees and expenses as
well as RMII's motion to strike as moot.
one of several non-practicing entities that are run by
Managing Director and inventor of the patents-in-suit, Leigh
M. Rothschild. (D.I. 104 at 3.) On May 16, 2014, RMII
initiated a suit against Mitek claiming infringement of the
patents-in-suit. (D.I. 1.) On June 12, 2014, RMII amended its
Complaint to add JPMC as a defendant. (D.I. 7.) On September
8, 2014, RMII filed three additional actions naming
Mitek's customers BoA, Citi, and Wells Fargo as
defendants. (C.A. No. 14-1142, D.I. 1; C.A. No. 14-1143, D.I.
1; C.A. No. 14-1144, D.I. 1.)
September 29, 2014, the parties engaged in settlement
conversations where RMII's counsel commented that it
intended to "sue every customer/direct infringer and not
entertain any 'wholesale level' settlement
offers." (D.I. 28 at Ex. 4.) Further, RMII's counsel
warned Mitek that it was "too small to afford to play in
the space, so it needs to be put out of business through
horrific indemnity obligations. In light of [Mitek's] bad
faith conduct to date, I am happy to be the agent of their
demise." (Id.) RMII's counsel alleged that
"actions will take the place of threats in due
course" and that "RMII will stomp Mitek out of
existence." (D.I. 28 at Ex. 5.) On November 19, 2014,
Mitek served RMII with a notice pursuant to Federal Rule of
Civil Procedure 11 ("Rule 11 letter"), which
expressed Mitek's concerns with the sufficiency of
RMII's pre-filing investigation. (D.I. 95 at Ex. BB.)
Specifically, the Rule 11 letter detailed how at least one
limitation in each asserted claim was not satisfied by the
accused products. (Id.) The Rule 11 letter
complained that had RMII conducted a sufficient pre-filing
investigation, it would have determined that there was no
good faith basis for alleging infringement of the asserted
claims. (Id.) Mitek did not include any attachments
to the Rule 11 letter, and Mitek did not follow the Rule 11
letter with a motion for sanctions.
January 26, 2015, Mitek filed IPR petitions claiming that all
of RMII's asserted claims were unpatentable as obvious
over the cited prior art. (D.I. 93 at 3; D.I. 94 at Exs.
B-E.) On July 8, 2015, RMII amended the Complaint to name NCR
and Fiserv as defendants. (C.A. No. 14-1142, D.I. 55; C.A.
No. 14-1143, D.I. 60; C.A. No. 14-1144, D.I. 58.) Between
July and August of 2015, the PTAB instituted review on all of
the asserted claims in the patents-in-suit. (D.I. 104 at 6;
D.I. 76 at 1.) Following the PTAB's institution
decisions, the parties submitted a joint stipulation to stay
the litigation. (D.I. 73.) The court entered a stay in the
case on August 19, 2015. (D.I. 74.) During the course of the
settlement negotiations that took place during the stay,
RMII's counsel rejected Mitek's offers as
"idiotic" and proclaimed that "Mitek can roll
along on the brink of bankruptcy." (D.I. 95 at W.) The
settlement discussions, again, were fruitless.
January 26, 2016, RMII filed a petition for IPR against
Mitek's patent, U.S. Patent No. 8, 379, 914. (D.I. 95 at
Ex. CC.) RMII's petition was rejected seven months later.
IPR2016-00457. By July 20, 2016, the PTAB had either
invalidated or entered an adverse judgment on all of the
asserted claims of the patents-in-suit. (D.I. 84 at Ex. 1 at
51, 98-99, 137; D.I. 95 at Ex BB.) Following the PTAB's
decisions, the parties submitted two joint requests and two
stipulations to extend the length of the stay in the district
court litigation from August 3, 2016 until September 16,
2016. (D.I. 76, 77, 78, 79.) On September 16, 2016, RMII
filed a motion to dismiss its Complaint without prejudice.
(D.I. 81.) On September 15, 2017, the court ordered
RMII's Complaint dismissed with prejudice. (D.I. 90.)
Fourteen days later, on September 29, 2016, Mitek filed the
present motion for attorney's fees. (D.I. 92.) On
November 13, 2017, RMII opposed Mitek's motion for
attorney's fees and filed the pending motion to strike.
STANDARD OF REVIEW
patent law cases, a court is authorized by statute "in
exceptional cases [to] . . . award reasonable attorney fees
to the prevailing party." 35 U.S.C. § 285. The
Supreme Court has held that an "exceptional" case
is "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). A party
moving for attorney's fees must demonstrate, by a
preponderance of the evidence, that the case is
"exceptional." Id. at 1758. Exceptional
cases involve "litigation misconduct; vexatious,
unjustified, and otherwise bad faith litigation; a frivolous
suit or willful infringement." Epcon Gas Sys. Inc.
v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed.
Cir. 2002). Ultimately, the court must make a decision based
on the totality of circumstances. See Octane
Fitness, 134 S.Ct. at 1756.
may also award attorney's fees under 28 U.S.C. §
1927. According to the statute, "[a]ny attorney or other
person admitted to conduct cases in any court of the United
States or any Territory thereof who so multiplies the
proceedings in any case unreasonably or vexatiously may be
required by the court to satisfy personally the excess costs,
expenses, and attorney's fees reasonably incurred because
of such conduct." 28 U.S.C. § 1927. The Third
Circuit has held that sanctions are warranted under Section
1927 if an attorney has "(1) multiplied proceedings; (2)
unreasonably and vexatiously; (3) thereby increasing the cost
of the proceedings; (4) with bad faith or with intentional
misconduct." LaSalle Nat'l Bank v. First Conn.
Holding Group, L.L.C. XXIII, 287 F.3d 279, 288 (3d Cir.
2002). A finding of willful bad faith is required.
Id. at 181.
addition to Section 1927, the Supreme Court has authorized a
district court to use its "inherent power to police
itself and "assess attorney's fees when a party has
acted in bad faith, vexatiously, wantonly, or for oppressive
reasons." Chambers v. NASCO, Inc., 501 U.S. 32,
45-46 (1991) (internal quotation marks omitted); see
LaSalle Nat'l Bank, 287 F.3d at 288 ("[A]n
award of fees and costs pursuant to the court's inherent
authority to control litigation will usually require a
finding of bad faith.")
Fees Under 35 U.S.C. § 285
parties do not dispute that Mitek is the prevailing party as
required by Section 285. The award of attorney's fees,
therefore, turns on whether this case is exceptional. ...