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Intellectual Science and Technology, Inc. v. Sony Electronics

May 4, 2010

INTELLECTUAL SCIENCE AND TECHNOLOGY, INC., PLAINTIFF,
v.
SONY ELECTRONICS, INC., DEFENDANT.



The opinion of the court was delivered by: Avern Cohn United States District Judge

HON. AVERN COHN

MEMORANDUM AND ORDER DENYING ATTORNEY'S FEES

I.

This is a patent case. On December 15, 2009, the Federal Circuit affirmed the Court's grant of summary judgment in favor of defendant Sony Electronics, Inc. (Sony) on the issue of infringement. See 589 F.3d 1179 (Fed. Cir. 2009). The opinion describes the nature of the case, including the claim of infringement and the reasons why the plaintiff, Intellectual Science and Technology, Inc. (Intellectual), could not take its claim to a jury.

Now before the Court is Sony's application for attorney's fees (Doc. 80), initially filed three (3) days after the judgment dismissing the case was entered (Doc. 69). The application was stayed (Doc. 89) pending resolution of the appeal (Doc. 72). The stay was lifted following the Federal Circuit's decision (Doc. 96).

For the reasons that follow, the application is DENIED. There is no reason to disturb the American rule which requires each party to pay its attorneys.

II.

Initially, Sony asked for attorney's fees and other expenses of $1,024,778 on four (4) grounds: 35 USC §285; Fed.R.Civ.P. 11; 28 USC §1927; and the inherent authority of the Court. Sony has abandoned the Rule 11 grounds. See Sony Electronics Inc.'s, JVC Americas Corp.'s and Panasonic Corporation of North America's Reply in Support of Their Joint Motion for Attorneys' Fees (Doc. 87).

A. "An award of attorney fees [in a patent case] should be reserved for extraordinary cases where there is a finding of unfairness or bad faith in the conduct of the losing party, or some other equitable consideration of equal force which makes it grossly unjust for the prevailing party to be left to bear the burden of its own counsel fees." PETER S. MENELL ET AL., FEDERAL JUDICIAL CENTER, PATENT CASE MANAGEMENT JUDICIAL GUIDE § 9.2.3.2 (2009).

B.

A claim for attorney's fees under 28 USC §1927 is directed to an attorney's conduct in a case as contrasted to a party ("Any attorney may be required by the court to satisfy personally. . ."). Moreover, the claim must be made against a specific attorney rather than a law firm as a whole. BDT Products, Inc. v. Lexmark International, Inc., 2010 WL 1565462, at *8 (6th Cir. April 21, 2010) ("28 U.S.C. does not authorize the imposition of sanctions on law firms.").

As to a claim under §1927, the Sixth Circuit has said:

We have held that sanctions under §1927 may be appropriate when an attorney reasonably should know that a claim is frivolous, "simple inadvertence or negligence that frustrates the trial judge will not support a sanction under section 1927." Ruben, 825 F.2d [977] at 984. Rather, [t]here must be some conduct on the part of the subject attorney that trial judges, applying the collective wisdom of their experience on the bench, could agree falls short of the obligations owed by a member of the bar to the court and which, as a result, causes additional expense to the opposing party.

Orlett v. Cincinnati Microwave, Inc., 954 F.2d 419 (6th Cir. 1992).

The Federal Circuit has noted that an attorney is ethically bound to make reasonable arguments on a client's behalf. Medtronic Navigation, Inc. v. Brainlab Medizinische Computer-Systeme GMBH, 2010 WL 1644062, at *19 (Fed. Cir. April 26, 2010). The court then noted that if a client's actions are not considered unreasonable under 35 U.S.C. § 285, a court should impose sanctions under § 1927. Id. ("Because we have held that it was not unreasonable for Medtronic to seek relief even in light of the court's claim construction, it follows a fortiori that McDermott, as Medtonic's counsel, cannot be held liable [under § 1927] for continuing to represent Medtronic in that effort.").

Aside from failing to specifically identify the Intellectual attorney or attorneys to be held liable, there is nothing in the record of this case to even remotely suggest any Intellectual attorney "fell short of the obligations owed by a member of the bar to the court (etc)." The §1927 claim is frivolous.

C.

The lack of merit in the claim for attorney's fees under the inherent power of the court is of the same order as the claim under §1927. A court's inherent powers "must be exercised with restraint and discretion" and should be limited to cases where a party has acted "in bad faith, vexatiously, wantonly, or for oppressive reasons." Medtronic, 2010 WL 1644062, at *19. The Federal Circuit has further limited the exercise of a court's inherent power to cases that are "sufficiently beyond 'exceptional' within the meaning of [35 U.S.C. §] 285." Id. In a similar fashion, the Sixth Circuit has held that a court may not sanction a party pursuant to its inherent power without "a finding of bad faith or of conduct 'tantamount to bad faith.'" BDT Products, 2010 WL 1353462, at *9. It is not enough merely find that a plaintiff's claim was meritless. Id. at *10.

There is nothing in the record of this case to even remotely suggest bad faith or an attempt to perpetuate a fraud by Intellectual in pursuing a claim of infringement by Sony of the patents Intellectual owns.

Again, the inherent power claim is ...


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