The Central District of California recently granted a defendant's motion for an exceptional case finding and attorney's fees under 35 U.S.C. § 285. The court held that it could award fees for conduct taking place not only in the district court, but also in a related inter partes review before the Patent Trial and Appeal Board and subsequent appeal before the Federal Circuit. The court found that the plaintiff's improper and unreasonable conduct in all three venues justified an award of fees.

In July 2015, Game and Technology Co., Ltd. (GAT) filed a complaint against Wargaming Group Ltd. (“Wargaming”) for infringement of GAT's '243 Patent. In February 2016, Wargaming informed GAT it had not been properly served. In March 2017, Wargaming filed a petition for IPR and the district court litigation was stayed.

GAT filed a preliminary response in the IPR, arguing that Wargaming's petition was time-barred under 35 U.S.C. § 315(b). In support, GAT submitted a “Witness Statement” from a process server located in the U.K. GAT asserted that the process server served Wargaming's registered agent in London pursuant to the Hague Convention. GAT also filed an “Attestation by Superior Courts of England and Wales, Foreign Processing Section regarding service upon Wargaming.Net.LLP, dated January 6, 2016,” which included a summons with a clerk's signature and a court seal (as required by Fed. R. Civ. P. 4). Wargaming filed a reply with a declaration by its registered agent, stating that the agent had no record or recollection of being served.

The PTAB instituted the IPR, and ordered special briefing regarding GAT's request to dismiss the petition as time-barred. At his deposition, the process server testified that the Attestation filed by GAT in the IPR was “most definitely not the bundle that [he] served.” Following the deposition, GAT filed a Proof of Service in the district court, stating that service was effected on December 14, 2015. GAT attached a witness statement by the process server, with accompanying documents that GAT asserted the process server had served on Wargaming's registered agent. The summons, however, did not bear a court seal or clerk's signature. GAT then filed those documents with the PTAB, and argued that it had properly effected service despite the fact that these documents did not include a court's seal or clerk's signature. GAT also argued for the first time that service was properly effected because a complaint and summons had been mailed to Wargaming's purported alter ego in Cyprus. The PTAB issued a final written decision, finding the challenged claims unpatentable and holding that the petition was not time-barred because the summons contained in the Attestation (bearing the court seal and signature) was not served by the process server.

GAT appealed to the Federal Circuit. In addition to arguing that service was proper, GAT argued for the first time that Wargaming waived deficiencies in service. The Federal Circuit rejected this newly raised argument, and affirmed the PTAB's decision. Following the appeal, the district court lifted the stay and Wargaming moved for fees under § 285.

The court first addressed whether it could award attorney's fees for GAT's conduct before the PTAB. The court found that it could because the PTAB proceedings effectively replaced the district court litigation, and also because some of GAT's actions and arguments regarding service were rooted in the district court litigation.

The court next determined whether GAT's conduct was “exceptional.” First, the court found that a reasonable investigation by GAT would have uncovered that the summons served on Wargaming's agent did not bear a court seal or clerk's signature, and therefore was improper. Second, the court found that GAT acted unreasonably in continuing to argue—in the district court and the PTAB—that service was proper after learning that the summons did not bear the required court seal and clerk's signature. And third, the court found GAT acted unreasonably in continuously changing its arguments regarding service—including by raising new arguments on appeal and in opposition to Wargaming's motion for attorney's fees. Viewed collectively, the court found that this misconduct supported an exceptional case determination.

Finally, the court considered whether Wargaming's request for fees was reasonable. Wargaming sought an award only for fees incurred due to GAT's unreasonable tactics, and supported its calculation with a declaration describing its counsel's qualifications, their hourly rates, and the amount of time spent on tasks arising directly from GAT's misconduct. The hours for which Wargaming sought reimbursement amounted to approximately one-third of the total time it expended on the IPR and appeal. The court found that the information submitted by Wargaming was sufficiently detailed and bore a nexus to GAT's improper tactics. Accordingly, the court awarded Wargaming its requested fees (with minor modifications) for GAT's unreasonable actions across all three venues.

Practice Tip: Parties moving for an exceptional case determination and attorney's fees in district court should consider whether such misconduct spans more than one venue. If so, parties should further consider whether to seek fees arising from misconduct in those other venues.

Game and Tech. Co., Ltd. v. Wargaming Group, Ltd., LA CV16-06554 JAK (SKx), Order (C.D. Cal. Oct. 20, 2020) (Kronstadt, J)

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