August 17, 2024
On July 11, 2024, Southern District of Texas Judge Lee H. Rosenthal ruled a case against Volkswagen exceptional, holding plaintiff VDPP LLC and its counsel, Ramey LLP, jointly and severally liable for reasonable attorney fees incurred in defending it. This past week, the court quantified that award, shifting a total of $207,543.60. In doing so, the court declined VDPP's invitation to "allocate the fees between the frivolous and nonfrivolous aspects of the case" because "[i]t was all frivolous". Undeterred since that July 11 order, VDPP has filed new complaints in various districts, one against each of Casio, Dell, Digital Projection, GeoVision (USA Vision Systems), Giga-Byte Technology, Hon Hai Precision Industry (Belkin), Lenovo, Leyard Optoelectronic (Planar Systems), MediaTek, Pioneer (Pioneer Electronics), Qualcomm, Resideo Technologies, Roku, Senao Networks (EnGenius Technologies), STMicro, and TP-Link.
As recently covered, at "'This Was a Lie': A Long but Partial List of 'Flaws' Justifies Fees Shift" (July 2024), a key aspect of the misconduct that cost VDPP (and Ramey) $207K is the plaintiff's (repeated) request for relief, which sought against Volkswagen "future damages and a permanent injunction on a patent that had expired a year before" and "past damages despite an inability to allege patent marking". The "lie" mentioned in that title refers to VDPP's representation in its initial disclosures in the Volkswagen suit "that there were no settlement agreements, only 'agreements in principle'" when in fact "there were 11 settlement agreements" at that point, and none of them imposed marking requirements on the licensees under § 287.
Judge Rosenthal was not convinced by VDPP's arguments that marking compliance is a factual question not susceptible to resolution solely on the pleadings and that as an NPE, it need not plead marking compliance in the first place. To address the marking issue, VDPP has pleaded in its new complaints that as an NPE, it has never sold a product and that no prior "settlement license" was inked "to produce a patented article, for or under the Plaintiff's patents":
Duties of confidentiality prevent disclosure of settlement licenses and their terms in this pleadimng [sic] but discovery will show that Plaintiff and its predecessors-in-interest have substantially complied with Section 287(a). Furthermore, each of the defendant entities in the settlement licenses did not agree that they were infringing any of Plaintiff's patents, including the Patents-in-Suit, and thus were not entering into the settlement license to produce a patented article for Plaimntiff [sic] or under its patents. Further, to the extent necessary, Plaintiff has limited its claims of infringement to method claims and thereby remove any requirement for marking.
In at least a subset of its new complaints, VDPP still seeks:
..."a decree addressing future infringement that either (if) awards a permanent injunction enjoining Defendant and its agents, servants, employees, affiliates, divisions, and subsidiaries, and those in association with Defendant from infringing the claims of the Patents-in-Suit, or (ii) awards damages for future infringement in lieu of an injunction in an amount consistent with the fact that for future infringement the Defendant will be an adjudicated infringer of a valid patent, and trebles that amount in view of the fact that the future infringement will be willful as a matter of law.
See, e.g., the complaint against Roku, asserting a single VDPP patent (10,021,380). Note, however, that the '380 patent is in suit in earlier complaints, including, for example, a Northern District of California pleading filed against Optoma Technology in February 2024. There, where the '380 patent has been asserted with a second patent from the same family, Optoma has filed a motion to dismiss that, in part, argues that each asserted patent claims priority back to the same 2002 application such that each has long expired. (Optoma also argues in that motion that the claims of the two asserted patents are patent-ineligibly directed, under Alice, to the abstract idea of "processing or manipulating digital images").
How VDPP's continued pleas for past damages (in the absence of marking) and future damages (when asserting allegedly expired patents) will play out has yet to be seen. The plaintiff has filed a notice of appeal in the case against Volkswagen case, likely hoping that its arguments on both scores will help convince the Federal Circuit to overturn the shift of those $207K in attorney fees. Judge Rosenthal hammers VDPP in the order doing so, indicating, among other things, that "VDPP misses the point of the court's prior findings"; that "[t]his entire case was exceptional" because an injunction and future damages were sought for the infringement of an expired patent and because past damages were sought were marking was insufficiently pled; and "VDPP lied about the existence of prior licensing agreements that confirmed the meritless nature of its case".
As to the shifted amount, Judge Rosenthal notes, "Attorneys command high fees". He found the hourly rates charged by the attorneys doing the work here ("$979 per hour for the lead lawyer; $825 per hour for an of-counsel lawyer; and $600 for local counsel") to be reasonable. He also found the 256 hours billed on the case, arising "in a specialized area of patent law—marking requirements", to be reasonable, noting with favor that Volkswagen showed "billing judgment" by "applying a 10% reduction across the board, billing at 2023 rates, and not including any paralegal time in the amounts it seeks". The whole amount is proper to shift, per the court, because "VDPP's misconduct infected the entire litigation. It is entirely fitting to require VDPP to pay all of Volkswagen's fees to defeat a case that never should have been filed. Indeed, VDPP's protestations fit the classic definition of 'chutzpah.' VDPP displays some nerve in asking this court to relieve it of the consequences of its own misconduct".
For additional background concerning VDPP, its principals, the patents-in-suit, this leg of the campaign, and the prior leg of the campaign, see here. For an assertion grid for this litigation, see RPX Empower. Several of the new cases have been filed in districts that impose heightened disclosure requirements on litigants. In the Central and Northern Districts of California, VDPP has disclosed only VDPP as a nonparty having a pecuniary or financial interest in the outcome. In the Casio suit, filed in New Jersey, VDPP has yet to comply with the requirement that it disclose the presence of any third-party litigation funding. Note that in its prior cases, the plaintiff disclosed (through November 2021, under prior representation by Wawrzyn LLC) patent monetization firm Dynamic IP Deals LLC (d/b/a DynaIP) as a nonparty with an interest in the outcome of the proceeding.
Several of VDPP's older cases have recently been dismissed without prejudice, some of those after a noticed settlement but others without additional explanation. VDPP has exhibited a past pattern of, when a complaint is challenged, dismissing the case without prejudice and refiling substantially the same suit later. For example, VDPP sued Lenovo in December 2020 in the Northern District of Illinois, only to dismiss it without prejudice in March 2021 (there, without an attack on the pleading). Now, VDPP has sued Lenovo again, this time in the Western District of Texas. 7/26, Belkin, Central District of California; 7/31, Dell, GeoVision, Lenovo, Qualcomm, Resideo, Western District of Texas, Pioneer, TP-Link, Central District of California; 8/2, MediaTek, STMicro, Western District of Texas, Planar Systems, Southern District of Texas, Delta Electronics, Eastern District of Texas; 8/7, Casio, District of New Jersey; 8/12, EnGenius Technologies, Eastern District of Texas, Giga-Byte Technology, Central District of California; 8/16, Roku, Northern District of Texas.
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