In a dramatic conclusion to the nearly seven year old patent litigation between Datatern and Microstrategy (including a number of Microstrategy's customers), Judge Saylor in the District of Massachusetts recently awarded attorneys' fees based on Datatern's "blatant and unapologetic" judge shopping in the early stages of the case.
The dispute began on November 7 and 8, 2011, when Datatern filed eight patent infringement suits against Microstrategy's customers in the District of Massachusetts, none of which were marked as "related." All eight cases were therefore randomly assigned a judge. Datatern dismissed all but one of those cases within six weeks.
A week after the initial filings, on November 15, 2011, Datatern filed nine more lawsuits against other Microstrategy customers and, again, did not mark the cases "related." Datatern received more random judge assignments and dismissed most of the nine new cases within a few months. That is, every case except those assigned to Judge Stearns.
Then, on December 14, 2011, Datatern filed four more cases targeting Microstrategy customers and Microstrategy itself. This time, however, Datatern marked the cases as "related" to one of the suits before Judge Stearns. As a result, these four cases were assigned to Judge Stearns.
Over the next approximately six years, Microstrategy filed a number of dispositive motions, the parties fought over the timeliness of contentions (reported here), and the Court stayed the case pending a potentially dispositive claim construction ruling in the Southern District of New York. On February 7, 2017, the Massachusetts court issued its own Markman ruling, which effectively foreclosed Datatern's infringement case.
Then, in a surprising twist, Datatern's counsel filed a motion to withdraw in August 2017, explaining that its representation agreement "provides that the client will consent to [counsel's] withdrawal upon the occurrence of . . . material disagreements over the conduct of the case, non-payment of expert fees and non-payment of other disbursements," and noting that one of those circumstances had occurred. After granting the motion, the Court gave Datatern until October 20, 2017 to find alternate counsel. Datatern was unable to do so, and the Court dismissed the case with prejudice for failure to prosecute.
Microstrategy then filed a motion to recover its attorneys' fees, alleging in relevant part that Datatern's case was objectively unreasonable and that Datatern had engaged in judge shopping by filing over a dozen cases not marked as related, dismissing those not assigned to Judge Stearns, and then consolidating all remaining cases to those assigned to Judge Stearns. For its part, Microstrategy argued that it made a mistake, claiming that "we began [the suits] against individuals who we thought were independent software vendors. It turned out that they were resellers." The Court didn't buy it:
It seems that any amount of pre-suit investigation would have alerted plaintiff to the fact that those defendants were resellers (and it did not take plaintiff long to find out after the suits were filed . . .). But even assuming that plaintiff made the decision to file seventeen lawsuits in eight days without bothering to determine whether the cases were related beforehand, that does not explain why plaintiff proceeded to dismiss all the suits (except two) not before Judge Stearns, keep all the cases that were before Judge Stearns, and mark its five new cases as related not to the lowest-numbered remaining case . . . which at the time was assigned to Magistrate Judge Dein, but to the lowest-numbered remaining case before Judge Stearns.
Op. at 34 (emphasis in original). The Court therefore found the case "exceptional" due to Datatern's "blatant and unapologetic" judge shopping, which, it explained "run[s] a risk of eroding public confidence in the courts by seeming to reward a litigant for its gamesmanship." The Court also found that Datatern's case became objectively unreasonable after the Court issued its claim construction order in February 2017, awarding Microstrategy its fees incurred related to both issues.
The case is Datatern, Inc. v. Microstrategy Inc. et al., 11-cv-11970-FDS, in the District of Massachusetts. A copy of the opinion can be found here.
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