in the united states district court for the district …...the defendant here, imperium, has borne...

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

SAMSUNG ELECTRONICS CO., LTD., Plaintiff, v. IMPERIUM IP HOLDINGS (CAYMAN), LTD., Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. 15-cv-1059-MAK

IMPERIUM’S BRIEF IN SUPPORT OF ITS MOTION FOR ATTORNEY’S FEES

Dated: October 24, 2017 Alan M. Fisch (admitted pro hac vice) R. William Sigler (admitted pro hac vice) John T. Battaglia (admitted pro hac vice) FISCH SIGLER LLP 5301 Wisconsin Avenue NW Fourth Floor Washington, DC 20015 Telephone: (202) 362-3500 [email protected] [email protected] [email protected]

Brian E. Farnan (Bar No. 4089) Michael J. Farnan (Bar No. 5165) FARNAN LLP 919 North Market St., 12th Floor Wilmington, DE 19801 (302) 777-0300 [email protected] [email protected] Attorneys for Defendant Imperium IP Holdings (Cayman), Ltd.

Case 1:15-cv-01059-MAK Document 47 Filed 10/24/17 of 25 PageID #: 383

i

TABLE OF CONTENTS

I. PRELIMINARY STATEMENT ........................................................................................ 1

II. THE NATURE AND STAGE OF THE PROCEEDINGS ................................................. 2

III. SUMMARY OF ARGUMENT .......................................................................................... 2

IV. BACKGROUND ................................................................................................................ 2

A. Samsung’s Belated Assertion of the Sony-License Theory in the Texas Action ........................................................................................................... 2

B. Samsung Pursues Its Duplicative Action in Delaware—18 Months After Texas. ............................................................................................................. 3

C. The Texas Court Repeatedly Adjudicates the Untimely Sony-License Issue. .......................................................................................................... 5

D. Samsung’s Amended Complaint in Delaware Continues to Expressly Raise and Rely on the Same Transactional Facts and Allegations as the Texas Action. ............................................................................ 6

V. LEGAL STANDARDS ...................................................................................................... 7

A. The Exceptional-Case Standard Under 35 U.S.C. § 285 ........................................ 7

B. 28 U.C.S. § 1927 ..................................................................................................... 8

C. This Court’s Inherent Authority.............................................................................. 9

VI. ARGUMENT .................................................................................................................... 10

A. § 285 Is Applicable Here ...................................................................................... 10

B. Under Any of the Applicable Legal Standards, the Court Should Award Imperium Attorney’s Fees. ....................................................................... 11

C. Imperium’s Request for Fees Is Reasonable. ........................................................ 16

1. Imperium Should Recover All Fees Attributable to this Action. ....................................................................................................... 17

2. The Rates of Imperium’s Attorneys Are Reasonable. .............................. 18

VII. CONCLUSION ................................................................................................................. 20


ii

TABLE OF AUTHORITIES Cases

Anthony v. Abbott, 304 F. App’x 66 (3d Cir. 2008) ................................................................................................ 10

Bakker v. Grutman, 942 F.2d 236 (4th Cir. 1991) ...................................................................................................... 9

Blum v. Stenson, 465 U.S. 886 (1984) ................................................................................................................. 18

Brown v. KIA Motors Corp., 2010 WL 1026966 (W.D. Pa. Mar. 17, 2010) ............................................................................ 9

Chambers v. NASCO, Inc., 501 U.S. 32 (1991) ..................................................................................................................... 9

Clemmons v. Wells Fargo Bank, N.A., 680 F. App’x 754 (10th Cir. Mar. 2, 2017) .............................................................................. 12

Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) ................................................................................................ 11

Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) ................................................................................................................... 8

Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017) ................................................................................................... 9, 10, 17

Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016) ............................................................................................................... 5

Healey v. Labgold, 231 F. Supp. 2d 64 (D.D.C. 2002) ........................................................................................... 12

Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027 (Fed. Cir. 2006) ................................................................................................ 10

Home Indem. Co. v. Arapahoe Drilling Co., 5 F.3d 546 (10th Cir. 1993) ...................................................................................................... 12

Homeland Housewares, LLC v. Hastie2Market, LLC, 581 F. App’x 877 (Fed. Cir. 2014) ............................................................................................ 17

Imperium IP Holdings (Cayman), Ltd. v. Samsung Elecs. Co., 203 F. Supp. 3d 755 (E.D. Tex. 2016) ................................................................................. 6, 11


iii

Imperium IP Holdings (Cayman), Ltd. v. Samsung Elecs. Co., 2016 WL 278971 (E.D. Tex. Jan. 21, 2016) ............................................................................... 3

In re Prosser, 777 F.3d 154 (3d Cir. 2015) ....................................................................................................... 9

In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 278 F.3d 175 (3d Cir. 2002) ................................................................................................. 9, 10

Interspiro USA, Inc. v. Figgie Int’l Inc., 18 F.3d 927 (Fed. Cir. 1994) .................................................................................................... 10

Iris Connex, LLC v. Dell, Inc., --F. Supp. 3d--, 2017 WL 365634 (E.D. Tex. Jan. 25, 2017) .................................................. 18

John Akridge Company v. Travelers Companies, 944 F.Supp. 33 (D.D.C.1996) .................................................................................................. 12

Kilopass Tech., Inc. v. Sidense Corp., 82 F. Supp. 1154 (N.D. Cal. 2015) ........................................................................................... 17

Lewis v. Smith, 480 F. App’x 696 (3d Cir. 2012) ........................................................................................ 12, 14

Limerick v. Greenwald, 749 F.2d 97 (1st Cir. 1984) ...................................................................................................... 12

Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) ..................................................................................................... 18

Link v. Wabash R. Co., 370 U.S. 626 (1962) ................................................................................................................... 9

Loftus v. Se. Penn. Transp. Auth., 8 F. Supp. 2d 458 (E.D. Pa. 1998) ............................................................................................. 9

Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d 479 (Fed. Cir. 2016) ................................................................................................... 18

Mathis v. Spears, 857 F.2d 749 (Fed. Cir. 1988) ................................................................................................... 17

Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., 726 F.3d 1359 (Fed. Cir. 2013) .......................................................................................... 11, 12

Octane Fitness LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) ........................................................................................................... 7, 8


iv

Pact XPP Technologies, AG v. Xilinx, Inc., 2013 WL 4735047 (E.D. Tex. Sept. 3, 2014) ..................................................................... 12, 18

Pact Xpp Technologies, AG v. Xilinz, Inc., 2013 WL 4801885 (E.D. Tex. Aug. 30, 2013) .......................................................................... 12

Pentagen Techs. Int’l. Ltd. v. United States, 172 F.Supp.2d 464 (S.D.N.Y.2001) ......................................................................................... 12

Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010) ................................................................................................................. 18

ReedHycalog UK, Ltd. v. Diamond Innovations Inc., 2010 WL 3238312 (E.D. Tex. Aug. 12, 2010) .................................................................... 11, 18

Virginia Properties, LLC v. T-Mobile Ne. LLC, 865 F.3d 110 (2d Cir. 2017) ..................................................................................................... 18

Z4 Tech., Inc. v. Microsoft Corp., 2006 WL 2401099 (E.D. Tex. Aug. 18, 2006) .................................................................... 11, 18

Zdrok v. V Secret Catalogue, Inc., 215 F. Supp.2d 510 (D. NJ 2002) ............................................................................................ 12

Zuk v. E. Penn. Psychiatric Inst. of the Med. Coll. of Penn., 103 F.3d 294 (3d Cir. 1996) ....................................................................................................... 9

Statutes

28 U.S.C. § 1927 .................................................................................................................... passim

35 U.S.C. § 284 ............................................................................................................................... 5

35 U.S.C. § 285 ...................................................................................................................... passim

D. Del. LR 7.1.3(c)(1)(E)................................................................................................................ 2

Fed. R. Civ. P. 54 .......................................................................................................................... 10


1

I. PRELIMINARY STATEMENT

As this Court explained in dismissing this duplicative suit, “federal courts strive to avoid

wasting taxpayer-funded effort in duplicating analysis of the same arguments resolved before

another federal judge, tried before a jury and now on appeal.”1 But the American taxpayer was

not the only party harmed by Samsung. The defendant here, Imperium, has borne the direct brunt

of Samsung’s multiplication of the proceedings. Fortunately, 35 U.S.C. § 285, 28 U.S.C. § 1927,

and this Court’s inherent authority provide Imperium a remedy: the recovery of its attorney’s

fees. Here, Imperium seeks reimbursement of $247,160 in its fees attributable solely to its de-

fense of this action—fees that it has specifically not sought in its motion for $7,123,115.77 in

attorney’s fees that Imperium has expended to date in prosecuting the Texas action.2

Under 35 U.S.C. § 285, courts may order payment of attorney’s fees in “exceptional” pa-

tent cases that, like this second-filed Delaware suit, were objectively unreasonable or otherwise

involved bad-faith litigation. Samsung’s willfulness and litigation misconduct in the Texas ac-

tion, where Judge Mazzant already found that they warranted sanctions, enhanced damages, and

attorney’s fees, amplifies the conclusion that this case is exceptional. And under either 28 U.S.C.

§ 1927 or this Court’s inherent authority, courts may award attorney’s fees when attorneys or

parties unreasonably and vexatiously multiply proceedings or abuse the judicial process, as Sam-

sung has done here.

Indeed, an award here is justified both to compensate Imperium for its defense, as well as

to deter others from employing the tactics that necessitated it—tactics, like Samsung’s, that this

1 D.I. 44 (Memorandum) at 1.

2 Judge Mazzant has already ruled that Samsung owes Imperium its fees for the Texas case. Presently before Judge Mazzant is a determination of the exact amount, for which Imperium submitted its detailed billing entries last week.


2

Court firmly stated are “discourage[d] … in all cases.”3 Accordingly, Imperium respectfully re-

quests that this Court grant Imperium’s motion.

II. THE NATURE AND STAGE OF THE PROCEEDINGS

On October 10, 2017, this Court granted Imperium’s motion to dismiss this action (D.I.

45).

III. SUMMARY OF ARGUMENT

1. Imperium is entitled to the recovery of its attorney’s fees under 35 U.S.C. § 285, 28

U.S.C. § 1927, and/or this Court’s inherent authority.

IV. BACKGROUND

Recognizing that this Court already is familiar with the factual background of this case,

Imperium provides the following concise recitation of the facts, pursuant to D. Del. LR

7.1.3(c)(1)(E).

A. Samsung’s Belated Assertion of the Sony-License Theory in the Texas Action

On June 9, 2014, Imperium sued Samsung for patent infringement in the Eastern District

of Texas.4 Samsung answered in September 2014, alleging, among other things, a general ex-

haustion and/or license defense without any supporting bases.5 On April 2, 2015, Imperium pro-

duced a license agreement between Imperium and Sony. Under the Sony License, Imperium

granted Sony a license to Imperium’s patent portfolio and an accompanying release to “Licensed

Patents” for Sony products, which included the Imperium patents-in-suit in the Texas action.6

3 D.I. 44 at 1.

4 See E.D. Tex. Dkt No. 4:14-cv-371 (“Texas action”), D.I. 1 (Imperium’s Complaint).

5 Texas action, D.I. 29 (Samsung’s Answer) at ¶ 63.

6 D.I. 31 at ¶¶ 3, 23, 26.


3

All fact discovery closed and summary judgment motions were due in the Texas action

on September 9, 2015.7 The parties in the interim engaged in extensive discovery and motions

practice, including depositions in Korea and on two other continents. Almost a year and a half

after Imperium brought the Texas action—and only after the September 9 deadline—Samsung

disclosed, for the first time, a defense predicated on the Sony License. Samsung then waited an-

other eight weeks before it presented that theory to the Texas court on November 3, 2015, when

it requested that the court accept an “out-of-time” summary-judgment motion on this Sony-

License theory.8 The Honorable Amos L. Mazzant denied this request, finding that Samsung’s

delay was not due to “excusable neglect,” as Samsung was aware of the potential relevance of

the Sony License for at least five months before the September deadline.9 Following that, Judge

Mazzant ordered further briefing from the parties on how issues related to the Sony License

should affect the upcoming February 2016 trial.10

B. Samsung Pursues Its Duplicative Action in Delaware—18 Months After Texas.

While its out-of-time summary judgment motion was being litigated in Texas, Samsung

filed its complaint against Imperium here on November 16, 2015.11 As detailed in Imperium’s

motion to dismiss, Samsung’s complaint, framed as a breach of contract claim, set forth the same

facts and allegations that Samsung had raised in the Texas action with respect to the Sony Li-

cense.12 Further, on November 20, 2015, while the parties were in the midst of actively preparing

7 Texas action, D.I. 122 (Amended Scheduling Order) at 1; accord Texas action, D.I. 70 at 3.

8 See Texas action, D.I. 155.

9 Imperium IP Holdings (Cayman), Ltd. v. Samsung Elecs. Co., 2016 WL 278971, at *2–3 (E.D. Tex. Jan. 21, 2016) (Texas action, D.I. 219).

10 Id.

11 See D.I. 1.

12 D.I. 36 at 5–6; 10–12.


4

for trial in the Texas action, Samsung filed an “Emergency Motion for Expedited Proceedings”

and discovery in the Delaware action—despite its delay in asserting the Sony-License theory and

despite the fact the parties already engaged in extensive discovery in Texas.13 Consistent with

the relief sought in its Delaware complaint, Samsung then attempted to stop the Texas action

pending resolution of the Delaware case, but the Texas court denied that motion.14

On December 1, 2015, the Honorable Sue L. Robinson of this Court heard oral argument

on Samsung’s emergency motion. During the conference, Imperium noted that the Delaware ac-

tion arose from the same transactional facts as the Texas action and asserted allegations that al-

ready were before Judge Mazzant.15 Imperium also summarized the bases for dismissal, noting

specifically the first-filed rule and judicial comity and citing supporting precedent.16 At the con-

clusion of the conference, Judge Robinson requested that the parties each submit a two-page let-

ter explaining their positions on jurisdiction.17

Imperium’s letter to the Court elaborated on these points made at the hearing,18 and, on

December 4, 2015, Judge Robinson denied Samsung’s motion for expedited proceedings and

stayed the Delaware action, finding inter alia that “the dispute is before Judge Mazzan[t], who,

being very familiar with the parties and the technology, is in a much better position to resolve the

initial (if not the dispositive) issue ….”19

13 See D.I. 9 (Samsung’s Emergency Motion for Expedited Proceedings).

14 See Texas action, D.I. 171; 215.

15 D.I. 19 (Tr. of Dec. 1, 2015 Telephone Conference) at 10–11.

16 Id. at 11–12.

17 Id. at 18.

18 See D.I. 16.

19 D.I. 18 at 3.


5

C. The Texas Court Repeatedly Adjudicates the Untimely Sony-License Issue.

Samsung continued to file motions and other briefing on its Sony-License theory in Tex-

as. All told, Samsung filed 17 briefs in the Texas action alone related to the Sony License.20 In

addition to its “out-of-time” summary-judgment motion, for example, Samsung filed a motion to

submit additional expert reports on the theory, as well as multiple submissions for the late-

January 2016 final pretrial conference.21 Judge Mazzant and the parties devoted some 45

minutes of oral argument to the Sony-License issue at that conference, with Samsung counsel

agreeing that the issue boiled down to whether Samsung had shown that Imperium had “con-

cealed” its alleged “reliance” on Sony image sensors to prove infringement by Samsung.22 The

Court denied Samsung’s additional and duplicative requests on the Sony License once more,

while indicating that Samsung could raise the issue yet again following trial if necessary.23

The Texas action then proceeded to trial on February 1, 2016. The jury found that Sam-

sung willfully infringed Imperium’s patents-in-suit and awarded Imperium damages.24 Pursuant

to the Supreme Court’s Halo willfulness standard,25 the Texas court also concluded, after exten-

sive briefing, that Samsung’s willfulness and misconduct were so egregious as to warrant sanc-

tions and enhanced damages under 35 U.S.C. § 284, resulting in a total amended judgment of

$19.1 million.26

20 See Texas action, D.I. 154; 155; 157; 171; 176; 178; 182; 186; 198; 201; 212; 220; 227; 277; 299; 337; 343.

21 See, e.g., Texas action, D.I. 186 (Samsung’s Motion for Leave to Submit Supplemental Expert Reports); D.I. 198 (Samsung’s Motions In Limine) at 13.

22 See Texas action, D.I. 315 (Tr. for Pretrial Hearing on Jan. 29, 2016) at 10–36.

23 Id. at 35–36.

24 See Texas action, D.I. 253 (Verdict of the Jury).

25 Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016).

26 See Texas action, D.I. 329 (Memorandum Opinion) at 11–14.


6

Samsung then raised again its Sony-License theory on post-trial briefing.27 After consid-

ering that post-trial briefing, Judge Mazzant rejected Samsung’s allegations that Imperium had

“concealed its reliance on Sony image sensors” and held that Samsung had waived the Sony-

License theory.28 Samsung appealed to the Court of Appeals for the Federal Circuit, and these

issues currently are before that court.29

D. Samsung’s Amended Complaint in Delaware Continues to Expressly Raise and Rely on the Same Transactional Facts and Allegations as the Texas Action.

On August 16, 2017, this Court held a status conference in this action.30 Imperium once

again outlined the bases for why Samsung’s Delaware suit was barred, including the first-filed

rule and res judicata. Instead of addressing those bases, Samsung announced that it wanted to file

an amended complaint and conduct additional discovery on the previously litigated Sony-

License issue. So, in late August 2017, Samsung filed its First Amended Complaint (“FAC”).

But much like the original complaint, it expressly raised the same transactional facts and allega-

tions for the Sony License that Samsung had raised in the Texas action—and which Judge Maz-

zant had rejected.31 Given that, Imperium moved to dismiss, citing the first-filed rule and res ju-

dicata, among other bases for dismissal.

While Imperium’s motion was pending, Samsung pushed forward with its Delaware dis-

covery demands. It served a proposed Rule 26(f) scheduling order, asserting that in addition to

discovery from the parties, Samsung anticipated seeking discovery from third parties located

27 See, e.g., Texas action, D.I. 277 (Samsung’s Brief Regarding the Sony License and Enhanced Damages).

28 Imperium IP Holdings (Cayman), Ltd. v. Samsung Elecs. Co., 203 F. Supp. 3d 755, 759–61 (E.D. Tex. 2016), amended in part, 2017 WL 1716589 (E.D. Tex. Apr. 27, 2017).

29 See Fed. Cir. Dkt. No. 17-2107.

30 See D.I. 26 (Order).

31 See D.I. 31 (FAC).


7

overseas.32 Samsung further made plain that it would produce its witnesses in Korea, as it speci-

fied such Korean depositions and the cost of interpreters.33 Per Samsung’s estimation, discovery

on this duplicative Sony-license issue would “span approximately six months,” requiring a re-

quest to extend this Court’s customary 90-day discovery period.34 On October 2 and 3, Samsung

then served Imperium with nine interrogatories and 10 requests for production, including one for

the production of all documents produced in the Texas Action.35

On October 10, 2017, as noted above, this Court granted Imperium’s motion to dismiss

Samsung’s FAC, stating that “Samsung’s contract and damages claims are duplicative and sub-

stantially overlap the Texas Action” and that those fully litigated issues are “now presently be-

fore the United States Court of Appeals for the Federal Circuit.”36

V. LEGAL STANDARDS

A. The Exceptional-Case Standard Under 35 U.S.C. § 285

35 U.S.C. § 285 permits a court to “award reasonable attorney fees to the prevailing par-

ty” in a patent case. As the Supreme Court recently put it, there is “one and only one constraint

on district courts’ discretion” to award such fees: the case must be “exceptional.”37 Under the

Court’s Octane Fitness standard, an exceptional case “is simply one that stands out from others

with respect to the substantive strength of a party’s litigating position (considering both the gov-

erning law and the facts of the case) or the unreasonable manner in which the case was litigat-

32 See Exhibit 1 (Draft Rule 26(f) Report), attached hereto, at 5–6.

33 Id. at 6.

34 Id. at 5.

35 See Exhibit 2 (Samsung’s First Sets of Interrogatories and RFPs), attached hereto.

36 See D.I. 44 at 1, 8.

37 Octane Fitness LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1755–56 (2014).


8

ed.”38 In other words, “exceptional” for purposes of § 285 means “uncommon,” “not ordinary,”

or “special,” just as it does in the dictionary.39

Given the above, there is “no precise rule or formula” for determining whether a case is

exceptional.40 The Supreme Court has also made clear that there is no “specific evidentiary bur-

den, much less … a high one.”41 Instead, the determination is a “case-by-case exercise of [dis-

trict courts’] discretion, considering the totality of the circumstances.”42 Circumstances that

make a case exceptional may include “bad faith” or “misconduct” during the litigation; but even

conduct that is “not necessarily independently sanctionable” can “justify an award of fees” under

§ 285.43 Thus, as Judge Mazzant noted when he found the Texas action to be exceptional, courts

consider a non-exclusive list of factors that “includes ‘frivolousness, motivation, objective un-

reasonableness (both in the factual and legal components of the case) and the need in particular

circumstances to advance considerations of compensation and deterrence.’”44

B. 28 U.C.S. § 1927

Under 28 U.S.C. § 1927, a court may impose sanctions, including an award of attorney’s

fees, against any attorney who “multiplies the proceedings in any case unreasonably and vexa-

tiously.” The Third Circuit requires courts imposing sanctions under § 1927 to “find an attorney

has (1) multiplied proceedings; (2) in an unreasonable and vexatious manner; (3) thereby in-

38 Id. at 1756.

39 Id.

40 Id. (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994)).

41 Octane Fitness, 134 S. Ct. at 1758.

42 Id. at 1756.

43 Id. at 1754, 1757 (overruling Federal Circuit’s pre-2014 “rigid” interpretation of § 285, which required conduct that violates Fed. R. Civ. P. 11 “or like infractions”).

44 Texas action, D.I. 401 at 2 (quoting Octane Fitness, 134 S. Ct. at 1756 n.6).


9

creasing the cost of the proceedings; and (4) doing so in bad faith or by intentional miscon-

duct.”45 A court “need not make an express finding of bad faith in so many words,” however;

instead, that finding may be “implicit.”46 Some indications of bad faith include that the “claims

advanced were meritless” and “that counsel knew or should have known this.”47 As another cir-

cuit once put it: “Section 1927 was intended to sanction conduct Rule 11 does not reach; i.e.,

protracting or multiplying the litigation to run up the opposing party’s costs.”48 As with finding a

case “exceptional” under § 285, imposing § 1927 sanctions is an exercise of discretion, and “the

district court is entitled to rely on the totality of the circumstances.”49

C. This Court’s Inherent Authority

Earlier this year, in Goodyear Tire & Rubber Co. v. Haeger, the Supreme Court reaf-

firmed that federal courts “possess certain ‘inherent powers,’ not conferred by rule or statute, ‘to

manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’”50

That includes the power to “assess attorney’s fees when a party has acted in bad faith, vexatious-

ly, wantonly, or for oppressive reasons.”51 Stated another way, courts have the inherent authority

45 In re Prosser, 777 F.3d 154, 162 (3d Cir. 2015) (quoting In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 278 F.3d 175, 188 (3d Cir. 2002)).

46 Zuk v. E. Penn. Psychiatric Inst. of the Med. Coll. of Penn., 103 F.3d 294, 297–98 (3d Cir. 1996) (internal quotation omitted); see Prosser, 777 F.3d at 162.

47 Prudential, 278 F.3d at 188 (citation omitted).

48 E.g., Bakker v. Grutman, 942 F.2d 236, 242 (4th Cir. 1991) (declining to reach merits of § 1927 claim because it was a new argument).

49 Brown v. KIA Motors Corp., 2010 WL 1026966, at *8 (W.D. Pa. Mar. 17, 2010) (citing Pru-dential, 278 F.3d at 188); Loftus v. Se. Penn. Transp. Auth., 8 F. Supp. 2d 458, 463 (E.D. Pa. 1998).

50 Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178, 1186 (2017) (quoting Link v. Wa-bash R. Co., 370 U.S. 626, 630–631 (1962)).

51 Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 (1991) (internal quotation omitted).


10

“to fashion an appropriate sanction for conduct which abuses the judicial process.”52 In the Third

Circuit, a court imposing sanctions pursuant to its inherent authority must make findings similar

to those required by § 1927.53 But unlike § 1927, “which is strictly a basis for sanctions against

an attorney,”54 a court may use its inherent authority to sanction either attorneys or parties.55

VI. ARGUMENT

A. § 285 Is Applicable Here.

As an initial matter, § 285 is applicable to this case regardless of Samsung’s effort—in

the Court’s words—to “dress up” the “most classic of defenses” in a patent-infringement action

as an affirmative claim for breach of contract.56 As the Federal Circuit has held, the applicability

of § 285 depends on “the rights at issue and whether they properly invoke the patent laws”—a

determination that should not “impermissibly elevate[] form over substance.”57 Here this Court

already found that “Samsung’s contract and damages claims are duplicative and substantially

overlap the Texas Action.”58 For that reason, and because whether products are licensed or in-

fringing is “a matter unquestionably governed by patent law,” § 285 is applicable here.59

Here, as in Texas, Imperium also is the prevailing party, as this Court dismissed Sam-

sung’s complaint.60 And in the Texas action for patent infringement, Judge Mazzant already

52 Goodyear, 137 S. Ct. at 1186 (quoting Chambers, 501 U.S. at 44–45).

53 See Prudential, 278 F.3d at 181.

54 Anthony v. Abbott, 304 F. App’x 66, 68 (3d Cir. 2008); see Goodyear, 137 S. Ct. at 1185 n.2.

55 See, e.g., Goodyear, 137 S. Ct. 1178 (remanding fee award on other grounds).

56 D.I. 44 at 1, 11.

57 Interspiro USA, Inc. v. Figgie Int’l Inc., 18 F.3d 927, 933 (Fed. Cir. 1994).

58 D.I. 44 at 8; see also id. at 6 (“Samsung is duplicating litigation in Texas.”).

59 Interspiro, 18 F.3d at 933.

60 See generally Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1035 (Fed. Cir. 2006) (not-ing that the Federal Circuit has “treated the prevailing party issue under Rule 54 and 35 U.S.C.


11

found both (1) that Imperium was the prevailing party under § 285, and (2) that Samsung had

waived the Sony-License theory that was the basis for its asserted claims here.61

B. Under Any of the Applicable Legal Standards, the Court Should Award Imperi-um Attorney’s Fees.

As previously noted, § 285 does not require sanctionable conduct after the Supreme

Court’s recent decision in Octane Fitness.62 But even before Octane Fitness, the Federal Cir-

cuit’s more rigid standard recognized that “litigation misconduct and unprofessional behavior

may suffice, by themselves, to make a case exceptional.”63 Indeed, the Federal Circuit explained

in 2013 that “many forms of misconduct [could] support a district court’s exceptional case find-

ing, including … litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation;

a frivolous suit; or willful infringement.”64 As a result, courts applying § 285 have awarded at-

torney’s fees based on conduct similar to that here, and in amounts much greater than the modest

sum Imperium is seeking from this Court.65 One noteworthy example is Monolithic Power, in

§ 285 similarly” and that the dispositive issue is whether a dismissal has “sufficient judicial im-primatur to constitute a judicially sanctioned change in the legal relationship of the parties”).

61 Texas action, D.I. 401 at 4 (“Accordingly, Imperium is a prevailing party and thus is eligible for its attorney’s fees.”); Imperium, 203 F. Supp. 3d at 761.

62 See note 43, supra.

63 Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., 726 F.3d 1359, 1366 (Fed. Cir. 2013) (in-ternal quotation omitted).

64 Id.

65 E.g., Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1324–26 (Fed. Cir. 2011) (affirming exceptional case finding based upon, inter alia, pursuit of baseless claims and “improper purpose of bringing the lawsuit … to obtain a nuisance value settlement”); ReedHycalog UK, Ltd. v. Di-amond Innovations Inc., 2010 WL 3238312, *5-9 (E.D. Tex. Aug. 12, 2010) (awarding § 285 fees and costs totaling approximately $8.4 million when defendant found liable for willful in-fringement and enhanced damages tried to conceal damaging documents, failed to properly plead a defense, abandoned another defense after extensive briefing, and otherwise engaged in exten-sive motions practice); Z4 Tech., Inc. v. Microsoft Corp., 2006 WL 2401099, at *25-26 (E.D. Tex. Aug. 18, 2006) (finding case exceptional and awarding fees when defendant willfully in-fringed and liable for enhanced damages, failed to produce documents during discovery, and


12

which the Federal Circuit affirmed an $8.4 million fee award based on “an overall vexatious liti-

gation strategy”—an apt description of Samsung’s conduct throughout its litigation with Imperi-

um.66

But Samsung’s or its attorneys’ conduct—especially in multiplying proceedings and pur-

suing the second-filed action in this forum—also goes beyond “exceptional” and into the realm

of sanctions. The Third Circuit has found similar conduct to warrant sanctions, as have other

courts within the Third Circuit and elsewhere.67 As a result, not only is this case “exceptional”

under either Octane Fitness or the Federal Circuit’s now-defunct standard, it also is sanctionable

tried to mislead jury and court); Pact XPP Technologies, AG v. Xilinx, Inc., 2013 WL 4735047, at *1–2 (E.D. Tex. Sept. 3, 2014) & 2013 WL 4801885 (E.D. Tex. Aug. 30, 2013) (finding case exceptional and awarding fees given defendant’s willful infringement, award of enhanced dam-ages, and infringer’s calculated plan to acquire patent owner’s patented technology without com-pensation).

66 Monolithic Power, 726 F.3d at 1365–66.

67 See, e.g., Lewis v. Smith, 480 F. App’x 696 (3d Cir. 2012) (affirming § 1927 sanctions based on second-filed suit); Home Indem. Co. v. Arapahoe Drilling Co., 5 F.3d 546 (10th Cir. 1993) (affirming § 1927 sanctions based on motion for summary judgment that “was unwarranted in fact and law, and duplicative of matters previously decided,” and noting that “sanctions under 28 U.S.C.1927 are appropriate when an attorney seeks to resurrect matters already concluded”); Limerick v. Greenwald, 749 F.2d 97, 101 (1st Cir. 1984) (§ 1927 sanctions appropriate where attorney brought “repetitive motions without a shred of rational basis” and sought “to resurrect matters long since finally concluded”); Pentagen Techs. Int’l. Ltd. v. United States, 172 F.Supp.2d 464, 473–74 (S.D.N.Y.2001) (§ 1927 sanctions appropriate where litigant filed suc-cessive lawsuits that were “designed to evade previous rulings” and that caused “needless occu-pation of judicial resources”); Healey v. Labgold, 231 F. Supp. 2d 64, 68, 70 (D.D.C. 2002) (§ 1927 sanctions appropriate where lawyer, representing himself, “cannot deny that the first five counts of the lawsuit he filed in this court were the very counts that another court had held were not his property”); John Akridge Company v. Travelers Companies, 944 F.Supp. 33, 34 (D.D.C.1996) (sanctions based on court’s inherent authority appropriate where litigant filed sec-ond suit “with the specific intent of circumventing this Court’s dismissal of [an] earlier suit”); Zdrok v. V Secret Catalogue, Inc., 215 F. Supp.2d 510 (D. NJ 2002) (noting that “in participating in this action in New Jersey, [plaintiff’s attorney] ignored the general rule that considerations of comity prevent parties from filing independent actions to void judgments in other courts”), va-cated on other grounds, 108 F. App’x 692, 694 (3d Cir. 2004); see also Clemmons v. Wells Far-go Bank, N.A., 680 F. App’x 754, 650–61 (10th Cir. Mar. 2, 2017) (Rule 11 sanctions applicable when reasonable attorney would have assessed that preclusion principles barred suit).


13

under § 1927 and this Court’s inherent authority. And regardless of which standard is applied,

the circumstances justify Imperium’s request for attorney’s fees.

The fact that Samsung commenced this second-filed case at all—some 18 months after

the first-filed Texas action had begun, had concluded discovery, and was nearing trial—alone

satisfies each of the above-described standards. And Samsung insisted on pursuing this second-

filed case even after Judge Mazzant ruled that Samsung had waived the Sony License.

A reasonable attorney would have known that the first-filed rule or related preclusion

principles barred Delaware action when the same issues already were before Judge Mazzant.

That Samsung and its attorneys did know as much is confirmed by their continued and repeated

attempts to raise the Sony-License theory in Texas, even after filing this Delaware suit. While

asserting that Samsung had to bring the Sony-License issue to Delaware because of the Sony Li-

cense’s forum-selection clause, Samsung altogether filed 17 briefs in Texas on the same Sony-

License issue. And Imperium explained the bases for dismissal of this action—including the

first-filed rule, principles of comity, and the relevant case law—to Samsung in a conference with

Judge Robinson in December 2015, in a letter brief following that conference, and in the status

conference before this Court on August 16, 2017.

Nonetheless, after this Court lifted the stay, Samsung doubled down on its efforts to draw

Imperium into protracted litigation in Delaware over the same issues that—in this Court’s

words—“the parties fully litigated” in Texas and are “now presently before the United States

Court of Appeals for the Federal Circuit following a multi-million dollar jury verdict and exten-

sive post-trial motions.”68 As previously noted, Samsung’s FAC raised the same allegations of

concealment and the same transactional facts as in the Texas action. Then, Samsung’s response

68 D.I. 44 at 1.


14

to Imperium’s motion to dismiss repeated those allegations, at times almost verbatim of Sam-

sung’s previous briefing in the Texas action.69 And Samsung’s draft Rule 26(f) report proposed

an extended discovery schedule, with costly depositions in Korea that would have further con-

sumed Imperium’s resources.

The Third Circuit’s non-precedential opinion in Lewis v. Smith illustrates how such con-

duct—indeed, how less serious conduct—justifies sanctions.70 In Lewis, the Court affirmed

§ 1927 sanctions based on a duplicative lawsuit, explaining

By filing [the second suit], [Attorney] Bailey multiplied proceedings that should have concluded with the resolution of [the first action]. If Bailey believed the out-come in [first action] was incorrect, he should have asked for reconsideration or filed an appeal … upon conclusion of the action. Bailey’s actions in filing an en-tirely separate case were therefore unreasonable and vexatious. And filing an en-tirely separate case obviously increases the cost of the proceedings.”71

And as to bad faith, the Third Circuit agreed with the district court’s findings and noted, inter

alia, that opposing counsel put the attorney on notice that his case was potentially meritless and

that the attorney’s prior sanctionable conduct “suggests a pattern of vexatious litigation.”72

The Lewis court, like other courts making exceptional-case or bad-faith findings, also

considered the history of the sanctioned attorney’s conduct in related—and even unrelated—

litigation. After all, the applicable tests require courts to consider the “totality of the circum-

stances.” That totality here shows a pattern of vexatious litigation by Samsung. Judge Mazzant’s

decisions awarding enhanced damages and attorney’s fees speak for themselves. On the issue of

69 See D.I. 42 at 2 (providing comparisons).

70 480 Fed. App’x 696 (3d Cir. 2012).

71 Id. at 698.

72 Id. at 699.


15

the willfulness of Samsung’s infringement (which by itself can be sufficient for a finding that an

action is exceptional73), he found:

that “there was ample evidence at trial of [Samsung’s] willful infringe-ment”;74

that Samsung “knew of Imperium’s patents for years [and] tracked those pa-tents in other litigation;”75

that Samsung “never investigated to form a good faith belief as to non-infringement and invalidity. Instead, the record indicates that [Samsung] used a patent broker to try to purchase the patents-in-suit without revealing [its] identity”;76 and

that Samsung has “continued to infringe the ’884 and ’029 Patents—after the jury found infringement, after the Court entered judgment, after the Court enhanced damages. The Court considers [Samsung’s] continued infringement to be unreasonable, deliberate and willful in nature, especially in light of the Court’s orders and the jury’s verdict.”77

Further, concerning Samsung’s conduct during the litigation, Judge Mazzant found:

that Samsung “made multiple material misrepresentations under oath and in their pleadings”;78

that “[d]uring trial,” Samsung’s witnesses “Mr. Bang and Mr. Lee gave false testimony regarding [Samsung’s] knowledge of the patents-in-suit”;79 and

that Samsung “failed to produce relevant documents timely. … Apparently, [Samsung] never searched for any such documents until the fourth day of tri-al,” and even then produced only the documents found on one laptop. “Only after Imperium and the Court raised the issue of sanctions did [Samsung]

73 See Texas action, D.I. 401 at 5 (collecting cases).

74 Id. at 4; accord Texas action, D.I. 329 at 13.

75 Texas action, D.I. 401 at 5.

76 Id.; accord Texas action, D.I. 329 at 12.


78 Id. at 5; see also id. at 6 (Samsung “misrepresented key facts bearing on infringement and willfulness”).

79 Id. at 5; see also D.I. 329 at 12 (“evidence produced at trial indicated that this testimony was demonstratively false and not worthy of belief”).


16

search their own files” and find more such documents on another computer, in a folder plainly labeled “Imperium.”80

Based on Samsung’s false testimony and material misrepresentations in the Texas action,

Judge Mazzant sanctioned Samsung at trial.81 Based on Samsung’s “egregious” conduct, he en-

hanced damages “to the maximum extent allowable under § 284.”82 And “based on [Samsung’s]

unreasonable conduct,” he found the Texas action to be exceptional under § 285.83

Here, as in Lewis, the duplicative Delaware action constitutes sanctionable conduct under

§ 1927 or this Court’s inherent authority. And here, as in Monolithic Power, the “overall vexa-

tious litigation strategy” that Samsung pursued makes this case exceptional under § 285. This

Court should thus award Imperium attorney’s fees.

C. Imperium’s Request for Fees Is Reasonable.

As set forth in the accompanying Declaration of Alan M. Fisch, Imperium is requesting a

total of $247,160 in attorney’s fees incurred solely in connection with this action.84 The billing

records attached to Mr. Fisch’s Declaration fully support this amount, which excludes an addi-

tional $26,377.50 in time that Imperium attorneys had recorded but that was removed based on

billing judgment and to reduce the disputed issues. Although Imperium may be entitled to recov-

er certain taxable and non-taxable costs in addition to those fees, Imperium is not burdening the

80 Texas action, D.I. 401 at 6; accord Texas action, D.I. 329 at 13.


82 Id.

83 Texas action, D.I. 401 at 7 (“[W]hen a party does all of these things mentioned above and con-tinues to infringe the patents-in-suit, the Court can only conclude this case is exceptional.”).

84 Imperium specifically excluded these fees for its attorneys’ work on this case from its request in Texas for the recovery of $7,123,115.77 in attorney’s fees that Imperium expended on work in that case. See Texas action, D.I. 406 at 2–3.


17

Court with a request for any such costs because they are relatively insignificant (i.e., less than

$1,000).

1. Imperium Should Recover All Fees Attributable to this Action.

Awarding Imperium fees based on the entirety of this action is appropriate regardless of

whether this Court relies on § 285—which by its terms authorizes “reasonable” attorney’s fees—

or whether this Court relies on § 1927 or its inherent authority—in which case an award of fees

must be causally related to the misconduct.85 As the Federal Circuit has held, § 285 is a “make-

whole” fee provision.86 That is, the purposes of the statute are best served if the prevailing party

receives its reasonable fees for the “entire[ty]” of the patent “action.”87 The Federal Circuit

therefore has rejected arguments that a court must limit a party’s fees to the conduct that the

court found “exceptional,” declining to “require such granularity from the district court, particu-

larly because it is the ‘totality of the circumstances’ … that justify the court’s award of fees.”88

And likewise, with respect to sanctions, it still is appropriate after the Supreme Court’s decision

in Goodyear for a defendant to recover all its attorney’s fees when the prosecution of the action

85 In Goodyear, the Supreme Court held that attorney’s fees awarded pursuant to a court’s inher-ent authority—similar to sanctions awarded pursuant to § 1927—may only be “compensatory” unless a sanctioned attorney or party is provided with the “procedural guarantees applicable in criminal cases.” 137 S. Ct. at 1186. As a result, any sanctions based on § 1927 or this Court’s inherent authority must be “limited to the fees the innocent party incurred solely because of the misconduct—or put another way, to the fees that the party would not have incurred but for the bad faith.” Id. at 1184.

86 E.g., Mathis v. Spears, 857 F.2d 749, 758 (Fed. Cir. 1988).

87 Kilopass Tech., Inc. v. Sidense Corp., 82 F. Supp. 1154, 1166 (N.D. Cal. 2015) (citations omitted).

88 Homeland Housewares, LLC v. Hastie2Market, LLC, 581 F. App’x 877 (Fed. Cir. 2014).


18

itself constituted sanctionable conduct.89 That is the case here, and so Imperium should recover

all fees attributable to this action.

2. The Rates of Imperium’s Attorneys Are Reasonable.

Regardless of the nature of a movant’s fee agreement, the analysis for determining the

movant’s reasonable-fee amount follows the same two steps. First, pursuant to the well-known

lodestar method pioneered by the Third Circuit, courts multiply the reasonable hours spent on the

case by the reasonable hourly rate, yielding a presumptive total fee amount.90 Second, courts

may adjust that presumptive amount based on various factors cited by the Supreme Court.91

To determine a reasonable hourly rate for an attorney in a particular case, the lodestar

method looks to “the prevailing market rates in the relevant community.”92 Here, it is appropri-

ate to consult the data provided by American Intellectual Property Law Association (“AIPLA”),

which courts routinely consider when determining the reasonableness of an attorney’s rates and

fee amounts in patent cases.93 As noted above, this case does indeed qualify as a patent case. But

even if that were not so, it was eminently reasonable for Imperium to continue to rely on the

89 See Virginia Properties, LLC v. T-Mobile Ne. LLC, 865 F.3d 110, 120 (2d Cir. 2017) (observ-ing, in one of the two circuit decisions so far to apply Goodyear, that “(1) if the district court’s findings [that plaintiff committed a fraud on the court] were correct, and (2) if [defendant] T-Mobile offered to settle for the entire amount of damages actually attributable to its cellular equipment, then continuing this litigation solely to harass or to obtain a windfall might well have been sanctionable conduct supporting an award of all costs and attorney’s fees”).

90 See Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010) (citing Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973)); see, e.g., Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d 479, 483 (Fed. Cir. 2016).

91 See generally Perdue, supra.

92 Perdue, 559 U.S. at 551 (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)).

93 E.g., Iris Connex, LLC v. Dell, Inc., --F. Supp. 3d--, 2017 WL 365634, at *21 (E.D. Tex. Jan. 25, 2017) (citations omitted); ReedHycalog, 2010 WL 3238312, at *5-9 (using AIPLA survey to determine fees); Z4 Tech., 2006 WL 2401099, at *25-26 (same); Pact, 2013 WL 4735047, at *1-2 (same).


19

same patent-litigation firm that represented it in the Texas action. After all, Samsung used the

same national counsel to prosecute this action, and the reason this Court dismissed it is because

Samsung was duplicating the litigation in Texas. That litigation involved complex electrical-

engineering and computer-science technologies and often novel or difficult legal issues, requir-

ing skilled and experienced patent- and federal-court litigators.

Therefore, as shown in the attached Declaration of Mr. Fisch, the hourly rates for Imperi-

um’s firms and the particular attorneys who litigated this case are reasonable, given their back-

ground, skill, experience, and recognition.94 Fisch Sigler in its short history has garnered acclaim

as one of the top patent-litigation firms in the country, regardless of size.95 And Farnan LLP, led

by the former Chief Judge of this district, is highly-regarded for its work in Delaware federal and

state courts.96 The Fisch Sigler and Farnan LLP partners, associates, and paralegals who worked

on this litigation are also skilled and experienced with well-deserved accolades and reputations.97

As reflected in Mr. Fisch’s Declaration and the attached 2017 AIPLA report, these attorneys’

standard hourly rates are commensurate with the rates for patent-litigation attorneys in Texas

(the relevant geographic market because the action that this case duplicated was prosecuted

there) for the same time period.98 Alternatively, these hourly rates are consistent with those

charged in Washington, D.C. and Philadelphia, the closest metro areas to Delaware for which

information is available.99

94 See Fisch Decl. at ¶¶ 8–15, 17–25.

95 Id. at ¶ 22; see also id. at ¶ 25.

96 Id. at ¶ 17.

97 Id. at 8–15, 17–25.

98 Id. at ¶¶ 24–25.

99 Id.


20

VII. CONCLUSION

In pursuing this duplicative, attempted end-run around Judge Mazzant’s rulings in Texas,

Samsung needlessly wasted the resources of all involved parties. Imperium felt the harm from

Samsung’s conduct most acutely and most particularly, coming as it has after four years of at-

tempting to obtain compensation from Samsung for its willful infringement of Imperium’s pa-

tents. Imperium respectfully asks the court to ameliorate this harm, and deter others from pursu-

ing similar conduct to Samsung’s, by awarding Imperium its reasonable fees in defending this

action.

Dated: October 24, 2017 Respectfully submitted,

FARNAN LLP

/s/ Michael J. Farnan Brian E. Farnan (Bar No. 4089) Michael J. Farnan (Bar No. 5165)

919 North Market St., 12th Floor Wilmington, DE 19801 (302) 777-0300 [email protected] [email protected] Alan M. Fisch (admitted pro hac vice) R. William Sigler (admitted pro hac vice) John T. Battaglia (admitted pro hac vice) FISCH SIGLER LLP 5301 Wisconsin Avenue NW Fourth Floor Washington, DC 20015 Telephone: (202) 362-3500

[email protected] [email protected] [email protected]

Attorneys for Defendant Imperium IP Holdings (Cayman), Ltd.


in the united states district court for the district …...the defendant here, imperium, has borne...

Documents