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Former Client Targets Firms to Recoup Fees From Failed Patent Suit
E-Pass is suing Moses & Singer and Squire, Sanders & Dempsey, alleging negligent misrepresentation
The Recorder
March 24, 2009
E-Pass Technologies is trying to recover millions it paid to Moses & Singer and Squire, Sanders & Dempsey in an ill-fated patent infringement suit by going after the two firms with a negligent misrepresentation lawsuit.
E-Pass originally sued Palm Inc. and others in the Northern District of California in 2000. But U.S. District Judge D. Lowell Jensen dismissed the litigation in 2006, found the German patent holding company had committed litigation misconduct, and awarded attorney fees to the defendants.
"In advising E-Pass to file and maintain their patent infringement claim, they spent $10 million in legal fees and costs without a sound basis to make the elemental case of patent infringement," said James Rosen of Rosen Saba, which filed the suit for E-Pass against its former lawyers at Moses & Singer and Squire Sanders.
The suit against the law firms (.pdf) was filed in San Francisco Superior Court in January, but Rosen Saba didn't serve it then because it was waiting for a decision on E-Pass' appeal of the underlying case, Rosen said. On Friday the U.S. Circuit Court of Federal Appeals affirmed Jensen's decision, and Rosen said the law firms will now be served.
The suit names E-Pass' primary trial counsel, Moses & Singer, and a partner at the New York firm, Stephen Weiss. It also targets Squire Sanders and San Francisco partner Mark Dosker, who served as local counsel.
Moses & Singer's Weiss said Monday that he hadn't been served and couldn't comment, and didn't reply to requests for comment once the suit was e-mailed to him. Dosker and a firm spokeswoman didn't respond to requests for comment Monday afternoon.
E-Pass alleges that the lawyers pursued claims without a legal basis, misrepresented evidence and overbilled. Rosen said the firms charged E-Pass $7.6 million and then cost the tiny patent holding company $2.3 million in attorney fees awarded by Jensen.
The underlying case got started when E-Pass claimed that Palm's PDAs infringed on a patent for a multi-function, credit card-sized computer that would allow people to store account numbers, PIN codes and other data. The patent was issued to European entrepreneur and E-Pass founder Hartmut Hennige in 1994. E-Pass first sued Palm and added other defendants, like Visa and PalmSource, later on.
But the case went poorly. Jensen criticized E-Pass for its "ever-changing allegations of infringement," for refusing to back up its claims, and for its failure to take discovery that it had requested and received, according to the Federal Circuit opinion. Jensen also chastised E-Pass for a "questionable" prefiling investigation into whether there actually was any infringement.
Not only did the Federal Circuit uphold Jensen's decision, but the majority of the three-judge panel sanctioned E-Pass and its more current lawyers at Cislo & Thomas for pursuing a frivolous appeal against one of the original defendants, PalmSource. Cislo & Thomas and E-Pass are now both on the hook for PalmSource's attorney fees.
"I think it signals an attempt by them to cut down on frivolous litigation and frivolous appeals," said Andrew Oliver, a Townsend and Townsend and Crew attorney who represented PalmSource, which is now known as Access Systems America. "I felt that it was nice that the judges held the attorneys jointly and severally liable."
Cislo & Thomas' Daniel Cislo, who has replaced Moses & Singer and Squire Sanders as counsel for E-Pass in the patent case, didn't return a call seeking comment.
