Federal Circuit OKs $12 Million Fee Award in 'Exceptional' Patent Case

Federal Circuit OKs $12 Million Fee Award in 'Exceptional' Patent Case Steven Strauss, Cooley partner

SAN FRANCISCO — The U.S. Court of Appeals for the Federal Circuit has upheld a $12 million “exceptional case” attorney fee award in a San Diego patent case involving GPS technology.

Tuesday’s ruling in Gabriel Technologies v. Qualcomm is a win for Cooley, which has been litigating the case for Qualcomm Inc. since 2008. How much it can recover is unclear, as Gabriel Technologies Corp. has filed for bankruptcy protection and its trial counsel, Hughes Hubbard & Reed, has already settled out.

The ruling was issued as nonprecedential, but it nevertheless demonstrates the Federal Circuit is ready and willing to affirm Section 285 fee awards under the new standard it set out in December in Kilopass Technology v. Sidense. The fact that the U.S. Supreme Court is reconsidering the standard of review for such awards didn’t deter Judges Alan Lourie, Haldane Mayer and Raymond Chen.

“Even applying de novo review—as opposed to a more deferential standard—we conclude that the district court correctly determined that the claims advanced by the Gabriel plaintiffs were objectively baseless,” the court’s opinion stated.

Gabriel could not identify which employees deserved credit for the patented technology and instead played a game of “inventor musical chairs” during discovery, the court stated. Gabriel then “acted with subjective bad faith by stubbornly continuing to press their claims long after they realized that those claims were without evidentiary support,” the court concluded.

Gabriel sought $1 billion for patent, trade secret and other claims stemming from technology it says its predecessor licensed to a company called SnapTrack Inc. Qualcomm acquired SnapTrack in 2000.

Gabriel’s original law firm, Munck Carter, withdrew in 2010, according to the Federal Circuit’s opinion. Gabriel board member John Hall then sent an email to the company’s chief financial officer, stating, “There are only a few full contingency firms that can afford to take on a case of this size and complexity. They won’t touch this case because we have no case. Just a lot of talk.”

Hughes Hubbard did take the case on a contingency basis, but U.S. District Judge Michael Anello of the Southern District of California ordered the company to post an $800,000 bond and warned “there is a strong likelihood defendants will ultimately prove this case is exceptional, and attorneys’ fees will be warranted at the conclusion of the litigation.”

Anello was right. U.S. District Judge Anthony Battaglia eventually ruled for Qualcomm, found the case exceptional and ordered Gabriel to pay Qualcomm $11.6 million, plus the $800,000 bond.

On Tuesday, the Federal Circuit affirmed both on the merits and on the exceptional-case finding.

“In many cases, unearthing evidence sufficient to establish a litigant’s subjective bad faith is challenging,” the court stated. “This is not such a case.”

Cooley partner Steven Strauss argued the appeal for Qualcomm. Robert Knaier of Chapin Fitzgerald represented Gabriel.

Contact the reporter at sgraham@alm.com.