An Arkansas federal judge has refused to award attorney fees to the prevailing party in a patent dispute, chastising its attorneys for using the threat of a fees award as a litigation cudgel.
On Tuesday in Wiley v. RockTenn C.P. LLC, U.S. District Judge Kristine Baker denied RockTenn’s motion for about $166,000 in fees.
“Exhibits in the record support that RockTenn threatened to seek fees from the beginning of this litigation,” she wrote. “Exhibits in the record also support Mr. [Ted] Wiley’s contention that RockTenn attempted to use the threat of fees to persuade Wiley to abandon all of his claims—including those claims based on RockTenn’s admitted breach of the license agreement.”
According to court records, the dispute involved a “heavy-duty, knock-down container” that Wiley invented—one that can be quickly assembled from its folded, flat state. He originally signed a licensing deal with Smurfit-Stone Container Enterprises Inc. RockTenn inherited the licensing arrangement when it acquired Smurfit-Stone.
Wiley sued RockTenn in 2012, ultimately amending his complaint to include patent infringement, breach of contract for unpaid royalties and patent infringement for selling a product after Wiley terminated the license.
Baker noted that Wiley’s allegations about which RockTenn products infringed his patent were unclear at different points in the proceedings. In October 2013, she granted RockTenn summary judgment on one of Wiley’s patent infringement claims and subsequently on his other claims after the parties agreed to a consent judgment in favor of RockTenn.
In this week’s order, Baker rejected RockTenn’s argument that Wiley’s lack of investigation before filing the suit made it an exceptional case meriting a court award of attorney fees. The U.S. Supreme Court gave district courts added discretion to award fees in its April ruling in Octane Fitness LLC v. ICON Health & Fitness Inc.
However, Baker wrote: “Even if this were an exceptional case, the court would exercise its discretion to decline to award fees, and the record does not support a finding that any lawyer’s conduct merits sanctions.”
Wiley’s lawyer, William Jennings Stanley of Stanley & Woodard in Jonesboro, Ark., did not respond to a request for comment. Neither did RockTenn nor its lawyers at Armstrong Teasdale of St. Louis and the Fayetteville, Ark., office of Conner & Winters.
The ruling is significant because litigation often is tilted against small companies and inventors, even if they have a meritorious claim, said Peter Toren, a Washington partner with Weisbrod Matteis & Copley, who represents patent plaintiffs but wasn’t involved in the case. “If a judge disagrees, they risk having attorneys’ fees on them.”
Given the plaintiff’s inadequate investigation and lack of evidence of infringing sales after he terminated RockTenn’s license, “it’s hard to imagine what an exceptional case would be,” said Blair Jacobs, Washington intellectual property litigation practice leader at McDermott Will & Emery, who also wasn’t involved in the case.