Patent Incivility Justifies Fee Shifting

Unreasonable patent litigation conduct can expose a litigant—and their counsel—to fee shifting in exceptional cases. The U.S. Court of Appeals for the Federal Circuit affirmed a district court’s award of attorney fees to a defendant and also awarded fees and double costs for the frivolous appeal. ABA Litigation Section leaders suggest that attorneys be mindful of the rules of professional conduct and be willing to tell a client “no” when the circumstances warrant, lest they find themselves facing sanctions for frivolous attempts to advance the client’s interests.

It’s Not You, It’s Me

In Pirri v. Cheek, the plaintiff alleged he invented a reverse online dating application, where people meet in the real world prior to dating virtually. The plaintiff claimed that he had shared his idea with his therapist, who then shared the idea with the defendant. The plaintiff purportedly learned of this breach of his confidence when he saw a rerun of the television series Shark Tank, in which the defendant had promoted a similar idea. The plaintiff sued for joint inventorship and various common-law torts. The trial court dismissed most of the claims, leaving only the patent-based claim.

The trial court then denied as futile the plaintiff’s request for leave to amend his complaint to add a “litany” of new and unrelated state law claims, including a defamation claim for an incident that had occurred 10 years removed from the alleged infringement. When the defendant moved for summary judgment on the patent case, the trial court ordered that the plaintiff stipulate to summary judgment or oppose it on a good-faith basis. Instead, the plaintiff sought to dismiss the complaint with prejudice, ostensibly to avoid the fee-shifting provision of 35 U.S.C. § 285. Section 285 provides that, in the patent context, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” After several court conferences and additional denied requests from the plaintiff that he be permitted to dismiss the claim, the plaintiff ultimately consented to summary judgment in the defendant’s favor.

The defendant then moved for attorney fees on several grounds, including section 285 and the trial court’s inherent authority. The trial court determined that this case was exceptional, noting that the plaintiff’s “filings stand apart from those of other failed civil plaintiffs for the sheer lack of colorable factual (or legal) support.” The court further called out the plaintiff’s “tendentious, bizarre, non-responsive and caustically accusatory arguments,” and awarded fees and costs to the defendant under section 285. The trial court also found the plaintiff’s attorney to be jointly responsible for payment of the defendant’s fees and costs, as he had prepared, signed, and filed all the relevant submissions. The plaintiff appealed.

The federal circuit affirmed the trial court’s award of attorney fees and costs and awarded fees and double costs relating to the appeal under Federal Rule of Appellate Procedure 38. The appellate court also held the plaintiff’s attorney jointly responsible for these additional fees. The court described the arguments raised below as “baffling” and held that counsel’s appellate briefing “far exceeds the bounds of proper decorum.” The plaintiff had characterized the defendant’s appellate briefing and conduct as “an outright lie,” “cheating to win,” “gamesmanship,” and “frivolous.” The appellate court found that none of those accusations had any basis in fact and that they justified the award of appellate fees and double costs.

Advancing Frivolous Claims Violates Ethical Rules

As explained by the appellate court, “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 governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Litigation Section leaders believe that the conduct in this case was sufficient to meet the standard for unreasonable conduct. “Lawyers are officers of the court,” states John M. Barkett, Miami, FL, cochair of the Section’s Ethics & Professionalism Committee. He notes that plaintiff’s counsel violated several ethical standards and rules, not the least of which was Rule 1.1, requiring an attorney to represent his or her client competently. Unlike in this case, “a competent lawyer would not bring a frivolous claim or advance a frivolous appeal,” he explains.

“Counsel here certainly violated ethical rules,” comments Michael S. LeBoff, Newport Beach, CA, cochair of the Section’s Professional Liability Litigation Committee, also pointing to the competence requirement. “Do your research on the law, make sure your arguments are well supported, and be able to say no to the client,” he advises. “We are seeing that courts are starting to call lawyers out more for driving up fees with frivolous motions and conduct,” he adds, stating that “it’s important for counsel to draw the line between a good-faith argument that’s a long shot and a frivolous motion or pleading.”

Where Is the Line Between Zealous Advocacy and Unreasonable Conduct?

“There is no place in the practice of law for incivility or unprofessionalism,” declares Barkett. “Zealous advocacy was removed from the test of the Model Rules a long time ago,” he continues, reiterating that “there are no implications here other than lawyers should not bring frivolous lawsuits or appeals.” Drawing the line between zealous advocacy and abusive or unethical conduct may be difficult, but “characterizing your opponent’s brief and conduct as ‘an outright lie,’ ‘cheating to win,’ ‘gamesmanship,’ and ‘frivolous,’ as occurred here, is one answer” to where it lies, he elaborates.

“It’s kind of like calling traveling in the NBA—there, they never call it and when they do it shocks everybody,” illustrates LeBoff, suggesting that it is difficult to predict when a court may call out a party’s or attorney’s conduct. Here, though, “counsel’s lack of civility and attacks on opposing counsel seemed to come back to bite him. It doesn’t pay to insult your opposing counsel,” he advises.

How Courts Police Unethical or Abusive Conduct

Some are troubled by an award that makes an attorney jointly liable for the award of fees and costs to the prevailing party. “You don’t want attorneys to be the guarantors of their clients’ cases,” cautions LeBoff. “An option for the court here would have been to refer the attorney to the local bar,” he suggests. “That doesn’t do anything for the aggrieved party,” he concedes, noting that the innocent party might still be left to deal with the consequences of opposing counsel’s potential misconduct, including increased fees.

Barkett declines to say whether an award of fees is the “best way” to prevent abusive conduct. “Certainly, referral to the bar for consideration of the lawyer’s fitness to practice law might be an option in extreme cases,” he offers. “For sure, a published opinion sanctioning a lawyer by an award of fees should serve as a deterrent,” he explains. However, noting that “the lower’s court’s award of fees did not deter the continued advancement of a frivolous appeal,” he suggests it was appropriate in this case. “Generally speaking, appellate courts will be reluctant to award fees. But when egregious facts are presented, as was the case here, they will not hesitate to award fees,” he warns. The bottom line is “know your case, make sure you can satisfy Rule 11 standards before filing, and if you learn after filing your client’s claim is frivolous, dismiss your case,” concludes Barkett.