The U.S. District Court for the Eastern District of Texas has awarded a total of nearly $400,000 in attorneys’ fees to twenty-four defendants in a patent infringement case pending before Judge Rodney Gilstrap. Judge Gilstrap found the case met the statutory “exceptional case” standard for fee awards because the plaintiff (non-practicing entity eDekka) had litigated the case in an unreasonable manner and its case was objectively unreasonable. The award follows on the heels of the Court’s ruling dismissing the case on the ground that the patent-in-suit (titled “Random Access Information Retrieval Utilizing User-Defined Labels”) was directed to subject matter—the “abstract idea of storing and labeling information”—that is not patentable under 35 U.S.C. § 101.
In justifying its fee award, the Court stated that “rather than acknowledging the inherent weaknesses of the ‘674 patent, eDekka proffered completely untenable arguments to the Court throughout the § 101 briefing process and at the September 10, 2015 hearing [on the motion to dismiss].” Among other failings in eDekka’s position, the Court noted that eDekka had argued that the patent claims required a special purpose computer based on two “wholly conclusory declarations,” when at most the patent only “allud[ed] to computer-based activity.” The Court also found that:
[eDekka’s] litigation history in this District—which includes filing strikingly similar lawsuits against over 200 defendants—reflects an aggressive strategy that avoids testing its case on the merits and instead aims for early settlements falling at or below the cost of defense.
The Court reviewed eDekka’s settlements to date and they confirmed “a pattern of defendants that agreed to settlements at relatively early points in the litigation for amounts significantly below the cost of taking a patent case to trial.” Finally, the Court noted that two days before the hearing on the motion to dismiss, “counsel for eDekka contacted numerous defendants with offers to settle their cases for three-thousand dollars each.” The Court concluded that:
eDekka acted with the goal of ‘exploiting the high costs to defend complex litigation’ to extract ‘nuisance value settlement[s] from defendants.’
The Eastern District is not known for exceptional case findings, and Judge Gilstrap specifically noted that an exceptional case finding “is something that this Court arrives at reluctantly, lest we unintentionally narrow the public’s access to the courts by chilling future decisions to seek redress for a case in which success is not guaranteed.” However, the Court found the exceptionality “threshold” had been crossed in this case. Time will tell whether this becomes a trend in the Eastern District of Texas, the nation’s most popular venue for bringing patent infringement actions.