On November 6, 2014, the Northern District of California ordered Plaintiff, IPVX Patent Holdings, Inc., to pay over $820k in attorney’s fees to Defendant, Voxernet LLC, for pursuing baseless litigation positions and for litigating in an unreasonable manner.

IPVX, a non-practicing entity, initially sued Voxernet for patent infringement over U.S. Patent No. 5,572,576, which relates to a telephone answering device allowing a user to check messages remotely. IPVX accused the Voxer App, a smartphone app allowing the exchange of voice, text, and image messages between users. On July 3, 2014, a day after the claim construction hearing, the court granted summary judgment of non-infringement in favor of Voxer—finding no material issues of fact over how the Voxer App worked. While IPVX moved to vacate, alter, amend or obtain relief from judgment under the federal rules, Voxer moved for attorney’s fees under 35 U.S.C. § 285. 

“Exceptional Case” Standard

In determining whether the case was “exceptional” and thus, whether it merited an award of attorney’s fees, the district court looked to the Supreme Court’s recent Octane Fitness decision. Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). There, the Supreme Court clarified that “an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated.” Id. at 1756. The Court also noted nonexclusive factors such as “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 1756, n.6.  

Plaintiff’s Unreasonable Positions and Litigation Conduct

The district court first noted that from the outset, IPVX’s infringement positions were unreasonable. IPVX’s attempts to link the Voxer App to a telephone network were “vague and conclusory” as it failed to tie any of the claim elements to the Voxer App. Similarly, IPVX’s positions on proposed claim constructions were “absurd and farfetched.” The court found a complete absence of evidence to support an infringement position either literally or under the doctrine of equivalents.

The court next looked at IPVX’s litigation conduct and concluded that this “case stands out from others” because of the “assembly-line fashion” in which the case was litigated. The court found no evidence of a pre-suit investigation of the Voxer App and noted that discovery was “carelessly” conducted with requests being sent to Voxer that had nothing to do with the accused device. Ultimately the district court concluded that “[f]rom the litigation conduct in this case, it appears that IPVX is actually not willing to invest the resources to prove up its infringement case.”

The court thus found the case to be exceptional under Octane Fitness, and proceeded to award attorney’s fees in the amount of $820,642. It summarized its holding as follows, which serves as a useful warning to plaintiffs in general: “IPVX’s position on infringement was objectively baseless a the inception of the lawsuit, and IPVX proceeded in this litigation without developing any factual record to support its infringement contentions, either on literal infringement or on infringement under the doctrine of equivalents.”

IPVX Patent Holdings, Inc. v. Voxernet LLC, No. 5:13-cv-01708 (N.D. Cal. Nov. 6, 2014).