Are Fees Recoverable Automatically When You Make a "Good" Offer of Judgement?

Nope.  The party seeking fees pursuant to a rejected Rule 68 Offer of Judgment still has the burden of showing a proper offer was made, was served, and was not accepted.

After what appears to have been 3+ years of contentious copyright infringement litigation, Plaintiffs were awarded $1,015.20 in damages against Defendants.  Plaintiffs owned copyrights in certain artwork, and Defendants had used this artwork in connection with certain "paint parties."  After this damage award, the parties engaged in various motion practice seeking sanctions and costs against each other.  The Court summarized the case's posture as follows:

Although this case presented fairly straightforward issues of copyright infringement, the case proceeded in anything but a straightforward manner. The nearly 400 docket entries in this case contain a plethora of motions for extensions of time and modification of deadlines, and other filings before the Court that can be best described as unprofessional and unnecessary squabbling between the parties. The tone of the parties’ papers was so poor, that early in the litigation the Magistrate Judge admonished the parties to “confine their presentations to facts and law that are relevant to the Court’s determination of the issues presented in the parties’ papers. Counsel shall refrain from caustic comments and characterizations of the motive of any party or counsel.” (Doc. 90, pp. 2–3). Unfortunately, this advice went unheeded, and the case dragged on for another three years.

After deciding neither sides' behavior rose to the level warranting sanctions, the Court addressed Defendants' argument that it was entitled to recover its fees and costs because Defendants had allegedly served an Offer of Judgment pursuant to Fed. R. Civ. P. 68 to settle the case for $2,500 -- more than Plaintiffs recovered at trial.  Problem is, Defendants did not  attach a copy of the offer of judgment that was purportedly served.

Instead, Defendants referenced an "Exhibit 1" in their briefing.  But Defendants did not attach an exhibit to the brief.  Instead, Defendants filed a brief that exceeded the page limits set by local rules and was admonished by the Court for doing so.  (The Court struck a few portions of the brief and refused to consider them in order to bring the brief's page count back into the 25-page limit set by the rules.)

The Court noted that it was not responsible for hunting for the evidence a moving party seeks to use to support its position:

The burden does not fall on this Court to ferret through the ballooned docket in this case to find evidence supporting Bloomington’s claims for fees and costs.  By failing to attach a Rule 68 offer to its Motion for fees, or to otherwise direct the Court where to find the document in the record, Bloomington has not carried its burden of establishing it is entitled to fees under Rule 68. 

Notwithstanding this admonition, the Court did search through the various docket entries and find something labeled "offer of judgment."  But there was not sufficient evidence showing such a document was served in accordance with the rules.   As such, the request for fees pursuant to Rule 68 were denied.

The Court then went through an analysis of Plaintiffs' request for recoverable costs, and awarded $4,482.95 as recoverable costs.

Motions for sanctions, denied.  Motion for fees, denied.  Motion for taxation of costs, granted.

Duncanson v Bloomington, Case No. 6:14-cv-704-PGB-KRS (M.D. Fla. Aug. 23, 2018) (J. Byron)

Is it a good idea to ignore the Court's orders?

No.

Taser International, Inc. sued Phazzer Electronics, Inc. for patent infringement.  The discovery history appears tortured.  Taser pursued a number of motions to compel discovery responses.  Phazzer produced some documents (and apparently no emails), but the documents conflicted with representations Phazzer had made about its corporate structure and relationships with third parties. 

Then came the attempts to schedule depositions of "the handful of critical witnesses associated with Phazzer."  Apparently these critical witnesses for this closely-held company "are represented to be on vacation, out of the country, in surgery, or convalescing."  Taser had been attempting to schedule these depositions for 5 months.

With a Technology Tutorial scheduled in court, the Court ordered the parties and their counsel to attend in person, and cautioned that failure to do so could result in sanctions (including default judgment).  The day the Court entered that order, Phazzer's counsel filed a motion to withdraw.  That same day, the Court denied the motion to withdraw, and specifically ordered counsel to continue to represent Phazzer, notwithstanding counsel's representation of "irreconcilable differences."   The next day, Phazzer's counsel filed a "Notice of Termination of Legal Representation."   The Court struck that notice the same day because "because it is not a motion or a filing that is otherwise authorized by the Federal Rules of Civil Procedure or this Court’s Local Rules."

Phazzer's corporate representative did not attend the Technology Tutorial, failed to attend the corporate deposition of Phazzer, and a number of other Phazzer witnesses did not attend their court ordered depositions. 

The court then set a hearing on Phazzer's counsel's renewed motion to withdraw, specifically ordering a representative of Phazzer to attend.  No corporate representative attended.  Denying Phazzer's motion to stay the case, the Magistrate Judge observed: "it appears that Phazzer, with the assistance of its counsel, is attempting in bad faith to further delay this litigation."

In light of this abusive practice, the Court granted Taser's request for sanctions, and imposed the following relief:

• Striking of Phazzer's motion to dismiss;
• default entered in favor of Taser and against Phazzer on all claims;
• compensatory damages;
• treble damages for "Defendant's willful infringement" and "willful false advertisement";
• attorneys' fees and costs; and
• a permanent injunction.

Notably, while the Court could not name the third-party manufacturers in the injunction (for due process concerns), the Court did note: "it is clear that nonparties who assist the enjoined party in violating the injunction may be held in contempt by this Court."

The injunction should be helpful with ceasing importation of these infringing devices (electroshock cartridges).  Whether Taser will ever see any money from this judgment is another question entirely.  Moral of the story, Court orders are not something to be ignored.

Motion for Sanctions, granted.
Taser International, Inc. v. Phazzer Electronics, Inc., Case No. 6:16-cv-366-Orl-40KRS (M.D. Fla. July 21, 2018) (J. Byron)
 

Want To Pursue Attorneys Fees After Invalidating A Patent in Front of the Patent Trial and Appeal Board?

Not so fast.  If the case is moot because all of the claims have been extinguished, you may have foregone your ability to pursue discovery to support your claim for attorneys fees in federal court.

MD Security Solutions, LLC sued Protection 1, Inc. for alleged infringement of U.S. Patent No. 7,864,983 concerning a security alarm system.  Protection 1 asserted the standard counterclaims seeking declarations of invalidity and noninfringement.  A third party (RPX, Corp., a patent risk management company) filed a request for inter partes review seeking to cancel the claims of the '983 Patent.  Protection 1 filed its own IPR as well (which was essentially the same as RPX's), and also joined in RPX's IPR.   Protection 1 agreed to be bound by whatever happened with RPX's IPR.  The parties in the federal case then jointly asked the Court to stay the case pending the PTAB proceedings.

The PTAB issued a final written decision finding all claims of the '983 Patent invalid.  MD Security did not appeal.  MD Security asked that the stay be lifted and the Court dismiss its claims.  Protection 1 asked for a short discovery period to pursue a claim for attorneys fees because "[i]n short, [Protection 1] argues the Plaintiff and both of its principals are patent trolls."

The Court first explained the law of mootness:

“A case is moot when events subsequent to the commencement of a lawsuit create a situation in which the court can no longer give the [party] meaningful relief.” National Ass’nof Boards of Pharmacy v. Board of Regents of the Univ. Sys. of Ga., 633 F.3d1297, 1308 (11th Cir. 2011) (citing Jews for Jesus, Inc. V. Hillsborough Cnty.Aviation Authority., 162 F.3d 627, 629 (11th Cir. 1998). As the Court in Nat. Ass’n of Bds of Pharmacy observed: 

Article III of the Constitution limits the jurisdiction of the federal courts to the consideration of “Cases” and “Controversies.”… [A] case is moot when it no longer presents a live controversy with respect to which the court can give meaningful relief. If events that occur subsequent to the filing of a lawsuit … that deprive the court of the ability to give the plaintiff … meaningful relief, then the case is moot and must be dismissed. Id. at 1309 (citations omitted).

The Court then determined the case was moot, and denied Protection 1's request to pursue discovery in support of its fee claim:

Once the ‘983 patent was determined to be unpatentable, the need for a declaratory judgement of invalidity and non-infringement became a moot issue. The parties do not disagree that a device cannot infringe a patent deemed to be unpatentable. Similarly, there is no need for a judicial determination that the ‘983 patent is invalid, since that very issue has been conclusively resolved in favor of the Defendant. Once the case is moot, the Court lacks the ability to permit discovery and the case must be dismissed. If the Defendant had desired to conduct discovery to prove the egregious conduct alleged in their response to the Order to Show Cause, they should not have joined in the IPR, nor should they have filed a separate petition for IPR of all claims of the ‘983 patent on the same grounds described in the then-pending IPR. Having chosen to invalidate the ‘983 patent before the USPTO, they cannot now complain that they are denied the ability to avail themselves of this federal forum

Case dismissed, but Protection 1 may file briefing on the issue of its entitlement to fees and/or costs.

MD Security Solutions, LLC v Protection 1, Inc., Case No. 6:15-CV-1968-ORL-40GJK (M.D. Fla. Sept. 26, 2017) (J. Byron)