A federal judge recently deemed a patent case “exceptional” (under 35 U.S.C. § 285) because the plaintiff and its attorneys engaged in bad-faith efforts to prolong the litigation. This will entitle the defendant to recover a large portion of its attorneys’ fees, perhaps as much as $1M. See Niazi Licensing Corp. v. St. Jude medical S.C., Inc., Case No. 17-cv-5096 (WMW/BRT), Dkt. 335, at *12 (D. Minn. Oct. 25, 2021). The bad-faith conduct included “repeatedly relying on evidence that had not been disclosed during fact discovery, repeatedly disregarding the deadlines established in the Court’s scheduling order, willfully violating this Court’s order striking improper evidence, and advancing unreasonable and meritless arguments” after the Court issued a claim construction order fatal to plaintiff’s infringement theories. Id.
Believe it or not, things get worst for the plaintiff’s side. The judge also found the plaintiff’s attorneys “jointly and severally liable for any award of attorneys’ fees and costs” due to unreasonable and vexatious litigation conduct (under 28 U.S.C. § 1927).
The plaintiff’s local counsel then filed a separate request for reconsideration, advancing what I’ll call “the Lemming Defense.” The local counsel urged the Court to absolve it of any personal liability because it was merely acting as local counsel for lead counsel and had limited involvement in the case. In other words, local counsel was simply following the other counsel’s lead. Local counsel also argued that its firm had billed less than $4,000 to the case, which spanned more than a year. Id., Dkt. 336. According to local counsel, “[defendant] estimates its fee request will approach $1 million. Such a fee would be, frankly, ruinous for a firm of our size.” Id. at 2, fn. 1.
The Court rejected the request, finding that “the record demonstrates that [plaintiff]’s local counsel participated in the preparation and presentation of [plaintiff]’s case, including the sanctionable conduct the Court has identified. And to the extent that [plaintiff]’s local counsel did not participate in preparing or presenting the sanctionable filings submitted by [plaintiff]’s lead counsel, such lack of participation demonstrates an intentional or reckless disregard of local counsel’s duties to the Court under Local Rule 83.5(d)(2)(A).” Id., Dkt. 340.
In 2014, the Supreme Court in Octane Fitness lowered the standard for a finding a “exceptional case” under § 285, which has led to more sanctions being dished out in patent cases (and rightfully so). Even still, the same questions come to mind every time I see a party pegged for exceptional case:
Was the plaintiff “driving the bus” so to speak, and the attorneys simply too subservient to the client’s wishes?
Was the plaintiff “in the dark” or misled by its attorneys regarding the positions and theories being advanced?
Were both the plaintiff and its attorneys knowing and willing participants in the sanctionable conduct?
While we’ll probably never know the answer to any of these questions, the answer is actually irrelevant. Regardless of where the true culpability lies, the plaintiff and its lead and local counsel were all found financially liable for the sanctionable conduct. Niazi is, thus, a serious reminder that when an attorney puts his or her name on court filings, regardless of whether the attorney is lead or local counsel or how much actual involvement the attorney has in the case, the attorney is endorsing those filings. An attorney is expected to keep his or her finger on the pulse of the case and ensure that the client (or other attorneys acting on behalf of the client) is acting professionally and ethically and complying with the applicable rules. The Lemming Defense does not apply.