Self-help group leader must pay Microsoft attorneys’ fees
Keith Raniere, the leader of a self-help group in the US, has been told he must pay telecoms company AT&T and Microsoft nearly $450,000 of attorneys’ fees and costs in a patent dispute.
Yesterday, April 18, a unanimous three-judge panel at US Court of Appeals for the Federal Circuit affirmed a district court’s decision to dismiss the case in 2016 and grant the attorneys’ fees as a sanction for Raniere’s conduct.
District courts can award reasonable attorneys’ fees to the prevailing party in patent litigation in exceptional cases.
Raniere had claimed that the companies had infringed his software patents, US numbers 6,373,936; 6,819,752; 7,215,752; 7,391,856; and 7,844,041.
However, in March 2016, the US District Court for the Northern District of Texas, Dallas Division determined that Raniere failed to establish that he owned the patents, and granted the defendants’ motion to dismiss.
In September that year, Chief Judge Barbara Lynn said that the case was “exceptional” because it “stands out from others with respect to the unreasonable manner in which it was litigated”.
She added that Raniere’s conduct throughout the litigation, “culminating in his untruthful testimony at the hearing on the motion to dismiss, demonstrates a pattern of obfuscation and bad faith”.
According to the Federal Circuit, Raniere had argued that his conduct was not “sufficiently egregious” to justify imposition of sanctions under the district court’s powers, but this was rejected by the Texas court.
The district court awarded $300,295 to AT&T and $143,719 to Microsoft in attorneys’ fees and costs.
Raniere appealed against the district court’s fee award, but the Federal Circuit concluded that the district court hadn’t erred in finding AT&T and Microsoft to be the prevailing parties and that it didn’t abuse its discretion in awarding attorneys’ fees and costs.
“Raniere contends that dismissal with prejudice for lack of standing is not an adjudication on the merits, as he contends is required to find that a defendant is a ‘prevailing party’ under our case law,” said the Federal Circuit.
Circuit Judge Kathleen O’Malley noted the US Supreme Court’s 2016 decision in CRST Van Expedited v EEOC, which held that a “favourable judgment on the merits is not necessary for a defendant to be deemed a prevailing party for purposes of statutory fee-shifting”.
The Federal Circuit sided with the Texas court, finding that AT&T and Microsoft were the prevailing parties.
On the award of attorneys’ fees, the Federal Circuit affirmed the district court’s “well-reasoned determination on this issue”.
It added: “Many of Raniere’s objections to the district court’s exceptionality determination raise factual disputes with the underlying merits ruling, which we cannot review at this stage of the proceeding.”
Raniere had requested that if the Federal Circuit affirmed the finding of exceptionality, it should reduce the fee and costs award. However, the Federal Circuit affirmed the determination because it was “well-supported” and reflected the district court’s “careful consideration of the relevant billing rates, invoices, and records”.
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