Thursday, July 28, 2022

CAFC finds blatant gamesmanship in Real-time case

*** Although Realtime was done with Delaware, it was not done with Netflix. The next day, Realtime started fresh, re-asserting the same six patents against Netflix, this time in the Central District of California—despite having previously informed the Delaware court that transferring the Delaware action across the country to the Northern District of California would be inconvenient and an unfair burden on Realtime. Netflix then simultaneously moved for attorneys’ fees and to transfer the California actions back to Delaware. Prior to a decision on either motion, Realtime again avoided any court ruling by voluntarily dismissing its case.


Netflix then renewed its motion for attorneys’ fees for the California actions as well as the related Delaware action and inter partes review proceedings. The district court awarded fees for both California actions pursuant to § 285 and, in the alternative, the court’s inherent equitable powers. The district court declined to award fees for the related Delaware action or inter partes review proceedings under either § 285 or Federal Rule of Civil Procedure 41(d).1 Realtime now appeals the court’s fee award for the California actions and Netflix cross-appeals the court’s denial of fees for the related proceedings. Because we hold that the district court did not abuse its discretion in awarding fees pursuant to its inherent equitable powers or in denying fees for the related proceedings, we affirm. We need not reach the question of whether the award also satisfies the requirements of § 285.

(///) The district court awarded Netflix attorneys’ fees for both California actions pursuant to its inherent equitable powers. Fees Award at *11. The district court reasonably found Realtime’s conduct in the California actions “improper,” “exceptional,” and “totally unjustified.” Id. at *6. When Realtime renewed its lawsuit in California, Realtime had in hand: (1) the Delaware magistrate judge’s report recommending the court find that claims of four asserted patents were ineligible under § 101, (2) the Delaware judge’s ruling in parallel actions that five related patents (that Realtime claimed helped its cause) were themselves patent-ineligible, and (3) Patent Trial and Appeal Board decisions instituting inter partes review proceedings, indicating that Netflix had demonstrated a reasonable likelihood of success in proving at least one claim of each patent unpatentable. Id. The district court also noted that Realtime knew, upon filing the California actions, that the Central District of California had recently “reached a more favorable ruling regarding the patent eligibility of [the same four patents] in another case.” Id. at *7. Realtime undoubtedly realized that by refiling in California, it could effectively erase the Delaware magistrate judge’s fulsome and compelling patent-ineligibility analysis and findings. In addition to Realtime’s efforts to avoid an adverse patent-eligibility determination, Realtime also resisted transfer back to the forum it originally chose. Contrary to earlier arguments that litigation should remain in Delaware because litigating in California would be inconvenient, id., and, in fact, “unfair,” J.A. 3813–14, Realtime refiled in California. It then fought transfer back to Delaware, arguing that relevant witnesses and evidence are in California and that Delaware would not be more convenient. J.A. 3365–68. Realtime also argued that judicial economy weighed against transfer back to Delaware despite that district court’s experience with, and now-wasted substantive analysis of, the asserted patents. J.A. 3369–70; see also Fees Award at *8. The district court correctly highlighted these contradictions to support a finding of “impermissible forum shopping.” Ultimately, Realtime was aware “that its lawsuit in Delaware was undeniably tanking,” making its decision to “run off to another jurisdiction in hopes of getting a more favorable forum [] totally unjustified,” and “improper.” Fees Award at *6–7.


Accordingly, there is nothing erroneous about the conclusion that Realtime “impermissibly” and “unjustifi[ably]” engaged in forum-shopping in attempt to avoid or delay an adverse ruling. Id. at *6–7. The blatant gamesmanship presented by the facts of this case constitutes a willful action for an improper purpose, tantamount to bad faith, and therefore within the bounds of activities sanctionable under a court’s inherent power in view of the Ninth Circuit’s standard. Identifying no legal error or clearly erroneous fact findings, we hold that the district court did not abuse its discretion in awarding fees pursuant to its inherent equitable powers. ***


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