Quicklogic Corporation v. Konda Technologies, Inc.

Background

QuickLogic filed a lawsuit seeking court declarations that it had not infringed Konda Technologies’ patents and had not breached the parties’ 2010 Licensing and Consulting Agreement. The defendants later asserted counterclaims for patent infringement, breach of contract, and related state-law claims.

The court previously dismissed virtually all of the defendants’ counterclaims with prejudice, while allowing an amendment concerning the agreement’s informal dispute-resolution clause. The defendants did not amend that claim. The court later dismissed QuickLogic’s contract declaration for lack of subject-matter jurisdiction, found QuickLogic’s patent non-infringement claims moot, and determined that QuickLogic was the prevailing party because it obtained dismissal with prejudice of the defendants’ patent counterclaims.

QuickLogic then sought attorneys’ fees under 35 U.S.C. § 285, which permits fees in an exceptional patent case; 28 U.S.C. § 1927, which permits sanctions for certain bad-faith litigation conduct; and the court’s inherent authority. QuickLogic initially sought $471,382.18 and later adjusted its request. The opinion does not decide the final amount.

Exceptional Case Under Section 285

The court held that the case was exceptional under Section 285 and that some fee award was justified. The court emphasized that the defendants asserted infringement of fourteen patents even though their counsel had stated shortly before filing that Dr. Konda could not determine whether QuickLogic infringed any patents. The defendants did not compare the patent claims with any QuickLogic product before filing the counterclaims. The court found that this investigation fell short of what was required before asserting patent infringement.

The court also considered the defendants’ litigation conduct. It found that the timing of the motion to disqualify QuickLogic’s counsel appeared designed to derail the litigation and that Dr. Konda gave inconsistent explanations for the timing and motivation of that motion. The court further found that Konda Technologies’ failure to obtain counsel for more than five months unnecessarily prolonged the proceedings and caused QuickLogic to incur unnecessary fees.

The court did not find all of the defendants’ positions objectively unreasonable. It found that the original motion to dismiss QuickLogic’s complaint was not frivolous, the defendants’ jurisdictional argument partly succeeded, and the defendants’ contract and state-law counterclaims were not so unreasonable as to support an exceptional-case finding. The court also rejected the defendants’ arguments that QuickLogic’s failure to use the informal dispute-resolution process barred fees and that QuickLogic was prevented from seeking fees by its earlier arguments about the agreement’s $260,000 liability limit.

Sanctions Under Section 1927 and Inherent Authority

The court denied QuickLogic’s request for sanctions against the defendants or Mr. Milks under Section 1927 and denied sanctions under the court’s inherent power. Although the defendants’ conduct was unsuccessful and sometimes questionable, the court found that it did not show the required subjective bad faith. The court stated that the patent counterclaims should not have been filed without further investigation and that the timing of the disqualification motion showed poor judgment, but it did not find that the defendants or Mr. Milks knowingly or recklessly raised frivolous arguments to harass QuickLogic.

Disposition

The court granted QuickLogic’s motion for attorneys’ fees in part and found that the case and the defendants’ conduct were exceptional under Section 285. It denied QuickLogic’s request for sanctions against the defendants or Mr. Milks under Section 1927 or the court’s inherent power. It also denied QuickLogic’s request to hold the defendants’ counsel jointly and severally liable.

The court granted QuickLogic’s request that it retain jurisdiction over supplemental fee requests and enforcement of its fee orders. QuickLogic was ordered to submit, within 21 days, a chart identifying fees related to its motion to dismiss the defendants’ counterclaims and its opposition to the motion to disqualify counsel. The court will determine the reasonableness of the requested fees separately.