Global Equity Management Pty. Ltd. v. Alibaba.com, Inc.

Background

Global Equity Management (SA) Pty. Ltd. filed three patent cases in the Eastern District of Texas. The cases were later transferred to the Northern District of California and stayed while the Patent Trial and Appeal Board reviewed the asserted claims in two inter partes reviews, which are proceedings before that Board to challenge patent validity. The Board invalidated the remaining claims, and the Federal Circuit affirmed. The district court entered judgment that specified claims of the ’400 and ’677 patents were invalid and dismissed the remaining asserted claims as moot.

Defendants then sought attorney’s fees and costs from the patent owner and its three law firms under 35 U.S.C. § 285, 28 U.S.C. § 1927, and the court’s inherent authority. The patent owner did not have counsel at the time of the fee motion, while counsel jointly opposed it.

Attorney’s-fee motion

The court denied the motion for attorney’s fees. It held that the fee statutes and inherent authority gave the district court discretion and found that defendants had overreached in several ways.

First, defendants relied on statements made during mediation to support their fee request. The court held that the statements were protected by mediation privilege and should not have been introduced, even though it did not decide that the patent owner’s conduct during mediation was proper.

Second, the court rejected defendants’ request for fees related to the two inter partes reviews. Although those proceedings invalidated the patents, the claims were presumed valid by statute, and the court found no record that the patent owner had obtained them through fraud. The court stated that the record did not provide the clarity needed to impose fees on the patent owner for defending those claims.

Third, no court or jury had ruled on defendants’ noninfringement arguments, and defendants had not moved for summary judgment on that issue. The court therefore could not determine from the record that defendants would have won on noninfringement.

Fourth, the court found that defendants overstated the evidence concerning waiver of mediation privilege and the conduct of Brooks Kushman P.C. The court concluded that Brooks Kushman had not contributed to any alleged bad-faith litigation on the record before it.

Sealing requests

The court granted requests to keep specified settlement and mediation communications sealed because the information was facially privileged. It denied requests to seal documents based only on confidentiality designations, general references to proprietary technical information, or unsupported assertions of commercial sensitivity. It also denied requests concerning the patent owner’s damages reports because the required supporting declaration was absent.

The court denied without prejudice requests to seal certain exhibits from Patent Trial and Appeal Board proceedings because it could not identify the affected third parties or confirm that they had received the required notice. It denied counsel’s sealing requests because the required supporting declaration had not been filed. The court granted defendants’ request to keep specified settlement and mediation references in their reply brief sealed, but denied other reply-brief sealing requests as unsupported and too general.

Disposition

Judge William Alsup denied the motion for attorney’s fees. The court granted some sealing requests, denied others, and denied without prejudice the requests concerning certain Patent Trial and Appeal Board exhibits. The court stated that no further motions for fees would be entertained.