Pop Top Corp v. Rakuten Kobo Inc.

Background

Pop Top alleged that Kobo’s eReader application infringed claim 1 of U.S. Patent No. 7,966,623. The patent describes a method for allowing users to highlight material in an internet document through a highlighting service. Pop Top alleged that electronic books used with Kobo’s application included executable code that invoked such a service.

Kobo disputed that allegation and provided Pop Top with an electronic book file, including its source code, so Pop Top could examine whether it contained code for invoking a highlighting service. Pop Top did not identify such code or conduct discovery. The court later granted Kobo summary judgment of non-infringement, finding that Pop Top had not shown a genuine dispute over whether the electronic books contained the required code. Judgment was entered for Kobo.

Kobo’s Fee Motion

Kobo moved for attorney fees under 35 U.S.C. § 285, non-taxable expenses under the court’s inherent authority, and an order holding Pop Top’s counsel personally liable under 28 U.S.C. § 1927. Pop Top opposed the motion and argued, among other things, that the motion was untimely. The court rejected the timeliness argument because Kobo had initially filed the motion within 14 days of judgment and promptly refiled it after the clerk identified an electronic-filing error.

Attorney Fees Under Section 285

The court found that Kobo was the prevailing party and that the case was exceptional under section 285. An exceptional patent case is one that stands out because of the weakness of a party’s litigation position or the unreasonable way the case was litigated.

The court concluded that Pop Top never offered factual support for its position that Kobo’s electronic books contained code for invoking a highlighting service. Pop Top had access to the relevant electronic-book files, received repeated requests to identify the alleged code, and still did not identify specific code in its summary-judgment briefing, at the summary-judgment hearing, or in its briefing on the fee motion. The court held that this demonstrated the objective unreasonableness and substantive weakness of Pop Top’s infringement position. It therefore ruled that an award of attorney fees under section 285 was appropriate.

The court did not separately find that Pop Top engaged in the kind of egregious litigation misconduct generally required for fees based on the manner of litigation. It nevertheless awarded fees under section 285 based on the substantive weakness of Pop Top’s claim.

Counsel’s Liability Under Section 1927

Section 1927 allows a court to require an attorney to personally pay excess fees and costs caused by unreasonably and vexatiously multiplying court proceedings. The court explained that this requires subjective bad faith and applies to unnecessary filings or tactics after a lawsuit begins, not merely to the filing of the initial complaint.

The court held that Kobo had not provided evidence showing that Pop Top’s counsel engaged in unnecessary filings or tactics with subjective bad faith. It therefore denied Kobo’s request to hold Pop Top’s counsel personally liable for attorney fees under section 1927.

Expert Fees Under the Court’s Inherent Authority

Kobo also requested $15,675 in expert-witness fees under the court’s inherent authority. The court explained that this authority is reserved for fraud, abuse of the judicial process, or comparable bad-faith conduct. Although the court found the case exceptional under section 285, it found that Kobo had not established fraud or the required bad faith. The court therefore denied the request for expert-witness fees.

Amount of the Attorney-Fee Award

The court found that Pop Top had waived objections to the reasonableness of Kobo’s hours and rates, but independently reviewed whether the requested fees were reasonable. The court found Kobo’s billing descriptions too general to determine whether the time claimed was excessive, duplicative, or unnecessary. It ordered Kobo to submit an abstract of its contemporaneous time records and a supplemental declaration explaining whether counsel exercised billing judgment.

The court stated that it would take the amount of Kobo’s attorney-fee award under submission after receiving those materials. In its conclusion, the court stated that Kobo’s motion for attorney fees and non-taxable costs was granted in part and denied in part.