ALD Social, LLC v. Apple, Inc.

Background

ALD Social sued Apple for patent infringement involving U.S. Patent Nos. 9,198,054 and 9,402,158. The patents concern systems for detecting crowd safety risks and alerting emergency personnel. The court dismissed ALD Social’s original complaint with leave to amend, finding that documents attached to the complaint were inconsistent with the accused product satisfying certain patent limitations.

ALD Social amended its complaint to assert only the ’054 patent. Apple moved to dismiss. ALD Social first dismissed its claims without prejudice, then, after the court kept the hearing on Apple’s motion to dismiss, dismissed the claims with prejudice. Apple then sought attorney fees and sanctions against ALD Social, its counsel, and AiPi Solutions.

Attorney Fees and Sanctions

Apple sought fees under 35 U.S.C. § 285, sanctions under 28 U.S.C. § 1927, and sanctions under the court’s inherent authority. Under § 285, a court may award reasonable attorney fees to the prevailing party in an “exceptional” case—one that stands out because of the strength of a party’s position or the unreasonable way the case was litigated. Apple was the prevailing party because ALD Social voluntarily dismissed its claims with prejudice.

Apple argued that ALD Social failed to conduct a sufficient pre-suit investigation. It relied on three matters: the ’158 patent’s requirement that the accused product aggregate current device locations; the ’054 patent’s “crowd risk determinant” limitation; and ALD Social’s initial choice of venue in the Western District of Texas.

The court rejected Apple’s arguments. Regarding the ’158 patent, the court had previously found that ALD Social’s documents did not plausibly show aggregation of current locations, but ALD Social dropped that patent after the court’s first ruling. The court concluded that this did not establish that ALD Social had failed to investigate before filing, particularly because Apple had not emphasized the same claim-construction issue in its pre-suit correspondence.

Regarding the ’054 patent, the court had previously found that ALD Social’s original allegations did not plausibly show that the accused product met the “crowd risk determinant” limitation. But Apple had served a sanctions motion under Federal Rule of Civil Procedure 11, and ALD Social dismissed its case within Rule 11’s 21-day safe-harbor period. The court explained that the safe harbor is intended to allow a party to withdraw a challenged pleading and avoid sanctions. The court found that the record did not show repeated filing and dismissal of claims in response to Rule 11 motions.

The court also found that ALD Social’s choice of venue did not make the case exceptional. Apple had not explained why an adequate pre-suit investigation would have shown that Apple did not make the accused product in the Western District of Texas. The court described ALD Social’s failure to respond to Apple’s transfer proposal as bad manners, but not conduct warranting attorney fees.

The court distinguished the cases Apple cited because those cases involved problems that a simple internet search would have revealed, such as an accused product predating the patent or allegations concerning the wrong product. The court characterized this case instead as a disagreement about claim construction and found that the dispute did not rise to the level required for an exceptional-case finding.

Rulings

The court held that Apple failed to prove by a preponderance of the evidence that the case was exceptional under 35 U.S.C. § 285. It therefore concluded that sanctions were also not warranted under 28 U.S.C. § 1927 or the court’s inherent authority. The court DENIED Apple’s motion for attorney fees and sanctions.

The court GRANTED Apple’s administrative motion to seal its own material. It DENIED Apple’s administrative motion asking the court to consider sealing another party’s material because ALD Social had not filed the required statement justifying sealing. The court UNSEALED Docket No. 65.