NetSoc, LLC v. Chegg INC

Background

NetSoc, LLC brought patent-infringement actions against Oath Inc. and Quora, Inc. involving U.S. Patent No. 9,978,107, titled “Method and System for Establishing and Using a Social Network to Facilitate People in Life Issues.” The actions were consolidated with similar cases involving Chegg Inc. and LinkedIn Corp. The claims involving LinkedIn and Quora were transferred to the Northern District of California, and the actions involving Oath and Chegg were dismissed on collateral-estoppel grounds, according to the opinion. Oath and Quora sought attorneys’ fees related to NetSoc’s claims under the ’107 Patent. Oath also asked the court to seal portions of its fee-motion filings.

NetSoc’s complaints against Oath and Quora included charts purporting to quote Claim 1 of the ’107 Patent. The charts actually used claim language from U.S. Patent No. 9,218,591 and materially differed from Claim 1 of the ’107 Patent. Oath and Quora raised this discrepancy in their motions to dismiss. NetSoc did not address the discrepancy in its opposition papers. On July 8, 2019, NetSoc’s counsel acknowledged the mistake, and NetSoc filed amended complaints the next day asserting infringement of the ’591 Patent instead. The parties later stipulated to dismissal with prejudice of NetSoc’s ’107 Patent claims.

Sealing motion

The court denied Oath’s motion to seal the materials supporting its fee request. Documents filed with a court are subject to a presumption of public access when they are relevant to the court’s work and useful in the judicial process. The fee records were important because the court needed to review the hours worked and hourly rates to decide whether the requested fees were reasonable. The court concluded that Oath’s privacy concerns and asserted confidentiality interests did not outweigh the public-access presumption.

Attorneys’ fees under 35 U.S.C. § 285

Section 285 permits a court to award reasonable attorneys’ fees to the prevailing party in an “exceptional” patent case. The court found that this case was exceptional based primarily on NetSoc’s failure to correct the incorrect patent claims for approximately three months after Oath and Quora identified the problem. The court determined that maintaining those claims after receiving notice was objectively unreasonable and that deterring similar conduct supported a fee award. The court did not rely solely on a later decision from another court finding the ’107 Patent’s subject matter unpatentable.

The court also found that Oath and Quora were prevailing parties. Although the ’107 Patent claims had been voluntarily dismissed, they were dismissed with prejudice, which was enough to establish prevailing-party status for purposes of the fee request.

Amount of the award

The court found that the attorneys’ hourly rates and the number of hours worked were reasonable overall, but reduced the period for which fees could be recovered. Oath and Quora could recover fees only for work performed after the dates on which they filed their motions to dismiss—March 25, 2019, for Oath, and March 26, 2019, for Quora—and before NetSoc amended its complaints on July 9, 2019. The court found that the work performed during that period was reasonable.

Disposition

Judge Ronnie Abrams granted Oath and Quora’s motions for attorneys’ fees under 35 U.S.C. § 285, with the stated modification limiting the recoverable period. Oath was awarded $22,106.00, and Quora was awarded $6,930.44. Judge Abrams denied Oath’s sealing motion and directed the clerk to terminate the specified motions and close the cases.