Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 1 of 27 PageID #: 4847
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`C.A. No. 15-228 (RGA)
`
`PUBLIC VERSION
`August 10, 2016
`
`C.A. No. 15-282 (RGA)
`
`C.A. No. 15-311 (RGA)
`
`)))))))))
`
`))))))))) )))))))))))
`
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`v.
`
`ACTIVISION BLIZZARD, INC.,
`
`Defendant.
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`v.
`
`ELECTRONIC ARTS INC.,
`
`Defendant.
`ACCELERATION BAY LLC,
`
`Plaintiff,
`
`v.
`
`TAKE-TWO INTERACTIVE SOFTWARE,
`INC., ROCKSTAR GAMES, INC. and
`2K SPORTS, INC.,
`
`Defendants.
`
`PLAINTIFF ACCELERATION BAY LLC’S ANSWERING BRIEF
`IN OPPOSITION TO DEFENDANTS’ MOTION FOR ATTORNEYS’ FEES
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 2 of 27 PageID #: 4848
`
`Philip A. Rovner (#3215)
`Jonathan A. Choa (#5319)
`POTTER ANDERSON & CORROON LLP
`Hercules Plaza
`P.O. Box 951
`Wilmington, DE 19899
`(302) 984-6000
`provner@potteranderson.com
`jchoa@potteranderson.com
`
`Attorneys for Plaintiff Acceleration Bay LLC
`
`OF COUNSEL:
`
`Paul J. Andre
`Lisa Kobialka
`James R. Hannah
`KRAMER LEVIN NAFTALIS
`& FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`(650) 752-1700
`
`Aaron M. Frankel
`KRAMER LEVIN NAFTALIS
`& FRANKEL LLP
`1177 Avenue of the Americas
`New York, NY 10036
`(212) 715-9100
`
`Dated: August 4, 2016
`Public Version: August 10, 2016
`1230657/42020
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 3 of 27 PagelD #: 4849
`
` TABLE OF CONTENTS
`
`IL NATURE AND STAGEOF PROCEEDINGS......cccccccsssceseeseerseteensssensenssessnseesessessennenenetaeags 1
`Il. SUMMARY OF THE ARGUMENT.......ccccccecssesseeeessecseesseessssseneeneseesssnseesessessneegessenneneeneegs 1
`IU. STATEMENTOF FACTSj.......ccccccccscecessesssssesscesseseesssseseesrasteeseseesneseaeesensesseeneeencenseeseeseoese 3
`A.
`Boeing Sold the Asserted Patents to Acceleration Bay .........ssecsseeeeereensees 3
`B.
`The Court Dismissed These Actions Without Prejudice, Allowing
`Acceleration Bay to Cure Prudential Standing and Continue to Assert its
`Patent Infringement Claims Against Defendants.............sscsseseseeersererenteeeneseenees 4
`TV. ARGUMENT.....cccccccscsssscscsseccssccsssesceseesesesetanecssesssacseeeesseaenseseenesenscsesessessesesnassssessesnanganeenengats 5
`A.
`DefendantsAre Not a Prevailing Party...........cccssssessseeeteesessssesseseeensesesneneeneeaes 5
`B.
`This is Not an Exceptional Case .........cccccseescsseereeesecesesseseeeseseasenenessneesesnenereneseeens 9
`1. Acceleration Bay Reasonably Asserted That it Had Standing to
`Pursue its Claims......c.cccccsccscescetsesscesseecssceeseasesneseessesenecseassesessoeseesssseeseneas 10
`2. Acceleration Bay’s Litigation Conduct Was Reasonable..............ssccsssseees 15
`Attorneys’ Fees Are Not Warranted Under the Court’s Inherent Power.............. 17
`C.
`Defendants’ Demand For Attorneys’ Fees is Excessive and Unreasonable......... 18
`D.
`V. CONCLUSION uicccccccscscsscsccsccsscsestesssectessesssssscesessecssesseseesessseasseseusssssensasssnesseansegnasasnenes 20
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 4 of 27 PagelD #: 4850
`
` TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`Advanced Video Techs. v. HTC Corp.,
`Nos.1:11 Civ. 06604 (CM), 2015 WL 7621483 (S.D.N.Y. Aug. 28, 2015)...seers 13, 14
`
`Alfred E. Mann Found. v. Cochlear Corp.,
`604 F.3d 1354 (Fed. Cir. 2010).....cccscsecessesseseeseerereessssenssnenssnesncensesensnnearensenenncnnsnnanncanecnsestess il
`
`Amsted Indus. Inc. v. Buckeye Steel Castings Co.,
`23 F.3d 374 (Fed. Cir, 1994)....csccecsecesseseseeseessecnsseessesseanecnensaneeseansenesernecesesnnceancenensnnenesntess 17
`
`Apple Inc. v. Rensselaer Polytechnic Institute,
`IPR2014-00319, Paper 12 (P.T.A.B. June 12, 2014)......ccsssecreseessessenterensseeseessessennecnnernenncenees8
`
`Beckman Instruments, Inc. v. LKB Produkter AB,
`892 F.2d 1547 (Fed. Cir. 1989)......cccsssesssseesececsessserssssesessesesnenennsensneensonsssensanensacnnenageacensensestes 18
`
`Bianco v. Globus Med., Inc.,
`9:12-CV-00147-WCB, 2014 WL 1904228 (E.D. Tex. May 12, 2014) ......sssecssereresressseess9
`
`Brilliant Optical Sols., LLC v. Comcast Corp.,
`No. 13-CV-00886-REB, 2015 WL 1476691 (D. Colo. Mar. 27, 2015) ...scessssssssesssereeneenes 18
`
`Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t ofHealth & Human Res.,
`532 U.S. 598 (2001) ...sccsscceessecsesssssesssessesesnecscenecanesnsssssneasecsnenseansnasaeeassacesccaseasecsssenaenasensensteseeees6
`
`Chambers v. NASCO,Inc.,
`501 U.S. 32 (U.S. 1991)eceecsessessesssessessecseesseneenscensssessnesecssensecncenccascncanccnsaneanscnssqnacnaanagansessentes 17
`
`Clouding IP, LLC v. EMC Corp.,
`C.A. No. 13-1455-LPS, 2015 WL 5766872 (D. Del. Sept. 30, 2015)... 14, 15, 16
`
`CreAgri, Inc. v. Pinnaclife, Inc.,
`11-CV-6635-LHK,2014 WL 2508386 (N.D. Cal. June 3, 2014) .....sscesseeseeseeseresseeenteeseenees9
`
`CRSTVan Expedited, Inc. v. E.E.0.C.,
`136 S. Ct. 1642 (2016)....ccccecsssssessessessesecsnssneenecseesessnesssesvsssssesnseneneeassasesssensasensacesanancensnaseasessess7
`
`eBay, Inc. v. Advanced Auctions LLC,
`IPR2014-00806, Paper 14 (P.T.A.B. Sep. 25, 2014) .....ssessecsssesseseseeneersstessseessensnneeneencanenntaes8
`
`EON Corp.IP Holdings, LLC v. FLO TVInc.,
`CV 10-812-RGA, 2014 WL 2196418 (D. Del. May 27, 2014) .....ssessecsesseseenerresesssesnensnennes9
`
`ii
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 5 of 27 PagelD #: 4851
`
`E.R. Techs., Inc. v. Astechnologies, Inc.,
`275 F.3d 1378 (Fed. Cir. 2002)....cccsccsscscseceeceesssssesnenssnssssessenssnsenerscssasensnscesenseeensancnsassesteseestess6
`
`Hensley v. Eckerhart,
`AG1 U.S. 424 (1983) ..scecsecseesessssstssscssessenensensenssssesssnasanecssesanennseacencesnessensancnsennasenenseesssgseeseeenes20
`
`Hygienics Direct Co. v. Medline Indus., Inc.,
`33 F. App’x 621 (3d Cir, 2002) ...scsecssesecsssssssssssssssenessennncecsnensnsecssssnsananennsennnnnsccnssssenssseneseettey7
`
`ICU Med., Inc. v. Alaris Med. Sys., Inc.,
`558 F.3d 1368 (Fed. Cir. 2009)...eeevoccceueceunececsavseesacsuceecsecssccscncecsssesssgeossensenseeeesseeasees®8
`Intellect Wireless, Inc.v. HTC Corp.,
`No. 09 C 2945, 2015 WL 136142 (N.D.Ill. Jan. 8, 2015) ...eessesseeceereecessseesseeenssessetenennnennnes 19
`
`Mars, Inc. v. JCMAm. Corp.,
`Civ. No. 05-3165 (RBK/JS), 2009 WL 2356834 (D.N.J.July 30, 2009) ..ceeceeessessecsseeeteeeeeeeees7
`
`Media Techs. Licensing, LLC v. Upper Deck Co.,
`334 F.3d 1366 (Fed. Cir. 2003)......ccsccscccsessecrssssssseecssesseecsnesnseneecnteassecsssensceaneraennsansnssenstessetss6
`
`Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd.,
`726 F.3d 1359 (Fed. Cir, 2013)....scsssssessecsessseesnserssesssensneesssecsncsaneneneeaseaseesnensasecanengaasenseeeeessees18
`
`Novo Nordisk A/S v. Mylan Pharms., Inc.,
`Civ. A. No. 09-2445 (FLW), 2010 U.S. Dist. LEXIS 127070 (D.N.J. Dec. 1,
`O10) seeesssssssccssssecccssssseccsnsesssssecessnsseccsnncenssscessnsseeesssseeessaneseseeeusesesMuseetseeseeeeeseeeeenesgteeegeesee200085
`Octane Fitness, LLCv. ICONHealth &Fitness, Inc.,
`134. S. Ct. 1749 (2014) ...cecescesessesseseseesesssseeseensessesseneseessssneenesnenecansasaeaneersscascensencnagangnsesseseens2,9
`
`Parallel Iron LLC v. NetApp,Inc.,
`70 F.Supp.3d 585 (D. Del. 2014)..ccccsesccssessesssssssonseesneeessnersnsesnstsssnensnecenecnansanennenasssesssensesee17
`
`Princeton Digital Image Corp.v. Hewlett-Packard,
`No.12 Civ. 779 (RIJS), 2013 WL 1454945 (S.D.N.Y. Mar. 21, 2013) ..eeceecscscssesereereeeeees 12, 13
`
`RFR Indus., Inc. v. Century Steps, Inc.,
`ATT F.3d 1348 (Fed. Cir. 2007).....scsscsssecsessseesserssecssssesssenseenecanennecaresssessnssscnscnnacennennenasensesssetgss6
`
`Semtek Int’l Inc. v. Lockheed Martin Corp.,
`531 U.S. 497 (2001)..scsssscsssecssesstesssesseesnccsnessneesarcsseessesrsssccanennnceancesssessessconssneasenananenseeseeessensneees6
`
`United Auto. Workers Local 259 Soc. Sec. Dep't v. Metro Auto Ctr.,
`501 F.3d 283 (3d Cir. 2007).....cscssssecsecsecsecnsesnsssnsesessseessnennecaennesancnsseseenscnncnnananenancansssntesetss20
`
`Walker Digital, LLC, v. Expedia, Inc.,
`950 F. Supp. 2d 729 (D. Del. 2013)....essssecsssessseesssesescsneencnesssnsssssecsssenenanacennnanensassenssseees7,14
`
`ili
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page6 of 27 PagelD #: 4852
`
`Statutes
`
`35 U.S.C. § 285 vcccsscscsessessesesssssesssessenesscsseassnecucatsscesssssesessanesnenscacuncananscacaasanseecsscensnaaeasnansengees passim
`
`Other Authorities
`Local Rule 54.1(C) ..ccccccsssssecsssessesseseseeseseesesenneceesecusensseseseenessanesenecacanencansaneasesensesenseesnennseeeseseggiss7,8
`
`iv
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 7 of 27 PagelD #: 4853
`
`I.
`
`NATURE AND STAGE OF PROCEEDINGS
`Acceleration Bayfiled these actions against Defendants, alleging infringement ofsix
`patents. D.I. 1.! The Court found that Acceleration Bay lacked prudential standing to proceed
`without The Boeing Company,the assignorofthe asserted patents, and gave Acceleration Bay
`
`two weeksto cure prudential standing. D.I. 149. Acceleration Bay informed the Court thatit
`cured prudential standing by entering into an Amended Patent Purchase Agreement with Boeing,
`refiled its actions against Defendants, and requested dismissal without prejudice ofthe original
`
`complaints. D.I. 152. The Court granted Acceleration Bay’s request, dismissing these actions
`without prejudice. D.I. 153. Acceleration Bay continues to pursue its patent infringement claims
`
`against Defendantsin the refiled actions.
`
`Il.
`
`SUMMARY OF THE ARGUMENT
`Defendants’ motion for attorneys’ fees should be denied because (1) Defendants are not
`
`prevailing parties, and (2) there is nothing exceptional about this case. As a threshold matter,
`Defendants are not prevailing parties, which is a statutory prerequisite to obtain any attorneys’
`
`fees under 35 U.S.C. § 285. To be deemeda prevailing party,a litigant must achievealegal
`
`victory that changesthe legal relationship between the parties. Here, the Court did not grant
`Defendantsrelief on the merits; instead the Court dismissed these cases without prejudice after
`
`Acceleration Bay filed new cases with substantially similar claims against Defendants. The
`
`Court made no determination on the validity or infringement of the patents-in-suit. Indeed, in
`
`the declaratory injunction complaints filed by Defendants in the Northern District of California,
`
`they plead that: “There is an immediate,real, and substantial justiciable controversy between
`Plaintiff and Defendantasto its purported right to threaten or maintain suit for infringement of
`
`
`1 Docket citations are to Acceleration Bay LLCv. Activision Blizzard Inc., C.A. No. 15-228-RGA
`(D. Del. Mar. 11, 2015), and are representative of similar pleadingsfiled in the related cases.
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page8 of 27 PagelD #: 4854
`
`the Asserted Patents .. . and as to whether Plaintiff infringes any enforceable claims of the
`
`Asserted Patents.” C.A. No. 16-453-RGA,D.I. 7, Ex. 1 at 15. Numerous courts, including
`
`judgesin this District, have found that dismissal of a complaint for lack of standing (even
`dismissal with prejudice) does not render a defendant a prevailing party. Awarding attorneys’
`
`fees here wouldradically depart from this well-established case law. Defendants’ motion should
`
`be denied onthis basis alone.
`
`Defendants’ motion fails for the additional reason that this is not an exceptionalcase.
`
`Although the Court ultimately sided with Defendants, Acceleration Bay’s goodfaith
`interpretation ofthe patent purchase agreementas conferring prudential standing was reasonable.
`Boeing and Acceleration Bay intendedto transfer to Acceleration Bay full ownership ofthe
`asserted patents andthe ability to independently enforce those patents against these particular
`Defendants, as confirmed by the contemporaneous documents, the sworn declaration of a Boeing
`
`attorney responsible for negotiating the patent purchase agreement, and the fact that Boeing and
`Acceleration Bay promptly amendedthe patent purchase agreement to covey full ownership to
`
`Acceleration Bay after receiving the Court’s order finding they had not yet done so.
`
`In finding that Acceleration Bay had not obtained ownership of these patents, the Court
`
`looked to a multi-factor factual test. Different courts have weighed the factors differently, and
`
`Acceleration Bayrelied on cases wheredistrict courts applied similar facts to find that a patent
`
`transfer did convey prudential standing. That the Court ultimately disagreed with Acceleration
`Baydoesnotelevate this “run-of-the-mill” case to an “exceptional” one justifying an award of
`attorney fees. Octane Fitness, LLC v. ICONHealth &Fitness, Inc., 134 S. Ct. 1749, 1757 (2014)
`
`(a case must“sufficiently set itself apart from mine-run cases to be ‘exceptional””).
`Thereis also no evidence that Acceleration Bay engagedin litigation misconduct.
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 9 of 27 PagelD #: 4855
`
`Defendants’ accusation that Acceleration Bay and Boeing waited nine months to produce the
`
`patent purchase agreementin somesinister schemeto hide the true nature of their agreementis
`disingenuous and baseless. Defendantsfailed to inform the Court that Boeing produced the
`
`agreementless than two weeksafter the entry of the protective order in the case.
`
`Defendantsalso failed to explain how Acceleration Bay prosecuted the case
`
`“aggressively,” other than by pursuing depositions to which it was plainly entitled. Acceleration
`
`Bay pursued discovery activities consistent with the Court’s schedule. The Special Master
`
`granted Acceleration Bay’s motion to compel Defendants to make witnesses available for
`deposition after Defendants delayed for months, validating Acceleration Bay’s approach and
`
`confirmingthat, if any party was guilty of litigation misconduct, it was the Defendants.
`Finally, Defendants failed to substantiate or document any oftheRBin fees and
`costs they seek. Moreover, they request reimbursement of fees and costs for the entire litigation,
`
`not just the standing issue on which their motionis based. For these reasons andas further
`
`discussed below, the Court should deny Defendants’ motion.
`
`Ill.
`
`STATEMENT OF FACTS
`
`Boeing Sold the Asserted Patents to Acceleration Bay
`A,
`Boeing and Acceleration Bay entered into a December10, 2014 patent purchase
`
`agreement. D.I. 111, Ex. 1 (“Purchase Agreement”). The Purchase Agreementstates that
`
`5535.
`Accordingto a Boeing in-house attorney involved in the negotiations,Fr
`
`GED 1.110 Radovsky Declaration) at 19 5,4
`ee 22. 2:15.
`
`

`

`Bythe Purchase Agreement, Acceleration Bay granted to Boeing a non-exclusive license
`
`to generally practice the Asserted Patents and an exclusive license in the “Boeing Field ofUse,”
`
`01 9525.43.
`Acceleration Bayretainedat least the following substantialrights in the Asserted Patents:
`
`
`
`
`
`w
`
`The Court Dismissed These Actions Without Prejudice, Allowing
`Acceleration Bay to Cure Prudential Standing and Continue to Assertits
`Patent Infringement Claims Against Defendants
`
`Defendants moved to dismiss these actions for lack of standing. D.I. 100. The Court
`
`held oral argument and requested supplementalletter briefing. D.L 135. While noting Boeing’s
`
`
`2 Acceleration Bay’s briefing in opposition to Defendants’ motion to dismiss presents a more
`fulsome discussion of the rights Acceleration Bay purchased from Boeing and the reasons those
`rights rendered Acceleration Bay the ownerof the asserted patents. D.I. 109 at 4-6.
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 11 of 27 PagelD #: 4857
`
`intention to “assign all ‘right, title and interest” in the Asserted Patents to Acceleration Bay
`
`(subject to the license back to Boeing), the Court foundthat the rights Acceleration Bay granted
`
`to Boeing rendered Acceleration Bay an exclusive licensee, particularly relying on the purported
`
`risk of duplicative or inconsistentlitigation. D.I. 148 at 4-5, 10. The Court further found that
`
`Acceleration Bay did not hold “all substantial rights” in the patents and, therefore, lacked
`
`prudential standing to proceed without Boeing. Id. at 9-10.
`
`The Court held that Acceleration Bay had 14 days to cure prudential standing or it would
`
`grant Defendants’ motion. Jd. at 11. On June 17, 2016, within the allotted cure period,
`
`Acceleration Bay informedthat Court that it would not be joining Boeing as a party. D.I. 152.
`
`Instead, Acceleration Bay entered into an Amended Purchase Agreement with Boeing that cured
`
`any defects in prudential standing. Id. Acceleration Bay provided a copy ofthe amended
`
`agreement to the Court and Defendants and askedthat these actions be dismissed without
`
`prejudice. Id. The Court granted Acceleration Bay’s request. D.I. 153.
`
`Acceleration Bayrefiled its patent infringement claims against Defendants. During the
`
`period for Acceleration Bay to cure standing andbefore the Court dismissed these actions,
`
`Defendants filed declaratory judgment actions in the Northern District of California, seeking
`
`declarations that they do not infringe the Asserted Patents. Declaration of Lisa Kobialka
`
`(“Kobialka Decl.”), § 2. In their declaratory judgmentactions, Defendants continue to assert the
`
`same non-infringement defenses they asserted in these cases. Id.
`
`IV.
`
`ARGUMENT
`
`A.
`
`Defendants Are Not a Prevailing Party
`
`Defendants are not a prevailing party. For that reason alone their motion should be
`
`denied because attorneys’ fees under 35 U.S.C.§ 285 are only available to a party qualifying as a
`
`“prevailing party.” Novo NordiskA/S v. Mylan Pharms., Inc., Civ. A. No. 09-2445 (FLW),
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 12 of 27 PagelD #: 4858
`
`9010 US.Dist, LEXIS 127070, at *5 (D.N.J. Dec. 1, 2010); 35 U.S.C. § 285 (“The court in
`
`exceptional cases may award reasonableattorney fees to theprevailingparty”) (emphasis
`added). The Supreme Court explainedthat, only “judgments on the merits and court-ordered
`
`consent decrees create the ‘material alteration of the legal relationship of the parties necessary to
`
`permit an award ofattorney’s fees.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of
`Health & Human Res., 532 U.S. 598, 603-04 (2001). The Supreme Court has refused to allow a
`
`plaintiffto recover fees where there was no judgment on the merits. Jd. at 610.
`Here,the Court found that Acceleration Bay lacked prudential standing to proceed ~
`
`without Boeing and gave Acceleration Bay an opportunity to cure, whichit did by entering into
`an amendedpurchase agreementandrefiling its cases against Defendants. The dismissal without
`prejudice of Acceleration Bay’s cases, enteredafter it already refiled cases against Defendants on
`the sameclaims, is neither a judgmenton the merits nor a material alteration of the legal
`
`relationship ofthe parities, as confirmedby the fact that Acceleration Bay continues to pursue its
`claims against Defendants. SemtekInt’l Inc.v. Lockheed Martin Corp., 531 U.S. 497, 503-06
`(2001) (holding that an adjudication on the merits is “the opposite of a ‘dismissal without
`prejudice,’” and finding the “primary meaning of ‘dismissal without prejudice’. .
`. is dismissal
`without barring the plaintiff from returning later .. .”); RFR Indus., Inc. v. Century Steps, Inc.,
`
`A77 F.3d 1348, 1353 (Fed. Cir. 2007) (reversing award of attorneys’ fees under § 285 after
`
`voluntary dismissal without prejudice “because the plaintiff is free to refile its action”).
`
`Under Federal Circuit law, dismissal for lack of standingis not relief on the merits and
`
`does not confer prevailingparty status on Defendants. H.R. Techs., Inc. v. Astechnologies, Inc.,
`
`275 F.3d 1378, 1384 (Fed. Cir. 2002); Media Techs. Licensing, LLC v. Upper Deck Co., 334
`
`F.3d 1366, 1370 (Fed. Cir. 2003) (finding dismissal for lack of standing basedonplaintiff's lack
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 13 of 27 PagelD #: 4859
`
`ofrights in patent was not an adjudication on the merits: “Because standingis jurisdictional, lack
`of standing precludesa ruling on the merits.”). Similarly, Judge Robinson found “defendants did
`not prevail on the merits” when they obtained dismissal for lack of standing by showing that a
`plaintiff did not own the patents-in-suit. Walker Digital, LLC, v. Expedia, Inc., 950 F. Supp. 2d
`729 (D.Del. 2013) (denying motion for attorneys’ fees).
`
`Other courts have also concludedthat dismissal on jurisdictional grounds does not
`
`convey prevailing party status. See, e.g., Hygienics Direct Co. v. Medline Indus., Inc., 33 F.
`App’x 621, 625 (3d Cir. 2002) (“a defendant cannotbe considered a ‘prevailing party’ when a
`complaint is dismissed for lack ofjurisdiction because the defendant has not prevailed ... on any
`issue that is fundamentalto the action”) (citation omitted); Mars, Inc. v. JCMAm.Corp., Civ.
`
`No. 05-3165 (RBK/JS), 2009 WL 2356834,at *5 (D.N.J. July 30, 2009) (defendants are not
`prevailing parties under section 285 whereplaintifftransferred the patent-in-suit and claims were
`
`dismissed for lack of standing).
`
`Defendants do notidentify a single case to the contrary. CRST Van Expedited, Inc. v.
`
`E.E.0.C., 136 S. Ct. 1642 (2016), concernedfee shifting underthe Civil Rights Act of 1964.
`Thedistrict court dismissed that case because the Equal Employment Opportunity Commission
`
`failed to comply with Title VII's presuit requirements. Id. at 1649. While the decision was
`based on a “non-merits” reason, the case endedin a final rejection ofthe claim at issue. CRST,
`
`therefore, has no relevanceto the situation here where there has been nofinal judgmentrejecting
`Acceleration Bay’s infringement claims against Defendants, on the merits or otherwise.
`
`Defendants’reliance on Local Rule 54.1(c) is also misplaced. That rule governs
`
`applications for costs, not attorneys’ fees, and prohibits the Court from finding a party to be
`prevailing where such “determination is inconsistent with statute or the Fed. R. Civ.P. or the
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 14 of 27 PagelD #: 4860
`
`rules of the appellate courts.” L. R. 54.1(c). Here, Federal Circuit law controls the
`
`determination ofattorneys’ fees awards under section 285, and, as described above, does not
`
`deem Defendants to be prevailing parties. ICU Med., Inc. v. Alaris Med. Sys., Inc., 558 F.3d
`
`1368, 1379 (Fed. Cir. 2009) (“We apply Federal Circuit law when reviewing an award of
`attorney fees under 35 USC. § 285.”) (citation omitted).
`Defendants failedto identify a “material alteration ofthe legal relationship ofthe
`parties.” The Court’s order on prudential standing did not resolve Acceleration Bay’s
`
`infringementclaims against Defendants and did not prevent Acceleration Bay from continuing to
`
`pursue those claims against Defendants. To the contrary, Acceleration Bayrefiled its complaints
`
`against Defendants after curing prudential standing before the original complaints were
`
`dismissed. Defendantsfiled actions against Acceleration Bay in the Northern District of
`
`California seeking declarations ofnon-infringementof the asserted patents and continue to
`
`pursuepetitions for interpartes review ofthe asserted patents. Kobialka Decl.,
`
`{ff 2-3.
`
`Defendants’ conduct, in addition to being blatant forum shopping, confirms they understood that
`the Court’s order did notresolve the parties’ dispute.’
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`Defendants’ claim that the newfiling date of these actions impacts the window of
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`damagesavailable to Acceleration Bayis a red herring and only suggests that Defendants
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`understandthat they are not the prevailing party. If Defendantstruly believed they were the
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`prevailing party, there would not be any discussion ofwhat damages Defendants owefor their
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`3 Acceleration Bay’s refiling ofits actions does not alter the one-year deadline for Defendantsto
`file petitions for inter partes review (“IPR”). See Kobialka Decl., Ex. 1, eBay, Inc. v. Advanced
`Auctions LLC, IPR2014-00806, Paper 14 at 3, 7 (P.T.A.B. Sep. 25, 2014) (holding that one-year
`bar wastriggered by the original complaint which was dismissed without prejudice due to lack of
`standing); see also id., Ex. 2, Apple Inc. v. Rensselaer Polytechnic Institute, IPR2014-00319, Paper
`12 at 6-7 (P.T.A.B.June 12, 2014) (finding one-year bartriggered by filing original complaint
`which wasdismissed without prejudice but continued immediately in the co-pending lawsuit).
`
`

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`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 15 of 27 PagelD #: 4861
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`infringement. Defendants’ damagesis from the time of actual or constructive notice. Moreover,
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`Defendants do notidentify any authority conferring prevailing party status under such a theory.
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`B.
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`This is Not an Exceptional Case
`
`Defendants’ motion also should be denied for the independent groundthat this is not an
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`exceptional case. The Supreme Court clarified the standard for finding an exceptional case
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`under35 U.S.C.§ 285, defining it as “one that stands out from others with respect to the
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`substantive strength of a party’s litigating position .
`
`.
`
`. or the unreasonable manner in which the
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`case waslitigated.” Octane Fitness, LLC, 134 S. Ct. at 1756. The Court emphasizedthat the
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`“totality ofthe circumstances” should be considered in determining whether a case is
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`exceptional. Jd. Here, Acceleration Bay proceededin good faith, took reasonable positions and
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`appropriately litigated its claims.
`
`Finding a case “exceptional” and awardingattorneys’feesis still the exception, and is
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`reserved for egregious circumstances. Since Octane Fitness, courts have rarely found cause to
`
`award fees despite having disposed of cases on summaryjudgment or a motion to dismiss. The
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`reluctance to award feesis especially so where,as here, the “case turned on a complex and
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`evolvingarea of law.” EON Corp. IP Holdings, LLC v. FLO TVInc., CV 10-812-RGA,2014
`
`WL 2196418,at *2 (D. Del. May 27, 2014)(finding strength of patentee’s case was not so
`
`conspicuously deficientas to justify the award of attorney’s fees even though the court granted
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`summary judgmentofinvalidity on all asserted patent claims where the “case turned on a
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`complex and evolving area of law.”); see also, e.g., CreAgri, Inc.v. Pinnaclife, Inc., 11-CV-
`
`6635-LHK,2014 WL 2508386,at *9-12 (N.D. Cal. June 3, 2014)(finding patent owner’s case
`
`not objectively baseless even though the court granted summary judgmentofinvalidity against
`
`patent owner); Bianco v. Globus Med., Inc., 2:12-CV-00147-WCB,2014 WL 1904228, at *2
`
`(E.D. Tex. May 12, 2014) (finding inventorship claim notto be in badfaith, frivolous, or
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`

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`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 16 of 27 PagelD #: 4862
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`otherwise exceptionally meritless despite the court ruling against inventorafter making factual
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`findings based on evidenceattrial).
`
`1.
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`Acceleration Bay Reasonably Asserted That it Had Standing to Pursueits
`Claims
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`Acceleration Bay’s position on the issue of prudential standing was reasonable, and does
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`not render this case exceptional. Acceleration Bay had a reasonable view that it was the owner
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`of the asserted patents andthat, as owner, it need not join exclusive licensee Boeing to pursue
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`claims against Defendants because Defendants are not within the Boeing field ofuse.*
`
`The substantive basis for Acceleration Bay’s position is set forth in its opposition to
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`Defendants’ motion to dismiss. D.I. 109 at 1-2. In particular, Acceleration Bay undisputedly
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`intended to purchase from Boeingall rights to the patents, including the sole rights to license,
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`assert and indulge infringementofthe asserted patents, except for rights to Boeing’s narrow
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`exclusive field of use license. D.J. 148 at 7 (Ordernoting that “Boeing conferred upon AB a
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`right to sue within a large field of use”). In arguingthatit purchasedthese substantialrights,
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`Acceleration Bayrelied on the fact that there wasnorisk oflitigation against these Defendants
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`without the involvement of Acceleration Bay, and that many courts found the absenceofrisk of
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`duplicative litigation to be dispositive on the issue ofprudential standing. See D.I. 109 at 7.
`
`Acceleration Bay’s position that it purchased ownership ofthe asserted patents is entirely
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`consistent with the evidence ofthe subjective intention of Acceleration Bay and Boeing in
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`entering into the patent purchase agreement. Indeed, the Court found that “Boeing intended to
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`assign all ‘right, title and interest’ in the patents .
`
`.
`
`. condition[ed] on the terms of the license
`
`
`4 Acceleration Bay respectfully disagrees with the Court’s finding thatit lacked prudential standing
`to pursue its claims against Defendants without joinder of Boeing, but to avoid further delay,
`elected to enter into an Amended Purchase Agreementandrefile its complaints, rather than appeal
`this issue.
`
`10
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`

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`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 17 of 27 PagelD #: 4863
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`Boeing retained.” D.I. 148 at 4. In particular, the undisputed evidence, including a sworn
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`declaration from oneofthe attorneys who negotiated the agreement and the contemporaneous
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`Hamilton Capital Loan Agreement, is that Boeing and Acceleration Bay intendedto transfer
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`ownership ofthe patents to Acceleration Bay andto enable Acceleration Bay to pursue patent
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`infringementclaimsagainst these specific Defendants alone and without the involvement of
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`Boeing. D.I. 109 (Opposition Brief) at 4-6, 15; D.I. 110 (Radovsky Decl.) at fj 4-6. This
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`understanding betweenthe parties was confirmed when Acceleration Bay and Boeing entered
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`into an Amended Patent Purchase Agreement shortly after the Court issued its order on standing.
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`D.I. 152.
`
`Forits ruling on standing, the Court looked to the multi-factor test ofAlfred Mann, which
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`provides a non-exhaustivelist of considerations to be weighed, rather than a bright-line test. D.I.
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`148 at 6, n.5. Manyof these eight factors supported the conclusion that Acceleration Bay had
`
`prudential standing. Indeed, the Purchase Agreement gave Acceleration Bayall substantial
`rights in the Asserted Patents. For examrp|e,(I
`eev2: Acceleration Bay’s responsibility to pay maintenance fees not
`Boeing(notedas “a relevant consideration,” by the Court),(ii
`I109 219-14; D148 2
`9. The Court notedthat, “some ofthe ‘termination provisions’ in the [purchase] agreement,
`
`along with the ‘right to receive infringement damages. . . [as] compensation,’ are consistent with
`
`an ‘assignment. .
`
`. ‘by way of mortgage,” (while ultimately finding this provision was different
`
`due to Boeing’s reversion right). D.I. 148 at 8-9, quoting Vaupel Teextilmaschinen KGv.
`
`Meccanica EuroItalia S.P.A., 944 F.2d 870, 875 (Fed. Cir. 1991).
`
`A determination ofprudential standing presents difficult questions, particularly because
`
`

`

`Case 1:15-cv-00311-RGA Document 160 Filed 08/10/16 Page 18 of 27 PagelD #: 4864
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`the Federal Circuit’s caselaw on standing is somewhat unclear and unsettled. Indeed,the parties
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`both cited case law supporting opposite conclusionson this legalissue. Different courts have
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`weighed the factors differently and cometo different conclusions based on similar facts, as set
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`forth in Acceleration Bay’s briefing. D.I. 109 at 12, n.4. While the Court ultimately foundthat,
`
`even ifAcceleration Bay was the owner and Boeing an exclusive licensee, Acceleration Bay
`
`wouldstill need to join Boeing to proceed,it noted thatits “conclusion may conflict with that
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`reached in Bluestone Innovations,” upon which Acceleration Bayrelied. D.I. 148 at 10, n.8.
`The Court also noted Acceleration Bay’sreliance on Princeton Digital regarding the impact of
`Acceleration Bay’s license back to Boeing. D.I. 148 at 5. Accordingly, Acceleration Bay’s
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`position was well-founded in case law and not exceptionally weak.
`
`Defendants’ attacks on Acceleration Bay are baseless. For example, Defendants make
`
`the demonstrably false claim that Acceleration Bay did not rely on Federal Circuit authority.
`
`D.L158 at 3. To the contrary, Acceleration Bayrelied on and analyzed numerous Federal
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`Circuit cases in its argument. Defendants also incorrectly accuse Acceleration Bay of
`
`
`5 See, e.g., D.1. 109 at 7 (citing Alfred E. Mann Found. v. Cochlear Corp., 604 F.3d 1354 (Fed.
`Cir. 2010) regarding importance ofright to bring suit to substantial rights analysis; id. at 8 (citing
`Int’l Gamco, Inc. v. Multimedia Games, Inc., 504 F.3d 1273 (Fed. Cir. 2007) as supporting the
`conclusion that Boeing cannot bring suit without Acceleration Bay, eliminating the risk of
`inconsistentlitigation);id. at 11 (citing Luminara Worldwide, LLC v. Liowan Elecs. Co., No. 2015-
`CV-1671, 2016WL 797925,at *5-6 (Fed. Cir. Feb. 29, 2016)) as holding that an exclusive licensee
`had prudential standing to enforce patents without the patent owner, even though the exclusive
`licensee held fewer rights than Acceleration Bay and as finding the intent of the assignor and
`assignee to be relevant to the prudential standing analysis); id. at 12 (citing Speedplay, I