Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 1 of 18 PageID #: 5032
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`C.A. No. 15-228 (RGA)
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`C.A. No. 15-282 (RGA)
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`C.A. No. 15-311 (RGA)
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`)))))))))
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`)))))))))
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`)))))))))))
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`ACCELERATION BAY LLC,
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`ACTIVISION BLIZZARD, INC.
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`Plaintiff,
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`v.
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`Defendant.
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`ACCELERATION BAY LLC,
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`ELECTRONIC ARTS INC.,
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`Plaintiff,
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`v.
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`Defendant.
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`ACCELERATION BAY LLC,
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`TAKE-TWO INTERACTIVE SOFTWARE,
`INC., ROCKSTAR GAMES, INC. and
`2K SPORTS, INC.,
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`Plaintiff,
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`v.
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`Defendants.
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`DEFENDANTS’ REPLY BRIEF IN SUPPORT OF
`THEIR MOTION FOR ATTORNEYS’ FEES
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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 2 of 18 PageID #: 5033
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`OF COUNSEL:
`Michael A. Tomasulo
`Gino Cheng
`David K. Lin
`WINSTON & STRAWN LLP
`333 South Grand Avenue, 38th Floor
`Los Angeles, CA 90071
`(213) 615-1700
`
`David P. Enzminger
`WINSTON & STRAWN LLP
`275 Middlefield Road
`Suite 205
`Menlo Park, CA 94025
`(650) 858-6500
`
`Daniel K. Webb
`Kathleen B. Barry
`WINSTON & STRAWN LLP
`35 West Wacker Drive
`Chicago, IL 60601
`(312) 558-5600
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`
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`
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`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Stephen J. Kraftschik (#5623)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`skraftschik@mnat.com
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`Attorneys for Defendants
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 3 of 18 PageID #: 5034
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`TABLE OF CONTENTS
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`Page
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`Defendants Are Prevailing Parties ...................................................................................1
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`These Cases Are Exceptional ...........................................................................................4
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`A.
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`Acceleration Bay’s Assertion Of Standing Was Objectively Unreasonable Under
`Longstanding Supreme Court And Federal Circuit Precedent ............................... 4
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`B.
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`Acceleration Bay Litigated These Cases In An Unreasonable Manner .................. 7
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`Fees Are Warranted Under The Court’s Inherent Power ..................................................9
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`The Fees Are Reasonable And Will Be Itemized At The Appropriate Time .....................9
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`I.
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`II.
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`III.
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`IV.
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`i
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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 4 of 18 PageID #: 5035
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`
`CASES
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`TABLE OF AUTHORITIES
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`Page(s)
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`Advanced Video Techs. LLC v. HTC Corp.,
`2015 WL 7621483 (S.D.N.Y. Aug. 28, 2015) ........................................................................ 7
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`Alfred E. Mann Found. For Sci. Research v. Cochlear Corp.,
`604 F.3d 1354 (Fed. Cir. 2010) .......................................................................................... 5, 6
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`Alps South, LLC v. Ohio Willow Wood Co.,
`787 F.3d 1379 (Fed. Cir. 2015) .............................................................................................. 4
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`Apple v. Rensselaer Polytechnic Inst.,
`IPR2014-00319, Paper 12 (P.T.A.B. June 12, 2014) .............................................................. 3
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`Aspex Eyewear, Inc. v. Miracle Optics, Inc.,
`434 F.3d 1336 (Fed. Cir. 2006) .............................................................................................. 5
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`Audubon Eng’g Co., LLC v. Int’l Procurement & Contracting Grp., LLC,
`2015 WL 4084053 (D. Del. July 6, 2015) ............................................................................ 10
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`Bluestone Innovations LLC v. Nichia Corp.,
`2013 WL 1729814 (N.D. Cal. Apr. 22, 2013) .................................................................... 6, 7
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`Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res.,
`532 U.S. 598 (2001) .......................................................................................................... 1, 2
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`Chalumeau Power Sys. LLC v. Alcatel-Lucent,
`2014 WL 4675002 (D. Del. Sept. 12, 2014) ......................................................................... 10
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`Clouding IP, LLC v. EMC Corp.,
`2015 WL 5766872 (D. Del. Sept. 30, 2015) ........................................................................... 5
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`CRST Van Expedited, Inc. v. E.E.O.C.,
`136 S. Ct. 1642 (2016) ...................................................................................................... 1, 2
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`Deep Sky Software, Inc. v. Sw. Airlines Co.,
`2015 WL 10844231 (S.D. Cal. Aug. 19, 2015) .................................................................... 10
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`Enzo APA & Son, Inc. v. Geapag A.G.,
`134 F.3d 1090 (Fed. Cir. 1998) .............................................................................................. 4
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`Fieldturf, Inc. v. Sw. Recreational Indus., Inc.,
`357 F.3d 1266 (Fed. Cir. 2004) .............................................................................................. 6
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`FR Indus., Inc. v. Century Steps, Inc.,
`477 F.3d 1348 (Fed. Cir. 2007) .............................................................................................. 2
`
`ii
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 5 of 18 PageID #: 5036
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`H.R. Techs., Inc. v. Astechnologies, Inc.,
`275 F.3d 1378 (Fed. Cir. 2002) .............................................................................................. 2
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`Hygienics Direct Co. v. Medline Indus., Inc.,
`33 F. App’x 621 (3d Cir. 2002) ............................................................................................. 2
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`IA Labs CA, LLC v. Nintendo Co.,
` 2012 WL 1565296 (D. Md. May 1, 2012), aff’d, 515 F. App’x 892 (Fed. Cir.
`2013) ................................................................................................................................... 10
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`Independent Wireless Tel. Co. v. Radio Corp.,
`269 U.S. 459 (1926) .............................................................................................................. 5
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`Int’l Gamco, Inc. v. Multimedia Games, Inc.,
`504 F.3d 1273 (Fed. Cir. 2007) .......................................................................................... 5, 6
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`MarcTec, LLC v. Johnson & Johnson,
`664 F.3d 907 (Fed. Cir. 2012)................................................................................................ 8
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`Mars, Inc. v. JCM Am. Corp.,
`2009 WL 2356834 (D.N.J. July 30, 2009) ............................................................................. 2
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`Media Techs. Licensing, LLC v. Upper Deck Co.,
`334 F.3d 1366 (Fed. Cir. 2003) .............................................................................................. 3
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`Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
`134 S. Ct. 1749 (2014) .................................................................................................. 2, 4, 7
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`Parallel Iron LLC v. NetApp Inc.,
`70 F. Supp. 3d 585 (D. Del. 2014) ......................................................................................... 9
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`Rambus v. Infineon Techs. AG,
`318 F.3d 1081 (Fed. Cir. 2003) ............................................................................................ 10
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`Semtek Int’l Inc. v. Lockheed Martin Corp.,
`531 U.S. 497 (2001) .............................................................................................................. 2
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`TufAmerica, Inc. v. Michael Diamond et al.,
`2016 WL 1029553 (S.D.N.Y. March 9, 2016) ................................................................... 2, 7
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`TufAmerica, Inc. v. Michael Diamond et al.,
`2016 WL 3866578 (S.D.N.Y. July 12, 2016) ................................................................. 1, 2, 7
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`Walker Digital, LLC v. Expedia, Inc.,
`2013 WL 5799912 (D. Del. 2013) ..................................................................................... 2, 5
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`Walker Digital, LLC, v. Expedia, Inc.,
`950 F. Supp. 2d 729 (D. Del. 2013) ....................................................................................... 2
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`iii
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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 6 of 18 PageID #: 5037
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`Wedgetail, Ltd. v. Huddleston Deluxe, Inc.,
`576 F.3d 1302 (Fed. Cir. 2009) ............................................................................................ 10
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`STATUTES
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`35 U.S.C. § 285 ................................................................................................................... 3, 7, 9
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`35 U.S.C. § 286 ........................................................................................................................... 4
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`35 U.S.C. § 315(b) ...................................................................................................................... 3
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`OTHER AUTHORITIES
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`D. Del. L.R. 26.2 ......................................................................................................................... 7
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`Fed. R. Civ. P. 21 ........................................................................................................................ 4
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`Fed. R. Civ. P. 54, 1993 Advisory Comm. Note ........................................................................ 10
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`Fed. R. Civ. P. 54(d)(2)(B)(iii) .................................................................................................. 10
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`iv
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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 7 of 18 PageID #: 5038
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`I.
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`Defendants Are Prevailing Parties
`Acceleration Bay argues that fees cannot be awarded here because “only ‘judgments on
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`the merits and court-ordered consent decrees create the ‘material alteration of the legal
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`relationship of the parties necessary to permit an award of attorney’s fees.’” D.I. 162 at 6
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`(referring to Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532
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`U.S. 598 (2001), error in original). This mischaracterizes Buckhannon. Moreover, it ignores the
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`Supreme Court’s recent ruling in CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642 (2016).
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`In CRST, the Supreme Court held “Congress must have intended that a defendant could
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`recover fees expended in frivolous, unreasonable, or groundless litigation when the case is
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`resolved in the defendant’s favor, whether on the merits or not.” 136 S. Ct. at 1652.
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`Acceleration Bay asserts CRST is limited to the Civil Rights Act of 1964 and cases where there
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`was a “final rejection” of the claims at issue. Neither argument has merit. First, the Supreme
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`Court specifically explained “Congress has included the term ‘prevailing party’ in various fee-
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`shifting statutes, and it has been the Court’s approach to interpret the term in a consistent
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`manner.” Id. (citing Buckhannon, 532 U.S. at 602-03, and 603, n.4). For instance, CRST has
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`already been applied to the Copyright Act’s fee shifting statute. Second, the Supreme Court held
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`“a favorable ruling on the merits is not a necessary predicate to find that a defendant has
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`prevailed.” Compare D.I. 162 at 7 with CRST, 136 S. Ct. at 1646. Just as importantly,
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`Acceleration Bay’s claims were “finally rejected.” The Dismissed Actions have been closed.
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`Acceleration Bay’s new suits are only possible because it purportedly acquired new rights.
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`Indeed, at least one court has relied on CRST to award attorneys’ fees in a nearly identical
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`dismissal of a copyright case. See TufAmerica, Inc. v. Michael Diamond et al., 2016 WL
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`3866578, at *1, n.1 (S.D.N.Y. July 12, 2016) (“TufAmerica Reconsideration Decision”). The
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`district court dismissed without prejudice the plaintiff’s copyright suit for lack standing and
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`1
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 8 of 18 PageID #: 5039
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`awarded the defendant attorneys’ fees as a prevailing party. See TufAmerica, Inc. v. Michael
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`Diamond et al., 2016 WL 1029553, at *3 (S.D.N.Y. Mar. 9, 2016) (“TufAmerica Fee Decision”).
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`The TufAmerica Reconsideration Decision referenced CRST and specifically rejected the same
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`argument Acceleration Bay raises here – namely, that “[d]efendants have not been ‘immunize[d]
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`from the risk of future litigation’ on the merits of those claims and thus may not be deemed
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`‘prevailing parties.’” TufAmerica, 2016 WL 3866578, at *1, n.1. Similarly, Defendants have
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`rebuffed Plaintiff’s challenge, and therefore, are prevailing parties.1
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`Even under Buckhannon, Defendants are prevailing parties because there has been a
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`“material alteration of the legal relationship of the parties.” 532 U.S. at 605. The Supreme
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`Court did not limit the definition of “prevailing party” to only two scenarios; it provided
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`“examples” of a “prevailing party.” CRST, 136 S. Ct. at 1646 (“[W]hen a plaintiff secures an
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`‘enforceable judgmen[t] on the merits’ or a ‘court-ordered consent decre[e],’ . . . that plaintiff is
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`the prevailing party because he has received a ‘judicially sanctioned change in the legal
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`relationship of the parties.’ . . . The Court, however, has not set forth in detail how courts should
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`determine whether a defendant has prevailed.”) (citations omitted). None of Acceleration Bay’s
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`other cited cases establish that Defendants are not prevailing parties.2
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`1 Acceleration Bay cites two cases that apply an analysis rejected in CRST, and, therefore appear
`to no longer be good law – Hygienics Direct Co. v. Medline Indus., Inc., 33 F. App’x 621 (3d
`Cir. 2002), and Mars, Inc. v. JCM Am. Corp., 2009 WL 2356834 (D.N.J. July 30, 2009).
`Acceleration Bay also cites to Walker Digital, LLC, v. Expedia, Inc., 950 F. Supp. 2d 729 (D.
`Del. 2013), but that opinion does not relate to attorneys’ fees. It appears that Acceleration Bay
`intended to cite to 2013 WL 5799912, which issued before Octane Fitness and CRST.
`2 Acceleration Bay cites a variety of cases that are inapplicable. Semtek Int’l Inc. v. Lockheed
`Martin Corp., 531 U.S. 497, 503-06 (2001), merely states that a dismissal without prejudice “is
`dismissal without barring the plaintiff from returning later . . . .” FR Indus., Inc. v. Century
`Steps, Inc., 477 F.3d 1348, 1353 (Fed. Cir. 2007), states that an early, voluntary dismissal before
`defendant served its answer did not confer prevailing party status. H.R. Techs., Inc. v.
`Astechnologies, Inc., 275 F.3d 1378 (Fed. Cir. 2002), and Media Techs. Licensing, LLC v. Upper
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`2
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 9 of 18 PageID #: 5040
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`First, the most obvious material alteration of the legal relationship of the parties resulting
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`from Defendants’ victory is that Acceleration Bay could not maintain its lawsuits without either
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`joining Boeing or acquiring new patent rights. Acceleration Bay chose to seek to acquire new
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`patent rights, and further admitted that the Dismissal Order (D.I. 148) required this material
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`alteration of the legal relationship between the three sides – Acceleration Bay, Defendants, and
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`the patent owner Boeing.
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`Second, the one-year deadline to file additional inter partes reviews was reset by the
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`Dismissal Order, which constitutes another material alteration of the legal relationship of the
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`parties. The PTAB decisions Acceleration Bay cites simply reflect that the PTAB has
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`occasionally found exceptions (inapplicable here) to the general rule (see Exs. 15, 16). The fact
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`that there may be exceptions does not change the fact that the dismissal without prejudice has
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`materially changed the legal relationship between the parties with respect to the § 315(b) bar.3
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`Third, the Dismissal Order also impacts Acceleration Bay’s potential ability to collect
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`damages. Damages are limited to the six years prior to the filing of the complaint. 35 U.S.C. §
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`286. Thus, in the wake of the dismissal, the six year period now begins in June 2016 rather than
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`Deck Co., 334 F.3d 1366 (Fed. Cir. 2003), held that dismissal for lack of standing was not relief
`on the merits, but neither case addressed the issue of “prevailing party” or 35 U.S.C. § 285.
`3 In any event, the PTAB’s administratively created exceptions are inapplicable here. In eBay,
`Inc. v. Advanced Auctions, and Apple v. Rensselaer Polytechnic Inst. and Dynamic Advances, the
`first and second parallel district court actions were consolidated by stipulation (not dismissed),
`and there was no decision issued by the court determining there was lack of standing.
`Accordingly, in each of these cases, the PTAB concluded that the first complaint could not be
`treated “as if it never existed.” E.g., IPR2014-00319, Paper 12 at 7 (P.T.A.B. June 12, 2014). In
`contrast, this Court determined that Acceleration Bay lacked standing and dismissed and closed
`the cases. Acceleration Bay also specifically requested to keep the same schedule in the newly
`filed cases as in these dismissed cases, which relief the Court did not grant. D.I. 152, 153. From
`the perspective of the PTAB, the dismissal of these cases leaves the parties in the same legal
`position as if the dismissed actions had never been brought.
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`3
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 10 of 18 PageID #: 5041
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`early 2015. Even if Acceleration Bay could show liability, which it cannot, more than a year of
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`potential damages has been removed.
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`Lastly, Acceleration Bay argues that Defendants have not yet prevailed by asserting that
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`it “cured” prudential standing “within the allotted cure period.” D.I. 162 at 5. This is untrue.
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`Acceleration Bay did not “cure” standing – it dismissed the three cases and filed three new ones
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`based on newly acquired rights. While a plaintiff can cure a prudential standing defect by adding
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`a party under Fed. R. Civ. P. 21, it cannot do so by entering into a new agreement: “nunc pro
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`tunc assignments are not sufficient to confer retroactive standing . . . parties should possess rights
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`before seeking to have them vindicated in court.” Enzo APA & Son, Inc. v. Geapag A.G., 134
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`F.3d 1090, 1093 (Fed. Cir. 1998); see also Alps South, LLC v. Ohio Willow Wood Co., 787 F.3d
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`1379, 1384 (Fed. Cir. 2015).
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`II.
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`These Cases Are Exceptional
`These cases are “exceptional” because they “stand[] out from others with respect to the
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`substantive strength of a party’s litigating position” and because of “the unreasonable manner in
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`which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct.
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`1749, 1756 (2014). The Supreme Court referred to considering the totality of circumstances, and
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`provided a list of “nonexclusive” factors including “frivolousness, motivation, objective
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`unreasonableness (both in the factual and legal components of the case) and the need in
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`particular circumstances to advance considerations of compensation and deterrence.” Id.
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`A.
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`Acceleration Bay’s Assertion Of Standing Was Objectively Unreasonable
`Under Longstanding Supreme Court And Federal Circuit Precedent
`Remarkably, Acceleration Bay continues to argue that its assertion of the patents in these
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`three cases was reasonable because “the Purchase Agreement gave Acceleration Bay all
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`substantial rights in the Asserted Patents.” D.I. 162 at 11. This argument is simply contrary to
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`4
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 11 of 18 PageID #: 5042
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`the Dismissal Order (D.I. 148 at 9) (“I conclude that Boeing did not transfer all substantial rights
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`to AB.”).
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`Acceleration Bay also argues that its position was reasonable because it involved a
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`“complex and evolving area of law.” D.I. 162 at 9. This argument also is not credible because
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`the law has been settled for nearly a century, and Acceleration Bay simply ignored controlling
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`authority for evaluating standing when there is an exclusive licensee or field of use licensee:
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` The presence of both the patent owner and any exclusive licensee “is indispensable . . . to
`enable the alleged infringer to respond in one action to all claims of infringement for his act.”
`Independent Wireless Tel. Co. v. Radio Corp., 269 U.S. 459, 466 & 468 (1926) (“[B]oth the
`owner and the exclusive licensee are generally necessary parties in the action in equity.”).
` “For the same policy reasons that a patentee must be joined in any lawsuit involving his or
`her patent, there must be joinder of any exclusive licensee.” Aspex Eyewear, Inc. v. Miracle
`Optics, Inc., 434 F.3d 1336, 1344 (Fed. Cir. 2006) (citing Independent Wireless Tel. Co. v.
`Radio Corp., 269 U.S. 459, 466 (1926)); Alfred E. Mann Found. For Sci. Research v.
`Cochlear Corp., 604 F.3d 1354, 1360 (Fed. Cir. 2010) (“When there is an exclusive license
`agreement, as opposed to a nonexclusive license agreement, but the exclusive license does
`not transfer enough rights to make the licensee the patent owner, either the licensee or the
`licensor may sue, but both of them generally must be joined as parties to the litigation.”).
` An exclusive field-of-use licensee “does not hold all substantial rights in the full scope of the
`. . . patent,” and therefore lacks standing. Int’l Gamco, Inc. v. Multimedia Games, Inc., 504
`F.3d 1273, 1280 (Fed. Cir. 2007) (“allowing a licensee, even one with exclusive rights to the
`patent for a particular field of use, to sue in its own name alone poses a substantial risk of
`multiple suits and multiple liabilities against an alleged infringer . . .”).
`It was objectively unreasonable for Acceleration Bay to believe it had standing to assert the
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`patents in light of these long-standing rules. This alone justifies an award of fees.4
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`Instead of addressing settled standing law, Acceleration Bay seeks shelter behind the
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`multifactor test of Alfred E. Mann. This effort fails, too, because none of the “most important”
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`factors was found in its favor. As Alfred E. Mann and other precedent make clear, a patent
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`4 Acceleration Bay appears to acknowledge that a case can be deemed exceptional for lack of
`standing in its discussion of Advanced Video Techs. D.I. 162 at 13-14 (“That case was
`exceptional because the plaintiff had no basis at all to proceed with the case.”). These cases
`differ from Walker Digital, LLC v. Expedia, Inc., 2013 WL 5799912 (D. Del. 2013), and
`Clouding IP, LLC v. EMC Corp., 2015 WL 5766872 (D. Del. Sept. 30, 2015), because, far from
`failing at interpreting “complex and evolving” law, Acceleration Bay failed to comply with key
`principles and well-settled law. This failure is particularly inexcusable because Acceleration
`Bay’s litigation counsel was involved along every step of the way to the courthouse.
`
`5
`
`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 12 of 18 PageID #: 5043
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`plaintiff simply cannot have “all substantial rights” where it lacks the sole right to practice the
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`patents in their entirety or the patentee has retained a right to assert or license the patents. Id. at
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`1360-61 (“the exclusive right to make, use, and sell . . . is vitally important,” and “the nature and
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`scope of the [patentee’s] retained right to sue accused infringers [and license the patent are] the
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`most important factor[s] in determining whether an [agreement] . . . transfers sufficient rights to
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`render the [other party] the owner of the patent.”). The Federal Circuit has made it clear that a
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`plaintiff that lacks these rights does not have “all substantial rights.” Id.
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`Here, Acceleration Bay did not have these rights. D.I. 148 at 7-9. In fact, it lacked any
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`rights at all in the Boeing Field of Use. That alone meant that it lacked “all substantial rights.”
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`Fieldturf, Inc. v. Sw. Recreational Indus., Inc., 357 F.3d 1266, 1269 (Fed. Cir. 2004) (“licensor’s
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`retention of a limited right to develop and market the patented invention indicates that the
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`licensee failed to acquire all substantial rights”). Acceleration Bay’s position that it owned the
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`patents or had “all substantial rights” (a position that it maintains to this day, D.I. 162 at 11) was
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`and is objectively unreasonable. Any objective analysis would have concluded, as this Court
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`did, that Boeing owned the patents and that the only Alfred E. Mann factor in Acceleration Bay’s
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`favor is payment of maintenance fees. The conclusion that Acceleration Bay did not possess all
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`substantial patent rights was not a close question.5
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`5 Nor does Bluestone Innovations LLC v. Nichia Corp., 2013 WL 1729814 (N.D. Cal. Apr. 22,
`2013), render Acceleration Bay’s conduct reasonable. Bluestone involved a complex and unique
`series of transactions and – most importantly – one of the stakeholders had “covenanted not to
`sue under any Patent” for products within another’s field of use, thereby diminishing the risk of
`duplicative litigation. Id. Even as it relied on the case, neither Acceleration Bay nor Boeing
`provided any such covenant. Instead, Acceleration Bay expressly asserted claims in both Boeing
`and Sony’s field of use. Bluestone also illustrates the compelling logic of the Int’l Gamco
`decision: the Bluestone plaintiff abandoned its claims against products that fell between its patent
`rights and those of the exclusive field-of-use licensee. 2013 WL 1729814, at *4, n.1. Even if it
`supported Acceleration Bay’s position, it would directly contravene the overwhelming,
`countervailing Federal Circuit law and would not render Acceleration Bay’s conduct reasonable.
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`6
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`

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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 13 of 18 PageID #: 5044
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`Acceleration Bay also argues that its “subjective intent” was to purchase the patents; and,
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`therefore these are not “exceptional cases.” Octane Fitness, however, explicitly overruled this
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`line of reasoning. 134 S. Ct. at 1752-53. The TufAmerica Fee Decision addressed this very issue
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`in the context of a copyright case. There, as here, the plaintiff argued that “it intended for the
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`agreement to convey an exclusive license, and the fact that the agreement ‘failed in its wording
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`to accomplish its goal does not mean that [Plaintiff] was acting unreasonably.’” 2016 WL
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`1029553, at *2. There, as here, the “deficiencies of the agreements cited by Plaintiff as
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`conveying an exclusive license were readily apparent, rendering its [argument that it had
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`standing] ‘clearly without merit’ and ‘objectively unreasonable.’” Id. at *1. The court went on
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`to explain that one reason it awarded fees is that “the purposes of the Copyright Act are furthered
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`by deterring the filing and pursuit of lawsuits in which chain of title has not been adequately
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`investigated by the plaintiff” (id. at *3) – the exact same purpose of § 285. Octane Fitness, 134
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`S. Ct. at 1756.6
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`B.
`Acceleration Bay Litigated These Cases In An Unreasonable Manner
`Several facts establish the unreasonable manner in which Acceleration Bay litigated these
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`cases. Acceleration Bay does not and cannot offer a sufficient explanation to each of these, and
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`instead advances various red herrings, each of which fails for reasons described below.
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`Acceleration Bay pleaded that it owned the patents but withheld or delayed production
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`of the Boeing Agreement. The supposed confidentiality of the Boeing Agreement does not
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`excuse its delay in production. See D. Del. L.R. 26.2. Further, this Court adopted Defendants’
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`protective order proposals on December 1, 2015, and yet Acceleration Bay has never, to this day,
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`6 It also was objectively unreasonable for Acceleration Bay to rely on the self-serving but legally
`insignificant Recorded Assignments. See, e.g., Advanced Video Techs. LLC v. HTC Corp., 2015
`WL 7621483, at *7 (S.D.N.Y. Aug. 28, 2015) (rejecting plaintiff’s argument that it reasonable to
`believe that it owned the patent because the USPTO believed that it owned the patent).
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`7
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`produced the agreement with Boeing. Acceleration Bay’s motion for reconsideration only dealt
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`with source code and was thus irrelevant to the Boeing Agreement.
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`Acceleration Bay pressed on with discovery after receiving notice of its lack of
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`standing. As explained in the opening brief, courts have awarded fees where a plaintiff pushed
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`forward with its case while ignoring or misrepresenting governing case law. See, e.g., MarcTec,
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`LLC v. Johnson & Johnson, 664 F.3d 907, 920-21 (Fed. Cir. 2012) (affirming fee award because
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`plaintiff “not only initiated a frivolous lawsuit, it persisted in advancing unfounded arguments
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`that unnecessarily extended this litigation and caused . . . needless litigation expenses”). Here
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`and in all of its briefing, Acceleration Bay ignored or incorrectly represented the holdings of the
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`most important cases.7 And even now, it argues that it received “all substantial rights.” D.I. 162
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`at 11. In its opposition brief, Acceleration Bay attempts to shift the blame to Defendants by
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`arguing that they should have moved to stay the cases earlier. But they moved to stay as soon as
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`they learned at the hearing that Boeing would not join the lawsuits.
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`Acceleration Bay relied on the Recorded Assignment. With no evidence, Acceleration
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`Bay contends there was no “ruse” to conceal the lack of standing. Instead of providing evidence,
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`it simply argues that its conduct must be reasonable because it would be “illogical” to create such
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`a ruse knowing that it would be discovered and the cases dismissed for lack of standing. This
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`unsupported “straw man” argument would defeat nearly any fee motion. Moreover, Defendants
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`7 For instance, ignoring the governing case law, it argued that “Under Defendants’ unsupported
`reading of the law, a patent owner could never assert its patent alone in any field, after granting
`an exclusive license in a limited field of use. No court has reached this outlandish result.” D.I.
`109 at 8. This is exactly contrary to the controlling authority as set forth in Defendants’ papers
`and the Court’s Dismissal Order.
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`8
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`Case 1:15-cv-00311-RGA Document 162 Filed 08/22/16 Page 15 of 18 PageID #: 5046
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`need not ascertain its motive, especially when Acceleration Bay has offered no declaration or
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`other evidence of its actual motive for its supposedly “illogical” behavior.8
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`III.
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`Fees Are Warranted Under The Court’s Inherent Power
`Acceleration Bay does not challenge this Court’s inherent authority to award fees and
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`costs when a plaintiff has “brought [] suit without a good faith basis and then continued to
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`litigate the case via a misleading and prejudicial litigation strategy.” Parallel Iron LLC v.
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`NetApp Inc., 70 F. Supp. 3d 585, 591 (D. Del. 2014). Acceleration Bay attempts to argue that
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`the rationale in Parallel Iron does not apply here. See D.I. 162 at 17, n.8. But Parallel Iron is
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`plainly applicable: Acceleration Bay strung Defendants out for more than a year of aggressive
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`litigation even though a plain reading of the Boeing Agreement revealed its lack of standing.
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`And, unlike the plaintiff in Parallel Iron, Acceleration Bay has not attempted to come forth with
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`any evidence that it conducted a sufficient pre-suit investigation regarding this issue.
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`IV.
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`The Fees Are Reasonable And Will Be Itemized At The Appropriate Time
`Defendants are not seeking a windfall. They merely seek to recover the attorneys’ fees
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`and costs they were forced to incur because Acceleration Bay brought and maintained cases
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`when it knew or should have known it lacked standing. Courts award fees under Section 285 in
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`part to “make whole” a party’s injury by an abuse of the judicial process and because they are
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`seeking fees because the cases were objectively unreasonable, the fees may be recovered for the
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`8 There are many reasons Acceleration Bay may have chosen to proceed with these cases even
`though it plainly lacked standing.
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`9
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`whole action. Wedgetail, Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302, 1304 (Fed. Cir.
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`2009).9 In the declarations to be filed after the motion is resolved, Defendants will justify their
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`fees. Acceleration Bay also cites no support for the proposition it can avoid fees for pursuing a
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`frivolous case, because it may later acquire new