Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 1 of 20
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF IDAHO
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`Case No. 1:09-CV-105-BLW
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`MEMORANDUM DECISION AND
`ORDER
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`INTRODUCTION
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`Plaintiff,
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`v.
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`HOYT A. FLEMING,
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`ESCORT, INC., et al.,
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`Defendants.
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`The Court has before it nine post-trial motions. The motions are fully briefed and
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`at issue. In summary, the Court will (1) uphold the jury verdict; (2) award Fleming
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`attorney fees as the prevailing party; (3) award pre-judgment and post-judgment interest
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`to Fleming; (4) award sanctions against Escort’s counsel for violating a Court Order; and
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`(5) deny Escort’s motion to declare Fleming’s patents invalid due to his inequitable
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`conduct before the Patent and Trademark Office. The Court’s analysis is set forth below.
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`ANALYSIS
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`In this action, plaintiff Fleming claimed that defendant Escort manufactured and
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`sold radar detectors that infringed Fleming’s ‘038 and ‘653 patents. A jury found that
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`Escort had infringed a number of Claims of both patents, and awarded Fleming $750,000.
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`See Special Verdict Form (Dkt. No. 304). Specifically the jury found that the following
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`Escort products were infringing: GX65, Passport 9500, Passport 9500i, and Passport IQ.
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`The jury also found that other Claims of the two patents were invalid because they were
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`Memorandum Decision & Order – page 1
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`Escort Exhibit 2093, pg. 1
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 2 of 20
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`anticipated by the prior art. The Court directed Escort to place the $750,000 sum in
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`escrow, and Escort has now complied with that direction.
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`Motion for Attorney Fees & Motion To Award Prevailing Party Status to
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`Defendants
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`Plaintiff Fleming seeks an award of attorney fees under 35 U.S.C. § 285. That
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`statute states that “[t]he court in exceptional cases may award reasonable attorney fees to
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`the prevailing party.”
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`Escort responds that Fleming was not a prevailing party and hence cannot seek
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`fees under § 285. To be a “prevailing party,” Fleming must obtain “at least some relief
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`on the merits . . . [and] [t]hat relief must materially alter the legal relationship between
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`the parties by modifying [Escort’s] behavior in a way that “directly benefits” [Fleming].
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`Shum v. Intel, 629 F.3d 1360 (Fed.Cir. 2010) (quoting Farrar v. Hobby, 506 U.S. 103,
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`111–13 (1992)).
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`Fleming meets that test here. The jury found that Escort infringed both patents at
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`issue and awarded Fleming $750,000. Escort points out that it prevailed on some issues
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`and convinced the jury to award far less than Fleming demanded. But Farrar held that
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`“[a] judgment for damages in any amount, whether compensatory or nominal, modifies
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`the defendant’s behavior for the plaintiff’s benefit by forcing the defendant to pay an
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`amount of money he otherwise would not pay.” Farrar, 506 U.S. at 113. Here, Escort
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`must pay Fleming $750,000 for the right to make and sell the infringing products. That is
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`relief that materially alters Escort’s behavior in a way that directly benefits Fleming.
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`Hence Fleming is a prevailing party.
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`Memorandum Decision & Order – page 2
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`Escort Exhibit 2093, pg. 2
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`With that issue resolved, the remaining analysis under § 285 involves a two-step
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`process. First, the Court must determine whether Fleming has proved by clear and
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`convincing evidence that the case is “exceptional.” Second, if the Court finds the case to
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`be exceptional, it must then determine whether an award of attorney fees is appropriate.
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`Forest Laboratories v. Abbott Laboratories, 339 F.3d 1323 (Fed.Cir. 2003).
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`Section 285 is an exception to the “American Rule” concerning attorney fees, and
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`is limited to circumstances in which the award of fees is necessary “to prevent a gross
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`injustice.” Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305 (Fed.Cir. 2010).
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`In light of this high standard, recovery of attorney fees under § 285 “clearly was never
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`contemplated to become an ordinary thing in patent suits.” Forest Labs., 339 F.3d at
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`1329. At the same time, “litigation misconduct and unprofessional behavior may suffice,
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`by themselves, to make a case exceptional under § 285.” Monolithic Power Systems, Inc.
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`v. O2 Micro Intern., 726 F.3d 1359, 1366-67 (Fed.Cir. 2013). “[T]he aim of § 285 is to
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`compensate a [party] for attorneys’ fees it should not have been forced to incur.”
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`Kilopass Technology, Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed.Cir. 2013).
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`In the present case, there is clear and convincing evidence that Escort’s counsel
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`pursued a strategy in this litigation that vexatiously increased the fees incurred by
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`Fleming. There were numerous discovery disputes caused by Escort’s meritless refusals
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`to turn over discoverable information. Escort forced further litigation over its
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`unsuccessful attempt to add 286 new patent invalidity contentions over 18 months after
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`the deadline for those to be exchanged. On another occasion, Escort vehemently objected
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`Memorandum Decision & Order – page 3
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`Escort Exhibit 2093, pg. 3
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`to turning over sensitive trade secrets in discovery only to later allow those same
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`“secrets” to be publically disclosed at trial.
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`This is just a small sample of Escort’s vexatious conduct. While it is true that
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`most of Escort’s legal work was within the bounds of zealous advocacy, about 10% of the
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`litigation costs incurred by Fleming were caused directly by this vexatious conduct by
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`Escort’s counsel. To that degree, the Court finds this an exceptional case under § 285.
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`An exceptional case finding based on litigation misconduct “usually does not
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`support a full award of attorney's fees.” Monolithic Power Systems, 726 F.3d at 1369.
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`Instead, the fee award “must bear some relation to the extent of the misconduct, and
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`compensate a party for the extra legal effort to counteract the misconduct.” Id.
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`Fleming estimates that his total fees would be $1.2 million. This would result in a
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`fee award of about $120,000 under the Court’s calculation.
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`Fleming asks for an opportunity to submit a detailed statement of attorney fees and
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`the Court will grant him that opportunity. The Court will grant this motion for an award
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`of fees under 35 U.S.C. § 285. Assuming the final figure is about $1.2 million, the Court
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`will award 10% of that figure as attorney fees to Fleming under § 285.
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`Motion for Pre-judgment & Post-judgment Interest
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`Fleming seeks an award of pre-judgment and post-judgment interest. In
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`calculating pre-judgment interest, Fleming alleges that the infringement started on
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`January 8, 2007, and that pre-judgment interest should run from that date at the rate of
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`12% (under Idaho law) until the date the Judgment was entered (March 27, 2013) in the
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`Memorandum Decision & Order – page 4
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`Escort Exhibit 2093, pg. 4
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 5 of 20
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`sum of $750,000. The pre-judgment interest calculated in this manner comes to
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`$559,479.45.
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`Escort does not dispute the dates or mathematical computations, but argues that
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`Fleming is not entitled to an award because he could have accepted Escort’s settlement
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`offer of $1.3 million and received his money long ago. This argument violates the
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`Court’s Order that anything related to the settlement process “may not be used in any
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`way against any party.” See Order (Dkt. No. 92). Because of that Order, there is nothing
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`in the record detailing the settlement offer and so the Court cannot evaluate the role it
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`played in this litigation. That was the entire point: The Court-ordered confidentiality
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`was intended to promote a full and frank discussion during the settlement conference.
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`Consequently, the Court rejects Escort’s attempt to use its settlement offer to its
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`advantage, and will take up this issue in more detail below in ruling on Fleming’s motion
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`for sanctions.
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`Escort also argues that Fleming delayed filing this suit and cannot benefit from
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`that delay with an award of pre-judgment interest. But Escort raised these same
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`arguments earlier and they were rejected. See Memorandum Decisions (Dkt. Nos. 169 &
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`336). The Court finds no reason to reconsider that ruling.
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`The award of pre-judgment interest is “the rule, not the exception.” Sanofi–
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`Aventis v. Apotex, Inc., 659 F.3d 1171, 1177 (Fed.Cir.2011). An award of pre-judgment
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`interest carries out Congress’s “overriding purpose of affording patent owners complete
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`compensation” since a patentee’s damages also include the “forgone use of the money
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`between the time of infringement and the date of judgment.” Whitserve, LLC v.
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`Memorandum Decision & Order – page 5
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`Escort Exhibit 2093, pg. 5
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 6 of 20
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`Computer Packages, Inc. 694 F.3d 10, 36 (Fed.Cir. 2012). An award of pre-judgment
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`interest – starting from the date of infringement, which is when royalty payments should
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`have started – “merely serves to make the patent owner whole, since his damages consist
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`not only of the value of the royalty payments but also of the forgone use of the money
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`between the time of infringement and the date of judgment.” Sanofi-Aventis v. Apotex
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`Inc., 659 F.3d 1171, 1179 (Fed.Cir. 2011) (quoting Gen. Motors Corp. v. Devex Corp.,
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`461 U.S. 648, 655-56 (1983)).
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`The Court shall therefore award pre-judgment interest calculated on the Judgment
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`sum of $750,000, starting on January 8, 2007, and running at the rate of 12% until the
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`date the Judgment was entered (March 27, 2013). These figures and dates are not
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`disputed by Escort. The pre-judgment interest calculated in this manner comes to
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`$559,479.45.
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`Post-judgment interest is governed by 28 U.S.C. § 1961(a), which states that
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`“[i]nterest shall be allowed on any money judgment in a civil case recovered in a district
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`court.” The purpose of § 1961 is to “ensure[ ] that the plaintiff is further compensated for
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`being deprived of the monetary value of the loss from the date of ascertainment of
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`damages until payment by defendant.” American Tel. & Tel. Co. v. United Computer
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`Systems, Inc., 98 F.3d 1206, 1209 (9th Cir. 1996). Given the compensatory purpose of
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`§ 1961, courts have computed post-judgment interest on the sum of the verdict plus the
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`amount of pre-judgment interest. Fuchs v. Lifetime Doors, Inc., 939 F.2d 1275, 1280 (5th
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`Cir. 1991). The Court will do likewise. The Court finds that Fleming is entitled to post-
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`judgment interest at the rate set by § 1961, from March 27, 2013, the date of the
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`Memorandum Decision & Order – page 6
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`Escort Exhibit 2093, pg. 6
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 7 of 20
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`Judgment, on the sum of the Judgment plus the sum of pre-judgment interest, for a total
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`sum of $1,309,479.45. Fleming has calculated post-judgment interest to be paid each
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`year as follows:
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`Escort does not dispute this calculation, and the Court will order it.
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`Motion for On-Going Royalty or an Injunction
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`In this motion, Fleming seeks to (1) enjoin any further sales of Escort’s infringing
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`devices or (2) receive an ongoing royalty for each device sold. The issues raised in this
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`motion have been fully resolved in a later-filed case involving the same parties, Fleming
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`v. Escort 1:12-CV-66-BLW. In that case, Fleming sought damages from Escort for
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`continuing to sell the radar detectors that infringed the ‘038 and ‘653 patents. Escort
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`responded that Fleming was barred from such damages because the jury verdict in this
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`case represented a paid-up license covering both past and future use of the patented
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`technology. After reviewing the jury instructions and verdict in this case, the Court
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`agreed with Escort and ruled as follows:
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`In conclusion, the jury’s verdict, when read together with the jury
`instructions, demonstrates that the jury’s verdict was intended to
`require Escort to pay $750,000 for a paid-up license covering all past
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`Memorandum Decision & Order – page 7
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`Escort Exhibit 2093, pg. 7
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`and future use of the technology set forth in ‘038 and ‘653 patents.
`Escort has paid that sum into an escrow account as requested by
`Fleming until all appeals are completed. In essence, Escort has a
`paid-up license. Fleming’s attempt to receive further damages in this
`lawsuit for selling devices infringing the ‘038 and ‘653 patents is
`barred by the prohibition against a double recovery.
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`Memorandum Decision (Dkt. No. 61) in Fleming v Escort 1:12-CV-66-BLW at pg. 7.
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`Accordingly, the Court will deny this motion.
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`Fleming’s Motion for Judgment re Abandonment, Suppression or Concealment
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`Fleming seeks judgment on his claim that Escort failed to carry its burden of
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`proving that Orr did not suppress or conceal his invention. The jury found otherwise on
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`the Special Verdict Form, answering that Escort had carried its burden of proof.
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`That verdict, however, was advisory because “[w]hether suppression or
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`concealment has occurred is a question of law”. Apotex U.S.A., Inc. v. Merck & Co., 254
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`F.3d 1031, 1036 (Fed. Cir. 2001). Thus, the Court must now determine if Escort has
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`carried its burden of proof on this issue.
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`At trial, Escort argued that Robert Orr had conceived of his invention in 1988 and
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`reduced it to practice in 1996, well-ahead of the time he filed for a patent in 1999. The
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`issue at trial was whether Escort suppressed or concealed Orr’s invention between 1996
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`and 1999, because the product was not placed on the market during that time and no
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`patent application – with its accompanying public record – was filed until 1999.
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`If Escort suppressed or concealed Orr’s invention between 1996 and 1999, Escort would
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`not get the benefit of the 1996 reduction to practice in fixing the date for the invention.
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`Memorandum Decision & Order – page 8
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`Escort Exhibit 2093, pg. 8
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 9 of 20
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`An issued patent is presumed valid. 35 U.S.C. § 282. A patent may be invalidated
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`if “the invention was made in this country by another inventor who had not abandoned,
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`suppressed, or concealed it.” 35 U.S.C. § 102(g). Escort has the burden of proving by
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`clear and convincing evidence that Orr did not suppress or conceal his invention. Apotex,
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`254 F.3d at 1037.
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`The concealment must be intentional. Concealment “refers to situations in which
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`an inventor designedly, and with the view of applying it indefinitely and exclusively for
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`his own profit, withholds his invention from the public.” Eolas Technologies, Inc. v.
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`Microsoft Corp., 399 F.3d 1325, 1333 (Fed. Cir. 2005). Intentional concealment can be
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`inferred “based upon the prior inventor’s unreasonable delay in making the invention
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`publicly known.” Dow Chem. Co. v. Astro-Valcour, Inc., 267 F.3d 1334, 1342 (Fed. Cir.
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`2001). On the other hand, there is no suppression or concealment where there is “slow
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`(even fitful), but inexorable progress toward disclosure . . . .” Fujikawa v. Wattanasin, 93
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`F.3d 1559, 1568, 1567 (Fed. Cir. 1996). For example, the Federal Circuit found no
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`suppression or concealment where the inventor delayed about 17 months from reducing
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`the invention to practice and filing for a patent because he was “engaged in significant
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`steps towards perfecting the invention,” and because of the “complexity of the subject
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`matter.” Id. at 1568-69. On the other hand, evidence that the delay was simply due to the
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`inventor’s desire to retain the invention as a trade secret would be evidence of
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`concealment. Apotex, 254 F.3d at 1039.
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`There is no doubt that Orr kept his invention from public view – he admitted as
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`much from the stand during his testimony. If his intent was to retain a trade secret, he
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`Memorandum Decision & Order – page 9
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`Escort Exhibit 2093, pg. 9
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`would be guilty of concealment under § 102(g). But if his intent was to diligently work
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`to refine his invention with the goal of eventually filing a patent application, he is not
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`guilty of concealment under § 102(g).
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`Under this standard, the Court finds, after an independent review, that it agrees
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`with the jury verdict, which was only advisory. There is clear and convincing evidence
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`that Orr’s delay in filing his patent application was due to his attempts to refine his
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`invention. The subject matter was complex, and Escort’s predecessor (Orr’s employer at
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`the time) struggled financially, filing for bankruptcy in 1997. All of this supported Orr’s
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`own testimony that he was diligently attempting to perfect his invention to support a
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`patent filing, that was eventually made in 1999.
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`For all of these reasons, the Court will deny this motion.
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`Motion for Judgment on Issue of Patent Validity
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`The jury found that Claims 1, 18, 45, 47, and 48 of the ‘038 patent were invalid in
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`light of prior art, that included Orr’s Prior Invention and patents by Hoffberg, Ross, and
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`Valentine. Fleming seeks to overturn the jury’s verdict under Rule 50(b), arguing that
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`Escort failed to produce sufficient evidence of invalidity regarding these five Claims.
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`Before turning to the arguments of the parties, the Court must first consider the
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`impact of the rejection of these Claims by the Patent and Trademark Office (PTO) in a
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`reexamination proceeding. On March 14, 2013, after the jury’s verdict in this case, the
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`PTO issued an “Office Action” that rejected Claims 1-8, 18, 25, 26, and 45-48 as obvious
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`in light of the prior art represented by the Hoffberg and Ross patents. See Exhibit A (Dkt.
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`No. 365-1).
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`Memorandum Decision & Order – page 10
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`Escort Exhibit 2093, pg. 10
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 11 of 20
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`It is well-established that the cancellation of a patent’s claims in a reexamination
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`proceeding “cannot be used to reopen a final damages judgment ending a suit based on
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`those claim.” Fresenius USA, Inc. v. Baxter Intern., Inc., 721 F.3d 1330, 1346 (Fed.Cir.
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`2013). It is true that the PTO’s reexamination decision was issued about two weeks
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`before this Court entering Judgment. See Judgment (Dkt. No. 337). The PTO issued its
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`reexamination decision on March 14, 2013, and about two weeks later on March 27,
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`2013, the Court filed its Judgment. But the reexamination process is not complete until
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`the PTO issues a Certificate pursuant to 35 U.S.C. § 307 and 37 C.F.R. § 1.570. No such
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`Certificate has yet issued, and the PTO’s reexamination decision is presently on appeal
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`before the Board of Patent Appeals and Interferences. See Application No. 90/012,220.1
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`Because the validity of the Claims has not yet been finally adjudicated, Fresenius dictates
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`that any subsequent issuance of a Certificate invalidating those Claims will have no
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`impact on these proceedings because a Judgment has been entered.
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`The Court will now turn to the arguments of the parties. Fleming argues that the
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`jury’s verdict declaring those Claims invalid should be set aside because Escort failed to
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`present the expert testimony required to explain in detail how each claim element is
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`disclosed in the prior art references. Specifically, with regard to the impact of the prior
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`art reference known as Orr’s Prior Invention, Fleming argues the Court must ignore the
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`testimony of Steven Orr (the purported inventor of Orr’s Prior Invention) and consider
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`only the testimony of Escort’s expert Dr. Grindon.
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`1 The appeal is noted at http://portal.uspto.gov/pair/PublicPair.
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`Memorandum Decision & Order – page 11
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`Escort Exhibit 2093, pg. 11
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 12 of 20
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`Orr did testify that he had no expertise in interpreting patent claims. But Orr was
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`qualified to describe in detail the structural and functional aspects of his invention, and he
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`did so in detail. See Trial Tr. (Dkt. No. 322) at 120-27. His factual description of his
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`invention aligned with the language of the Claims at issue here. Id. Following Orr’s
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`testimony, Dr. Grindon linked Orr’s factual testimony to the Claim language and testified
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`that Orr’s Prior Invention anticipated each Claim element. See Trial Tr. (Dkt. No. 324) at
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`50-58. He also testified that there was motivation for one skilled in the art to combine the
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`other prior art patents – Hoffberg, Ross, and Valentine – with Orr’s Prior Invention to
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`render the invention described in the ‘038 patent obvious. Id. at 58-70.
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`The issue raised by Fleming is whether the Court must ignore the non-expert
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`testimony of Orr in resolving the issue whether the ‘038 patent was anticipated by the
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`prior art. There is no rigid requirement of expert testimony in all cases where
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`obviousness is an issue. Wyers v. Master Lock Co., 616 F.3d 1231, 1242 (Fed.Cir.2010).
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`In so ruling, the Federal Circuit relied on the Supreme Court holding in KSR
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`International Co. v. Teleflex Inc. 550 U.S. 398, 415 (2007), requiring an “expansive and
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`flexible approach” in determining whether a patented invention was obvious at the time it
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`was made. In particular, KSR emphasized the role of common sense: “Rigid
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`preventative rules that deny factfinders recourse to common sense . . . are neither
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`necessary under our case law nor consistent with it.” Id. at 421. Following KSR, the
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`Federal Circuit has held that the legal determination of obviousness, especially where the
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`technology at issue is “easily understandable,” “may include recourse to logic, judgment,
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`and common sense, in lieu of expert testimony.” Wyers, 616 F.3d at 1239, 1242. “Thus,
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`Memorandum Decision & Order – page 12
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`Escort Exhibit 2093, pg. 12
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`in appropriate cases, the ultimate inference as to the existence of a motivation to combine
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`references may boil down to a question of ‘common sense.” Id. at 1240.
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`Escort established its defense based on Orr’s Prior Invention by using both the
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`factual account of Orr to establish the structural and functional aspects of his invention
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`and the testimony of an expert, Dr. Grindon, to tie these facts to an obviousness defense.
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`Given KSR’s holding that the obviousness inquiry is to be “expansive and flexible,” the
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`Court refuses to ignore the testimony of Orr in determining whether Escort established
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`the obviousness defense. KSR, 550 U.S. at 415.
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`Obviousness is a question of law based on underlying findings of fact. In re
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`Enhanced Sec. Research, LLC, 739 F.3d 1347, 1351 (Fed.Cir. 2014). The differences
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`between the claimed invention and the prior art as well as what a reference actually
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`teaches are questions of fact. Id. Orr and Dr. Grindon established the similarities
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`between Orr’s Prior Invention and the Claims in Fleming’s ‘038 patent. On a Rule 50(b)
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`motion, the Court cannot question the credibility of Orr’s account concerning how he
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`invented the radar detector. See Experience Hendrix LLC v Hendrixlicensing.com Ltd.,
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`2014 WL 306600 (9th Cir. Jan. 29 2014). Dr. Grindon testified as to what was taught by
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`the Hoffberg, Ross, and Valentine patents and described the motivation of one skilled in
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`the art to combine those prior art patents with Orr’s Prior Invention to render the
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`invention described in the ‘038 patent obvious. This is sufficient, and for that reason, the
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`Court will deny Fleming’s motion for judgment as a matter of law on the obviousness
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`issue.
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`Fleming’s Motion for Judgment for Lack of Corroboration
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`Memorandum Decision & Order – page 13
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`Escort Exhibit 2093, pg. 13
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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 14 of 20
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`Fleming argues that Escort failed to present sufficient corroborating evidence to
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`establish Orr’s Prior Invention as prior art that anticipated Fleming’s patents. There is no
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`dispute that Escort was required to submit more than Orr’s testimony to establish that
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`Orr’s Prior Invention anticipated Fleming’s patents. An individual who claims to have
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`reduced to practice the patented device prior to the patent must offer more than just his
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`testimony to prove his claim. Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157 (Fed.Cir.
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`2006). This corroboration requirement “provides an additional safeguard against courts
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`being deceived by inventors who may be tempted to mischaracterize the events of the
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`past through their testimony.” Id. at 1170.
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`The sufficiency of the corroboration is evaluated under a “rule of reason”
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`standard. Ohio Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333, 1346 (Fed.Cir.
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`2013). In applying the “rule of reason” test, all pertinent evidence is examined in order to
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`determine whether the testimony is credible. Id. This includes both documentary
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`evidence and testimony from others. Id. In analyzing the sufficiency of corroborative
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`evidence, the Court must keep in mind that “corroboration is fundamentally about
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`credibility . . . .” Medichem, 437 F.3d at 1171.
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`
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`Fleming argues that the corroboration evidence must corroborate every element of
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`every Claim that Escort seeks to invalidate. Yet Fleming cites no case so holding.
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`Fleming’s promotion of a rigid standard does not align with the rule of reason and
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`ignores KSR’s holding that obviousness is to be judged by an “expansive and flexible”
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`standard. KSR, 550 U.S. at 415. Ultimately, the corroboration requirement is intended to
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`determine credibility, and such evidence could establish the credibility of the purported
`
`Memorandum Decision & Order – page 14
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`Escort Exhibit 2093, pg. 14
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`

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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 15 of 20
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`inventor without establishing every element of every Claim. That is the case here. Orr
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`produced many documents that corroborated his testimony, and his allegations were
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`supported by the testimony of John Kuhn and Tom Humphrey. The jury reasonably
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`concluded that the corroboration requirement was satisfied, and the Court will
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`accordingly deny this motion.
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`Motion for Sanctions
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`
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`Fleming seeks sanctions against defense counsel for willfully violating an Order of
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`this Court. The Order at issue was entered by Magistrate Judge Bush prior to holding a
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`settlement conference in this case. That Order states in pertinent part as follows:
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`All oral statements, written documents, or other materials considered
`during the settlement procedure shall be held in confidence and may
`not be used in any way against any party to this litigation.
`
`See Order (Dkt. No. 92) at ¶ 10. Despite this prohibition, Escort’s counsel argues to this
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`Court – in a number of post-trial motion briefs – that during the settlement conference,
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`Fleming rejected Escort’s offer of $1.3 million to settle and instead “held out for a
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`lottery-type verdict . . . .” See Escort’s Brief (Dkt. No. 351) at pp. 2-3, 7. For example,
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`this was the principal argument advanced by Escort to show that it was the prevailing
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`party in this litigation.
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`Escort violated the Order by revealing the settlement offer and Fleming’s
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`response, matters that – according to the Order – “shall be held in confidence and may
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`not be used in any way against any party to this litigation.” In response, Escort argues
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`that it revealed nothing to the jury. But the Order’s ban is not limited to the jury only.
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`The Order states that settlement material “may not be used in any way against any party
`
`Memorandum Decision & Order – page 15
`
`
`Escort Exhibit 2093, pg. 15
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`

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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 16 of 20
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`to this litigation.” This broad wording clearly prohibits revealing settlement offers in the
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`briefing on post-trial motions to this Court.
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`Escort argues that “it merely recited to the Court what Fleming had already
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`disclosed to it.” See Escort Brief (Dkt. No. 366) at p. 3. In support, Escort cites
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`Fleming’s Motion for Entry of Judgment (Dkt. No. 130). If Escort is arguing that
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`Fleming’s Motion somehow opened the door to Escort’s violation of the Court’s Order,
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`Escort is wrong. Fleming’s Motion contains absolutely nothing regarding the settlement
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`conference, and indeed was filed well-before the settlement conference even took place.
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`Escort cites numerous cases holding that settlement offers are relevant to the
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`issues raised by the pending motions. But Escort cites no case holding that a party can
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`willfully violate a court order to bring that settlement material to the Court’s attention.
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`This Court has the inherent power to sanction a party or its lawyers if they act in
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`willful disobedience of a court’s order. Evon v. Law Offices of Sidney Mickell, 688 F.3d
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`1015, 1035 (9th Cir. 2012). A “willful” violation of a court order “does not require proof
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`of mental intent such as bad faith or an improper motive, but rather it is enough that a
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`party acted deliberately.” Id.
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`There is no doubt that Escort’s counsel acted deliberately here. They do not argue
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`otherwise in their briefing – instead they argue that they were justified in violating the
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`Order, an argument the Court has rejected above.
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`An appropriate sanction is an award of attorney fees levied against counsel, rather
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`than the party, and measured by the fees incurred by opposing counsel in his attempts to
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`block the improper use of the confidential information. Id. Here, Fleming had to respond
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`Memorandum Decision & Order – page 16
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`Escort Exhibit 2093, pg. 16
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`

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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 17 of 20
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`to Escort’s use of settlement material in a number of briefs. It would be very difficult to
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`cull out the time Fleming’s counsel spent responding to that issue as opposed to the time
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`he spent responding to all other issues. A more accurate method would be to award the
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`amount of fees Fleming incurred in filing his motion for sanctions, and then increasing
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`that sum by 20% representing the time Fleming’s counsel had to spend responding in his
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`various response briefs. The Court will accordingly grant the motions for sanctions along
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`these lines.
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`Motion to Vacate Judgment
`
`
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`Escort seeks to vacate the Court’s Judgment on the ground that Fleming is guilty
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`of inequitable conduct before the PTO. Specifically, Escort argues that Fleming
`
`represented to the PTO that the Hoffberg and Murakami references only disclose a radar
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`detector with a remote GPS unit (that is external to the radar detector). Escort argues that
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`Fleming’s statements constitute misrepresentations and that they have now been rejected
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`by four different patent examiners at the PTO. Escort asks the Court to find that Fleming
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`has committed inequitable conduct before the PTO, a finding that Escort argues would
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`result in Fleming’s patents being declared invalid.
`
`
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`To prove inequitable conduct, Escort must show by clear and convincing evidence
`
`that Fleming (1) misrepresented or omitted information material to patentability, and (2)
`
`did so with specific intent to mislead or deceive the PTO. Therasense, Inc. v. Becton,
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`Dickinson and Co., 649 F.3d 1276, 1285 (Fed.Cir. 2011). Because Fleming did provide
`
`the Hoffberg and Murakami references to the PTO, this is not a failure-to-disclose case.
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`Memorandum Decision & Order – page 17
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`
`Escort Exhibit 2093, pg. 17
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`

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`Case 1:09-cv-00105-BLW Document 376 Filed 02/21/14 Page 18 of 20
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`Rather, the issue here turns on whether Fleming’s interpretation of those prior art
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`references constitutes inequitable conduct.
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`Patent applicants are required to prosecute patent applications with candor, good
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`faith, and honesty. Honeywell Int’l Inc. v. Universal Avionics Sys. Corp., 488 F.3d 982,
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`999 (Fed.Cir.2007). At the same time, an applicant “is free to advocate [his]
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`interpretation of [his] claims and the teachings of prior art.” Innogenetics, N.V. v. Abbott
`
`Laboratories, 512 F.3d 1363, 1379 (Fed.Cir. 2008). When the advocate has submitted
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`the prior art to the PTO, the patent examiner “is free to accept or reject the