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`Case 9:09-cv-81046-KLR Document 340 *SEALED* Entered on FLSD Docket 08/31/2012
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF FLORIDA
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`Case No. 09-81046-CIV-RYSKAMP/HOPKINS
`
`~UG 3_ 0 2012
`STEVEN M- LAR\MORf
`CLERK U. S. D\ST. C .
`5. D. of FLA. - W.P.B.
`
`INNOVATIVE BIOMETRIC
`TECHNOLOGY, LLC,
`
`Plaintiff,
`
`v.
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`TOSIDBA AMERICA INFORMATION
`SYSTEMS, INC.,
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`Defendant,
`
`and
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`AUTHENTEC, INC.,
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`____________________________/
`
`Intervenor.
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`FILED UNDER SEAL
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`SEALED
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`ORDER GRANTING MOTION FOR FEES AND COSTS. REQUESTING SUBMISSION
`OF MATERIALS FOR IN CAMERA REVIEW AND GRANTING MOTION TO STRIKE
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`TillS CAUSE comes before the Court pursuant to Defendants' consolidated motion for
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`attorneys' fees and costs, filed November 28, 2011 [DE 289]. Plaintiff responded on December
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`6, 2011 [DE 297]. Defendants replied on December 13, 2011 [DE 304]. This cause is also
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`before the Court pursuant to Defendants' motion to strike the declaration of Robert A. Vitale,
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`filed December 13, 2011 [DE 302]. Plaintiff responded on December 28, 2011 [DE 307].
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`Defendants replied on January 1, 2012 [DE 308]. The Court held a hearing on these motions on
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`March 30, 2012. Intervenor AuthenTec, Inc. filed a supplemental brief on April 13, 2012 (DE
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`321], to which Plaintiffresponded on April17, 2012 [DE 325]. AuthenTec replied on April24,
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`2012 [DE 331]. These motions are ripe for adjudication.
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`Exhibit 1236 Page 01 of 22
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`
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`Case 9:09-cv-81046-KLR Document 340 *SEALED* Entered on FLSD Docket 08/31/2012
`Page 2 of 22
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`2
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`I.
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`BACKGROUND
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`IBT is a non-capitalized entity without products, employees or sales. Scott Harris
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`("Harris"), the inventor of the '016 patent, is an experienced patent prosecutor and is a former
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`principal at the Fish & Richardson law firm. While still at Fish & Richardson, Harris prosecuted
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`patents in his own name, including the '0 16 patent. In 2006, Harris began enforcing his patents
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`through litigation with the help of the Niro Haller & Niro law firm. In 2007, Harris filed suits
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`against Dell and Google, both Fish & Richardson clients. Harris was asked to and did resign
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`shortly thereafter. Harris then "sold" his patents to a number of shell companies. At least six
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`Harris-related shell companies, IBT included, are purportedly "owned" and "controlled" by
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`James Beauregard Parker ("Parker"), a Florida attorney. Parker created IBT on July 27, 2007 and
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`is listed as its sole owner and managing partner. Parker admitted that he never made the capital
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`contribution required under IBT's formation document, nor did he maintain a bank account or
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`accounting papers for IBT. Parker admitted that he would follow Harris's directions with regard
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`to corporate affairs involving any Harris patents.
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`On July 30, 2007, pursuant to a Patent Sale Agreement, Harris transferred the '016 patent
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`to IBT. IBT was to enforce the '016 patent, with Harris receiving 70% of the proceeds. The
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`Niro finn decides which companies IDT will accuse of infringement and when and how to
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`commence enforcement efforts and has authority to file complaints and pursue other litigation
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`strategies on behalf of IBT.
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`In early 2009, the Niro firm sent notice letters and claim charts regarding the alleged
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`infringement of the '0 16 patent to several parties. Each party independently reviewed the claims
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`Exhibit 1236 Page 02 of 22
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`_____ _ __ ,. _____ _
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`3
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`and responded with the same substantive argument, informing IBT that its interpretation of the
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`"limited exception mode" would not withstand scrutiny and that prior art invalidated the patent. 1
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`Undeterred, IBT filed an amended complaint on February 12, 2010. Trial was set for
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`December 2011. Claim construction briefing concluded on February 25, 2011. IBT's claim
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`construction materials included the same infringement claim charts that it included with its notice
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`letters.
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`On March 15, 2011, the Court issued an order indicating an intent to appoint a special
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`master. Defendants opposed the proposed appointment and moved for summary judgment on
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`March 25, 20 11. IBT did not respond to the summary judgment motion and pressed the Court to
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`appoint the special master. Notably, IBT still had not taken any depositions by that time. IBT
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`even suggested that its own claim constructions could be wrong and filed a Rule 56( d)
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`declaration in which counsel affirmed under oath that additional discovery was necessary to form
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`a substantive response to the summary judgment motion.
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`After filing its Rule 56( d) declaration, IBT pursued and obtained discovery from each
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`Defendant. Depositions IBT conducted demonstrated no real efforts to pursue any questioning
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`with AuthenTec regarding the functionality or material differences between the Protector Suite
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`software cited in IBT's infringement contentions and the Protector Suite identified as
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`invalidating prior art in Defendants' Motion for Summary Judgment. It is also evident from the
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`record that IBT's counsel did not thoroughly examine documents produced during discovery. On
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`the last day of the discovery period, IBT alleged that AuthenTec withheld broad categories of
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`1 The Veridicom prior art disclosed prior to the filing of this action is a later version of the same Veridicom
`software that Defendants asserted as invalidating prior art in their swnmary judgment motion.
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`Exhibit 1236 Page 03 of 22
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`Case 9:09-cv-81046-KLR Document 340 *SEALED* Entered on FLSD Docket 08/31/2012
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`4
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`documents- even though the documents were produced nearly a month prior, along with an
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`index for reference purposes.
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`After the close of discovery, the Court set a hearing on the summary judgment motion
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`even though IBT had not substantively responded to same. At the eleventh hour, IBT requested
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`permission to respond on the merits to the summary judgment motion, again seeking to delay any
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`type of ruling on the merits. The Court granted permission to respond, stating that "Defendants
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`and Intervenor are understandably upset. .. The Court, too, wishes that Plaintiff had not waited
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`until the eleventh hour to file this motion."
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`IBT responded to the summary judgment motion on July 5, 2011. The opposition did not
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`cite to a single piece of the discovery that counsel had attested under oath in the Rule 56( d)
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`declaration was needed to oppose the summary judgment motion. Instead, IBT attached the
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`declaration of Dr. Koopman, who had a long-standing relationship with the Niro firm and had
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`been retained for this case by March 9, 2011- before the filing of the summary judgment motion.
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`The record evidence contradicted Dr. Koopman's opinions on every dispositive factual
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`issue. For example, Dr. Koopman claimed that the Veridicom PCT application does not directly
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`or inherently disclose "decrypting." But the Veridicom PCT application expressly teaches using
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`"cryptographic storage techniques" to store biometric features and references the co-pending
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`Veridicom patent application for those techniques. Dr. Koopman also ignored that the co-
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`pending Veridicom patent application patent specifically states: "[a]ccording to another aspect of
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`the present invention, ... a cryptographic key can be generated ... from the user's fingerprint. This
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`cryptographic key can be used to decrypt information meant for the user." (Ex. 20, disclosing
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`encryption, including use of cryptographic keys and codes.) Dr. Koopman made a similar claim
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`Exhibit 1236 Page 04 of 22
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`Case 9:09-cv-81046-KLR Document 340 *SEALED* Entered on FLSD Docket 08/31/2012
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`5
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`with regard to the BioLogon materials, but his opinion was again contradicted on the face of the
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`materials. His theory of why decryption was not necessary to compare fingerprints was refuted
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`by a textbook authored by experts in the fi~ld of fingerprint matching who were not paid by the
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`Niro firm or any party in this matter to offer an opinion in this case. Fujitsu told IBT in
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`September 2009 that, when it comes to fingerprints, matching is not as simple as comparing
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`whether "A=B"- and yet the entirety of Dr. Koopman's opinion rests on that notion.
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`At the summary judgment hearing, the Court expressed serious concerns about IBT's
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`position:
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`Now, the defendants have supplied the Court with a number of
`statements and exhibits indicating that for some years this
`information- I should say for some years even prior to this patent
`that fingerprint recognition was an accepted method, others have
`used it, and there's another patent involved in it.
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`And I may be missing something here, but this seems like a fairly
`simple case. I know you're making it very complicated with a lot
`of talk .... Now, there might be some unusual little variance to this
`thing, which I don't know how significant it would be, but it seems
`to me that this technology has been around ....
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`Transcript, 6:5-18 (Ex. 22). During the hearing, the undersigned noted IBT's improper strategy
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`in this case:
`
`What you're really saying is there's nobody financially responsible
`on the plaintiffs side for all of the costs they're incurring to the
`defendant.. .. That's so typical of these kinds of claims. You've got
`nothing to lose. Because if you lose, you're not going to pay
`anything. If you win, you might get paid nuisance value or
`something like that. I would be interested in how big the
`settlements were with the people you settled with. They're
`probably nominal settlements, weren't they? ... And that's what I'm
`concerned with ....
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`Exhibit 1236 Page 05 of 22
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`6
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`Jd., 42: 20-22; 43: 4-10; 43: 17-19 (Ex. 22).
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`The undersigned also stated that once it discovered the truth, it would punish the party
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`that was misrepresenting the facts: "And there's going to be serious consequences to this if it
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`eventually appears who is not telling the truth in this case." !d., 32: 22-24. IBT then urged the
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`Court to delay ruling on the summary judgment motion until a special master construed the
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`claims.
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`Following the hearing, the Court informed the parties that it intended to appoint Stanford
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`Law School professor Mark Lemley as special master and also indicated that IBT would have to
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`pay $30,000. Even though IBT previously urged the Court to appoint a special master, IBT now
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`opposed the appointment of a special master and objected to paying the $30,000. The Court
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`appointed Professor Lemley over IBT's objections. IBT posted the $30,000 bond, then settled
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`with Fujitsu. AuthenTec and Toshiba refused to settle, however. With judgment day
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`approaching and with the possibility that the special master was already using IBT' s bond
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`money, IBT unilaterally issued a covenant not to assert and moved to dismiss the case with
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`prejudice.
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`IBT never notified Defendants of its intent to file the covenant not to assert and to dismiss
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`this case with prejudice. IBT never informed the Court that it had not notified Defendants of its
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`filing. Accordingly, the Court granted the motion to dismiss with prejudice before Defendants
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`responded. Defendants filed a motion to vacate.
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`IBT claimed that it moved to dismiss because the matter was no longer worth pursuing in
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`light of the "de minimus" remaining "damages," but this contention is incredible given that
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`Exhibit 1236 Page 06 of 22
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`Toshiba is a major U.S. computer supplier- significantly larger than ACI, MSI and others who
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`settled. Essentially, there was no possibility of securing a damages award, as judgment day had
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`arrived, and there was no possibility of a final settlement with either AuthenTec or Toshiba.
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`IDT's sudden and unilateral effort to withdraw from this case confirms that it never
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`intended to try this case on the merits. Rather, IDT and its counsel used this Court and the
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`judicial system as a tool in their extortive efforts. In a role reversal, it was Defendants that
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`sought to move this case to judgment, with the plaintiff dragging its feet. Even though IDT only
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`filed claims of indirect infringement, IBT never pursued the third party discovery required to
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`prove its case. IDT's witness list, which does not identify any actual infringing user, speaks
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`volumes.
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`Discovery confirmed that IDT conducted little, if any, pre-filing investigation. It was
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`unable to provide any evidence that it obtained the accused products, tested the accused products,
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`or conducted prior art searches before filing suit. The only reference to any examination of a
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`potentially infringing device was Scott Harris's self-serving statements that he happened to
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`already own a Lenovo laptop and that his children happened to use a Toshiba laptop. When
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`asked about IDT's pre-filing investigation as IBT's 30(b)(6) witness on this topic, Harris was
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`instructed not to answer questions relating to the pre-filing investigation, and IBT produced no
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`documents evidencing any pre-suit investigation.
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`IDT continues to take frivolous positions to avoid liability. When it first secured
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`dismissal in this matter (an order that was subsequently vacated), Defendants served a draft bill
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`of costs and supporting documentation seeking less than $20,000 in compensation. IBT's lead
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`trial counsel, Mr. Ray Niro, refused to engage in a meaningful meet and confer, objecting to the
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`Exhibit 1236 Page 07 of 22
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`8
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`costs but refusing to explain the legal basis for his objection, stating: "File your motion and
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`you'll see why." Although Defendants withdrew their requests for statutory costs when the Court
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`re-opened this case, IBT's opposition arguments were even more outrageous. IBT proclaimed
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`that Defendants were not "prevailing parties," ignoring cited controlling Federal Circuit case law
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`holding on identical facts that the Defendants were the prevailing party. IBT argued that fees
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`could not be awarded because "this Court had used its discretion to dismiss all claims pursuant to
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`41(a)(2) and close this case." IBT, its principals and attorneys continue to evidence their
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`deliberate disregard for this Court and the financial harm they have imposed on Defendants.
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`A.
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`Retention of Jurisdiction
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`II.
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`DISCUSSION
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`This Court retains jurisdiction to award fees and costs even after a voluntary dismissal is
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`requested. A court's jurisdiction to impose fees, costs or sanctions continues even if the court is
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`without subject matter jurisdiction over the underlying action. See Cooter & Gel/ v. Hartmarx
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`Corp., 496 U.S. 384, 395 (1990) ("It is well established that a federal court may consider
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`collateral issues after an action is no longer pending."); Willy v. Coastal Corp., 503 U.S. 131,
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`138-39, 112 S.Ct. 1076, 1081 (1992) (court may impose sanctions even if it is later determined to
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`be without subject matter jurisdiction). IBT's covenant not to assert and requested dismissal
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`does not prevent this court from awarding fees and costs. See Cooter& Gell, 496 U.S. at 396
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`("Like the imposition of costs, attorney's fees, and contempt sanctions, the imposition of a Rule
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`11 sanction is not a judgment on the merits of an action .... Such a determination may be made
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`after the principal suit has been terminated.").
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`Exhibit 1236 Page 08 of 22
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`9
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`IBT relies on Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F .3d 1054, 1059
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`(Fed. Cir. 1995) for the proposition that the filing of a covenant not to sue in a patent
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`infringement case immediately divests the Court of subject matter jurisdiction. If the covenant
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`not to sue complies with Super Sack, the Court is divested of jurisdiction only over the
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`declaratory judgment claims, not the affirmative infringement claims.
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`B.
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`Bases for Fees and Costs Award
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`The Court is empowered to award attorneys' fees and costs under four separate grounds:
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`Rule 41(a)(2), 35 U.S.C. § 285, Rule 56 and 28 U.S.C. § 1927.
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`1.
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`Rule 41(a)(2)
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`A vohmtary dismissal under Rule 41 ( a)(2) may be conditioned upon reimbursement of a
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`defendant's litigation-related expenses. The decision to grant a voluntary dismissal and the
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`conditions accompanying same are entrusted to the Court's discretion. "[A] plaintiff may only
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`voluntarily dismiss an action 'by court order, on terms that the court considers proper"' under
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`Rule 4J(a)(2). Thus, the Court maintains the "power to set terms and conditions" of any such
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`dismissal. See Tesma v. Maddox-Joines, Inc., 254 F.R.D. 699, 702 (S.D. Fla. 2008). Pursuant to
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`Rule 41(aXl)(i), once a party files an answer or a motion for summary judgment, a plaintiff has
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`no right to an unconditional dismissal of his action.
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`The Court elects to set two conditions to IBT' s dismissal of its action. First, IBT' s
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`covenant not to assert will run with the '016 patent so as to bar enforcement against Defendants,
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`including Defendants' customers and supply chain, by any future patent owner. This condition is
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`necessary to protect Defendants from any possibility of another lawsuit concerning the '-16
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`Exhibit 1236 Page 09 of 22
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`
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`Case 9:09-cv-81046-KLR Document 340 *SEALED* Entered on FLSD Docket 08/31/2012
`Page 10 of 22
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`10
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`patent. A covenant not to assert, like a license, may be considered a promise of the patent owner
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`not to sue. See Transcore, LP v. Electronic Transaction Consultants Corp., 563 F.3d 1271, 1276
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`(Fed. Cir. 2009). Thus, a covenant not to assert may be personal and non-transferrable, thereby
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`allowing the next owner able to bring another suit. Ownership of the '016 patent can
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`contractually revert to Harris because offfiT's failure to meet the contractual milestone of paying
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`Harris $1,000,000 in licensing revenue. Second, the Niro firm, Harris, Parker and IDT have
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`demonstrated a disregard for a contractual obligation in that they sued ACI even though they
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`were each a party to a covenant not-to-sue that precluded the suit against ACI.
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`Second, IDT will be required to reimburse Defendants' litigation expenses. A "plaintiff
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`ordinarily will not be permitted to dismiss an action without prejudice under Rule 41 (a)(2) after
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`the defendant has been put to considerable expense in preparing for trial, except on the condition
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`that the plaintiff reimburse the defendant" for litigation expenses. McCants v. Ford Motor Co.,
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`781 F.2d 855, 860 (11th Cir. 1986) (remanding case for ruling on defendant's request that
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`conditions be attached to any dismissal of case) (citations omitted); see also McCants v. Ford
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`Motor Co., 789 F.2d 1539, 1540 (11th Cir. 1986) (affirming court's decision to require plaintiff
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`to reimburse defendant's litigation expenses). Reimbursable costs "may include all litigation-
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`related expenses incurred by the defendant, including reasonable attorneys' fees." See McCants,
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`781 F.2d at 860. Courts in this district routinely condition a plaintiffs request for voluntary
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`dismissal under Rule 4l(a)(2) on reimbursement of a defendant's litigation expenses. Tesma,
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`254 F.R.D. at 701-02 (requiring payment of costs and fees as condition of dismissal where
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`defendant "forced to litigate [ meritless claims] without reason"); So be News, Inc. v. Ocean Drive
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`Fashions, Inc., 199 F.R.D. 377, 378 (S.D. Fla. 2001) (conditioning voluntary dismissal on
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`Exhibit 1236 Page 10 of 22
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`II
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`reimbursement of defendants litigation expenses); In re Great Lakes Dredge & Dock Co., I79
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`F.R.D. 336, 340 (S.D. Fla. 1996) (finding plaintiff"abused the process ofthis Court" and
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`conditioning voluntary dismissal on reimbursement of defendant's litigation expenses). An
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`award of attorneys' fees and litigation costs as a condition of dismissal is warranted here.
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`2.
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`35 u.s.c. § 285
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`This case is exceptional under 35 U.S.C. § 285. Defendants are prevailing parties in light
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`ofiBT's voluntary dismissal of all claims. Highway Equip Co. Inc. v. FECO, Ltd., 469 F.3d
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`I027, 1036 (Fed. Cir. 2006) (Rule 41(a)(2) dismissal after a covenant not to sue has been granted
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`confers prevailing party status on dismissed defendant); Mathews v. Crosby, 480 F.3d I265, I276
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`(II th Cir. 2007) ("The Defendants, having obtained from [Plaintiff] a voluntary dismissal with
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`prejudice, are considered prevailing parties.").
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`Prevailing parties may be awarded attorneys' fees under 35 U.S.C. § 285 when the court
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`determines that: (1) the case is "exceptional" by clear and convincing evidence; and (2) an award
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`of attorneys' fees, in the Court's discretion, is appropriate. See Eon-Net LP v. Flagstar Bancorp,
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`653 F.3d 1314, 1323-24 (Fed. Cir. July 29, 20II). "The decision to award attorney fees is within
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`the discretion of the trial judge, but the conclusion that a case is exceptional is a finding of fact
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`reviewable only for clear error." Takeda Chern. Indus. v. My/an Labs. , 549 F.3d 1381, 1385
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`(Fed. Cir. 2008) (case is exceptional and Takeda awarded $16,800,000 for attorney fees,
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`expenses, and expert fees, plus interest) (citing Beckman Instruments, Inc. v. LKB Produkter AB,
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`892 F.2d I547, I551 (Fed. Cir. 1989) (remanding exceptional case for new determination of
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`fees)).
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`Exhibit 1236 Page 11 of 22
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`12
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`Several factors weigh in favor of an exceptional case finding against a patent plaintiff,
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`including litigation misconduct, submission of frivolous finding, vexatious or unjustified
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`litigation, or maintenance of a meritless claim. "[M]any varieties of misconduct can support a
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`district court's exceptional case finding, including lodging frivolous filings and engaging in
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`vexatious or unjustified litigation." Eon-Net, 653 F.3d at 1324 (citing Takeda, 549 F.3d at 1387-
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`88). "Litigation misconduct and unprofessional behavior are relevant to the award of attorney
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`fees, and may suffice to make a case exceptional." Taltech Ltd. v. Esquel Enters., 604 F.3d 1324,
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`1329 (Fed. Cir. 2010) (citing Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574 (Fed. Cir.
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`1996)). Examples of misconduct include the failure to engage in good faith discovery or
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`litigation efforts, lodging frivolous filings, causing undue delay, or engaging in vexatious and
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`unjustified litigation. Eon-Net, 653 at 1324 (citing Takeda, 549 F.3d at 1387-88)).
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`Absent misconduct, sanctions under this provision "may be imposed against the patentee
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`only if both (1) the patentee brought the litigation in bad faith; and (2) the litigation is objectively
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`baseless." Id. at 1324. Specifically, a case is deemed "exceptional when a patentee maintains its
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`claims after realizing, or on reasonable investigation should know, that its claims are baseless.
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`Moreover, a court may infer bad faith where a patentee is manifestly unreasonable in assessing
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`infringement, while continuing to assert infringement. ... " F &G Research, Inc. v. Google Inc. ,
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`No. 06-60905-CIV, 2007 WL 2774031, at *12 (S.D. Fla. 2007) (citations omitted). Bad faith
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`may be inferred when a patentee's contentions are manifestly unreasonable: "Where, as here, the
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`patentee is manifestly unreasonable in assessing infringement, while continuing to assert
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`infringement in court, and inference is proper of bad faith, whether gounded in or denominated
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`wrongful intent, recklessness, or gross negligence." Eltech Sys. Corp. v. P PG Indus., Inc., 903
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`Exhibit 1236 Page 12 of 22
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`Case 9:09-cv-81046-KLR Document 340 *SEALED* Entered on FLSD Docket 08/31/2012
`Page 13 of 22
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`13
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`F.2d 805, 811 (Fed. Cir. 1990). A plaintiff's pre-filing preparation is also relevant- including an
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`analysis (or lack thereof) of the accused products, preparation of claim charts, and good-faith
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`efforts to construe the claims. See Superior Fireplace Co. v. Majestic Prods. Co., 270 F.3d
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`1358, 1378 (Fed. Cir. 2001) (remanding case to determine whether attorneys' fees were
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`warranted, including an assessment of plaintiffs pre-filing diligence. This Court has defined a
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`"frivolous suit" as one "where the patentee knew, or should have known by reasonable
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`investigation, that the suit was groundless." F&G Research, 2007 WL 2774031, at* 12. A case
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`can be found to be exceptional if it is objectively meritless, or where the plaintiff si objectively
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`reckless in initiating or maintaining the action. See iLOR, LLC v. Google, Inc., 631 F.3d 1372,
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`1377 (Fed. Cir. 2011) ("The objective baselessness standard for enhanced damages and
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`attorneys' fees against a non-prevailing plaintiff under Brooks Furniture is identical to the
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`objective recklessness standard for enhanced damages and attorneys' fees against an accused
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`infringer for§ 284 willful infringement actions under In Re Seagate Technology, LLC, 497 F.3d
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`1360 (Fed. Cir. 2007) (en bane).").
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`Here, Defendants have proven by clear and convincing evidence that IBT, its principals,
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`and counsel - all lawyers - have abused the legal process by filing, pursuing, and then dismissing
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`this frivolous case. First, IBT and its counsel knew or should have known that this case was
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`frivolous, or worse yet, in view of its strategy, proceeded with reckless disregard for the truth.
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`IBT produced no documents evidencing any infringement investigation. See Micromesh Tech.
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`Corp. v. American Recreation Products, Inc., No. C-06-6030 (MHP), 2007 WL 2501783, at *4
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`(N.D. Cal. Aug. 30, 2007); see also F&G Research, 2007 WL 2774031, at* 13 (Rule II and 35
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`U.S.C. § 285 sanctions warranted in part because "counsel made no reasonable inquiry into the
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`Exhibit 1236 Page 13 of 22
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`veracity of the allegations."). This failure is particularly egregious since the ProtectorSuite
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`software was freely available for download via the Internet, and fingerprint reader "dongles"
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`were widely available for around $50 before IBT filed suit. And in spite of Federal Circuit
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`authority requiring that a plaintiff obtain and test accused devices before filing suit, IBT did not
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`do so. See Judin v. United States, 110 F.3d 780, 784 (Fed. Cir. 1997).
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`IBT and its counsel also knew or should have known that its contrived construction of
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`"limited exception mode" would not withstand scrutiny. Each party that IBT approached
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`regarding infringement independently informed IBT that its claim construction argument was
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`frivolous, but IBT proceeded undeterred.
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`IBT also failed to perform a reasonable inquiry to ensure that its contentions avoided the
`prior art. See F&G Research, 2007 WL 2774031, at * 13-14. Before the suit was filed, various
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`defendants provided evidence that IBT's claim construction positions rendered the asserted claim
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`invalid. Indeed, there were a multitude of invalidating biometric prior art products on the market
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`that functioned identically to the accused products long before the patent was filed - and IBT and
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`its counsel knew about them. The accused ProtectorSuite software distributed by AuthenTec and
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`used by Toshiba was a direct descendant of the prior art Veridicom software identified to IBT
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`and its counsel by Acer before the suit was filed. For these reasons alone, the case is exceptional.
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`IBT and its counsel's strategy and litigation tactics comprise misconduct that forms an
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`independent reason to find this case exceptional. IBT's conduct demonstrates that it never had
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`any intention to try this case, but instead that its tactics were motivated solely to keep the case
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`going and drive up Defendants' costs to extract settlements from those who knew the case lacked
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`merit, but settled to avoid litigation costs. Throughout the case, IBT pursued discovery, but IBT
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`Exhibit 1236 Page 14 of 22
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`made no effort to obtain the evidence it would need to try this case. IBT did not even review the
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`materials it received. Remarkably, two years into the case, ffiT filed with the Court the exact
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`same infringement charts that it had sent with its notice letter. In its witness list filed with the
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`Court, IBT admitted that it had not yet identified users of the alleged method- evidence
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`necessary to pursue the case. IBT also avoided questioning deponents about the substance of the
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`summary judgment motion, even objecting when the prior art was raised on redirect.
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`To keep this case going, ffiT went as far as to argue that its own claim constructions
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`could be wrong, but still failed to revise its positions. See 4/8/2011 IBT's Rule 56( d) Response
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`at 1 [DE 183]. IBT' s reliance on its original claim constructions after it itself said they may be
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`wrong reeks of objective baselessness: "simply placing words on a document does not constitute
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`good-faith litigation practice unless the plaintiff's assertion is supported by a minimally
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`competent investigation and analysis." Micromesh, 2007 WL 2501783, at *6.
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`IBT's strategy with regard to Defendants' summary judgment motion is more of the same.
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`Defendants' motion established that IBT's theory of infringement was baseless and without
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`merit. Rather than address the motion on the merits, ffiT delayed this case via an objectively
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`baseless Rule 56( d) motion. Given the opportunity to file an untimely substantive response, IBT
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`did not cite a single production document- even though its counsel declared under penalty of
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`perjury that it could not respond without additional discovery. At the July 2011 summary
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`judgment hearing, ffiT wasted the Court's and the Defendants' time, wholly unwilling or unable
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`to explain the merits of its case. See Transcript, 43: 17-19. IBT evaded this Court's direct
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`questioning, misrepresented the state of the prior art, and avoided answering questions
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`concerning IBT's capitalization, ownership, and licensing activities. Ultimately, IBT retreated to
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`Exhibit 1236 Page 15 of 22
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`requesting additional delay by again urging the Court to appoint a special master.
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`When the Court finally indicated it would appoint a special master, IBT changed its mind
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`and objected to the appointment. When the special master was appointed over IBT's objection,
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`IBT moved for a voluntary dismissal with prejudice to avoid a determination on the merits. At
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`each tum, IBT's behavior evidences vexatious tactics designed to drive up litigation costs and
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`avoid a timely disposition on the merits solely to extort settlements. IBT and its counsel's
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`actions have led this Court to determine that this is an exceptional case under Section 285.
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`Repayment of Defendants' attorneys' fees and litigation costs is necessary to avoid a
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`gross injustice. Since the Court has determined that this case is exceptional, the decision to
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`award attorney fees "is discretionary and permits the judge to weigh intangible as well as tangible
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`factors: the degree of culpability of the infringer, the closeness of the question, litigation behavior
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`and any other factors whereby fee shifting may serve as an instrument of justice." Superior
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`Fireplace Co., 270 F.3d at 1378 (quotation omitted). An intervenor is entitled to its attorneys'
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`fees and costs just as any other prevailing party. See Int 'I Rectifier Corp. v. Samsung Elecs. Co.,
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`424 F.3d 1235, 1241 (Fed. Cir. 2005) ("the mere fact that a party voluntarily intervened does not
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`preclude an award of attorney fees").
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`Complete repayment by IBT of all attorneys' fees and litigation costs incurred by
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`Defendants is warranted. IBT's litigation tactics leveraged IBT's ability to force practicing
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`entities to incur substantial litigation costs to fight IBT on the merits, rather than bowing out for a
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`nuisance-value settlement. IBT candidly admitted to this Court that a patent case routinely
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`involves the expenditure of millions of dollars in attorneys'