Case 2:21-cv-00072-JRG-RSP Document 378 Filed 10/04/22 Page 1 of 5 PageID #: 23745
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`Case No. 2:21-cv-00072-JRG-RSP
`(LEAD CASE)
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`AGIS SOFTWARE DEVELOPMENT
`LLC,
` Plaintiff,
`v.
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`T-MOBILE USA, INC. and T-MOBILE
`US, INC.,
` Defendants.
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`ORDER
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`Before the Court is the Motion for Attorneys’ Fees under 35 U.S.C. § 285 and Entry of Bill
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`of Costs filed by Defendant Lyft, Inc. Dkt. No. 372.
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`I.
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`Background
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`On January 29, 2021, Plaintiff AGIS Software Development LLC brought claims of patent
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`infringement against Lyft. Case No. 2:21-cv-00024-JRG-RSP, Dkt. No. 1. The case against Lyft
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`was later consolidated with the above-captioned case for pre-trial purposes. Case No. 2:21-cv-
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`00024-JRG-RSP, Dkt. No. 11. After consolidation, Lyft moved to dismiss AGIS’s claims for
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`improper venue. Dkt. No. 30. On January 19, 2022, the Court adopted the Report and
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`Recommendation (Dkt. No. 212) and dismissed the claims against Lyft for improper venue. Dkt.
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`No. 334. Lyft now moves for its costs and attorneys’ fees.
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`II.
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`Legal Standard
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`The Federal Rules of Civil Procedure provide that “[u]nless a federal statute, these rules,
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`or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the
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`prevailing party.” Id. at 54(d)(1). Rule 54(d)(1) “creates ‘a strong presumption’ in favor of
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`awarding costs to a prevailing party, and ‘a district court may neither deny nor reduce a prevailing
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`1
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`Case 2:21-cv-00072-JRG-RSP Document 378 Filed 10/04/22 Page 2 of 5 PageID #: 23746
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`party's request for cost[s] without first articulating some good reason for doing so.’” U.S. ex rel.
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`Long v. GSDMIdea City, L.L.C., 807 F.3d 125, 128 (5th Cir. 2015) (quoting Manderson v. Chet
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`Morrison Contractors, Inc., 666 F.3d 373, 384 (5th Cir. 2012)). Federal Circuit law governs the
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`determination of whether a party is a “prevailing party.” VirnetX Inc. v. Apple Inc., 324 F.Supp.3d
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`836, 872 (E.D. Tex. 2017) (citing Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178,
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`1182 (Fed. Cir. 1996)).
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`Pursuant to the Patent Act, in “exceptional cases,” a district court “may award reasonable
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`attorney fees to the prevailing party.” 35 U.S.C. § 285. “An exceptional case is simply one that
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`stands out from others with respect to the substantive strength of a party's litigating position . . . .
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`District courts may determine whether a case is exceptional in the case-by-case exercise of their
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`discretion, considering the totality of the circumstances.” Octane Fitness, LLC v. ICON Health &
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`Fitness, Inc., 572 U.S. 545, 554 (2014).
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`III. Analysis
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`Beginning with the issue of costs, the parties primarily dispute whether Lyft is a prevailing
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`party and thus eligible for its fees under Rule 54(d)(1). As to attorney fees, Lyft argues that this
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`case is exceptional based on the combination of AGIS’s deficient pre-suit investigation and
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`AGIS’s behavior after this Court issued the Report and Recommendation recommending dismissal
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`for improper venue. The Court will address these issues in turn.
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`a. Prevailing Party
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`Lyft asserts that it is the prevailing party because it successfully “rebuffed” AGIS’s
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`infringement suit. Dkt. No. 372 at 6 (citing Dragon Intellectual Prop., LLC v. Dish Network LLC,
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`956 F.3d 1358, 1361 (Fed. Cir. 2020)). In response, AGIS argues that Lyft is not entitled to its
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`costs because the Court did not declare Lyft a prevailing party. Dkt. No. 374 at 6.
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`The Federal Circuit has recently clarified that “a defendant can be deemed a prevailing
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`party even if the case is dismissed on procedural grounds rather than on the merits.” Dragon, 956
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`F.3d at 1361 (quoting B.E. Tech., L.L.C. v. Facebook, Inc., 940 F.3d 675, 678-79 (Fed. Cir. 2019)).
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`However, in Dragon the case was dismissed as moot because the patents had been invalidated by
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`the PTAB. There was no chance that the plaintiff could refile in another federal court. Similarly,
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`in B.E. Tech the Federal Circuit explained “That the merits of the decision cancelling the claims
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`occurred in the PTO rather than the district court does not change the fact that the district court
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`dismissed the claims it had before it, albeit for mootness.” Id. at 679.
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`In Dunster Live, LLC v. LoneStar Logos Management Company, LLC, 908 F.3d 948, 951
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`(5th Cir. 2018), the Court held:
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`“In the words of the standard the Supreme Court has announced for determining prevailing
`party status, a dismissal that allows for refiling does not result in a “material alteration of
`the legal relationship of the parties.” Buckhannon, 532 U.S. at 604, 121 S.Ct. 1835; see
`Alief, 655 F.3d at 418 (citing Milner, 583 F.3d at 1196–97). A dismissal without prejudice
`thus does not make any party a prevailing one.”
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`Other courts have reached the same result. In McKnight v. 12th & Division Properties, LLC, 709
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`F.Supp.2d 653 (M.D. Tenn. 2010), the court held that “a defendant in a case that is involuntarily
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`dismissed without prejudice is not a prevailing party for purposes of Rule 54(d).” Similarly, in
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`Cadkin v. Loose, 569 F.3d 1142 (9th Cir. 2009), the court held that “because the plaintiffs in this
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`lawsuit remained free to refile their copyright claims against the defendants in federal court
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`following their voluntary dismissal of the complaint we hold the defendants are not prevailing
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`parties.”
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`The dismissal in this case was done in lieu of transfer just because the parties had not
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`adequately briefed the issue of a transferee court, since the focus of the motion was improper venue
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`rather than inconvenient venue. The plaintiff is clearly free to refile in a proper venue. There is
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`no prevailing party at this stage.
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`b. Attorneys’ Fees
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`Although the Court is confident that Lyft is not a prevailing party, it will nonetheless
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`address attorneys’ fees. Lyft argues that this case is exceptional under § 285 because AGIS’s pre-
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`suit investigation was deficient and AGIS needlessly caused Lyft to incur additional litigation costs
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`by refusing to stay the case after the issuance of the Report and Recommendation. Dkt. No. 372 at
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`9-10.
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`The Court does not find this case exceptional. Lyft argues that if AGIS had been more
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`thorough in verifying that Lyft no longer utilized an “Express Drive” location in Plano, Texas,
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`AGIS would have known venue was not proper in this District. However, it was only after the
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`parties engaged in venue discovery and the Court held an evidentiary hearing that the Court was
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`able to determine that AGIS did not offer sufficient evidence to establish that the Express Drive
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`location was being utilized by Lyft at the time of filing. If AGIS’s theories of venue were as
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`deficient as Lyft argues, there would have been no need for the Court to engage in such a thorough
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`review of the record to determine venue was improper.
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`Furthermore, the Court heard arguments and evidence on AGIS’s other venue theories in
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`an effort to better understand these theories. Although the Court ultimately found these other
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`theories conflicted with Federal Circuit authority concerning venue, the Court arrived at this
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`conclusion after reviewing AGIS’s arguments and evidence. Again, if AGIS’s theories were so
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`deficient to be exceptional, the Court would have been able to reject AGIS’s other theories
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`outright, not only after a thorough review of the arguments and evidence offered by AGIS.
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`Next, although Lyft emphasizes that AGIS could have verified that the Express Drive
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`location was not in operation at the time suit was filed, the Federal Circuit has acknowledged that
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`there is a circuit split as to the exact timing for determining venue. In re Google LLC, 949 F.3d
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`1338, 1340 n.1 (Fed. Cir. 2020). Although the Court found that venue is determined at the time of
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`filing, AGIS was not clearly wrong under Federal Circuit authority to argue that this Court
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`determine venue using a different timing.
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`Finally, AGIS’s refusal to agree to stay the case does not support a finding of
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`exceptionality. There is no requirement that parties stay a case pending the district court’s
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`decisions after a report and recommendation is issued. Thus, the Court finds this argument
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`unpersuasive and finds that this case is not exceptional.
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`IV. Conclusion
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`Accordingly, the Motion is DENIED.
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`5
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`____________________________________
`ROY S. PAYNE
`UNITED STATES MAGISTRATE JUDGE
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`SIGNED this 3rd day of January, 2012.
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`SIGNED this 3rd day of October, 2022.
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