Case 1:16-cv-00455-RGA Document 533 Filed 07/15/22 Page 1 of 7 PageID #: 37587
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`V.
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`TAKE-TWO INTERACTIVE SOFTWARE,
`INC., ROCKSTAR GAMES, INC. and 2K
`SPORTS, INC.,
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`Defendants.
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`C.A. No. 16-455-RGA
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`MEMORANDUM ORDER
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`Before me is Defendants' motion for attorneys' fees and costs, estimated to be about nine
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`million dollars.
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`(D.I. 520). I have considered the parties' briefing.
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`(D.1. 521 , 524, 528). For
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`the reasons set forth below, Defendants' motion (D.I. 520) is DENIED.
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`I.
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`BACKGROUND
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`In its complaint, Plaintiff alleged that online features of three accused video games ( Grand
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`Theft Auto Online ("GTAO"), NBA 2K15, and NBA 2K16) infringe six patents: U.S. Patent Nos.
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`6,701 ,344 ('344 patent), 6,714,966 ('966 patent), 6,732,1 47 ('147 patent), 6,829,634 ('634 patent),
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`6,910,069 ('069 patent), and 6,920,497 (' 497 patent). (D.1. 1). Defendants disagreed and moved
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`for summary judgment of non-infringement on all asserted claims. (D.I. 462). After considering
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`the parties' arguments, I granted Defendants' motion and ordered that judgment be entered in favor
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`of Defendants. (D.I. 492, 495). Plaintiff appealed my judgment on multiple grounds. The
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`Federal Circuit affirmed-in-part and dismissed-in-part on appeal. See Acceleration Bay LLC v.
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`2K Sports, Inc. , 15 F.4th 1069, 1079 (Fed. Cir. 2021).
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`Case 1:16-cv-00455-RGA Document 533 Filed 07/15/22 Page 2 of 7 PageID #: 37588
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`II.
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`LEGAL ST AND ARD
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`The Patent Act provides, "The court in exceptional cases may award reasonable attorney
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`fees to the prevailing party."
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`35 U.S.C. § 285. Under the statute there are two basic
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`requirements: (1) that the case is "exceptional" and (2) that the party seeking fees is a "prevailing
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`party." The Supreme Court defined an "exceptional" case as "simply one that stands out from
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`others with respect to the substantive strength of a party' s litigating position ( considering both the
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`governing law and the facts of the case) or the unreasonable manner in which the case was
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`litigated." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 545 (2014).
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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." Id. The Supreme Court has provided
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`a non-exclusive list of factors for district courts to consider in deciding whether a case is
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`exceptional, including frivolousness, deterrence, motivation, and objective unreasonableness in
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`the factual and legal components of the suit.
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`Id. at 554 n.6. A movant must establish its
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`entitlement to attorneys' fees under§ 285 by a preponderance of the evidence.
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`Id. at 557-58.
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`28 U.S.C. § 1927 provides, "Any attorney or other person admitted to conduct cases in any
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`court of the United States or any Territory thereof who so multiplies the proceedings in any case
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`unreasonably and vexatiously may be required by the court to satisfy personally the excess costs,
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`expenses, and attorneys' fees reasonably incurred because of such conduct." The Third Circuit
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`limits § 1927 fee awards to instances where an attorney has "(1) multiplied proceedings; (2)
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`unreasonably and vexatiously; (3) thereby increasing the cost of the proceedings; ( 4) with bad faith
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`or with intentional misconduct." LaSalle Nat '! Bankv. First Conn. Holding Grp. , LLC. , 287 F.3d
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`279, 288 (3d Cir. 2002). "[S]anctions may not be imposed under § 1927 absent a finding that
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`counsel's conduct resulted from bad faith, rather than misunderstanding, bad judgment, or well-
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`Case 1:16-cv-00455-RGA Document 533 Filed 07/15/22 Page 3 of 7 PageID #: 37589
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`intentioned zeal."
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`Id. at 289. Further, "§ 1927 explicitly covers only the multiplication of
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`proceedings that prolong the litigation of a case and likely not the initial pleading, as the
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`proceedings in a case cannot be multiplied until there is a case." In re Schaefer Salt Recovery,
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`Inc., 542 F.3d 90, 101 (3d Cir. 2008) (emphasis in original).
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`III. DISCUSSION
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`Defendants argue that this was an exceptional case warranting an award of attorneys ' fees
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`under 35 U.S.C. § 285 for two reasons: (1) Plaintiff's "substantive litigation positions were
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`exceptionally weak" and (2) Plaintiff's "litigation conduct was exceptional[ly ]" unreasonable.
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`(D.I. 521 at i).
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`First, Defendants provide numerous examples of Plaintiff relying on "exceptionally weak"
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`arguments during this litigation. (Id. at 5-13). Defendants' prime example is their assertion that
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`Plaintiff relied on a modified screenshot from GTAO as falsified evidence supporting its
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`infringement theory for the "m-regular" limitation.
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`(Id. at 5-8). Plaintiff's experts did not
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`recognize that certain modifications were made to this screenshot during their depositions.
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`(See
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`id. at 7-8 (citing D.I. 464, Ex. E-5 at 56:23-57:8, 65:7-14, Ex. E-6 at 36:24-37:1 , 132:24-133 :9)).
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`All things considered, I am not convinced that Plaintiff or its experts intentionally relied on a
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`falsified screenshot, particularly given that Defendants' experts noted in their reports that these
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`images were otherwise "modified." (D.I. 464, Ex. A-1 at 1173, Ex. A-2 at 1129; see also D.I. 524
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`at 2-7, 5 (Plaintiff arguing that, "Even Take Two' s counsel acknowledged the understanding that
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`the [modified GTAO] image was only intended to illustrate concepts and was not offered as
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`evidence of infringement during the experts' depositions.")).
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`Besides the accusation of relying upon falsified evidence, Defendants argue that in many
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`additional instances Plaintiff's arguments were exceptionally weak. (D.I. 521 at 5-13). These
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`Case 1:16-cv-00455-RGA Document 533 Filed 07/15/22 Page 4 of 7 PageID #: 37590
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`instances include: Plaintiff's infringement theories for the "m-regular" limitation, none of which
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`made it past summary judgment (id. at 5-9) (arguing that, in addition to the use of falsified
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`evidence, Plaintiff's infringement theories for the "m-regular" limitation were "baseless");
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`Plaintiff's arguments regarding the eligibility of asserted computer readable medium claims under
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`35 U.S.C. § 101, where, after an unfavorable claim construction ruling, Plaintiff was unwilling to
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`stipulate to ineligibility and instead pressed forward only to lose at summary judgment (id. at 9-
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`1 O); Plaintiffs infringement accusations against games operating on the Sony Play Station platform
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`that were dismissed for a lack of standing (id. at 10-11 ; see Acceleration Bay LLC v. Activision
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`Blizzard, Inc. , No. 1 :16-cv-00453-RGA, 2017 WL 3668597 (D. Del. Aug. 24, 2017)); and
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`Plaintiff's damages theories which were excluded in a related case (D.I. 521 at 11-13). I agree
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`that Plaintiff lost on several issues with objectively weak arguments, which ultimately led to my
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`granting summary judgment. Yet, I do not find that Plaintiff's arguments stand out as
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`exceptionally weak; instead, it is often the case in complex litigation that zealous advocates will
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`lose on multiple issues. (See D.I. 524 at 7-14 (Plaintiff explaining why their arguments were not
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`unreasonable)).
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`Second, Defendants argue that the impropriety of Plaintiff's litigation conduct-including
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`the lack of candor, forcing relitigation of lost issues, and the pattern of inappropriate conduct in
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`previous cases-further proves that this case was exceptional.
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`(See D.I. 521 at 13-15).
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`Regarding the lack of candor, I stated in an earlier Order in a related case that I was "concerned
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`that Plaintiff's national counsel cannot be relied upon for 'candor to the tribunal'" based on
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`incidents that occurred during discovery and claim construction. Acceleration Bay LLC v.
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`Activision Blizzard, Inc., No. l:16-cv-00453-RGA, D.I. 422 (D. Del. Jan. 17, 2018) (denying
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`Defendants' request to strike untimely expert reports).
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`I do not agree, however, that this proves
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`that this case was exceptional. As to forcing relitigation of lost issues, Defendants list several
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`instances in which they feel this was the case.
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`(See D.I. 521 at 13-14). I again disagree that these
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`instances stand out from other cases I have seen.
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`Regarding Plaintiff's pattern of misconduct, Defendants reference multiple instances
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`where courts have reprimanded Plaintiff's attorneys for inappropriate conduct.
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`(Id at 14-15
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`(citing Freshub, Inc. v. Amazon.com Inc. , No. 6:21-cv-00511-ADA, 2021 WL 5987106, at *6
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`(W.D. Tex. Dec. 17, 2021) (pending appeal in Fed. Cir. Case No. 22-1425) ("[A] bitter losing
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`party's difficulty in explaining its loss is never a proper basis for counsel to invoke baseless
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`allegations ofracism and anti-Semitism to request a new trial. Such vitriolic and unsubstantiated
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`allegations are not only shocking, but also offensive to this Court. . .. By making such baseless
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`allegations, Freshub's counsel has breached their duty to the Court."); Finjan, Inc. v. Juniper
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`Networks, Inc., No. 3:17-cv-05659-WHA, 2021 WL 3140716, at *4 (N.D. Cal. July 26, 2021)
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`(pending appeal in Fed. Cir. Case No. 21-2253) ("In no way does this order vindicate Attorneys
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`James R. Hannah, Lisa Kobialka, and Paul J. Andre. Their conduct was improper and frustrated
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`the fairness of the proceedings. Judges in the future should take this into account when dealing
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`with them in future cases."); Midwest Athletics & Sports All. LLC v. Ricoh USA, Inc. , No. 2:19-
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`cv-00514-JDW, 2021 WL 1907475, at *6 (E.D. Pa. May 12, 2021) (pending appeal in Fed. Cir.
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`Case No. 21-2340) ("No court likes to say that a party acted in bad faith, but the Court questions
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`how MASA and its attorneys could have thought that such conduct fell within expected standards
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`of practice.") (cleaned up))). While the need for deterrence must be considered in deciding
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`whether a case is exceptional, I do not believe these attorneys' misconduct in unrelated cases
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`(which seems worse than what I saw) described in opinions issued well after the final judgment in
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`this case should too heavily cloud my consideration of whether the present case was exceptional.
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`Case 1:16-cv-00455-RGA Document 533 Filed 07/15/22 Page 6 of 7 PageID #: 37592
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`What I said previously about the conduct in this case (D.I. 422) stands, 1 and it is Defendants'
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`strongest single argument for an exceptional case determination, but I nevertheless do not think it
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`had a significant impact on the proceedings in this case. Thus, the conduct, while regrettable,
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`does not in my opinion justify a finding that the case is exceptional.
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`In sum, I agree with Defendants that there are multiple instances where Plaintiffs counsel
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`could and in some instances should have litigated this case differently, and I understand
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`Defendants' frustration. Yet, I do not believe the totality of these instances proves that this case
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`was exceptional.
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`Having found that Defendants have not shown that this case was exceptional, I need not
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`determine whether attorneys' fees should be awarded against Plaintiffs principals, alter egos, and
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`attorneys.
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`(See D.I. 521 at 16-18; see also Dragon Intel!. Prop., LLC v. DISH Network L.L. C.,
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`No. CV 13-2066-RGA, 2021 WL 5177680, at *5 (D. Del. Nov. 8, 2021) ("The Federal Circuit
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`held in two non-precedential opinions that§ 285 does not permit a fee award against counsel.")).
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`I note Defendants' request that I reconsider my decision in Dragon Intellectual Property
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`(somewhat ironically given their complaint that Plaintiff relitigates issues), and extols the virtue
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`of Iris Connex LLC v. Dell, Inc. , 235 F.Supp. 3d 826 (E.D. Tex. 2017). Whatever the virtue of
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`Iris Connex might be in its factual context, one thing that stands out is that the Court' s
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`consideration of attorneys' fees did not result in the award of attorneys' fees against counsel for
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`his litigation of the case ( although he was sanctioned pursuant to Rule 11 ).
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`Further, Defendants argue, "Alternatively, the Court should award Defendants their fees
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`and costs under its inherent power." (D.I. 521 at 19-20, 19 (citing 28 U.S.C. § 1927)). For the
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`1 I note that I had a trial with the same counsel last fall and no similar issues arose.
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`Case 1:16-cv-00455-RGA Document 533 Filed 07/15/22 Page 7 of 7 PageID #: 37593
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`same reasons described above regarding 35 U.S.C. § 285, I do not find that Plaintiff's counsel has
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`"(1) multiplied proceedings; (2) unreasonably and vexatiously; (3) thereby increasing the cost of
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`the proceedings; (4) with bad faith or with intentional misconduct." LaSalle, 287 F.3d at 288.
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`I
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`also note that it would be a rare case where there could be a basis for an inherent power sanction
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`when there was an insufficient basis for a§ 285 finding.
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`IV. CONCLUSION
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`Defendants' motion for attorneys' fees and costs is DENIED.
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`IT IS SO ORDERED this 15th day of July, 2022.
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