Judge Andrews Denies Motion for Attorneys’ Fees In Suit Against Pragmatus

Written By: Alyssa M. Pugh

In Pragmatus Telecom LLC v. Newegg Inc., Judge Andrews addressed Newegg’s Motion for Attorneys’ Fees in view of the Supreme Court’s “exceptional case” doctrine set forth in Octane Fitness, LLC v. ICON Health & Fitness, Inc. Judge Andrews ultimately found that this case, one in a wave of infringement suits filed by Pragmatus, did not rise to the level of “exceptional” under the Octane framework.

As explained by the Supreme Court in Octane Fitness, an “exceptional case” is “‘one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.’” Believing Pragmatus’s actions fell within this framework, Newegg filed a Motion for Attorney’s Fees in the District of Delaware, alleging that Pragmatus asserted meritless infringement contentions (had a “substantively” weak position) and litigated in bad faith (in an “unreasonable manner”).

Judge Andrews determined Newegg’s “bad faith” argument to be without sufficient support, refusing to allocate “nefarious motives” to Pragmatus’ initial decision to oppose the transfer of the case to the District of Delaware, or to Pragmatus’ decision to take no discovery in view of impending settlements. Judge Andrews found that these actions, taken together, did not rise to the level of “litigation misconduct.”

Judge Andrews also dismissed Newegg’s arguments that Pragmatus brought the suits to extract nuisance settlements instead of to litigate meritorious claims. He found that Pragmatus’ strategy in suing 70 users of the accused technology, rather than the suppliers making and selling the accused technology, could not be grounds for finding a case “exceptional” when the Patent Act expressly allows for such suits. Additionally, Judge Andrews found that the settlements reached by Pragmatus with the suppliers were hardly “nuisance” sums indicating that Pragmatus litigated in an “unreasonable manner.”

Having found that Newegg failed to meet its burden under the “unreasonable manner” prong of Octane Fitness, Judge Andrews turned his attention to Newegg’s arguments that Pragmatus set forth “exceptionally meritless claims.” Judge Andrews found that Newegg’s non-infringement positions were insufficient to establish the meritless nature of Pragmatus’ suits, going so far as to state “Newegg’s barebones non-infringement arguments do not come close to demonstrating that Pragmatus’s claims were exceptionally meritless.”

Judge Andrews found Newegg’s invalidity, obviousness, and indefiniteness contentions similarly deficient, and criticized the strength of Newegg’s arguments. He stated that “Newegg essentially asks this Court to find three issued patents so clearly obvious as to render this case exceptionally meritless with one page of briefing and without any expert testimony.” Having found that neither Newegg’s argument of “bad faith” or “meritless contentions” were sufficiently supported, Judge Andrews determined that the case was not exceptional, and did not warrant the award of attorneys’ fees to Newegg.