by Julia Romero Peter, Esq.,
TERIS Vice President of Business Development
Back in 2008, plaintiffs alleged in a press release that defendants had infringed upon patents that had been developed by Gabriel’s previous incarnation, Locate Networks Inc. In February 2013, U. S. District Judge Anthony J. Battaglia for the Southern District of California ordered Gabriel to pay attorney fees for filing baseless claims against defendants. The $12M award included $2.8M in review and e-Discovery fees, plus an additional $64,316.50 in sanctions.
In the original lawsuit, Gabriel Technologies requested over $1B in damages from defendants, spread out among 11 causes of action, ranging from misappropriation of trade secrets to outright patent infringement. Over time, the Court either granted summary judgment in favor of the defendants, or dismissed claims entirely. With all 11 courses of action resolved, the defendants then filed a request for attorney’s fees.
Specifically, defendants sought a total award of $13,465,331.01, which included $10,244,053 for attorneys fees attributable to lead counsel; $391,928.91 for attorneys’ fees attributable to document review vendor costs; and $2,829,349.10 for fees associated with a document review algorithm generated by a separate outside vendor.
The defendants’ request for $13M in fees, although that was ultimately reduced to $12M, on the basis of the latter number being demed more reasonable in the court’s estimation. The additional sanctions were issued against local counsel for neglecting to “undertake a reasonable investigation into the merits of the case.”
One of the primary deciding factors that Judge Battaglia considered when awarding fees was the abundance of internal plaintiff emails that repeatedly referred to their case in chief’s overall weakness. The plaintiffs’ continued inability to identify the actual alleged inventors of the patents in question supported the judge’s finding that the claims were “objectively baseless” and filed in “subjective bad faith.”
Focus on Significance
The significance of this case is important in several aspects. First, filing patent claims without a clear basis for infringement can carry very real (and very severe) financial consequences. If the ruling is upheld on appeal, this decision will serve as persuasive precedent against frivolous patent claims in the Ninth Circuit.
Of perhaps more significance are the document review and e-Discovery costs in this case. During the cost evaluation, the Court determined that the requested review fees were reasonable, since defendants used computer-assisted review services to reduce overall e-Discovery costs prior to submitting documents for manual review. While the $2.8M review and e-discovery may be high, the number is even more sobering when taking into account that the predictive review or assisted review technology typically reduces costs by 90 percent.