United States District Court, N.D. California
October 13, 2005.
MONSTER CABLE PRODUCTS, INC., Plaintiff,
THE QUEST GROUP d/b/a/ AUDIOQUEST, Defendants.
The opinion of the court was delivered by: MARILYN PATEL, District Judge
MEMORANDUM AND ORDER
Plaintiff Monster Cable Products, Inc. filed this patent
infringement action against defendant The Quest Group, d/b/a/
AudioQuest ("AudioQuest"). The complaint alleges infringement of
United States Patent No. 5,307,416 ("the '416 Patent"), which
relates to audio cable technology. The court entered final
judgment for defendant on August 8, 2005. Now before the court is
defendant's motion for attorneys' fees in the amount of
$592,002.14. Having fully considered the parties' arguments and
submissions and for the reasons set forth below, the court enters
the following memorandum and order.
Both plaintiff Monster Cable and defendant AudioQuest are
manufacturers of connecting cables for audio equipment. Monster
Cable is the assignee of the '416 Patent, which relates generally
to coaxial cables that make use of a biased conductive shield to
reduce electromagnetic interference with the transmitted signal. In January, 2004,
Monster Cable filed the instant lawsuit, alleging that
AudioQuest's audio cables infringe claims of the '416 Patent. The
court resolved the lawsuit in AudioQuest's favor by granting
summary judgment of noninfringement on August 8, 2005. Having
prevailed on the merits, AudioQuest now seeks to recover in full
the attorneys' fees incurred in defending this lawsuit. In
support of its motion, AudioQuest alleges a host of abuses
beginning with the investigation leading up to the lawsuit,
continuing through discovery and claim construction, and
culminating in Monster Cable's cross-motion for summary judgment
The parties offer different explanations for the motivation
behind this lawsuit. According to AudioQuest, Monster Cable
hastily filed the lawsuit in response to AudioQuest's growing
success in the marketplace. Specifically, approximately at the
same time the lawsuit was filed, a national vendor of home
theater systems decided to cease selling Monster Cable's products
and entered into an exclusive arrangement with AudioQuest. For
its part, Monster Cable claims that it was alerted in the fall of
2003 that AudioQuest's products were similar to the invention
claimed in the '416 Patent, that it investigated whether
AudioQuest's products likely infringed the '416 Patent, and that
as a result of the investigation it filed this lawsuit.
The extent of Monster Cable's prefiling investigation is the
principal issue underlying this motion. Prior to filing the
complaint in this lawsuit, Monster Cable performed a physical
investigation of one of AudioQuest's products a one-meter
"Jaguar" cable and prepared a claim chart comparing the Jaguar
cable to claim 2 of the '416 Patent. Monster Cable did not
perform physical evaluations of AudioQuest's other products.
Instead, relying on publicly available specifications for
AudioQuest's other biased cable products, Monster Cable accused
all such products in its complaint.
Following fact and expert discovery, the court held a Markman
hearing on March 15, 2005, in which it construed six terms used
in claim 2 of the '416 Patent. See March 18, 2005 Claim
Construction Order. Relevant to the current motion, the court
construed the term "coaxial cable" as a "cable with two conductors that share an axis." This
construction was unfavorable to Monster Cable, as none of
AudioQuest's products has a simple coaxial structure.
On May 4, 2005, Monster Cable filed a motion seeking leave to
request reconsideration of the Markman ruling, citing particular
language in an intervening Federal Circuit opinion, Gillette Co.
v. Energizer Holdings, Inc., 405 F.3d 1367 (Fed. Cir. 2005). The
language in Gillette, read in isolation, might have supported a
broader claim construction. The court denied Monster Cable's
motion because when read in context the language did not suggest
any change in the law. See Order of May 18, 2005.
After the court issued its Markman ruling, Monster Cable served
an interrogatory requesting that AudioQuest provide updated
noninfringement contentions. AudioQuest ultimately agreed to
provide updated contentions no later than May 12, 2005. On April
25, 2005, while Monster Cable's request was still pending, the
parties attended a case management conference at which AudioQuest
expressed an intent to file a motion for summary judgment of
noninfringement. Allegedly in response to AudioQuest's stated
intention, on April 26, 2005 Monster Cable served AudioQuest with
785 requests for admission seeking infringement-related
information about the accused products.
The parties disagree as to the motivation behind and the
propriety of the requests for admission. Monster Cable asserts
that they were served to allow Monster Cable to prepare for
AudioQuest's motion for summary judgment. As Monster Cable had
not received AudioQuest's interrogatory response, Monster Cable
argues that the requests for admission were necessary insurance.
AudioQuest, on the other hand, characterizes the requests for
admission as wholly duplicative of the interrogatory and
On May 12, 2005 AudioQuest served its response to Monster
Cable's infringement interrogatory, which consisted of a cursory
citation to documents produced during fact discovery and to
AudioQuest's forthcoming motion for summary judgment. See Masur
Dec., Exh. R. Despite the lack of useful information in the
response, Monster Cable subsequently withdrew its requests for
admission relating to infringement. On May 16, 2005, AudioQuest filed a motion for summary judgment
of noninfringement of the '416 Patent with respect to all of the
AudioQuest products at issue, or in the alternative, for summary
adjudication of noninfringement of the asserted claims of the
'416 Patent with respect to certain products. Monster Cable
opposed this motion and cross-moved for summary judgment of
infringement with respect to all claim limitations.
AudioQuest argued for noninfringement on the basis of five
claim elements, three of which appear in the preamble of claim 2
of the '416 Patent. Monster Cable's cross motion alleged that the
accused products met all limitations in the body of claim 2 and
that the language in the preamble did not impose additional
limitations. In the alternative, Monster Cable argued that each
disputed limit in the preamble was met literally as well as under
the doctrine of equivalents. At oral argument, Monster Cable
effectively conceded its literal infringement argument but
maintained its argument under the doctrine of equivalents.
In the midst of the summary judgment briefing process, Monster
Cable filed a motion to preclude untimely produced evidence and
to strike references thereto, alleging that certain documents
relied upon by AudioQuest had not previously been produced in
discovery. Monster Cable was in error, as all but one of the
documents had already been produced. The court denied the motion
to preclude and noted that Monster Cable's failure to identify
the earlier produced documents bordered on sanctionable
misconduct. The court, however, chose not to award sanctions sua
The court granted AudioQuest's motion for summary judgment and
denied Monster Cable's cross motion on August 8, 2005. In denying
Monster Cable's motion, the court held that the language of the
preamble was inherently intertwined with the body of the claim,
and therefore that the elements of the preamble imposed
additional limitations on the claim. The court also held that
Monster Cable's literal infringement arguments had no merit, and
that the accused AudioQuest products were not equivalent to the
claimed invention because they achieved electromagnetic isolation
in a substantially different way.
AudioQuest now seeks an award of its attorneys' fees for the
entire lawsuit based on Monster Cable's allegedly inadequate prefiling investigation. In the
alternative, AudioQuest seeks attorneys' fees incurred in
connection with Monster Cable's motion to seek reconsideration of
the court's Markman ruling, Monster Cable's requests for
admission, and Monster Cable's motion to preclude untimely
Pursuant to Rule 11, a court may sanction an attorney or party
who makes improper representations to the court, such as through
the filing of papers for an "improper purpose" or which contain
"allegations and other factual contentions . . . [that have no]
evidentiary support." See Fed.R.Civ.Pro. 11(b)(2)-(3).
Under the Patent Act, a court "in exceptional cases may award
reasonable attorney fees to the prevailing party."
35 U.S.C. § 285. Misconduct during litigation, vexatious or unjustified
litigation, and frivolous suits are among the circumstances which
may make a case "exceptional" under section 285. See Amsted
Indus., Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 376
(Fed. Cir. 1994) (quoting Beckman Instruments, Inc. v. LKB
Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989)); Epcon Gas
Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed.
Cir. 2002) ("[l]itigation misconduct and unprofessional behavior
are relevant to the award of attorney [sic] fees, and may
suffice, by themselves, to make a case exceptional"). A frivolous
suit for infringement is one in which the patentee knew or should
have known that the suit was baseless. See Automated Bus.
Cos., Inc. v. NEC Am., Inc., 202 F.3d 1353, 1354 (Fed. Cir.
2000); Haynes Int'l, Inc. v. Jessop Steel Co., 8 F.3d 1573,
1579 (Fed. Cir. 1993), modified by 15 F.3d 1076 (Fed. Cir.
1994). The party seeking attorneys' fees must prove that the case
is exceptional by clear and convincing evidence. Interspiro USA,
Inc. v. Figgie Intern. Inc., 18 F.3d 927, 933 (Fed. Cir. 1994).
Additionally, 28 U.S.C. section 1927 provides authority for the
imposition of sanctions against attorneys. It states in relevant
part that "any attorney . . . who so multiplies the proceedings . . .
unreasonably and vexatiously may be required [to pay the]
excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." See
28 U.S.C. § 1927. In order to impose sanctions under section 1927,
there must be a showing of subjective bad faith on the part of
the attorney. See Salstrom, et al., v. Citicorp Credit Servs.,
Inc., 74 F. 3d 183 (9th Cir. 1995), cert. denied sub nom Webb
v. Citicorp Credit Servs., Inc., 519 U.S. 813 (1996) (quoting
MGIC Indem. Corp. v. Moore, 952 F.2d 1120, 1122 (9th Cir.
1991)). Knowing or reckless behavior is sufficient to establish a
finding of bad faith. New Alaska Dev. Corp. v. Guetschow,
869 F.2d 1298, 1306 (9th Cir. 1989).
I. Adequacy of Monster Cable's Pre-Filing Investigation
In order to obtain fees associated with the entire lawsuit,
AudioQuest must prove by clear and convincing evidence that
Monster Cable conducted an inadequate pre-filing investigation.
AudioQuest offers four bases for this assertion.
A. Two Opinions of Counsel
First, AudioQuest claims that obtaining two separate opinions
of counsel prior to filing a lawsuit is suspicious, and suggests
that the first opinion may not have concluded that AudioQuest's
products infringe. Following oral argument for this motion, the
court reviewed the two opinions of counsel in camera. Based on
this review, AudioQuest's insinuation is without merit. Both
opinions found a reasonable probability of infringement.
B. Reverse Engineering
Second, AudioQuest contends that Monster Cable's limited
investigation of the accused products is inadequate as a matter
of law because Monster Cable did not reverse engineer each of the
accused products and perform an element-by-element comparison
against the asserted claims. Monster Cable counters that it was
only required to perform the reverse engineering analysis for a single accused product and compare that product against each of
the asserted claims. For the remaining products, according to
Monster Cable, it was sufficient to review AudioQuest's publicly
available data sheets. Both parties cite Network Caching
Technology LLC v. Novell Inc., No. C-01-2079-VRW, 2002 WL
32126128 (N.D. Cal. Aug 13, 2002) (Walker, J.) in support of
their arguments. The court in Network Caching Technology held
that Rule 11 requires "that a plaintiff compare an accused
product to its patents on a claim by claim, element by element
basis for at least one of each defendant's products." Id. at
*5 (emphasis added). The quoted language plainly requires Monster
Cable to investigate only a single accused product in detail.
AudioQuest's argument that Monster Cable was required to
reverse engineer every accused product depends on the
linguistically untenable position that "each defendant's
products" actually means "each of defendant's products." To the
contrary, Network Caching Technology involved multiple
defendants; the plaintiff was required to establish a reasonable
infringement position with respect to each of them. Id. at *1.
In this lawsuit there is a single defendant. Thus, in order to
comply with the requirement set forth in Network Caching
Technology, Monster Cable was required at a minimum to reverse
engineer a single accused product here, the Jaguar one-meter
cable and perform an element-by-element analysis against the
Reverse engineering a single product will not be adequate in
all cases, of course. Where the accused products differ
materially from each other, simply reviewing data sheets for the
other products may not be enough. Here, the accused products have
cross sections with varying geometries, but all make use in some
form or another of a conductive shield surrounding a center
conductor. Under Monster Cable's broad construction of the
claims, this common characteristic may have been sufficient to
support a finding of infringement. The court subsequently found
Monster Cable's construction to be erroneous, but not so
objectively unreasonable as to warrant imposing sanctions.
AudioQuest also points out that the evidence of Monster Cable's
pre-filing investigation of the accused products (other than the
Jaguar cable) is very sparse. Neither of Monster Cable's opinions of counsel mentions an investigation of the other
accused products, and there is no contemporaneous record of that
investigation currently before the court. However, along with its
opposition to this motion Monster Cable filed a declaration from
the attorney who performed the investigation, which states that
he had reviewed the publicly available product specifications and
had performed an element-by-element comparison with claim 2. In
addition, Monster Cable's preliminary infringement contentions,
filed after the commencement of the lawsuit, reflect a
product-by-product, element-by-element analysis. In combination,
these two pieces of evidence support Monster Cable's contention
that it investigated each accused product prior to filing the
lawsuit. AudioQuest has not proved by clear and convincing
evidence that Monster Cable failed to do so.
C. Infringement Analysis Underlying Monster Cable's Motion for
Third, AudioQuest argues that Monster Cable failed to include a
complete element-by-element analysis in its cross-motion for
summary judgment of infringement, as is required to carry its
burden of proof. Monster Cable's moving papers focused on the
five disputed elements that were also the subject of AudioQuest's
motion for summary judgment of noninfringement: "coaxial cable,"
"center conductor," "conductive shield," "means for applying the
electrical signal," and "bias means."
AudioQuest does not dispute that it included with its own
motion for summary judgment Monster Cable's Patent Local Rule
3-1(c) infringement charts, which purport to provide facts in
support of infringement for each element of the body of claim 2,
or that Monster Cable addressed each element of the body of claim
2 as well as the disputed elements of the preamble "coaxial
cable," "center conductor," and "conductive shield" in its
motion. Nor does AudioQuest identify a particular element of the
preamble that Monster Cable failed to address. AudioQuest also
ignores the nature of Monster Cable's argument, which was that
the preamble of claim 2 did not impart additional limitations on
the claimed invention. Although the court rejected Monster
Cable's legal argument, Monster Cable's factual proffer was
adequate under its mistaken view of the law. D. Assertion of Claim 1
Fourth, AudioQuest contends that Monster Cable improperly
asserted claim 1 of the '416 Patent, or refused to clarify that
claim 1 was not asserted, despite the lack of any reasonable
basis for finding infringement. Claim 1 requires "digital gates"
which are indisputably not present in AudioQuest's products.
Monster Cable replies that the complaint does not (and is not
required to) assert any individual claims, and that Monster
Cable's infringement contentions, served on AudioQuest on
September 9, 2004, do not include allegations of infringement of
claim 1. At oral argument AudioQuest was unable to identify any
authority requiring Monster Cable to disclose its detailed
infringement contentions any earlier than required by Patent
Local Rule 3-1. Without some coherent argument as to why Monster
Cable's disclosure of its infringement contentions was untimely,
the court cannot award attorneys' fees on this theory.
The court has certainly harbored substantial concerns about the
merits of this lawsuit from early on. Monster Cable has
repeatedly engaged in tactics and advanced arguments that
demonstrate, viewed charitably, a certain lack of attention to
detail; some of these tactics and arguments are discussed below.
It does not improve the court's opinion that at oral argument for
this motion Monster Cable represented that its attorneys had
reverse engineered two products prior to filing the lawsuit, one
for each opinion of counsel that Monster Cable obtained. In fact,
Monster Cable's lawyers apparently reverse engineered the very
same product the Jaguar cable both times. This sort of
dissembling and shading of the truth is disrespectful of the
court and comes perilously close to the threshold for
That said, the burden placed on the party seeking attorneys'
fees is heavy. Monster Cable has provided evidence that it
performed the bare minimum analysis necessary to file the
complaint in this action, and AudioQuest has failed to establish
objectively unreasonable behavior on Monster Cable's part by
clear and convincing evidence. Thus a blanket award of attorneys'
fees spanning the entire action is unwarranted. II. Discovery and Motion Practice Abuses
AudioQuest's remaining contentions pertain to two of Monster
Cable's motions and one of Monster Cable's written discovery
requests. AudioQuest argues that Monster Cable's Motion for Leave
to File Motion for Reconsideration of Claim Construction Order
(filed on May 4, 2005), and Motion to Preclude Untimely Produced
Evidence and to Strike References Thereto (filed on June 20,
2005) were objectively frivolous. AudioQuest also argues that
Monster Cable's decision to serve 785 requests for admission on
the day after a case management conference was unreasonable and
in bad faith. The court considers each alleged abuse in turn.
A. Motion Seeking Reconsideration
The sole basis for Monster Cable's motion seeking
reconsideration of the court's claim construction order was a
single sentence in Gillette Co. v. Energizer Holdings, Inc.,
stating generally that "[t]he word `comprising' transitioning
from the preamble to the body signals that the entire claim is
presumptively open-ended." 405 F.3d at 1371. Gillette simply
restates a common convention of claim interpretation and says
nothing at all about the effect of the word "comprising" on
elements in the preamble, as opposed to the body. The court has
already found that Monster Cable "willfully [misread]" both the
Markman order in this case and Gillette, noting that Monster
Cable's argument "defies grammar and logic." Given the lack of
any reasonable basis for Monster Cable's motion, it is
appropriate to award attorneys' fees in the amount claimed by
B. Motion to Preclude
This court has already, sua sponte considered whether Monster
Cable was unreasonable in moving to preclude certain evidence
AudioQuest used in support of its motion for summary judgment.
See Order of August 8, 2005 at n. 4. Although Monster Cable was
not particularly diligent in filing its motion, the court
accepted the explanation that Monster Cable had inadvertently confused two documents. Nothing in the current motion provides a
reason to revise this conclusion, and AudioQuest's request for
fees in connection with the motion to preclude is denied.
C. Requests for Admission
It is difficult to imagine how filing 785 requests for
admission prepared in advance, by Monster Cable's own admission
the day after a case management conference could be viewed as
reasonable. Monster Cable asserts, in effect, that the requests
were a preemptive strike in anticipation of AudioQuest's
deficient response to Monster Cable's outstanding contention
interrogatory. Discovery, however, is not a game of tit-for-tat.
Monster Cable's act of self-help the litigation equivalent of
vigilante justice was entirely inappropriate for two reasons.
First, Monster Cable had an obligation to confer with AudioQuest
in an attempt to obtain the discovery it needed. Second, Monster
Cable had ample opportunity to raise any discovery issues related
to summary judgment motions with the court. Monster Cable's
failure to do so is inexcusable, particularly in light of the
case management conference that took place one day prior to the
date of the requests for admission.
The fact that AudioQuest's response to Monster Cable's
interrogatory was so shoddy does not give the court great
comfort; it is arguably appropriate to invoke the doctrine of
maledicta sunt duo domu's vestri and deny any award of fees
altogether. Strictly speaking, however, the adequacy of
AudioQuest's response is irrelevant to the propriety of the
requests for admission, which were served over two weeks earlier.
AudioQuest's motion for attorneys' fees in the amount of $6,405
is therefore granted.
III. Subjective Bad Faith
Although AudioQuest identifies several instances of poor
judgment, two of which rise to the level of sanctionable conduct,
the court does not find that Monster Cable acted with subjective
bad faith in this lawsuit. An award of fees under
28 U.S.C. section 1927 is therefore inappropriate. CONCLUSION
For the above reasons the court hereby GRANTS IN PART and
DENIES IN PART defendant's motion for attorneys' fees. Monster
Cable is ordered to make payment of $7,915 to AudioQuest within
30 days of this order.
IT IS SO ORDERED.
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