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Digital Reg of Texas v. Adobe Systems, Inc.

United States District Court, N.D. California

March 9, 2015

DIGITAL REG OF TEXAS, LLC Plaintiff,
v.
ADOBE SYSTEMS, INC., et al., Defendants.

ORDER ON MOTIONS FOR ATTORNEYS' FEES (Docket No. 794)

CLAUDIA WILKEN, District Judge.

On December 22, 2014, the Court entered judgment in favor of Defendant Adobe Systems, Inc. against Plaintiff Digital Reg of Texas, LLC. Docket No. 777. Adobe moves for an award of attorneys' fees under 35 U.S.C. § 285. Docket No. 794. Digital Reg opposes the motion and argues in the alternative that the issue of attorneys' fees should be deferred until the Federal Circuit decides the appeal of the Court's order. Based on the papers, the Court GRANTS the motion in part.

BACKGROUND

In this patent infringement case, Digital Reg sued Adobe alleging infringement of U.S. Patent No. 6, 389, 541 (the 541 patent), U.S. Patent No. 6, 751, 670 (the 670 patent) and U.S. Patent No. 7, 421, 741 (the 741 patent). These patents cover different aspects of digital rights management (DRM). DRM is a generic term of art describing the control technologies that allow copyright holders, publishers and hardware manufacturers to restrict access to digital content.

Adobe denied infringement of all three patents and argued that the asserted patent claims were invalid. On June 10, 2014, the Court issued a claim construction order and entered summary judgment in favor of Adobe on the 741 patent, but denied summary judgment with respect to the other two patents. Docket No. 574. The parties went to trial on the 541 and 670 patents. Having found each of the disputed patent claims to be obvious, and therefore invalid, the jury awarded Digital Reg no damages. On December 22, 2014 the Court entered judgment in favor of Adobe against Digital Reg. Docket No. 777.

LEGAL STANDARDS

Under 35 U.S.C. § 285, the court "in exceptional cases may award reasonable attorney fees to the prevailing party." The Supreme Court, in construing this section, has held that

an "exceptional" case is simply 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. District courts may determine whether a case is "exceptional" in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). Because the exceptional case determination may be informed by the district court's unique insight into the manner in which the case was litigated, it is within the sound discretion of the district court. Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S.Ct. 1744, 1748 (2014).

DISCUSSION

As a preliminary matter, Digital Reg's request that the Court defer consideration of the fees issue is denied. If this Court decides the fees issue now, the Federal Circuit may consider all appellate issues together, thereby saving judicial resources. See Nystrom v. TREX Co., 339 F.3d 1347, 1350 (Fed. Cir. 2003) (disapproving piecemeal appeals).

Adobe contends that this case is exceptional because Digital Reg (1) proposed objectively unreasonable claim constructions; (2) offered unreliable and unreasonable expert opinion; (3) engaged in litigation misconduct with respect to two fact witnesses; and (4) was only seeking nuisance value settlements. Adobe only seeks fees resulting from the exceptional conduct.

A. Claim Construction

Adobe first argues that Digital Reg pursued objectively unreasonable and frivolous claims by proposing claim constructions that were baseless or had been previously disavowed. Adobe contends that the unreasonable nature of Digital Reg's claims is demonstrated by three instances in which the Court found that Digital Reg's proposed claim constructions were inconsistent with the specification and prosecution history. In addition, Adobe argues that Digital Reg's proposed construction of the term "header" in the 741 patent was "egregiously flawed." Digital Reg had proposed that the term "header" be construed as "control information including at least a key associated with a data block." Finding no intrinsic evidence supporting this proposed ...


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