One patent troll has found no refuge — and a much lighter wallet — at the hands of a federal appeals court.
The judges for the Court of Appeals for the Federal Circuit used just one word Oct. 9 to allow a $1.4 million fee to be levied against Acacia Research Corporation—“affirmed.”
Acacia, a patent licensing firm, will now have to pay the legal fees and expenses for the data storage company NetApp, thanks to a Supreme Court ruling from 2014 that removes some of the challenges for defendants attempting to recoup their legal fees due to groundless patent suits.
Appearing before District Court Judge Gregory Sleet in Dec. 2014, NetApp requested the following hourly rates to cover their attorney’s fees: $1,025 per hour for partners, $750 for associates, and $310 for paralegals. Judge sleet granted the request.
Acacia then appealed to the federal circuit, calling the legal fees “conscience-shocking.”
Judge Sleet permitted the $1.4 million fee because Summit was less than forthcoming regarding its case. On Sept. 25, 2014, he wrote in a brief:
“Summit pursued an action against NetApp without any basis for infringement, delayed disclosing the existence of the Licensing Agreement for 18 months, extracted settlements from co-defendants worth a fraction of what it would actually cost them to defend the lawsuit, and then voluntarily dismissed its claims with prejudice prior to the court issuing a ruling on the merits.”
“Summit’s motivation was to extract quick settlements that were dwarfed by the costs to litigate…The court is convinced that an award of attorneys’ fees in this case is necessary to deter this sort of reckless and wasteful litigation in the future.”
The case originated in 2010, when Summit Data Systems, a subsidiary of Acacia, sued a number of corporations for infringing on two of their patents. In addition to NetApp, some of the other defendants included in the suit were D-Link Systems, Fujitsu America, and Netgear.
By the time of the trial, only NetApp remained as a defendant.
In June 2010, Summit licensed the allegedly infringed products with a computer industry “patent aggregator” that obtains patent licenses for its member companies. Once a company becomes a member, they are allowed access to the patents purchased by the aggregator. However, it wasn’t until 2012 when Summit disclosed the licensing agreement to the court.
Due to Summit’s group licensing agreement, NetApp could not be held liable for infringement. Summit voluntarily offered to dismiss the the charges, with each party responsible for their own legal costs. NetApp objected over the fee apportionment.
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