District Court of Delaware Grants Business Objects America its Attorneys’ Fees and Expenses in Defending a Patent Suit

Last year, the Federal Circuit affirmed former District of Delaware Judge Kent A. Jordan’s decision in Microstrategy Inc. v. Crystal Decisions, Inc. d/b/a Business Objects Americas which granted partial summary judgment in favor of Business Objects America on invalidity of two of Microstrategy’s patents and summary judgment as to non-infringement of a third Microstrategy patent. (See earlier Delaware IP Law Blog posting, June 27, 2007.) Business Objects subsequently filed a motion for its attorney fees and expenses pursuant to 35 U.S.C. Section 285 and the Court granted this motion, in part, on March 25, 2008. Microstrategy Inc. v. Crystal Decisions, Inc. d/b/a Business Objects Americas, C.A. No. 03-1124-MPT, Memo. Op. (D. Del. March 25, 2008). Magistrate Thynge stressed over and over again in her opinion that Microstrategy’s “failure to produce” any evidence contrary to Business Objects’ evidence as to anticipation on one patent-in-suit was critical to the finding of fees. Id. at 6-7. The Court stated that Microstrategy was “clearly aware” of the prior art and the fact that it would make any claim of infringement unjustified and yet “failed to reassess the merit of its claims”. Id. at 8. These two things together established the “manifestly unreasonable” conduct necessary for a finding of fees. Id. at 8.

As to a second patent that was asserted in the litigation, the Magistrate found that Microstrategy presented a “reasonable basis” to continue litigating certain claims but their continued pursuit of the remaining asserted claims was in bad faith. Id. at 10.

Finally, on the third patent-in-suit, Business Objects argued that Microstrategy had no reasonable basis to allege infringement of certain claims of that patent. Id. at 11. After Business Objects directed Microstrategy to an error in its expert report, the expert submitted a supplemental report with a new theory of infringement. This new theory contradicted its representations to the PTO during reexamination of the patent-in-suit. Id. at 11-12. The Court found that this new theory, in addition to Microstrategy’s failure to provide an explanation of its expert’s mistake and the timing of its reassessment of the claims, “calls into questions its motives and whether it, in fact, continued this action in good faith.” Id. at 12. Such conduct ultimately supported a finding of bad faith.

Based on the facts, the Court found that by March 2005, it was unreasonable for Microstrategy to continue its pursuit of certain claims and therefore the Court limited Business Objects to its fees and expenses after that date. Id. at 12. Despite Microstrategy’s arguments that Business Objects failed to show any “gross injustice,” Magistrate Thynge stated that “forcing an alleged infringer to defend against apparent baseless claims” was the “gross injustice.” Id. at 13.

Of note for future attorneys’ fee applications in the District of Delaware, Magistrate Thynge found the fees reasonable based on the following evidence: billing rate and amount of hours charged by each attorney, the level of experience of each attorney, description of each attorney’s activities during a period, expense statements and a comparative analysis of its rates and the AIPLA cost survey (see AIPLA website for more information). Id.

For a copy of the opinion click here.

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