Astornet Technologies, Inc. v. Bae Systems, Inc.

201 F. Supp. 3d 721, 2016 U.S. Dist. LEXIS 102260, 2016 WL 4141006
CourtDistrict Court, D. Maryland
DecidedAugust 4, 2016
DocketCase No. RWT 14-cv-0245
StatusPublished
Cited by3 cases

This text of 201 F. Supp. 3d 721 (Astornet Technologies, Inc. v. Bae Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Astornet Technologies, Inc. v. Bae Systems, Inc., 201 F. Supp. 3d 721, 2016 U.S. Dist. LEXIS 102260, 2016 WL 4141006 (D. Md. 2016).

Opinion

MEMORANDUM OPINION

ROGER W. TITUS, UNITED STATES DISTRICT JUDGE

On September 17, 2015, the Federal Circuit affirmed this Court’s decision to grant Defendant BAE Systems, Inc.’s (“BAE”) Motion to Dismiss the Complaint filed against it by Plaintiff Astornet Technologies, Inc. (“Astornet”). Astornet’s Complaint alleged that BAE had induced the Transportation Security Administration (“TSA”) to infringe on Astornet’s patented technology through BAE’s bids and subsequent contracts with the TSA. Astornet Technologies, Inc. v. BAE Systems, Inc., 802 F.3d 1271 (Fed.Cir.2015). Both this Court and the Federal Circuit found that 28 U.S.C. § 1498 limited Astornet’s remedy to an action against the United States in the Court of Federal Claims. See id. at 1273.

On November 9, 2015, BAE filed a Renewed Motion for Attorneys’ Fees. ECF No. 45. BAE seeks to recover its attorneys’ fees based on two discretionary statutes, 28 U.S.C. § 1927 and 35 U.S.C. § 285. For the reasons that follow, the motion shall be granted in part and denied in part as moot with leave to refile.

[725]*725BACKGROUND

Astornet alleges that it is the sole exclusive licensee of United States Patent No. 7,649,844 (hereinafter the ’844 patent). ECF No. 13 at 3. Astornet’s sole owner, Michael Haddad (“Haddad”), is listed-in the patent as the sole inventor. Id. Astor-net was .retained by the Transportation Security Administration in 2007 to develop a system to improve airport gate security. Id. at 2-3. In 2009, TSA solicited bids to build a new security-related system, the Credential Authentication Technology-Boarding Pass Scanning System (hereinafter the “CAT/BPSS”). Id. at 5. Astornet submitted a bid but was unsuccessful. Id. BAE, NCR Government Systems, LLC (“NCR”), and MorphoTrust USA, LLC (“MorphoTrust”) were awarded trial CAT/BPSS contracts. Astornet, 802 F.3d at 1274.

On January 27, 2014,1 Astornet filed a Complaint against BAE, NCR, and Mor-phoTrust in this Court based on indirect patent infringement. ECF No. 1. BAE and NCR filed motions to dismiss, arguing that 28 U.S.C. § 1498 limited Astornet’s remedy to an action against the United States in the Court of Federal Claims.2 ECF Nos. 14, 22. The motions were granted, Astor-net appealed, and the Federal Circuit affirmed, holding, as did this Court, that Astornet’s exclusive remedy for the alleged infringement was a suit against the United States in the Court of Federal Claims under 28 U.S.C. § 1498. See Astornet, 802 F.3d at 1283.

On November 9, 2015, BAE submitted a motion for attorneys’ fees that included those fees incurred on appeal. ECF No. 45. Following a hearing oh the motion on January 2Í, 2016, the Court ordered Geoffrey Mason, then counsel for Astornet, to submit a complete and accurate financial statement under oath. ECF No. 50. Mason submitted a declaration and, pursuant to an agreement between the parties, a second supplemental declaration containing specifics regarding his ability to pay sanctions under 28 U.S.C. § 1927. ECF Nos. 51, 54. In response, BAE withdrew its Renewed Motion for Attorneys’ Fees as to the award against Mason under 28 U.S.C. § 1927 (but not under 35 U.S.C. § 5285) with the option to refile should BAE later discover that the declarations were incomplete or inaccurate. ECF No. 56.

ANALYSIS

BAE seeks to recover its attorneys’ fees in this litigation based on two discretionary statutes, 28 U.S.C. § 1927 and 35 U.S.C. § 285. The crux of BAE’s argument is that (1) 28 USC. § 1498 clearly provides that Astornet’s exclusive remedy for the alleged infringement was a suit against the United States in the Court of Federal [726]*726Claims; (2) this was indicated to Astornet many times; (3) Astornet never reasonably argued that it did not apply; and (4) it was frivolous to bring and maintain the case in this Court rather than in the Court of Federal Claims. Astornet, meanwhile, opposes paying any attorneys’ fees under these statutes because it argues that the case was not decided on the merits, nor was it brought in bad faith because it was similar to prior cases based on similar facts.

I. Attorneys’ Fees Under 28 U.S.C. § 1927

Section 1927 provides that “[a]ny attorney.. .who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” The United States Court of Appeals for the Federal Circuit reviews a court’s decision on a motion for sanctions “under 28 U.S.C. § 1927 pursuant to the law of the regional circuit.” Nystrom v. TREX Co., 424 F.3d 1136, 1141 (Fed.Cir.2006) (citing Phonometrics, Inc. v. Westin Hotel Co., 350 F.3d 1242, 1246 (Fed.Cir.2003)). A court considering the propriety of a § 1927 award must focus on the conduct of the litigation and not on its merits. DeBauche v. Trani, 191 F.3d 499, 511 (4th Cir.1999). An award of fees under § 1927 requires “a finding of counsel’s bad faith as a precondition to the imposition of fees.” TREX, 424 F.3d at 1150 (citing Chaudhry v. Gallerizzo, 174 F.3d 394, 411 n. 14 (4th Cir.1999)). Bad faith may be found “when it becomes evident that a claim lacks merit but an attorney persists in litigating the claim nonetheless.” Shank v. Eagle Techs., Inc., No. CIV. A. RWT-10-2231, 2013 WL 4442033, at *2 (D.Md. Aug. 15, 2013) (quoting Blue v. U.S. Dep’t of Army, 914 F.2d 525, 637 (4th Cir.1990)).

BAE argues that Astornet’s attorney, Geoffrey Mason, should be sanctioned under § 1927 because he had actual notice since the start of the litigation that 28 U.S.C. § 1498 barred the claim, yet he continued the litigation through the appeal. BAE points to a series of e-mails and filings that explicitly indicate that Mason was on notice of this issue.

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201 F. Supp. 3d 721, 2016 U.S. Dist. LEXIS 102260, 2016 WL 4141006, Counsel Stack Legal Research, https://law.counselstack.com/opinion/astornet-technologies-inc-v-bae-systems-inc-mdd-2016.