Gabriel Technologies Corp. v. Qualcomm Incorporated

560 F. App'x 966
Court of Appeals for the Federal Circuit·Decided March 18, 2014·No. 2013-1205·Unpublished·Cited by 3 cases

Opinion

PER CURIAM.

Gabriel Technologies Corporation (“Gabriel”) and Trace Technologies, LLC (“Trace”) appeal a final order of the United States District Court for the Southern District of California awarding Qualcomm Incorporated (“Qualcomm”), SnapTrack, Inc. (“SnapTrack”), and Norman Krasner attorneys’ fees pursuant to 85 U.S.C. § 285 and the California Uniform Trade Secrets Act (“CUTSA”), Cal. Civ.Code § 3426.4. See Gabriel Techs. Corp. v. Qualcomm Inc., No. 08-CV-1992, 2013 WL 410103 (S.D.Cal. Feb. 1, 2013) (“Attorneys’ Fees Order ”). We affirm.

Background

The district court provided a comprehensive account of the history of this case in its summary judgment decisions, see Gabriel Techs. Corp. v. Qualcomm Inc., No. 08-CV-1992, 2012 WL 4574550, at *1-3 (S.D.Cal. Oct. 1, 2012) (“Inventorship Decision”); Gabriel Techs. Corp. v. Qualcomm Inc., 857 F.Supp.2d 997, 1000-02 (S.D.Cal.2012) {“Trade Secrets Decision ”), and its Attorneys’ Fees Order, 2013 WL 410103, at *1-2, and we need only provide a brief summary here. William Clise and Michael Crowson founded Locate Networks, LLC (“Locate”), a company which sought to incorporate global positioning system (“GPS”) technology into paging systems. Trade Secrets Decision, 857 F.Supp.2d at 1000. In 1999, Locate entered into a licensing agreement with SnapTrack, under which Locate obtained a license to use SnapTrack’s GPS software. Id. The licensing agreement stipulated that the parties would share ownership in technology which was jointly developed in connection with the licensing agreement. Id.

Qualcomm acquired SnapTrack in March of 2000. In 2004, Locate sold its assets to Trace, and then transferred its interest in Trace to Gabriel. Locate subsequently went out of business.

On October 24, 2008, Gabriel and Trace (collectively the “Gabriel plaintiffs”) filed suit against Qualcomm, SnapTrack and Krasner (collectively the “Qualcomm defendants”), seeking more than $1 billion in damages. J.A. 206-39. Their complaint contained eleven causes of action, including claims for correction of inven-torship, breach of the 1999 license agreement, fraud/fraudulent inducement, unfair competition, and misappropriation of trade secrets. J.A. 231-78. Each of these claims was grounded on the contention that individuals affiliated with Locate conceived of the inventions disclosed in several Qualcomm patents. The Gabriel plaintiffs asserted that “[o]ver time, Kras-ner, SnapTrack, and Qualcomm surreptitiously misappropriated Locate’s valuable enabling technology and other ... intellectual property rights.” J.A. 243.

In September 2009, the district court dismissed six of the Gabriel plaintiffs’ eleven causes of action, concluding that they had failed to state a viable claim for breach of the 1999 license agreement, J.A. 492-95, and that their unfair competition claims were preempted under CUTSA because they were premised on the same conduct that gave rise to their trade secret misappropriation claims, J.A. 507. Three months later, the court dismissed the Gabriel plaintiffs’ cause of action for fraudulent inducement, concluding that they had failed to plead that claim with the particularity required by Federal Rule of Civil Procedure 9(b). J.A. 616-18.

On September 20, 2010, the district court required the Gabriel plaintiffs to post a bond of $800,000 as a condition for continuing their suit. J.A. 2400-23. The *968 court determined that the bond was necessary because the Qualcomm defendants had “presented significant, unrebutted evidence that” the suit filed by the Gabriel plaintiffs was “likely unmeritorious, and brought in bad faith to salvage Gabriel.” J.A. 2421. The court explained that although the Gabriel plaintiffs had “been investigating their claims for several years,” they had failed “to draw any meaningful connection between Locate’s technology and the allegedly misappropriated information found in [Qualcomm’s] patents.” J.A. 2421. The court further noted that Gabriel had “a long history of corrupt officers and directors who [were] not above taking illegal and fraudulent actions to guarantee their own personal gain.” J.A. 2421 (footnote omitted). According to the court, there was a “strong likelihood” that the Qualcomm defendants would be awarded their attorneys’ fees pursuant to section 285 at the conclusion of the litigation. J.A. 2421.

The Gabriel plaintiffs then posted the required $800,000 bond, J.A. 2435-36, and the parties proceeded with discovery. In March 2012, the district court granted the Qualcomm defendants’ motion for partial summary judgment, concluding that the trade secret misappropriation claims asserted by the Gabriel plaintiffs were time-barred. Trade Secrets Decision, 857 F.Supp.2d at 1002-10. Following additional discovery, the district court granted summary judgment against the Gabriel plaintiffs on their remaining inventorship claims, concluding that they had failed to produce any evidence that individuals affiliated with Locate made an inventive contribution to the disputed Qualcomm patents. Inventorship Decision, 2012 WL 4574550, at *4-9.

On February 1, 2013, the trial court issued an order declaring the case exceptional under section 285 and awarding the Qualcomm defendants more than $12 million in attorneys’ fees. 1 The court held that the claims advanced by the Gabriel plaintiffs “were objectively baseless and brought in subjective bad faith,” Attorneys’ Fees Order, 2013 WL 410103, at *4, noting that they “brought and maintained [inventorship] claims without knowing the identity of the allegedly omitted inventors, the most basic prerequisite for a successful correction of inventorship patent claim,” id. at *5. An award under section 285 was warranted because the Gabriel plaintiffs were well aware that they “lacked the requisite evidence” to support their claims, but “opted to pursue their claims nonetheless.” Id. at *4 (footnote omitted). The court was “particularly struck by [the Gabriel plaintiffs’] decision to pursue their claims further following [its] warning that the case would likely be found exceptional based on the evidence before [it] at the bond hearing.” Id. at *5. In addition, the court concluded that an award of fees and costs was appropriate under CUTSA, see Cal. Civ. Code § 3426.4, because the trade secret misappropriation claims advanced by the Gabriel plaintiffs “were objectively specious and ... brought and maintained ... in subjective bad faith.” Attorneys’ Fees Order, 2013 WL 410103, at *7.

The Gabriel plaintiffs then filed a timely appeal challenging the district court’s award of attorneys’ fees under both section 285 and CUTSA. 2 We have jurisdiction under 28 U.S.C. § 1295(a)(1).

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Gabriel Technologies Corp. v. Qualcomm Incorporated, 560 F. App'x 966 (Fed. Cir. 2014).

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