WPEM, LLC v. SOTI Inc.

CourtDistrict Court, E.D. Texas
DecidedFebruary 4, 2020
Docket2:18-cv-00156
StatusUnknown

This text of WPEM, LLC v. SOTI Inc. (WPEM, LLC v. SOTI Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
WPEM, LLC v. SOTI Inc., (E.D. Tex. 2020).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

WPEM, LLC, § § Plaintiff, § § v. § CIVIL ACTION NO. 2:18-CV-00156-JRG § SOTI INC., § § Defendant. §

MEMORANDUM OPINION AND ORDER Before the Court is Defendant SOTI Inc.’s (“SOTI”) Motion to Recover Attorneys’ Fees Pursuant to 35 U.S.C. § 285 (the “Motion”). (Dkt. No. 39.) The Court held an evidentiary hearing on the Motion on November 20, 2019. (Dkt. No. 51.) At the conclusion of said hearing, the Court ordered the parties to file supplemental briefing directed to what steps Plaintiff WPEM, LLC (“WPEM”) undertook in conducting its pre-suit investigation. (Id. at 82:7–83:19.) Having considered all that is before it, and for the reasons set forth herein, the Court is of the opinion that the Motion should be and hereby is GRANTED. The Court finds that SOTI is entitled to and should be awarded reasonable attorneys’ fees in the amount of $179,622.00. I. BACKGROUND A. Procedural History On April 18, 2018, WPEM filed a complaint against SOTI alleging that SOTI’s MobiControl Speed Lockdown (the “Accused Technology”) infringes U.S. Patent No. 9,148,762 (the “Asserted Patent”). (Dkt. No. 1.) Specifically, WPEM alleged infringement based upon its review of a user manual for version 11 of the Accused Technology. (Dkt. No. 53-8 ¶ 9; see also Dkt. No. 1 ¶ 10.) In its Answer, filed July 9, 2018, SOTI asserted that the Asserted Patent is invalid in view of version 10 of the Accused Technology, which predates the Asserted Patent, among other references. (Dkt. No. 10 ¶ 29.) Counsel for SOTI asserted this same position in correspondence to counsel for WPEM sent the same day. (Dkt. No. 39-16.) On August 17, 2018, WPEM’s counsel offered to settle its claims against SOTI for $429,000. (Dkt. No. 39-17.) SOTI’s counsel reiterated its position that the Accused Technology

was publicly available prior to the priority date of the Asserted Patent and therefore was invalidating prior art. (Id.) On September 25, 2018, at WPEM’s counsel’s request, SOTI’s counsel sent WPEM’s counsel an executable version of version 10 of the Accused Technology. (Dkt. No. 39-19 at 2–3.) On October 16, 2018, WPEM’s counsel demanded $150,000 to settle its claims against SOTI. (Dkt. No. 39-22 at 1.) The following day, SOTI’s counsel sent WPEM’s counsel a Rule 11 letter asserting that WPEM had violated Rule 11 of the Federal Rules of Civil Procedure because a reasonable investigation would have revealed (1) that the Asserted Patent is invalid in light of the Accused Technology; (2) that the Asserted Patent is invalid in light of WPEM’s own prior art: U.S. Patent

Application No. 13/091,977, which published as U.S. Patent Publication No. 2011/0264246 (the “’246 Publication”); (3) that WPEM’s inequitable conduct rendered the Asserted Patent unenforceable because WPEM did not disclose the ’246 Publication to the U.S. Patent and Trademark Office (“PTO”); and (4) that the Asserted Patent was unenforceable because it failed to include an inventor: Tina Pantoja. (Dkt. No. 39-15.) SOTI gave WPEM ten days to dismiss the complaint before seeking Rule 11 sanctions. (Id. at 5.) On October 24, 2018, WPEM offered to settle for $75,000. (Dkt. No. 39-24.) SOTI declined. (Id.) WPEM then offered to dismiss the claims with prejudice and grant a license in exchange for SOTI dismissing its counterclaims and not pursuing attorneys’ fees.1 (Id.) On October 30, 2018, WPEM filed a motion to dismiss its claims with prejudice pursuant

to Federal Rule of Civil Procedure 41(a)(2). (Dkt. No. 28.) SOTI filed a response stating that it did not oppose dismissal but did not believe each party should bear its own costs and fees, as WPEM’s motion requested. (Dkt. No. 30.) The Court dismissed WPEM’s claims with prejudice and this Motion followed. (Dkt. No. 36; Dkt. No. 39.) B. WPEM’s Pre-Suit Investigation Mr. William Taylor is the sole inventor listed on the Asserted Patent. (Dkt. No. 1-1.) Mr. Taylor and Ms. Tina Pantoja are the two owners of WPEM. (Dkt. No. 53-8 ¶ 2.) Mr. Taylor and Ms. Pantoja are also the sole co-owners of W2W, LLC, a predecessor entity. (Id.) Mr. Taylor and Ms. Pantoja first became aware of the Accused Technology in December 2017 by reviewing a user manual for version 11 of the Accused Technology that they discovered on the Internet. (Id. ¶ 3, 9.) According to Mr. Taylor, he was not then aware that there were other versions of the Accused Technology and did not see any other versions on SOTI’s website. (Id. ¶ 9.) Mr. Taylor contacted counsel for WPEM2 regarding his belief that the Accused Technology infringed the Asserted

Patent, and beginning in February 2018, Mr. Taylor worked with counsel to create a claim chart

1 The timestamps on the emails exchanged are incongruous, seemingly as a result of differing time zones. (Dkt. No. 39-24.) However, it appears that WPEM’s offer to settle for $75,000 and its ultimate offer to dismiss its claims with prejudice for no payment appear to have been sent on the same day. (Id.) 2 WPEM was created after Mr. Taylor contacted counsel and pursuant to counsel’s advice for the purpose of holding the Asserted Patent. (Dkt. No. 53-8 ¶ 10.) demonstrating infringement of the Asserted Patent based upon the user manual for version 11 of the Accused Technology. (Id.) Other than attempting to establish clean title to the Asserted Patent in WPEM and developing claim charts for infringement, neither WPEM nor Mr. Taylor describe any other steps

they took as part of a pre-suit investigation prior to filing WPEM’s complaint on April 18, 2018. Neither WPEM nor Mr. Taylor establish or relate any efforts to conduct a prior art search or review SOTI’s website, beyond the statement that “[Mr. Taylor] did not see any other versions [of the Accused Technology] on SOTI’s website.”3 (Id.) Mr. Taylor does assert that he was aware of SOTI during the relevant time period and had reason to believe that they did not possess the invention covered by the Asserted Patent in January 2013, when version 10 of the Accused Technology was released. Mr. Taylor believed this because in 2012, AT&T contracted with Mr. Taylor’s company to add this functionality to a system that was provided by SOTI. (Id. ¶ 15.) Mr. Taylor continued to provide this functionality to the SOTI system until AT&T terminated its license agreement with Mr. Taylor in the third quarter of 2015.

(Id. ¶ 19.) II. LEGAL STANDARD “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. “When a party seeks dismissal of an action under Rule 41(a)(2) unilaterally, rather than as part of a settlement, the opposing party is ordinar[ily] regarded as the prevailing party” because a dismissal with prejudice “has res judicata effects that result in a judicially sanctioned change in the legal relationship of the parties.” Trover Grp., Inc. v. Dedicated

3 Such a statement does not indicate what level of search Mr. Taylor may have conducted of SOTI’s website or if he ever visited it at all. Micros USA, No. 2:13-cv-1047-WCB, 2015 WL 4910875, at *1 (E.D. Tex. Aug. 17, 2015) (Bryson, J). 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.” Octane Fitness, LLC v.

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Bluebook (online)
WPEM, LLC v. SOTI Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/wpem-llc-v-soti-inc-txed-2020.