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Defendant Awarded Attorney Fees After NPE Dismissed Frivolous Case with Prejudice

| Mark Kachner

BLACKBIRD TECH LLC v. HEALTH IN MOTION LLC

Before Wallach, Prost, and Hughes. Appeal from U.S. District Court for the Central District of California.

Summary: The Federal Circuit affirmed a finding that a frivolous patent case was exceptional and an award of more than $360,000 in attorney fees after Plaintiff persisted with the case for nineteen months and then dismissed the case with prejudice before trial.

Blackbird, a non-practicing entity, sued Health in Motion for patent infringement related to exercise equipment.  Health in Motion refused multiple settlement offers including a walk-away settlement offer that would have provided a royalty free license to the asserted patent.  Health in Motion countered, requesting payment from Blackbird on the grounds that Health in Motion would ultimately be awarded attorney fees.  Blackbird refused.  After claim construction, discovery, and fully briefing a motion for summary judgment of noninfringement, Blackbird voluntarily dismissed the suit with prejudice, executed a covenant not to sue, and moved to dismiss for lack of subject matter jurisdiction.  The district court then awarded Health in Motion $363,243.80 in attorney fees.

The Federal Circuit affirmed the attorney fees award.  The court agreed that Blackbird’s claim construction and infringement contentions were meritless.  The court agreed that Blackbird litigated in an unreasonable manner.  The court found multiple problems that supported the exceptional finding, including: (1) Blackbird’s multiple settlement demands that were far less than the anticipated cost of defense, (2) Blackbird unreasonably delayed producing documents, and (3) Blackbird waited until pretrial submissions were due to file a notice of dismissal without first giving notice to opposing counsel.  The court also held that the district court did not abuse its discretion in considering the need to deter future abusive litigation.  The court noted that Blackbird “has filed over one hundred patent infringement lawsuits, and none have been decided, on the merits, in favor of [Blackbird].”

Editor: Paul Stewart