It Costs $440,000 to Dismiss a Case for Lack of Standing, but Plaintiff Had to Pay it

In Raniere v. Microsoft Corp., [2017-1400, 2017-1401] (April 18, 2018), the Federal Circuit held that the district court did not err in finding that Microsoft and AT&T were the prevailing parties under 35 U.S.C. § 285  (2012), and did not abuse its discretion in awarding attorneys’ fees and costs.

Raniere sued for infringement of a total of five patents (U.S. Patent Nos. 6,373,936, 6,819,752, 7,215,752, 7,391,856, and 7,844,041), and Microsoft and AT&T challenged Raniere’s standing.  Rainiere and the other inventors assigned the underlying inventions to Global Technologies, Inc.  In May 1996, GTI was administratively dissolved.  In December 2014, Raniere executed a document on behalf of GTI, claiming to be its president and “sole owner,” that purportedly transferred the asserted patents from GTI to himself.

Microsoft challenged Raniere’s standing, and the district court ordered Raniere to produce documentation proving his representations. The district court found that the documents produced by Raniere failed to indicate that Raniere had an ownership interest in GTI at any time or that Raniere had the right to assign the patents at issue from GTI to himself.  Given Raniere’s failure to produce evidence to support his standing, the district court permitted Appellees to conduct limited discovery into the standing issue and stayed the cases pending its resolution.  The parties suspended discovery when they began negotiating terms of settlement, but Raniere refused
to finalize the settlement. AT&T then filed a motion for an order to show cause why the action should not be dismissed under Federal Rule of Civil Procedure 41(b) for
lack of standing.

The district court found that Raniere’s testimony surrounding the alleged transfer contradicted Raniere’s earlier representations and was “wholly incredible and untruthful. Moreover, the district court found that Raniere’s conduct demonstrated “a clear
history of delay and contumacious conduct.”  In a subsequent fees motion the district court award fees.  AT&T submitted evidence that it incurred $395,050.30 in attorney fees and $13,917.10 in costs, and Microsoft submitted evidence that it incurred
$176,166.40 in attorney fees and $2,073.68 in costs.  The district court found Appellees were not entitled to fees spent on certain matters after the district court issued its stay order. And, the district court reduced the lodestar for both Appellees by twenty percent due to duplication of efforts between Microsoft and AT&T attorneys. In view of these determinations, the district court awarded $300,295.71 to AT&T and $143,719.26 to Microsoft in attorney fees and costs.

The Federal Circuit agreed that the Appellees were the prevailing parties, and that the district court did not abuse its discretion finding the case exceptional and awarding fees. The Federal Circuit, noting that the district court was in a better position to determine whether a case is exceptional, had no reason to disturb the district court’s well-reasoned determination.  The Federal Circuit also concluded that the district court’s discretionary determination of fees and costs is well-supported and reflects the court’s careful consideration of the relevant billing rates, invoices, and records.