Discovery/Special Fee Shifting Statute/Trade Secrets: Losing Plaintiffs In Patent/Trade Secret Dispute Hit With $12.46 Million For Attorney’s Fees And Electronic Discovery Expenses

 

Only $1 Million Reduction From Fees Requested.

     Patent/trade secrets are usually vigorously and heavily litigated, and the losers can get hit with substantial fees/expenses as Gabriel Techs., Corp. v. Qualcomm, Inc., Case No. 08CV1992 AJB (MDD), 2013 WL 410103 (S.D.Cal. Feb. 1, 2013) demonstrates.

     There, plaintiffs lost a patent infringement/trade secrets case. But that was hardly the finish of the story. The district judge then awarded winning defendants $12,465,331.01 in attorney’s fees and electronic discovery expenses because the patent and misappropriation claims were objectively baseless and pursued in bad faith. (35 U.S.C. § 285 [patent] and California Civil Code § 3426.4 [trade secret misappropriation] are statutes allowing for fee shifting in these situations.) No apportionment was necessary because each of Plaintiffs’ claims were within the ambit of one of the statutes.

     The district judge assessed $64,316.50 in fees against local counsel, finding that sanctions were warranted under Fed.R.Civ.P. 11 for counsel’s failure to conduct a sufficient inquiry into the merits of Plaintiffs’ case after the judge warned about substantial deficiencies in the case and ordered posting of an $800,000 bond.

     The fee request was only reduced by $1 million, based on the district judge’s view that it was proper to limit the imposition of fees to those incurred after entry of the bond order.

     Yikes!