Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-05978/USCOURTS-cand-3_18-cv-05978-4/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 15:1126 Patent Infringement

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DIEM LLC,

Plaintiff,

v.

BIGCOMMERCE, INC.,

Defendant.

Case No. 18-cv-05978-SI 

ORDER DENYING DEFENDANT BIG 

COMMERCE'S MOTION FOR 

ATTORNEYS' FEES

Re: Dkt. No. 126

Defendant BigCommerce, Inc.’s (“BigCommerce”) motion for attorneys’ fees is scheduled 

for a hearing on March 8, 2019. Pursuant to Civil Local Rule 7-1(b), the Court determines this matter 

is suitable for resolution without oral argument and VACATES the hearing. Having considered the 

arguments made, the papers submitted, and for good cause shown, the Court DENIES defendant’s 

motion. 

BACKGROUND

Plaintiff Diem LLC (“Diem”) is a Delaware company with its principal place of business in 

Dover, Delaware. Dkt. No. 1. Defendant Big Commerce is a Texas corporation with its principal 

place of business in Austin, Texas. Id. The parties commenced litigation in the Eastern District of 

Texas on March 27, 2017.1 Id. Plaintiff claimed defendant infringed its U.S. Patent No. 7,770,122 

(the ’122 Patent), entitled “Codeless Dynamic Websites Including General Facilities.” Id.

The parties entered into a settlement agreement on March 27, 2018, through which the

parties selected the disposition of defendant’s then still-pending summary judgment motion as the 

determinative event. The parties stipulated that if the court’s ruling stated plaintiff Diem had 

 

1 The case was transferred to the Northern District of California on September 28, 2018. 

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disclosed a theory of joint infringement in its original July 11, 2017 infringement contentions, 

defendant BigCommerce would pay Diem a lump sum of $30,000. Dkt. No. 120.2. If the court 

ruled plaintiff had not disclosed a theory of joint infringement, no payment would occur. The Eastern 

District of Texas denied defendant’s motion for summary judgment as moot on May 3, 2017. Dkt. 

No. 74. The court did not address whether Diem had disclosed joint infringement in its original 

infringement contentions, noting that “[w]hether or not Diem initially disclosed such a theory or 

limited its case to a single- actors theory is mooted by the service of amended contentions and 

the parties’ immediate knowledge that this case must proceed on a theory of joint infringement 

after the Court’s claim construction ruling.” Id. at 2.2 As a result, the parties asked this Court to 

interpret and enforce the settlement agreement. The Court’s January 19, 2019 order found that 

plaintiff had not disclosed a theory of joint liability in its original infringement contentions and 

granted defendant’s motion to enforce the settlement. Dkt. No. 125. Because of the Court’s findings, 

pursuant to the settlement agreement, defendant did not have to pay Diem $30,000. 

Defendant now moves for attorneys’ fees pursuant to 35 U.S.C. § 285 which states: “The 

court in exceptional cases may award reasonable attorneys fees to the prevailing party.” Defendant 

argues that (1) due to the alleged material alteration of the parties’ relationship arising from this 

Court’s order enforcing the settlement agreement and (2) because of the alleged unreasonable 

manner in which plaintiff litigated, BigCommerce is entitled to fees. Plaintiff Diem opposes this 

motion, arguing that defendant is not the prevailing party and the case is not exceptional. 

LEGAL STANDARD

To invoke 35 U.S.C. § 285, the moving party must establish they are (1) the prevailing party 

and (2) the matter is an “exceptional case.” 

To qualify as the “prevailing party,” a party need not prevail at trial. Rather, obtaining relief 

on the merits or an order materially changing the relationship of the parties suffices. CRST Van 

 

2 The EDTX’s claim construction order rejected plaintiff’s single actor related claims and 

held that the claim in suit required joint infringement. Dkt. No. 66 at 14. Plaintiff Diem subsequently 

amended its infringement contentions to disclose a joint infringement theory. 

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Expedited, Inc. v. EEOC, 136 S. Ct. 1642, 1651, 194 L. Ed. 2d 707 (2016) (holding a favorable 

judgment on the merits is not necessary for a defendant to be deemed a prevailing party for purposes 

of fee-shifting.); Raniere v. Microsoft Corp., 887 F.3d 1298, 1308, (Fed. Cir. April 18, 2018)

(concluding “the district court did not err in finding Appellees are ‘prevailing parties’ for the 

purposes of § 285” where plaintiff’s complaint was dismissed with prejudice for lack of standing); 

Max Sound Corp. v. Google, Inc., 2017 U.S. Dist. LEXIS 168541, *17-18, (N.D. Cal. September 

25, 2017) (Parties did not dispute that defendants were prevailing party where court granted 

defendants’ motion to dismiss and did not allow plaintiff to file an amended complaint). 

As the statutory language of 35 U.S.C. § 285 suggests, the award of attorneys’ fees is 

discretionary, and a district court may decide not to award fees even in an exceptional case. Modine 

Mfg. Co. v. Allen Group, Inc., 917 F.2d 538, 543 (Fed. Cir. 1990) (“The decision whether or not to 

award fees is still committed to the discretion of the trial judge, and ‘even an exceptional case does 

not require in all circumstances the award of attorney fees.’”). Congress’ policy objective in 

enacting § 285 was two-fold: (1) to provide a deterrent to frivolous or unnecessary patent litigation, 

and (2) to serve a compensatory purpose for parties injured by such litigation. Raylon, LLC v. 

Complus Data Innovations, Inc., 700 F.3d 1361, 1372-73 (Fed. Cir. 2012) (internal citations 

omitted) (“Section 285 was enacted to address a patent-specific policy rationale, awarding fees in 

exceptional cases in which sanctions were necessary to deter the improper bringing of clearly 

unwarranted suits. The purpose of the statute has been described by this court as compensation to 

the prevailing party for its monetary outlays in the prosecution or defense of the suit.”); Mathis v. 

Spears, 857 F.2d 749, 758 (Fed. Cir. 1988)(internal quotations omitted) (“Congress authorized 

awards of attorney fees to prevailing defendants to enable the court to prevent a gross injustice to 

an alleged infringer.”) (emphasis in original).

DISCUSSION

In the matter at bar, there is no prevailing party because the parties executed a settlement 

agreement (“Settlement Agreement”). In the Settlement Agreement the parties agreed that “[if] the 

MSJ is denied and the Court rules that Joint Infringement is Included, then BigCommerce will pay 

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Diem the sum of $30,000 ... If the ruling on the MSJ does not address whether Joint Infringement

is Included, then BigCommerce will file a motion to address the same issue ... If a Subsequent 

Motion is denied then” BigCommerce will pay Diem $30,000. Dkt. 120.2. In the event of another 

outcome – for example, if a subsequent motion is granted, which is exactly what happened – the 

Settlement Agreement states “the parties will move to dismiss the action with prejudice (with clear 

language that BigCommerce did not pay Diem to settle this action).” Dkt. 120.2. BigCommerce’s 

summary judgment motion was denied. This Court then heard the parties’ subsequent motion on 

the joint infringement issue. While the Court granted Defendants’ motion, resulting in 

BigCommerce not having to pay anything, this precise scenario was contemplated by the parties and 

accounted for in the Settlement Agreement. Thus, there is no “prevailing party.” Section 8.11 of 

the Settlement Agreement underscores this point, stating: 

The Parties agree that the settlement reflected in this Agreement is intended solely 

as a compromise of disputed claims. Each Party expressly denies any liability or 

wrongdoing. A Party’s participation in this Agreement, its agreement to any term of 

this Agreement, and any action taken by a Party pursuant to this Agreement: (a) do 

not constitute and may not be construed as an admission of liability or as a concession 

by any Party that any Claim or defense asserted by the other Party is valid; and (b) 

may not be offered or admitted in evidence in any legal proceeding between the 

Parties other than one to enforce rights and obligations arising out of this Agreement.

Had the parties wanted to negotiate attorneys’ fees in the Settlement Agreement they could have. 

They did not. While BigCommerce correctly notes that success on the merits is not necessary to be 

a “prevailing party,” settlement precludes such a finding. Exigent Tech. v. Atrana Solutions, Inc., 

442 F.3d 1301, 1312, (Fed. Cir. 2006) (Court vacated award, finding “[a]n award of fees and costs 

was not proper unless Atrana was a prevailing party. Atrana cannot be a prevailing party if the case 

was resolved by settlement.” (citations omitted)). BigCommerce argues the Supreme Court has 

explicitly held settlement does not bar recovery of attorneys’ fees, citing Maher v. Gagne, 448 U.S. 

122 (1980). But in that case, the Court was assessing §1988 claims.

Because BigCommerce is not the prevailing party, the Court need not reach whether the case 

is exceptional.3

 

3 This case does not strike the Court as exceptional. BigCommerce argues Diem’s arguments 

are so without merit they are fantastical. Dkt. No. 129 at 3. But plaintiff survived a motion for 

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CONCLUSION

For the forgoing reasons and for good cause shown, the Court hereby DENIES 

BigCommerce’s request for attorneys’ fees pursuant to 35 U.S.C. § 285. 

IT IS SO ORDERED.

Dated: March 1, 2019

______________________________________

SUSAN ILLSTON

United States District Judge

 

summary judgment Dkt. at 74. BigCommerce also argues Diem utilized underhanded, and costly, 

tactics forcing BigCommerce to review, isolate, produce, and house code that allegedly Diem never 

intended to review. Dkt. No. 126 at 7-9. But the local rules in the Eastern District of Texas required 

BigCommerce to produce code. Dkt. No. 128 at 12. BigCommerce expounds on the strength of its 

case versus the weakness of Diem’s case, Dkt. No. 126 at 4-7, Dkt. No. 129 at 2-5, but this argument 

is undercut by the fact that BigCommerce chose to settle. Further, the facts at bar do not resemble 

instances in which courts have found exceptional circumstances. Raniere v. Microsoft Corp., 887 

F.3d 1298, 1301 (Fed. Cir. April 18, 2018) (exceptional circumstances found where plaintiff’s

“conduct throughout this litigation, culminating in his untruthful testimony at the hearing on the 

motion to dismiss, demonstrates a pattern of obfuscation and bad faith.”); See also, Shipping & 

Transit, LLC v. Hall Enters., 2017 U.S. Dist. LEXIS 109122, *20-21 (C.D. Cal. July 5, 2017)

(exceptional circumstances found where plaintiff was a chronic litigant – filing nearly 500 patent 

lawsuits and “repeatedly dismissed its own lawsuits to evade a ruling on the merits” and therefore

fees.).

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