Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-01328/USCOURTS-cand-5_07-cv-01328-6/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:145 Patent Infringement

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United States District Court

For the Northern District of California

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

MAG

United States District Court

For the Northern District of California

E-FILED on 3/21/08

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SERIOUS MATERIALS, LLC,

Plaintiff,

v.

SUPRESS PRODUCTS, LLC,

Defendant.

No. C-07-01328 RMW

ORDER DENYING DEFENDANT'S

MOTION RE: EXCEPTIONAL CASE

DETERMINATION; DENYING

PLAINTIFF'S MOTION FOR SANCTIONS;

GRANTING DEFENDANT'S MOTION TO

TAX COSTS AGAINST PLAINTIFF

[Re Docket No. 37, 88, 96]

Before the court are three motions that were brought by the parties after they settled and

plaintiff Serious Materials, LLC ("Serious") stipulated to dismiss its patent infringement claims

against defendant Supress Products, LLC ("Supress"). The first motion, filed by defendant Supress,

asks the court to declare this case exceptional under 35 U.S.C. § 285 and to award Supress attorney's

fees ("Exceptional Case Motion"). The second motion, filed by plaintiff Serious, asks the court to

impose sanctions on Serious for bringing the Exceptional Case Motion ("Sanctions Motion"). The

third motion, brought by Supress, asks the court to review the clerk's taxation of costs in the amount

of $0. 

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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I. BACKGROUND

On March 7, 2007, plaintiff Serious filed the instant action against Supress for infringement

of United States Patent No. 7,181,891 ("the '891 patent"). The '891 patent, titled "Acoustical Sound

Proofing Material and Methods for Manufacturing Same" was originally filed on September 8, 2003

and issued on February 27, 2007. Serious claimed that the Supress product known as "SoundEngineered Drywall" infringed the '891 patent and sought damages and injunctive relief. Supress

counterclaimed for declaratory judgment that it does not infringe the '891 patent and that the patent

is invalid.

The parties have a history with one another. Defendant Supress was founded by Bruce

Donaldson, who was formerly a vice president of sales and marketing at Quiet Solution, which is

now a division of plaintiff Serious. The named inventors of the '891 patent, Marc U. Porat and

Kevin J. Surace, were the chairman and chief executive officer of Quiet Solution. Decl. Jonah

Mitchell Supp. Exceptional Case Mot. ("Mitchell Decl."), Ex. A. In April 2005, Donaldson left

Serious. Shortly thereafter, Donaldson founded Supress. Supress sold a composite wallboard that

consisted of two pieces of gypsum wallboard glued together with a noise-reducing viscoelastic glue,

a three-layer product. Later, Supress introduced a thicker specialty product, the accused "SoundEngineered Drywall," which added another layer of glue and another piece of gypsum wallboard – a

five-layer product comprising alternating layers as follows: gypsum-viscoelastic-gypsumviscoelastic-gypsum.

In November 2005, shortly after Supress started selling its thicker drywall product, Quiet

Solution sued Supress and Donaldson in Marin County Superior Court for trade secret

misappropriation and sought a preliminary injunction based on a non-compete clause in Donaldson's

employment contract with Quiet Solution. The court denied the preliminary injunction in December

2005 and thereafter in July 2006 the parties settled the trade secret case for a $100 payment by

Supress, mutual releases and dismissals with prejudice. Mitchell Decl., Ex. S. Seven months later,

Serious filed the instant suit based on the '891 patent on March 7, 2007, which was two weeks after

the patent issued. 

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

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During the pendency of the instant lawsuit, Serious filed a third lawsuit against Supress in

state court: a trademark complaint alleging that Supress's "key word" advertising constituted federal

trademark infringement. After Supress removed the trademark action to federal court, the parties

settled the case without payment by either party. The parties agreed to permissible and

impermissible uses of key word advertising for both parties, and Serious dismissed the case with

prejudice.

The parties filed a notice of stipulated voluntary dismissal in the instant action on November

13, 2007. Docket No. 32. On November 26, 2007, the court signed and filed the proposed

stipulated voluntary dismissal and judgment. Docket No. 33. On December 10, 2007, Supress filed

a motion for attorney's fees under 35 U.S.C. § 285 as well as a bill of costs. Although Supress did

not assert inequitable conduct in its answer or counterclaims against Serious, Supress now bases its

Exceptional Case Motion on alleged inequitable conduct before the PTO and litigation misconduct

by Serious. By its motion, Supress seeks $468,034 in attorney's fees and costs through December

2007, and intends to seek attorney's fees and costs for time spent in briefing these motions and for

appearing at the hearing. Decl. of Morgan Tovey Supp. Exceptional Case Mot. ("Tovey Decl.") ¶ 8.

II. ANALYSIS

A. Motion for Attorney's Fees Under 35 U.S.C. § 285

35 U.S.C. § 285 provides, "The court in exceptional cases may award reasonable attorney

fees to the prevailing party." "The determination of whether a case is exceptional and, thus, eligible

for and warranting an award of attorney fees under § 285 is a two-step process in which the district

court must (1) determine whether there is clear and convincing evidence that a case is exceptional, a

factual determination reviewed for clear error, and (2) if so, then determine in its discretion whether

an award of attorney fees is justified." Digeo, Inc. v. Audible, Inc., 505 F.3d 1362, 1366-67 (Fed.

Cir. 2007) (citing Cybor Corp. v. FAS Techs., 138 F.3d 1448, 1460 (Fed. Cir. 1998)). 

1. Timeliness

As an initial matter, Serious contends that Supress's motion is not timely under the Federal

Rules of Civil Procedure or this district's local rules because it was brought 27 days after the parties

filed their notice of Serious's voluntary dismissal of the suit. Supress e-filed the notice of voluntary

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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dismissal titled "[Proposed] Stipulated Voluntary Dismissal and Judgment" for the court's signature

on November 13, 2007. Docket No. 32. The court signed and entered the Stipulated Voluntary

Dismissal and Judgment on November 26, 2007. Docket No. 33. Supress filed its motion for

attorney's fees on December 10, 2007. Docket No. 37. 

Under Fed. R. Civ. P. 54(d)(2)(B) and N.D. Cal. Civ. L.R. 54-6(a), a motion for attorney's

fees must be served and filed within 14 days after entry of judgment by the court. Serious asserts

that the date the parties filed their notice of dismissal is the date of judgment for purposes of Rule

54(d)(2)(B) and L.R. 54-6(a) and that Supress's motion for attorney's fees is thus untimely because

the date of the notice was November 13, 2007 and Supress's motion was filed on December 10,

2007. Supress contends, however, that its motion is timely because its motion was filed 14 days

after the court signed and entered the Stipulated Voluntary Dismissal and Judgment.

 Rule 54(d)(2)(B) provides, "Unless otherwise provided by statute or order of the court, [a

motion for attorney's fees] must be filed no later than 14 days after entry of judgment . . .". Rule

41(a)(1) provides that "an action may be dismissed by the plaintiff without order of the court . . . (ii)

by filing a stipulation of dismissal signed by all parties who have appeared in the action." Serious

contends that the November 13, 2007 notice operates as an entry of judgment under Rule 54 to start

the 14-day period for filing attorney's fees. 

The court disagrees. Although it is true that the plaintiff may dismiss the action by filing a

stipulation of dismissal signed by all the appearing parties without further order of the court, the

parties clearly intended that the court take further action to enter the judgment. The document,

signed by both parties, is titled "[Proposed] Stipulated Voluntary Dismissal and Judgment" and

provides a block for signature by the court. Accordingly, the court finds that judgment was entered

on November 26, 2007, when it was signed by the undersigned and filed. Defendant's motion was

filed 14 days after the court entered judgment and is thus timely under Rule 54 and L.R. 54-6(a)

2. Exceptional Case

"A case may be deemed exceptional when there has been some material inappropriate

conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct

in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that

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1

 As discussed in further detail below, Supress did not plead inequitable conduct in its answer and

counterclaims. It raised the issue for the first time in the instant motion for attorney's fees. 

ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

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violates Fed. R. Civ. P. 11, or like infractions." Brooks Furniture Mfg, Inc. v. Dutailier Int'l, Inc.,

393 F.3d 1378, 1381 (Fed. Cir. 2005) (emphasis added). However, "[a]bsent misconduct in conduct

of the litigation or in securing the patent, sanctions may be imposed against the patentee only if both

(1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless." Id.

(citing Professional Real Estate Investors v. Columbia Pictures Indus, 508 U.S. 49, 60-61 (1993)

(defining "sham" litigation)). The Federal Circuit has declined to expand the scope of exceptional

cases to include "a patentee's bad-faith business conduct toward an accused infringer prior to

litigation." Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1329 (Fed. Cir. 2003). 

a. Inequitable Conduct

Inequitable conduct must be pleaded with particularity. Ferguson Beuregard/Logic

Controls, Inc., v. Mega Sys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003). To prove inequitable

conduct, a defendant must show by clear and convincing evidence, that the patentee engaged in

"affirmative misrepresentations of a material fact, failure to disclose material information, or

submission of false material information, coupled with an intent to deceive." Dayco Prods., Inc. v.

Total Containment, Inc., 329 F.3d 1358, 1362 (Fed. Cir. 2003).1

 

As recently clarified by the Federal Circuit, materiality is measured under two different

standards: "[I]f a misstatement or omission is material under the new Rule 56, it is material.

Similarly, if a misstatement or omission is material under the 'reasonable examiner' standard . . . it is

also material." Digital Control Inc. v. Charles Machine Works, 437 F.3d 1309, 1316 (Fed. Cir.

2006). Under the current Rule 56, 37 C.F.R. § 1.56(b) (2006),

information is material to patentability when it is not cumulative to information

already of record or being made of record in the application, and

(1) It establishes, by itself or in combination with other information, a prima

facie case of unpatentability of a claim, or

(2) It refutes, or is inconsistent with, a position the applicant takes in:

(i) Opposing an argument of unpatentability relied on by the Office, or

(ii) Asserting an argument of patentability.

A prima facie case of unpatentability is established when the information compels a

conclusion that a claim is unpatentable under the preponderance of evidence,

burden-of-proof standard, giving each term in the claim its broadest reasonable

construction consistent with the specification, and before any consideration is given

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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to evidence which may be submitted in an attempt to establish a contrary conclusion

of patentability.

Under the reasonable examiner standard, "information is material where there is a substantial

likelihood that a reasonable examiner would consider it important in deciding whether to allow the

application to issue as a patent." Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1364 (Fed. Cir

2007) (quoting 37 C.F.R. § 1.56(a) (1991)).

"The intent element of inequitable conduct requires that 'the involved conduct, viewed in

light of all the evidence, including evidence indicative of good faith, must indicate sufficient

culpability to require a finding of intent to deceive.'" Id. (quoting Impax Labs. v. Aventis Pharm.

Inc., 468 F.3d 1366, 1374-75 (Fed. Cir. 2006)). 

Should the court find "that the requirements of materiality and intent have been established

by clear and convincing evidence, it must then 'balance the equities to determine whether the

patentee has committed inequitable conduct that warrants holding the patent unenforceable. Id.

(quotation and citation omitted). Under the balancing test, "[t]he more material the omission or the

misrepresentation, the lower the level of intent required to establish inequitable conduct, and vice

versa." Id. (citing Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256

(Fed. Cir. 1997)).

Supress asserts that Porat and Surace, the named inventors on the '891 patent, engaged in

inequitable conduct in their dealings with the PTO in two different ways. First, Supress asserts that

the inventors falsely represented that their claimed invention provided superior sound transmission

reduction by citing STC (sound transmission class) ratings that were obtained from tests that the

inventors knew were not compliant with the relevant ASTM E90 testing protocol. Second, Supress

contends that Porat and Surace falsely represented by way of their inventor's oaths that they were the

only true inventors of the subject matter of the '891 patent.

i. Testing Protocol

All of the independent claims of the '891 patent claim "a laminated structure." '891 Patent,

cls. 1, 6, 7, 16. Each of the independent claims appears to claim a five-layer sandwiched structure

comprising three layers of non-metallic material alternating with two layers of a viscoelastic glue

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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(i.e., material-viscoelastic-material-viscoelastic-material). Id. This structure as claimed is "used for

constructing walls, floors, or ceilings or doors." Id., cls. 1, 6, 16. 

The specification of the '891 patent states that the invention relates to "soundproofing

materials of a novel laminar construction which significantly improves the soundproofing ability of

walls, ceilings, floors and doors, thereby to prevent the transmission of sounds from one area to

another." '891 patent, col. 1:7-12. The Background section of the specification describes the

importance of soundproofing, stating

Noise is emerging as both an economic and public policy issue. Soundproof rooms

are required for a variety of purposes. For example, apartments, hotels and schools all

require rooms with walls, ceilings and floors that minimize the transmission of sound

thereby to avoid annoying people in adjacent rooms. . . . One measure of the severity

of the problem is the widespread emergence of city building ordinances that specify a

minimum Sound Transmission Class ("STC") rating.

Id., col. 1:21-27. 

The patent specification describes STC numbers as "numbers which are used in the

architectural field to rate partitions, doors and windows for their effectiveness in blocking sound.

The number assigned to a particular partition design as a result of STC testing represents a best fit

type of approach to a set of curves that define the sound transmission class." Id., col. 6:57-63. It

sets forth that the STC numbers are "defined by ASTM E90 laboratory test for sound measurements

obtained in 1/3 octave bands, and ASTM E413 for calculating "STC" (Sound Transmission Class)

numbers from the sound transmission loss in each partition, and these standards are available on the

internet at http://www.astm.org." Id., col. 6:65-7:4.

Figure 3 describes a configuration for an acoustical soundproofing panel arranged as follows:

gypsum board, viscoelastic QuietGlue, mass loaded vinyl, viscoelastic Quiet Glue, gypsum board. 

Id., col. 6:7-15. The specification notes that the use of two panels in the configuration described in

Figure 3 would result in an STC of 54, while "a similar configuration with standard 5/8 inch drywall

on both sides of standard 2x4 construction yields an STC of 34." Id., col. 7:21-26. The

specification goes on to assert, "Accordingly, this invention yields a 20 STC point improvement

over standard drywall in this particular construction." Id., col. 7:27-29. 

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2

 The parties do not appear to dispute that the appropriate panel testing size for the E90 testing

protocol is 9' x 14'.

ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

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Supress presents evidence that the testing that yielded the STC numbers cited in the

specification was set up using a 4' x 4' panel of sheetrock. Mitchell Decl., Ex. N. Porat was told in

an July 29, 2003 e-mail that Quiet Solution should test 9' x 14' panels because "[i]t's not worth

fighting the test standards be they right or wrong." Id., Ex. O.2 The email noted that there would be

STC point differences between testing a 9' x 14' panel and an 8' x 8' or 4' x 4' panel that would reflect

negatively on the STC rating were the recommended panel size to be used. Id. ("I doubt that this

test size will cost you more than one STC point over an 8 x 8 specimen, although you may lose a

few points from your 4 x 4 test."). Based on these documents, Supress asserts that the inventors

knowingly misrepresented the STC value achieved by the preferred embodiment of in the '891 patent

specification and thereby misled the patent office.

Serious points out that the patent specification discloses that the assemblies tested consisted

of 4' x 4' panels. '891 patent, Figs. 5-10 (noting that the specimen area is "16 sq. ft."). It also notes

that the specification never states that the panels were tested in compliance with the ASTM E90

testing protocol and cites to a website from which the protocol is available (albeit for a fee), id. col.

7:65-8:4. Accordingly, it asserts that the specification misrepresents nothing with regard to the

testing standards used to achieve the STC numbers cited.

There is evidence that the inventors were aware that their testing of the disclosed invention

was not compliant with the ASTM E90 testing protocol. However, as Serious asserts, the

specification discloses the size of the assemblies tested and only asserts that the ASTM E90 testing

protocol is an appropriate measurement protocol, not that the assemblies were tested in compliance

with the protocol. The specification may have been artfully worded to avoid misrepresentation to

the PTO that the STC numbers were obtained using the ASTM E90 testing protocol, which certainly

raises some question whether the inventors sought to mislead the examiner regarding the STC

numbers attainable by use of the invention. However, although Supress asserts that the July 29,

2003 e-mail demonstrates that a smaller sample size may have had the effect of reducing the STC

rating achieved from the ASTM E90 test, it has provided no clear and convincing evidence that a

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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different sample size would have necessarily resulted in a different STC number, so the court cannot

conclude that any misrepresentation necessarily occurred or that the inventors intended to mislead. 

Even assuming there was a misrepresentation, Supress has not provided clear and convincing

evidence that the examiner found the test results to be material to the issuance of the patent. While

it seems clear that the patent specification was drafted in order to emphasize that the invention

disclosed resulted in increased performance under the ASTM E90 Testing Protocol, there is no

indication that the examiner found the STC numbers provided to be material during prosecution of

the patent claims or relied on those numbers in permitting the claims to issue. 

To find that the patentee engaged in inequitable conduct, the court must find both that the

omission was material and that there was sufficient intent. Intent may be inferred from evidence

presented, "[t]he more material the omission or misrepresentation, the lower the level of intent

required to establish inequitable conduct and vice versa." Cargill, Inc., 476 F.3d at 1364. Here,

although the evidence establishes that Surace and Porat were aware of the ASTM testing methods

and fact that the patent specification notes the improved acoustical qualities of the claimed invention

in terms of STC numbers, without concrete evidence that the STC numbers or test results were

material to the examiner, it is difficult to infer sufficient intent to deceive sufficient to establish

inequitable conduct. Because clear and convincing evidence does not establish either materiality or

intent to deceive, the court does not undertake the balancing step. The court therefore concludes that

Supress has failed to establish inequitable conduct by the requisite clear and convincing evidence

with respect to the STC numbers.

ii. Inventorship

Supress also contends that Serious engaged in inequitable conduct by submitting false

information regarding the inventors' sole inventorship of the '891 patent. It asserts that, contrary to

their inventor's oaths swearing that they were the true and only joint inventors of the '891 patent

subject matter, third parties other than Surace and Porat are actually co-inventors. 

Supress presents email from Surace dated four months prior to the inventors' oaths

acknowledging that neither he nor Porat had a background in construction. Surace states, "the

principals of Quiet Solution (myself included) do not have a construction background. We have,

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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until last year, run several large high-tech (software as well as hardware) companies . . .so we are

learning this business." Mitchell Decl., Ex. M. In the same email, Surace states, "We do, however,

have a world class engineering team, including PhDs developing new polymers and products for

sound damping. So we hope to improve the state of the art." Id. Supress contends that this

statement identifies that the true inventors were not Surace and Porat, but the engineering team

working for them. It also asserts that an email sent by Porat indicates his ignorance of basic

architectural acoustic principles and thus that he could not be an inventor of the '891 patent. 

Mitchell Decl., Ex. N ("Typically, when you double the density of a material, e.g. sheetrock, you

pick up 6 db he says. So if 2 layers of sheetrock is STC-34, 4 layers would be STC-40, 8 layers

would be STC-46 etc. I don't know why this is the case – you should talk to him."). 

The court does not find that this evidence clearly and convincingly demonstrates that Porat's

inventors' oath was false. Although the email seems to indicate that Porat did not himself know the

principle that is the subject of his email, the court cannot necessarily conclude that his lack of

understanding of this principle means that he did not correctly attest to being a joint inventor with

Surace. Nor does the evidence presented convince the court that anyone other than Surat and Porace

were co-inventors so as to render the inventor's oaths false. As Supress itself acknowledges, "the

technology at issue in this case is not rocket science." Mot. at 3. Even considering the evidence that

Surace and Porat did not have a background in construction or acoustical design , it does not

necessarily follow that they could not have invented the laminate structure claimed in the '891

patent.

Supress further asserts that Serious produced nothing in discovery to demonstrate that Porat

was an inventor of the material claimed in the '891 patent. Exceptional Case Mot. at 20 ("Indeed,

Plaintiff's 'evidence' that Porat and Surace conceived of, and reduced to practice, their claimed

invention is more instructive for what it is missing. Curiously absent from Plaintiff's conception

'evidence' are inventor notebooks and design, engineering and 'as-built' drawings."). Although it

points to what types of evidence of conception that it expected to find but did not, Supress fails to

demonstrate by clear and convincing evidence that Porat was not properly named as an inventor of

the '891 patent or that his inventorship oath was false. 

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 Supress argues that Serious should have known that it was initiating litigation a patent that it

should have known would be found obvious because the Supreme Court's decision in KSR

International Co. v. Teleflex, Inc., 127 S.Ct. 1727, 1734 (2007), was issued before Serious filed suit. 

ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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MAG 11

Supress also contends that a continuation in part application ("CIP") filed from the parent

application that matured into the '891 patent omitted Porat as the inventor even though the

specification for the CIP "was, for the most part, identical to the parent application," incorporated

the parent application by reference and contained a claim "which substantially overlapped with a

claim in the parent application." The court does not find this argument convincing. The mere fact

that a CIP was filed naming a new inventor does not provide evidence that Porat was not an inventor

of the parent application. 

Because the court finds that Supress has not presented clear and convincing evidence that

there was any deception, it concludes that Supress has failed to meet its burden that Serious engaged

in inequitable conduct with respect to the inventor's oaths.

b. Litigation Misconduct: Bad Faith, Vexatious Tactics

"If there is clear and convincing evidence that a plaintiff has brought a baseless or frivolous

suit against an accused infringer, that is a sufficient basis to require a district court to deem the case

exceptional under § 285." Digeo, 505 F.3d at 1367 (citing Forest Labs., Inc. v. Abbott Labs., 339

F.3d 1324, 1329-30 (Fed. Cir. 2003)). "A frivolous infringement suit is one which the patentee

knew or, on reasonable investigation, should have known, was baseless." Haynes Int'l Inc. v. Jessop

Steel Co., 8 F.3d 1573, 1579 (Fed. Cir. 1993). Supress contends that Serious engaged in bad faith

litigation tactics by initiating and continuing to prosecute this litigation because it either

intentionally or recklessly sued on a patent that it knew as unenforceable for inequitable conduct or

invalid as anticipated or obvious. As set forth above, the court finds that Supress has failed to

present clear and convincing evidence of inequitable conduct in procuring the '891 patent. 

Therefore, the court turns to considering whether Serious knew or should have known that its

patents were invalid as obvious or anticipated. Haynes, 8 F.3d at 1579. "Merely negligent conduct

does not suffice to establish that a case is exceptional." Digeo, 505 F.3d at 1369 (citing Mach. Corp.

of Am. v. Gullfiber AB, 774 F.2d 467, 473 (Fed. Cir. 1985)).3

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approximately two months after Serious filed this suit on March 7, 2007. 

ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

MAG 12

Supress argues that there was nothing novel about the multi-layer laminate construction

claimed by Surace and Porat when they filed their patent application in September 2003. Serious

points to multiple patents that disclose that the use of viscoelastic materials provides sound

dampening qualities. Mitchell Decl., Ex. C, U.S. Patent No. 5,256,223, issued October 26, 1993 ("It

is well known that constrained viscoelastic layer damping treatments provide an effective meas of

passive control for structural vibration."); id., Ex. D, U.S. Patent No. 5,262,232, issued November

16, 1993 ("It has long been known that the vibration of component parts of devices and structures

that vibrate . . . can be reduced by the attachment of a layer of viscoelastic material."). Supress also

points to a number of references that disclosed multi-layer laminate configurations involving

alternating construction materials with viscoelastic glues. See id., Exs. G, H, I, J (all disclosing

laminated structures of construction materials and viscoelastic glue). While some of these

references describe a "plurality" of layers and others even describe a 3-layer laminate comprised of

gypsum-viscoelastic-gypsum, none of these references discloses the 5-layer gypsum-viscoelasticgypsum-viscoelastic-gypsum laminate claimed in the '891 patent. 

Supress particularly points to U.S. Patent No. 4,663,224, issued May 5, 1987 ("the '224

patent") which it contends anticipates the '891 patent claims. Even assuming that the '224 patent

anticipates or renders obvious the '891 patent, Serious asserts that it was not aware of this prior art

and was only informed by Supress of its existence on October 30, 2007. The '224 patent was not

disclosed in Supress's invalidity contentions served on Serious on August 13, 2007. See Am. Decl.

John Cooper Supp. Mot. Sanctions, Ex. G. On October 31, 2007, the day after Supress disclosed the

'224 patent as anticipating prior art, the parties began to exchange communications regarding

settlement of the suit. Id. ¶¶ 15-16 . Serious accepted the terms of the settlement proposed by

Supress by letter dated November 9, 2007. Id., Ex. L. The parties subsequently filed the stipulation

of dismissal on November 13, 2007.

The court has no reason to disbelieve Serious's assertion that it did not know about the '224

patent prior to its disclosure on October 30, 2007 by Supress. It further finds that Serious could

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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have reasonably believed that the '891 patent was neither anticipated nor obvious based on the '224

patent or the other prior art Supress cites and that Serious did not act wrongfully by continuing to

pursue the litigation until it accepted Supress's offer to settle on November 9, 2007. 

Finally, Supress points to an opinion received by Serious from the International Searching

Authority regarding the foreign counterpart to the '891 patent. The opinion, which issued before

Serious initiated litigation on the '891 patent against Supress, stated with regard to claims 10 and 12

(claims that were not at issue in the instant action), that in light of two prior art references cited to

the PTO, 

[i]t would have been obvious to one having ordinary skill in the art at the time the

invention was made to have one more laminated structure for the external layer

comprising a first layer of metal, a second layer of viscoelastic glue, a third of

gypsum, since it has been held that mere duplication of essential parts of a device

involves only routine skill in the art. The motivation for doing so would have been to

maximize to the sound absorption on the first layer.

Mitchell Decl., Ex. HH at SM02046-47. Supress contends that based upon this opinion Serious

should have known that the '891 patent as a whole would have been found to be obvious. First, the

court agrees with Supress that this opinion only regards claims 10 and 12, which were not asserted

against Supress. Second, this opinion of obviousness is based on two specific prior art references,

Kirshner and Hartman, both U.S. Patents cited in the prosecution of the '891 patent. Serious

amended its claims and distinguished Kirshner during prosecution of the '891 patent. Cooper Decl.,

Ex. B at SM01244-51. Thus, the ISA opinion does not necessarily put Serious on notice that its

issued '891 patent, which had been issued over the same prior art references, would be found to be

obvious in light of the presumption that issued United States patents are valid. Serious's decision to

litigate based on the '891 patent is not objectively baseless and does not necessarily demonstrate bad

faith.

Based on the evidence presented, the court does not conclude that this was an exceptional

case due to bad faith litigation tactics by Serious. 

B. Motion for Sanctions

Litigants are subject to Rule 11 sanctions for, among other reasons, presenting to the court

"claims, defenses, and other legal contentions . . . [not] warranted by existing law or by a

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4

 On February 8, 2008, after the briefing had closed on both the Exceptional Case Motion and the

Sanction Motion, Supress filed a request asking the court to take judicial notice of pleadings filed by

Serious's counsel, Mr. Cooper of Farella Braun and Martell, in a separate case, Dolby Labs., Inc. v.

Lucent Technologies, Inc., Case No. 01-20709. These pleadings include a motion for attorney's fees

under 35 U.S.C. § 285 based on a claim of inequitable conduct that Farella Braun and Martell had

not previously pled. The court sustains Serious's objection and denies this request as untimely under

L.R. 7-3(d) ("once a reply is filed, no additional memoranda, papers, or letters may be filed without

court approval"). 

ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

MAG 14

nonfrivolous argument for the extension, modification, or reversal of existing law or the

establishment of new law," or factual contentions that lack evidentiary support. Fed. R. Civ. P.

11(b)(2) & (3). Serious contends that Rule 11 sanctions are appropriate against Supress because its

Exceptional Case Motion is (1) legally frivolous and (2) lacks evidentiary support.

1. Legally Frivolous

Serious initially argues that the inequitable conduct upon which Supress in part bases its

inequitable conduct motion was never pled. To the extent that Serious seeks to contend that Supress

has waived its claim for attorney's fees under 35 U.S.C. § 285, the court disagrees. "At the pretrial

stage, there is no prevailing party, and thus, any claim for attorneys' fees would be premature." 

Sulzer Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1370 (Fed. Cir. 2004); cf. Brasseler, U.S.A. I,

L.P., v. Stryker Sales Corp., 182 F.3d 888, 892 (Fed. Cir. 1999) (rejecting an argument that a claim

for attorney fees was waived by failing to raise the claim in a successful summary judgment motion,

holding that "until the 'prevailing party' is known, a party that has pled a claim for attorneys' fees

under Section 285 cannot be expected to request such fees"). 

The court acknowledges that the circumstances presented in this case differ slightly: Supress

bases its motion for attorney's fees in part on inequitable conduct by Serious in obtaining the '891

patent. Although it did not assert inequitable conduct in its answer and counterclaim, Supress

contends that it did not determine that it had a claim for inequitable conduct until discovery revealed

that Porat and Surace were aware that the ASTM E90 tests were conducted on a smaller sample size

than set forth in the testing protocols. Supress asserts that had the case not settled, it would have

sought leave to amend its answer and counterclaims to plead inequitable conduct based on this

discovery.4

 

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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MAG 15

Given that Supress asserts inequitable conduct based on both the late-discovered test

protocol non-compliance and the inventors' allegedly false oath that they were the sole inventors, the

court is somewhat doubtful that Supress could not have asserted an inequitable conduct claim prior

to discovering the email regarding the sample size for the ASTM E90 test. Nevertheless, it does not

find under the circumstances that Supress waived its claim for attorney's fees to the extent that the

claim is based on inequitable conduct. Further, although the court certainly does not endorse

Supress's approach in this case of seeking to litigate the issue of inequitable conduct after the case

has settled, the court does not find Supress's position to be entirely legally frivolous.

2. Lacking Evidentiary Support

The court also does not find that this motion is entirely without evidentiary support such that

Rule 11 sanctions are warranted. While the court does not find that this case is exceptional, it also

does not find that Supress's claims of inequitable conduct and bad faith litigation were so devoid of

support as to warrant sanctions under Rule 11. As discussed above, Supress has presented evidence

in support of its arguments that Serious engaged in inequitable conduct before the PTO and in bad

faith litigation by initiating this action knowing that the '891 patent may be invalid as obvious or

anticipated. Merely because Supress was unable to carry its burden of proof to show that Serious

engaged in inequitable conduct with respect to the '891 patent or bad faith litigation tactics does not

mean that its contentions are without evidentiary support. The court thus concludes that Rule 11

sanctions against Supress are not warranted.

C. Motion re: Taxation of Costs

Under Fed. R. of Civ. P. 54(d), "costs other than attorneys' fees shall be allowed as of course

to the to the prevailing party unless the court otherwise directs." The parties do not dispute that

Supress is the prevailing party in this case as the case was dismissed with prejudice by Serious with

a covenant not to sue Supress, its customers, distributors or successors. 

Supress filed its Bill of Costs on December 10, 2007 seeking $1,867: $178 for fees for

service of subpoena and $1,689 for exemplification and copies of papers obtained for use in the case.

Docket No. 40. On January 25, 2008, the Clerk taxed costs in the amount of $0.00 with a notation

"no judgment entered." Supress asks the court to review the Clerk's declination to tax costs.

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

FOR SANCTIONS; GRANTING DEFENDANT'S MOTION TO TAX COSTS AGAINST PLAINTIFF — No. C-07-01328 RMW

MAG 16

As with Supress's Exceptional Case Motion, Serious contends that the Bill of Costs was

untimely. L.R. 54-1(a) states that a bill of costs must be filed within 14 days after the entry of

judgment. For the reasons set forth above, the court finds that the Bill of Costs is timely.

Serious also contests the Bill of Costs on the basis that Supress has not submitted sufficient

documentation to support its claim of $1,689 for exemplification and copies for papers obtained for

use in the case. Supress submitted invoices supporting the amount claimed and a declaration

required by L.R. 54-3 stating that these costs "are correct and were necessarily incurred in this

action and the services for which fees have been charged were actually and necessarily performed." 

See Docket No. 40. Although the invoices do not specify exactly what documents were copied and

do not specifically exclude "motions, pleadings, notices, and other routine case papers," the court

sees no reason to question the declaration signed by Supress's counsel that the costs are compliant. 

It therefore rejects Serious's contention that Supress's Bill of Costs is not sufficiently supported and

overrules its objections.

The court thus finds the Clerk's declination to tax costs to be in error and taxes costs in the

amount of $1,867 as originally requested by Supress.

III. ORDER

For the foregoing reasons the court:

1. denies Supress's Exceptional Case Motion and declines to award attorney's fees;

2. denies Serious's Sanctions Motion; and

3. taxes costs against Serious in the amount of $1,867.

DATED: 3/21/08

RONALD M. WHYTE

United States District Judge

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ORDER DENYING DEFENDANT'S MOTION RE: EXCEPTIONAL CASE DETERMINATION; DENYING PLAINTIFF'S MOTION

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Notice of this document has been electronically sent to:

Counsel for Plaintiff:

John L. Cooper jcooper@fbm.com

Jeffrey M. Fisher jfisher@fbm.com

June Tsu-Ain Tai jtai@fbm.com

Counsel for Defendants:

Jonah Dylan Mitchell jmitchell@reedsmith.com

Morgan William Tovey mtovey@reedsmith.com

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 3/21/08 /s/ MAG

Chambers of Judge Whyte

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