Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_02-cv-02060/USCOURTS-casd-3_02-cv-02060-43/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 Patent Infringement

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Microsoft originally filed this motion within fourteen days of the March 2007

summary judgment order. [# 1406] The Court deferred ruling pending the outcome of

Lucent’s appeal. [# 1913]. As soon as the Federal Circuit affirmed that Microsoft did not

infringe Lucent’s ‘954 patent, Microsoft renewed its motion. 

Consistent with the Court’s prior rulings, the Court rejects Lucent’s argument that

Microsoft is not the “prevailing party” in the “case” but only one of several patents being

litigated (including current proceedings in related case numbers). The Court divided the

(continued...)

- 1 - 02CV2060 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LUCENT TECHNOLOGIES, INC.,

MULTIMEDIA PATENT TRUST., et

al.,

Plaintiffs & Counter-Defendants,

CASE NO. 02-2060-B (CAB)

consolidated with

Civil No: 03CV0699-B (CAB) and

Civil No: 03CV1108-B (CAB)

ORDER DENYING MICROSOFT

CORPORATION’S MOTION FOR

AN AWARD OF ATTORNEY’S

FEES

[Group 3 Patents]

[Docket No. 2203]

vs.

GATEWAY, INC, et al.,

Defendants and Counter Claimants,

and

MICROSOFT CORPORATION,

Intervenor and Counter Claimant, __________________________________

AND CONSOLIDATED CASES

__________________________________

Following the Federal Circuit’s decision, Lucent v. Gateway, 525 F.3d 1200 (Fed. Cir.

2008), Microsoft Corporation renewed its motion for an award of attorney’s fees on the Alta

‘954 Patent (U.S. Patent No. 4,701,954) pursuant to the exceptional case patent statute.1

 The

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consolidated cases into groups for case management purposes, including judgment, but finds

each patent to be a separate case for purposes of costs and fees analysis. This motion

concerns the sole remaining speech coding patent in Group 3, as Lucent voluntarily

dismissed the other two patents in this group. 

- 2 - 02CV2060 

Court found the motion suitable for decision on the papers. Local Civil Rule 7.1(d)(1). The

Court commends counsel for the excellent, comprehensive yet concise, and cogent written

briefs. 

The parties are familiar with the facts, the technology, and procedural history in the

patent application proceedings and in this Court. 

Discussion

“The court in exceptional cases may award reasonable attorney fees to the prevailing

party.” 35 U.S.C. § 285. In the first step, the applicant must show clear and convincing

evidence that the case is exceptional. Beckman Instruments, Inc. v. LKB Produkter AB, 892

F.2d 1547, 1551 (Fed. Cir. 1989). Vexatious or unjustified litigation may make a case 

exceptional if it was objectively baseless and maintained in bad faith. Brooks Furniture Mfg.

v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005); Standard Oil Co. v. American

Cyanamid Co., 774 F.2d 448, 455 (Fed. Cir. 1985). In the second step, the Court exercises

its discretion as to whether to award attorneys’ fees. Stephens v. Tech Int’l, Inc., 393 F.3d

1269, 1273 (Fed. Cir. 2004). Awarding fees is appropriate when shifting fees will prevent a

“gross injustice” but are not automatically awarded whenever a patent owner loses an attempt

to protect its patents. Forest Labs., Inc. v. Abbott Labs, 339 F.3d 1324, 1329 (Fed. Cir.

2003).

Microsoft argues that once the Court issued the Markman Order, it was abundantly

clear that Microsoft was not infringing Lucent’s ‘954 patent under the Court’s construction

of the term “each successive iteration including the steps of.” Phonometrics Inc. v. Westin

Hotel Co., 350 F.3d 1242 (Fed. Cir. 2003) (declaring case exceptional when patentee

maintained case after claim construction order showed there could be no infringement). 

Microsoft’s speech codecs removed pitch “outside” the pulse-forming loop – the method

found in the prior art. To overcome that prior art, Lucent narrowed its pitch redundancy

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removal claim by adding five steps that are to be performed iteratively and inside the pulseforming loop during each pulse. Microsoft argues that the file history conclusively showed

that an alleged equivalent using a method in which fewer than all the calculations were

performed in each pulse-forming iteration was directly at odds with Lucent’s amendment that

“the claimed invention found and removed pitch redundancies during the formation of each

successive pulse in the multipulse sequence.” 

Microsoft argues the Court can infer subjective bad faith because Lucent conceded –

through its expert witness during the deposition and its attorney at the summary judgment

hearing – that Microsoft did not infringe under the Court’s construction of Claim 1. Despite

the Court’s arguably unambiguous interpretation at the Markman hearing, Microsoft accuses

Lucent of attempting to interject confusion and to overtly abuse the alleged clear Markman

ruling. The Court’s claim construction “lef[t] no room” for Lucent’s contorted theory. 

Union Oil Co. of Calif. v. Chevron USA Inc., 34 F. Supp. 2d 1222 (C.D. Cal. 1998) (tactics

and arguments at trial showed attempts to circumvent the claim construction order). 

The Court finds no evidence that Lucent pursued its ‘954 patent against Microsoft in

bad faith or that its infringement claim was objectively unmeritorious. Although Lucent’s

arguments did not carry the day at various stages of the litigation (including the construction

of the phrase at issue, the summary judgment motion, and the appeal), the record shows that

Lucent’s positions were reasonable, even though arguably weakly-supported by expert

testimony, if at all. Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1260 (Fed. Cir. 2000)

(reasonably relying on retained experts). Specifically as to Lucent’s expert, the Court does

not accept Microsoft’s characterization that Dr. Kabal “conceded” no literal infringement. 

His written expert report and his declaration to the summary judgment motion outlined his

view that Microsoft’s products literally infringed the ‘954 patent if the Court’s Markman

ruling were correct. Microsoft’s Ex. E at 61 (Expert Report at 9-10); Lucent’s Ex. 6 at 5

(Kabal Decl. ¶ 12 ). More specifically, it appears to the Court that Dr. Kabal testified in his

deposition nonsensically as to literal infringement in his answer to Microsoft’s hypothetical

question. His answer contradicted itself when he said “No. They’re infringed under the

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doctrine of equivalents.” Microsoft’s Ex. F at 70 (Kabal Depo. at p. 121, lines 11-12). That

answer, to make sense, should be read as “Yes, but they’re infringed under the doctrine of

equivalents.” There was no attempt by Microsoft to remove the inconsistency and selfcontradiction of this answer, as it could have done.

Furthermore, Lucent was within its rights at the summary judgment hearing (and on

appeal) to attempt to persuade the Court that the initial construction of the phrase should be

modified. Microsoft’s Ex. G at 82 (RT at 98); e.g., Jack Guttman, Inc. v. Kopykake Enters.,

Inc., 302 F.3d 1352, 1361 (Fed. Cir. 2002). The Court finds that Lucent presented legitimate

arguments within the professional boundaries of zealous advocacy. Moreover, Lucent also 

challenged the construction of the phrase in its appeal to the Federal Circuit. Lucent, 525

F.3d at 1215 (acknowledging that District Court’s construction was not supported by the sole

embodiment described in the specification). Although Lucent’s doctrine of equivalents

position and its theory of literal infringement failed on the merits, there is no injustice, let

alone a gross injustice, in following the usual rule that each party bears its own attorney’s

fees. Forest Labs., 339 F.3d at 1329.

As an alternative ruling, the Court determines, in its discretion, that an award of

attorney’s fees is not appropriate on the ‘954 litigation. Beckman, 892 F.2d at 1552. Lucent

(as well as Microsoft) did not commit any acts of misconduct and the efforts of its attorneys,

at all times, were professionally presented. For example, Lucent voluntarily dismissed two

other speech coding patents from Group 3 before any substantive motions were filed. 

IT IS SO ORDERED.

DATED: July 17, 2008

Hon. Rudi M. Brewster

United States Senior District Judge

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