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 The Honorable Ricardo S. Martinez 

UNITED STATES DISTRICT COURT 

WESTERN DISTRICT OF WASHINGTON 

AT SEATTLE 

EON-NET, L.P., 

 

 Plaintiff, 

 v. 

FLAGSTAR BANCORP, 

 Defendant. 

CASE NO. C05-2129 RSM 

PLAINTIFF EON-NET L.P.’S RESPONSE 

TO DEFENDANT FLAGSTAR 

BANCORP’S MEMORANDUM 

REGARDING FEES AND COSTS 

Case 2:05-cv-02129-RSM Document 194 Filed 02/16/2010 Page 1 of 9
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I. INTRODUCTION

Plaintiff Eon-Net, L.P. (“Eon-Net” or “plaintiff”) and its counsel Jean-Marc 

Zimmerman (“Zimmerman”) submit this response in opposition to defendant Flagstar 

Bancorp’s (“Flagstar” or “defendant”) Memorandum Regarding Fees and Costs and its 

application to have undersigned counsel (“Zimmerman”) sanctioned under Federal Rule 

of Civil Procedure 11 (“Rule 11”). In opposition to Flagstar’s application for Rule 11 

Sanctions, Eon-Net and Zimmerman hereby incorporate by reference Eon-Net’s 

previously filed Response to Flagstar’s Motion for Attorneys Fees and Costs (Dkt. #179), 

and Motion for Reconsideration (Dkt. #189). 

 In September 2007, the U.S. Court of Appeals for the Federal Circuit (”Federal 

Circuit”) found that Zimmerman conducted a proper pre-suit investigation of Flagstar’s 

accused web-based operations before filing this action, and also found that the 

specification of the patents-in-suit (“Eon-Net patents”) support Eon-Net’s infringement 

position. Since then, on three different occasions, the U.S. Patent and Trademark Office 

(“PTO”) has confirmed the non-frivolousness and objective reasonableness of Eon-Net’s 

claim construction of the Eon-Net patents by issuing/allowing three new patents having 

the same specification as the Eon-Net patents, which three new patents each have claims 

explicitly directed towards processing information from documents that do not originate 

form scanned hard copy documents. Accordingly, Zimmerman did not violate Rule 11, 

and he should not be sanctioned. 

 In addition, Flagstar’s application for fees and costs should be denied because the 

fees and costs it seeks to be paid are unreasonable, and because many of the fees and 

costs it seeks are for services directed to issues that were not yet ripe for presentation to 

the Court, or indeed, even for preparation for submission to the Court. In opposition to 

Flagstar’s application for Fees and Costs, Eon-Net and Zimmerman hereby incorporate 

by reference Eon-Net’s previously filed Response to Flagstar’s Memorandum 

Establishing Attorneys’ Fees and Costs (Dkt. #84). 

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II. ARGUMENT

A. Rule 11 Sanctions Should Not Be Imposed Against Zimmerman 

Because the Claim Construction Proffered in this Case Was 

Reasonable and this Case was Filed for a Proper Purpose 

Rule 11 requires an attorney “to conduct a reasonable inquiry into the law and 

facts before filing a pleading in a court and to certify that the claims contained therein are 

not frivolous, legally unreasonable, without factual foundation, or asserted for an 

improper purpose.” Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1300 

(Fed.Cir. 2004). A complaint violates Rule 11 only if it is “both baseless and made 

without a reasonable and competent inquiry.” Moore v. Keegan Mgmt. Co., 78 F.3d 430, 

434 (9th Cir.1996) (quoting Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362 

(9th Cir.1990)) (emphasis added in Moore). In the context of patent infringement actions, 

Rule 11 requires that “an attorney interpret the asserted patent claims and compare the 

accused device with those claims before filing a claim alleging infringement.” QPharma, 360 F.3d at 1300-1301. “‘A good faith, informed comparison of the claims of a 

patent against the accused subject matter’ constitutes a reasonable investigation.” 

Biomedino, LLC v. Waters Corp., 2005 WL 2211374 (W.D. Wash.) (quoting Q-Pharma). 

 Rule 11 sanctions are inappropriate in this case because as the Federal Circuit 

previously held in September 2007, Zimmerman conducted a proper pre-suit 

investigation prior to filing this action, and the specification supports the claim 

construction put forth by Zimmerman that the claim terms “document or file” include 

electronic documents, i.e. files, not derived from scanned hard copy documents. 

Specifically, in reversing this Court’s erroneous award of Rule 11 Sanctions in October 

2006 (Dkt. #79), the Federal Circuit found that: 

1. Eon-Net’s counsel conducted a proper pre-suit investigation “by applying 

the claims of the ‘697 patent to the accused device (portions of the 

Flagstar website) and concluding that there was a reasonable basis for 

finding of infringement” and that “[t]here is really no dispute that EonCase 2:05-cv-02129-RSM Document 194 Filed 02/16/2010 Page 3 of 9
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Net’s counsel did examine portions of Flagstar’s website and, based on his 

experience, concluded that it worked in a manner that infringed the ‘697 

patent.” Eon-Net v. Flagstar, 2007-1132, p. 12; and 

2. “[t]he specification also supports Eon-Net’s infringement position 

because, although it initially describes a system for extracting information 

form hard copy documents through a scanner, it further provides that the 

hardware for inputting data can include ‘a keyboard, a light pen, a mouse, 

a touch screen, a laser scanner, a microphone, a tablet, a disk drive, a 

magnetic tape drive, and a modem.’” Id., p. 13. 

 The Federal Circuit thus found that Zimmerman’s claim construction that the 

Eon-Net patents cover processing information not derived from scanned hard copy 

documents was reasonable and not frivolous. 

 The objective reasonableness and non-frivolousness of Zimmerman’s claim 

construction was recently affirmed by the PTO not once, not twice, but three times, when 

the PTO issued two patents and allowed a third patent, each based on the same 

specification as the Eon-Net patents, each new patent having claims directed to 

processing information not derived from scanned hard copy documents. Significantly, 

the PTO issued and allowed the three new patents, respectively, after reviewing and 

considering this Court’s Order on Claim Construction (Dkt. #187) which Eon-Net’s 

principal Mr. Medina provided to the PTO prior to the issuance of the first of these three 

new patents. 

 Even assuming, arguendo, that this Court’s claim construction is correct (which is 

disputed by Eon-Net and Zimmerman), the non-sanctionable objective reasonableness of 

Zimmerman and Eon-Net’s claim construction is confirmed by the Federal Circuit’s 

express finding that the specification of the Eon-Net patents “supports Eon-Net’s 

infringement position” and the PTO’s issuance/allowance of three additional patents 

having the same specification as the Eon-Net patents and having claims directed towards 

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processing information not derived from scanned hard copy documents. 

 “Complaints are not filed for an improper purpose if they are non-frivolous.” 

Intamin, Ltd. v. Magnetar Technologies Corp., 483 F.3d 1328, 1338 (Fed. Cir. 2007) 

(quoting Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990)). A 

frivolous claim or pleading for Rule 11 purposes is one that is “legally or factually 

‘baseless’ from an objective perspective . . . [and made without] a reasonable and 

competent inquiry.” Intamin, 483 F.3d at 1338 (quoting Q-Pharma, 360 F.3d at 1299). 

By finding that Zimmerman “conducted a proper pre-suit investigation” the Federal 

Circuit determined that Zimmerman conducted a reasonable and competent inquiry. By 

finding that the “specification also supports Eon-Net’s infringement position” and by 

issuing/allowing three new patents, the Federal Circuit and the PTO, respectively, each 

found that Eon-Net’s claim construction was objectively not baseless and thus not 

frivolous. Thus, Zimmerman did not violate Rule 11 by bringing this action. 

 In arguing that Zimmerman be sanctioned, Flagstar has ignored the aforementioned language from the Federal Circuit’s previous ruling in this case, and has 

ignored the actions of the PTO in issuing/allowing the three new patents. Rather, 

Flagstar: 1) has focused on this Court’s previous ruling on sanctions that was found by 

the Federal Circuit to have been erroneous and was reversed; 2) has focused on this 

Court’s recent determination that the claim construction was frivolous, which 

determination Zimmerman respectfully disputes and will be appealing; and 3) has 

focused on the purportedly improper, but in reality proper actions of plaintiff and its 

counsel in seeking to license the patents-in-suit. 

 Further, in seeking to have Zimmerman sanctioned, Flagstar has misrepresented 

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various actions and statements in this case that it has attributed to Zimmerman. 

Flagstar’s contention that Zimmerman provided “no evidence” to support Eon-Net’s 

claim construction is not true. Zimmerman provided the same intrinsic evidence, i.e., 

U.S. Patent 6,683,697 (“the ‘697 patent”), that it submitted to and that the Federal Circuit 

relied upon to issue its ruling in 2007. Zimmerman also provided additional intrinsic 

evidence, i.e., the two other Eon-Net patents; and Que’s Computer User Dictionary that 

was considered by the PTO is issuing the Eon-Net patents. 

 Also contrary to Flagstar’s contention, Zimmerman never claimed that the EonNet patents “cover virtually all web-based commerce”. Rather, Zimmerman indicated 

that they “cover many online web applications” (Dkt. # 179, p. 10). Also, at the Rule 11 

hearing before Judge Pechman, Zimmerman made clear that it was not “the Web as a 

whole” but only “websites [he] looked at” and brought suit against that he believed were 

infringing (Dkt. # 77, p. 9). 

 Since the Federal Circuit previously found support for Eon-Net’s claim 

construction in the specification of the patents-in-suit, since the PTO recently reaffirmed 

the reasonableness, and the non-frivolousness, and the correctness of this construction by 

issuing/allowing three new patents having claims directed towards processing 

information from electronic documents that do not originate from scanned hard copy 

documents, there is and was nothing improper in Eon-Net filing suit against and seeking 

to license its patents to Flagstar. Flagstar seeks to punish Zimmerman for assisting EonNet implement its business model of licensing the Eon-Net patents for reasonable license 

fees. However, as the Federal Circuit held, “the mere fact Eon-Net filed identical 

infringement suits against a variety of companies does not by itself establish an improper 

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purpose; a company may hold a patent on a widely-used device or process that many 

different types of companies use, as might be the case here if it is true that Eon-Net holds 

a valid patent on a process related to online web applications.” Eon-Net v. Flagstar, 

2007-1132, pp. 13-14. Hence, the fact that plaintiff has licensed or offered to license the 

patents-in-suit to many parties does not make this suit improper. In any event, and more 

importantly, since the claim construction asserted in this case is objectively reasonable 

and not frivolous, there is no basis for sanctioning Zimmerman under Rule 11. 

B. Flagstar’s Request for Attorneys Fees 

 and Costs Should Be Substantially Reduced 

 Flagstar’s request for attorneys fees and costs should be substantially reduced 

because: 1) Flagstar seeks to recover the fees and costs previously awarded in connection 

with its frivolous license defense that was the basis for its Rule 56 and Rule 11 Motions 

in 2006, which award the Federal Circuit found improper; 2) Flagstar seeks to recover 

fees and costs for services directed towards matters not relevant to claim construction 

and/or not yet presented to the Court; 3) Flagstar has failed to mitigate its fees; 4) 

Flagstar’s attorneys billed an excessive amount of time in this case; and 5) the hourly 

rates of Flagstar’s attorneys are excessively high. 

 Flagstar is not entitled to recover its fees and costs awarded in 2006 prior to the 

first appeal in this case as the Federal Circuit found that award to have been erroneous 

and improper since 1) Zimmerman conducted a proper pre-suit investigation, and 2) there 

is support for Eon-Net’s infringement claim in the specification of the Eon-Net patents. 

 After this case was remanded back to this Court, Flagstar successfully moved this 

Court to limit discovery solely to claim construction (Dkt. #124). Accordingly, Flagstar 

is not entitled to any fees or costs for items not directly related to claim construction after 

the entry of the Court’s Order on March 25, 2008 so limiting discovery. To do otherwise 

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would be manifestly unfair. For example, Flagstar should not recover its fees and costs 

associated with: 1) searching for and analyzing prior art, see for example Dkt. # 192, 

Exhibit 7, entry for April 1, 2008; or 2) preparing non-infringement defenses, see for 

example Dkt. # 192, Exhibit 7, entry for April 11, 2008; or 3) seeking to mount a joint 

defense, see for example Dkt. # 192, Exhibit 8, entry for May 9, 2008. 

 Similarly, Flagstar should not recover its non-claim construction related fees and 

costs associated with hiring experts to: 1) search for and analyze prior art; 2) prepare 

invalidity contentions; and 3) analyze Eon-Net’s infringement contentions to prepare 

non-infringement arguments (Dkt. #192, Exhibits 32-39). 

 As previously shown in Eon-Net’s Response to Flagstar’s Memorandum 

Establishing Attorneys’ Fees and Costs (Dkt. #84), Flagstar’s counsel has failed to 

mitigate its fees and costs in this case, as for example in connection with its transfer 

motion and Eon-Net’s Motion for Leave to Amend its original Complaint. 

 Finally, Flagstar’s fees and costs in this case have been excessive and 

unreasonable. The hourly rate for Flagstar’s principal attorney on this case, Melissa 

Baily, who graduated from law school in 2001, is $605.00 per hour. By contrast, the 

hourly rate for Bradley Keller, who graduated from law school in 1979 and is one of the 

name partners of the Seattle firm that is Flagstar’s local counsel, is $365.00 per hour. In 

addition, Flagstar is charging 24¢ per copy, whereas Staples in Seattle charges 8¢ per 

black and white copy. See Declaration of Jean-Marc Zimmerman in Response to 

Flagstar’s Memorandum Regarding Attorneys’ Fees and Costs, ¶2. 

 Any monetary award to Flagstar should be reduced by the amount of the 2006 

sanctions award that was found to have been erroneous, and by the amount of the charges 

for fees and costs – including experts - not relevant to claim construction. Further, any 

award should recalculate the fees and costs using hourly billing rates and copy charges 

that are more reasonable than those charged by Flagstar’s principal counsel and her firm. 

 

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III. CONCLUSION

For the foregoing reasons, Zimmerman should not be sanctioned under Rule 11, 

and the fees and costs that Flagstar seeks should be substantially reduced. 

 

 By:/s/Jean-Marc Zimmerman 

 Jean-Marc Zimmerman (Pro Hac Vice) 

 Zimmerman & Levi, LLP 

 226 St. Paul Street 

 Westfield, NJ 07090 

 Tel: (908) 654-8000 

 Fax: (908) 654-7207 

 John W. Hathaway 

 Law Offices John W. Hathaway, PLLC 

 4600 Bank of America Tower 

 701 Fifth Avenue 

 Seattle, WA 98104 

 Tel: (206) 624-7100 

 Fax: (206) 624-9292 

 

 Attorneys for Plaintiff Eon-Net, L.P. 

 Date: February 15, 2010 

 Westfield, New Jersey 

Case 2:05-cv-02129-RSM Document 194 Filed 02/16/2010 Page 9 of 9