IN UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

ZT IP, LLC, 

Plaintiff, 

v. 

VMWARE, INC., 

Defendant. 

Case No. 3:22-cv-970-X 

JURY TRIAL DEMANDED 

DEFENDANT VMWARE, INC.’S 

MOTION FOR RULE 11 SANCTIONS 

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TABLE OF CONTENTS

Page

 -iI. INTRODUCTION ............................................................................................................. 1

II. STATEMENT OF FACTS ................................................................................................ 2 

A. The Parties, ZT and VMware ................................................................................. 2 

B. ZT Files Suit, Relying Extensively on the 2002 ESX 1.5 User Manual. ............... 2 

C. VMware Repeatedly Tells ZT that Its Patent Is Invalid and that Damages 

Are Unavailable. .................................................................................................... 3 

D. ZT Finally Dismisses Its Complaint. ..................................................................... 5 

III. LEGAL STANDARD ........................................................................................................ 6 

A. Sanctionable Conduct Under Federal Rule of Civil Procedure 11 ........................ 6 

IV. ARGUMENT ..................................................................................................................... 7 

A. The Court Should Sanction ZT’s Counsel for Failing to Conduct an 

Adequate Pre-Filing Investigation. ........................................................................ 7 

1. ZT Did Not Adequately Review Public Materials Showing that 

ESX 1.5 Predates the ’583 Patent. ............................................................. 7 

2. ZT Did Not Adequately Review Public Materials Showing 

VMware Removed the Service Console Essential to its 

Infringement Theory. ................................................................................. 9 

3. ZT Ignored the Proof of Non-Infringement and No Damages. ................. 9 

4. The Court Should Sanction ZT’s Counsel and Award VMware 

Attorneys’ Fees and Costs. ...................................................................... 10 

V. CONCLUSION ................................................................................................................ 12 

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TABLE OF AUTHORITIES 

 Page(s) 

Cases 

Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 

393 F.3d 1378 (Fed. Cir. 2005)................................................................................................11 

Budri v. FirstFleet Inc., 

No. 19-cv-0409, 2019 U.S. Dist. LEXIS 188250 (N.D. Tex. Sep. 20, 2019) ...........................4 

Bus. Guides, Inc. v. Chromatic Commc’ns Enters., Inc., 

498 U.S. 533 (1991) ...................................................................................................................6 

Cooter & Gell v. Hartmarx Corp., 

496 U.S. 384 (1990) ...................................................................................................................6 

Dietgoal Innovations LLC v. Chipotle Mexican Grill, Inc., 

No. 12-cv-764, 2015 U.S. Dist. LEXIS 34784 (E.D. Tex. Mar. 20, 2015) ...............................4 

Google LLC v. IPA Techs. Inc., 

34 F.4th 1081 (Fed. Cir. 2022) ..................................................................................................8 

Grynberg v. Ivanhoe Energy, Inc., 

663 F. Supp. 2d 1022 (D. Colo. 2009) .....................................................................................12 

Hostingxtreme Ventures, LLC v. Bespoke Grp., LLC, 

No. 14-cv-1471, 2017 U.S. Dist. LEXIS 203277 (N.D. Tex. Nov. 13, 2017) ...........................4 

Marrin v. Griffin, 

599 F.3d 1290 (Fed. Cir. 2010)..................................................................................................7 

Polaroid Corp. v. Eastman Kodak Co., 

789 F.2d 1556 (Fed. Cir. 1986)..................................................................................................7 

Scott v. Wollney, 

No. 20-cv-2825, 2021 U.S. Dist. LEXIS 200868 (N.D. Tex. Sep. 16, 2021) ...........................4 

Skidmore Energy, Inc. v. KPMG, 

455 F.3d 564 (5th Cir. 2006) .............................................................................................10, 11 

Source Vagabond Sys. Ltd. v. Hydrapak, Inc., 

753 F.3d 1291 (Fed. Cir. 2014)..................................................................................................6 

Stewart v. RCA Corp., 

790 F.2d 624 (7th Cir. 1986) .....................................................................................................9 

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iii 

View Eng’g, Inc. v. Robotic Vision Sys., Inc., 

208 F.3d 981 (Fed. Cir. 2000).......................................................................................... passim

WPEM, LLC v. SOTI Inc., 

No. 2:18-CV-00156-JRG, 2020 WL 555545 (E.D. Tex. Feb. 4, 2020), aff’d, 

837 F. App’x 773 (Fed. Cir. 2020), cert. denied, 141 S. Ct. 2628 (2021) ....................... passim

Statutes 

35 U.S.C. § 100 ................................................................................................................................8 

35 U.S.C. § 285 ..............................................................................................................................11 

35 U.S.C. § 286 ............................................................................................................................1, 9 

Other Authorities 

Fed. R. Civ. P. 11 ................................................................................................................... passim

Fed. R. Civ. P. 12(b)(6)............................................................................................................10, 11 

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I. INTRODUCTION 

The Federal Circuit has warned that “[a] patent suit can be an expensive proposition. 

Defending against baseless claims of infringement subjects the alleged infringer to undue costs—

precisely the scenario Rule 11 contemplates.” View Eng’g, Inc. v. Robotic Vision Sys., Inc., 208 

F.3d 981, 986 (Fed. Cir. 2000) (referring to Fed. R. Civ. P. 11). Here, ZT IP, LLC (“ZT”) and its 

counsel ignored that warning by filing its Complaint against VMware, Inc. (“VMware”). 

ZT’s Complaint suffered from two obvious defects. First, ZT accused certain VMware 

functionality of infringing U.S. Patent No. 7,647,583 (the “’583 patent”). But the accused ESX 

functionality predates the ’583 patent and thus could not infringe. Second, VMware removed the 

accused ESX functionality over a decade ago. This means that, even if ZT’s infringement theory 

were plausible (which it is not), ZT could not recover damages under 35 U.S.C. § 286. 

ZT and its counsel should have known of both defects pre-suit. Publicly available 

materials readily confirm that the accused ESX technology predates the ’583 patent. And 

publicly available materials readily confirm that VMware removed this technology in 2010. 

By filing its Complaint, ZT and its counsel violated Rule 11 twice over. Having been 

chastised for the same conduct only two years ago, ZT’s counsel should have known better. See 

WPEM, LLC v. SOTI Inc., No. 2:18-CV-00156-JRG, 2020 WL 555545, at *3-6, 8 (E.D. Tex. 

Feb. 4, 2020) (awarding $179,000 in attorneys’ fees for “conduct[ing] no pre-filing investigation 

into the validity and enforceability of the Asserted Patent at all”), aff’d, 837 F. App’x 773 (Fed. 

Cir. 2020), cert. denied, 141 S. Ct. 2628 (2021).1

 

Post-filing, ZT and its counsel undeniably knew of these defects. Before serving this 

1

 Judge Gilstrap’s award of fees against ZT’s counsel in WPEM on identical facts and the Federal 

Circuit’s affirmance of that award are attached as Exhibits 1 and 2, respectively, to the 

Declaration of Diek Van Nort (“Van Nort Decl.”). 

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motion, VMware’s in-house counsel met with ZT and provided the public evidence showing that 

the accused ESX technology predated the ’583 patent and had been removed long ago. Not only 

did ZT fail to respond to that evidence, ZT skipped a meeting that it scheduled to discuss the 

evidence. ZT then ignored correspondence from VMware’s outside counsel reiterating—

again—the fatal defects with its case and service of this Rule 11 motion. 

ZT had no basis for filing this lawsuit and even less of a basis for maintaining it. ZT 

dismissed this suit with prejudice only after VMware filed a motion to dismiss, after VMware 

served a Rule 11 motion, and after the twenty-one-day safe harbor under Rule 11 expired. ZT’s 

conduct was not harmless; its maintenance of this suit forced VMware to incur $104,915 in 

attorneys’ fees preparing and filing its motion to dismiss, preparing and serving this Rule 11 

motion, and trying to convince ZT of the frivolous nature of this lawsuit. In view of ZT’s failure 

to conduct an adequate pre-filing investigation and maintenance of this suit despite VMware’s 

repeated requests to dismiss, VMware asks that the Court sanction ZT and its counsel under Rule 

11 and award VMware its attorneys’ fees and costs. 

II. STATEMENT OF FACTS 

A. The Parties, ZT and VMware 

ZT is a limited liability company formed in Austin, Texas on February 28, 2022, three 

months before filing the Complaint in this action. (Van Nort Decl., Ex. 3.) VMware is a marketleading cloud computing and virtualization technology company based in Palo Alto, California. 

(Declaration of Daniel Lin (“Lin Decl.”) ¶ 2.) 

B. ZT Files Suit, Relying Extensively on the 2002 ESX 1.5 User Manual. 

On May 2, 2022, ZT sued VMware, alleging that ESX 1.5 infringes the ’583 patent by 

“maintain[ing], operat[ing], and administer[ing] systems, products, and services that facilitate 

developing real time operating system [sic].” (ECF No. 1 ¶ 9.) In a claim chart appended to the 

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Complaint, ZT identified VMware’s ESX server version 1.5 (“ESX 1.5”) as the accused product. 

Neither the Complaint nor the claim chat accuses other products. (ECF No. 1, Ex. A.) 

C. VMware Repeatedly Tells ZT that Its Patent Is Invalid and that 

Damages Are Unavailable. 

After ZT filed suit, VMware repeatedly advised ZT of the deficiencies in its Complaint. 

During a June 1, 2022 Zoom call, VMware’s in-house counsel presented documents showing 

that ESX 1.5 was commercially released over a year before the ’583 patent’s priority date. (Lin 

Decl. ¶¶ 5–9.) VMware’s in-house counsel explained that the ’583 patent therefore is invalid. 

(See id. ¶¶ 7–8.) VMware’s in-house counsel further explained that VMware had removed the 

ESX 1.5 Service Console (an essential part to ZT’s infringement theory) in 2010, precluding any 

claim for damages. (Id. ¶¶ 8–9; ECF No. 13-4 at 1-3 (summarizing June 1, 2022 Zoom call 

presentation).) VMware further provided public links confirming these representations using 

Zoom’s chat feature, and ZT’s counsel orally confirmed his receipt of the same. (See Lin Decl. 

¶¶ 9–10.) 

In view of these fundamental defects, VMware asked that ZT’s counsel dismiss the case 

immediately. (See id. ¶ 11; ECF No. 13-4 at 1.) Although ZT requested a follow-up Zoom 

meeting for June 8, 2022, to discuss VMware’s positions, ZT’s counsel failed to show up. (See 

Lin Decl. ¶¶ 13-14.) 

On June 9, 2022, VMware’s in-house counsel again wrote ZT to reiterate the baseless 

nature of ZT’s Complaint: 

Given all the easily obtainable public evidence above, we see no 

reasonable basis for a finding of infringement and don’t believe anyone on 

the ZT IP team conducted a reasonable inquiry to determine that 

infringement allegations in the complaint would be well grounded in fact. 

To avoid either side incurring any additional legal costs, we wanted to 

give you and your client a less formal opportunity to re-consider the 

complaint, but you do not seem inclined to timely respond despite our 

efforts, having been 15 minutes late for our first scheduled call and 

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missing your own requested follow-up call entirely. We now will have to 

move forward with our defenses and seek all remedies we feel proper in 

view of the circumstances. 

(ECF No. 13-4 at 3.) VMware’s in-house counsel again noted the publicly available materials 

supporting VMware’s representations and asked that ZT dismiss its case. (Id. at 1-3.) 

ZT and its counsel did not respond. (Lin Decl. ¶¶ 15-16.) 

Having heard nothing, VMware was forced to retain counsel. Via letter dated June 13, 

2022, VMware’s counsel again explained to ZT how the Complaint and claim chart illustrated 

ZT’s lack of a good-faith basis for bringing this case. (ECF No. 13-2.) VMware’s counsel 

specifically advised ZT that it would pursue recovery of its fees and costs if ZT did not dismiss 

the lawsuit promptly. (Id. at 3.) 

ZT and its counsel still did not respond. (Van Nort Decl. ¶ 5.) 

On June 21, 2022, VMware served a draft of its Rule 11 motion on ZT.2

 (Van Nort 

Decl., Ex. 4.) And on July 8, 2022, VMware filed its motion to dismiss—explaining again that 

ESX 1.5’s prior art status meant that the ’583 patent was invalid, and that the Service Console’s 

removal means that damages were unavailable. (ECF No. 13 at 1, 4 n.2.) 

ZT and its counsel still did not respond. (Van Nort Decl. ¶ 5.) 

2

 The draft served was substantially identical to this motion and thus satisfies Rule 11(c)(2)’s 

safe harbor provision. See Scott v. Wollney, No. 20-cv-2825, 2021 U.S. Dist. LEXIS 200868, at 

*8 n.3 (N.D. Tex. Sep. 16, 2021) (Rule 11 safe harbor satisfied by party’s filing a 

“substantially identical copy” of served motion); Hostingxtreme Ventures, LLC v. Bespoke Grp., 

LLC, No. 14-cv-1471, 2017 U.S. Dist. LEXIS 203277, at *7 n.3 (N.D. Tex. Nov. 13, 2017) 

(same); Budri v. FirstFleet Inc., No. 19-cv-0409, 2019 U.S. Dist. LEXIS 188250, at *13 n.8 

(N.D. Tex. Sep. 20, 2019) (same); Dietgoal Innovations LLC v. Chipotle Mexican Grill, Inc., No. 

12-cv-764, 2015 U.S. Dist. LEXIS 34784, at *11-12 n.2 (E.D. Tex. Mar. 20, 2015) (same). 

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D. ZT Finally Dismisses Its Complaint. 

On July 13, 2022, VMware requested a meet and confer in advance of filing its Rule 11 

motion. (Van Nort Decl., Ex. 5.) ZT’s counsel did not respond. (Id.) After additional 

prodding—and after ignoring six weeks’ worth of correspondence—ZT finally agreed to meet 

and confer on July 18, 2022. (Id.) 

At the July 18, 2022 meet and confer, ZT’s counsel alleged ZT was continuing to 

evaluate VMware’s positions, as ZT had filed suit only three months earlier. (Id. ¶¶ 7-10.) In 

response, VMware’s counsel explained that parties’ counsels are obligated not to file papers 

lacking a Rule 11 basis and reminded ZT’s counsel of the prior WPEM decision. (Id.) 

VMware’s counsel also explained that ZT had received ample time to review VMware’s 

positions and needed to dismiss its Complaint, at minimum, to avoid sanctions. (Id.) 

ZT’s counsel then launched into an expletive-filled tirade accusing VMware of 

“threatening” him. (Id.) The meet and confer concluded with VMware’s counsel indicating that 

VMware would move forward with its Rule 11 motion, and ZT’s counsel indicating its intent to 

continue considering VMware’s positions. (Id.) 

Despite claiming the need for additional time to review and better understand VMware’s 

positions, ZT dismissed its Complaint with prejudice less than thirty minutes after the call’s 

conclusion. (ECF No. 17.) 

To date, VMware has incurred approximately $104,915 in outside counsel fees defending 

against ZT’s frivolous claims. VMware expended approximately $42,400 on its motion to 

dismiss and $58,100 on this motion and the fees motion. (Van Nort Decl. ¶ 10; id. Exs. 6-7; 

Declaration of Steven Callahan ¶ 5; id. Ex. 15.) 

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III. LEGAL STANDARD

A. Sanctionable Conduct Under Federal Rule of Civil Procedure 11 

Rule 11 operates to maintain the integrity of the judicial process and streamline litigation 

by deterring baseless filings. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). 

It imposes on parties and their attorneys an affirmative duty to investigate the facts surrounding 

the case before filing suit. See Bus. Guides, Inc. v. Chromatic Commc’ns Enters., Inc., 498 U.S. 

533, 545 (1991) (citation omitted). By signing a paper filed in federal court, an attorney certifies 

that to the best of his or her “knowledge, information, and belief, formed after an inquiry 

reasonable under the circumstances . . . the [allegations and other] factual contentions have 

evidentiary support.” Fed. R. Civ. P. 11(b)(3) (emphasis added). 

A defendant may invoke Rule 11 to protect against the substantial costs of defending 

against a suit without a well-grounded factual basis. This policy is suited particularly well for 

patent infringement suits, where the presence of complicated technical and scientific issues and 

the need for expensive expert testimony drives the average cost of litigation into the millions. As 

the Federal Circuit has recognized, “[d]efending against baseless claims of [patent] infringement 

subjects the alleged infringer to undue costs—precisely the scenario Rule 11 contemplates.” 

Source Vagabond Sys. Ltd. v. Hydrapak, Inc., 753 F.3d 1291, 1298 (Fed. Cir. 2014) (emphasis 

added) (quoting View Eng’g, 208 F.3d at 986). 

To satisfy Rule 11, a plaintiff’s attorney must conduct an infringement analysis before 

filing a patent-infringement complaint. See View Eng’g, 208 F.3d at 986. This analysis requires, 

at minimum, that the plaintiff “perform an objective evaluation of the claim terms to satisfy its 

obligation to conduct a reasonable pre-suit evaluation.” Source Vagabond Sys., 753 F.3d at 1301 

(internal quotation omitted). “The presence of an infringement analysis plays the key role in 

determining the reasonableness of the pre-filing inquiry made in a patent infringement case 

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under Rule 11.” View Eng’g, 208 F.3d at 986. 

When a plaintiff conducts an inadequate inquiry—or none at all—courts may impose 

sanctions under Rule 11. See id. at 986. A plaintiff’s failure to review publicly available 

materials bearing on the merits of its case supports sanctions. See WPEM, 2020 WL 555545, at 

*3–6, 8 (“[A] reasonable plaintiff conducting even a minimally diligent infringement

investigation would have at least reviewed the would-be-defendants’ website”). 

IV. ARGUMENT

A. The Court Should Sanction ZT’s Counsel for Failing to Conduct an 

Adequate Pre-Filing Investigation. 

The Complaint and attached claim chart make clear that ZT lacked a good-faith basis to 

bring this action and did not conduct an adequate pre-suit investigation as required by Rule 11. 

Not only did ZT and its counsel fail to conduct a reasonable pre-suit investigation, they 

continued to pursue their frivolous claims despite notice of their case’s defects from VMware. 

1. ZT Did Not Adequately Review Public Materials Showing that 

ESX 1.5 Predates the ’583 Patent. 

 It is hornbook patent law that “that which infringes if later anticipates if earlier.” 

Polaroid Corp. v. Eastman Kodak Co., 789 F.2d 1556, 1573 (Fed. Cir. 1986) (citation omitted). 

For that reason, if an accused product predates the allegedly infringed patent, there can be no 

infringement, and any infringement case on that patent would be meritless. See Marrin v. 

Griffin, 599 F.3d 1290, 1295 (Fed. Cir. 2010) (“There can be no infringement of claims deemed 

to be invalid.”). 

Before filing suit, ZT and its counsel did not even check the commercial release date of 

ESX 1.5. Had they done so, they would have readily discovered public materials referring to 

ESX 1.5’s commercial release on May 13, 2002. (See, e.g., Van Nort Decl., Ex. 8 (“VMware 

Announces ESX Server 1.5 for Enterprise Server Consolidation,” VMWARE NEWS & STORIES

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(May 13, 2002) (available at https://news.vmware.com/releases/esx15)).) 

Had ZT and its counsel reviewed the very materials that they cited in the claim chart 

appended to the Complaint, they also would have uncovered this fact. One of the cited materials 

bears a 2002 copyright date. (See ECF No. 1, Ex. A (citing “VMware User’s Manual ESX 

Server Version 1.5” at 2 (“© 2002 VMware, Inc.”) (available at 

https://www.vmware.com/pdf/esx_15_manual.pdf.) As ESX 1.5’s release predates the ’583 

patent’s filing date by over a year, the patent is invalid under 35 U.S.C. § 102(b).3

 Just as in 

View Engineering, ZT’s counsel here plainly did not conduct “a reasonable inquiry for the 

purpose of filing patent infringement claims.” View Eng’g, 208 F.3d at 986. 

ZT’s counsel was chastised two years ago for making the same grievous error. See 

WPEM, 2020 WL 555545 at *3-6, 8 (awarding $179,622 in attorneys’ fees). In WPEM, ZT’s 

counsel “conducted absolutely no pre-filing investigation into the validity or enforceability of the 

Asserted Patent,” even though “the most cursory of such investigations would have revealed the 

grounds for invalidity and unenforceability [the defendant] now asserts.” Id. at *3. In particular, 

ZT’s counsel failed to discover publicly available materials showing that the plaintiff’s 

infringement theories rendered the patent invalid, as the accused product predated the patent. 

See id. at *4. 

So too here. As in WPEM, ZT’s counsel failed to adequately review readily available 

public materials, such as materials from VMware’s website and a user manual that ZT itself cited 

3

 35 U.S.C. § 102(b) provides that “[a] person shall be entitled to a patent unless . . . (b) the 

invention was patented or described in a printed publication in this or a foreign country or in 

public use or on sale in this country, more than one year prior to the date of the application for 

patent in the United States[.]”). Because the ’583 patent was filed before March 16, 2013, the 

version of Section 102 before the America Invents Act applies. See Google LLC v. IPA Techs. 

Inc., 34 F.4th 1081, 1084 n.1 (Fed. Cir. 2022); 35 U.S.C. § 100 (note). 

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in its claim chart. Those materials would have confirmed that ESX 1.5 predates the ’583 patent’s 

priority date by over a year, rendering the patent invalid. As in WPEM, “[i]t is hard to square 

this failure with the obligation to conduct a diligent pre-filing investigation.” 2020 WL 555545 

at *6. 

2. ZT Did Not Adequately Review Public Materials Showing 

VMware Removed the Service Console Essential to its 

Infringement Theory. 

ZT and its counsel’s failure to discover that the accused product predates the patent-insuit was not their only failure. ZT and its counsel also failed to realize that VMware removed 

the service console from the ESX product in 2010, mooting any claim for damages. 

The Service Console was essential to establishing ZT’s theory of infringement. ZT’s 

claim chart mapped the “operating system” limitation of all claims of the ’583 patent to ESX 

1.5’s service console. (ECF No. 1, Ex. A.) But publicly available materials also show that 

VMware removed that feature when transitioning to the ESXi platform in 2010. (See, e.g., Van 

Nort Decl., Ex. 9 (“The Architecture of VMware ESXi”), at 3 (“[T]he Linux-based service 

console has been removed . . . .”).) As 35 U.S.C. § 286 limits a plaintiff’s damages recovery to 

six years before the lawsuit, VMware’s removal of the service console 10+ years ago means that 

ZT could not recover damages, even assuming arguendo that its infringement claims had merit 

and the ’583 patent was valid. 

ZT and its counsel can offer and have offered no explanation for filing and then 

originally maintaining this litigation, despite the unavailability of damages. Their failure to 

investigate whether, in fact, damages are available independently violated Rule 11 and justifies 

sanctions. 

3. ZT Ignored the Proof of Non-Infringement and No Damages. 

ZT’s approach to this case has been to file first and think later, without adequately 

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investigating the merits of its infringement claim. Rule 11 does not permit such an approach. 

See Stewart v. RCA Corp., 790 F.2d 624, 633 (7th Cir. 1986) (“Rule 11 requires lawyers to think 

first and file later, on pain of personal liability.”) (citation omitted). 

ZT’s approach is all the more troubling, as VMware undertook to point out these issues to 

ZT before filing this motion in the hope of avoiding unnecessary legal costs and motion practice. 

Post-suit, in correspondence, and in a Zoom meeting, VMware repeatedly explained why ZT 

could not reasonably maintain this litigation in view of the publicly available evidence that the 

accused ESX 1.5 functionality both predated ZT’s patent and was removed long ago. (See ECF 

No. 13-4 at 1-3; ECF No. 13-2; Lin Decl. ¶¶ 7-10.) VMware also provided ZT with the evidence 

itself. (See ECF No. 13-4 at 1-3, Lin Decl. ¶¶ 7-10.) 

Rather than respond to VMware’s showing, ZT disengaged and missed a call—which it 

scheduled—to discuss the evidence. ZT then ignored correspondence from VMware’s counsel 

and service of this Rule 11 motion. ZT’s maintenance of this action and refusal to dismiss it, 

after VMware served its Rule 11 motion and then moved to dismiss under Rule 12(b)(6), justify 

sanctions here. See Skidmore Energy, Inc. v. KPMG, 455 F.3d 564, 570 (5th Cir. 2006) (“[T]he 

court clearly concluded that [plaintiff’s] filing never satisfied Rule 11 to begin with—that is, at 

the time of filing—and the fact that he still had no evidentiary support by the time of the hearing 

only underscores the violation.”) (emphasis added). 

4. The Court Should Sanction ZT’s Counsel and Award VMware 

Attorneys’ Fees and Costs. 

As the Federal Circuit warned in View Engineering, patent cases are expensive, and 

defending a baseless patent case burdens the defendant with undue costs. 208 F.3d at 986. A 

court can award sanctions to deter plaintiffs from filing such baseless lawsuits. See Fed. R. Civ. 

P. 11(c)(4) (“A sanction imposed under this rule must be limited to what suffices to deter 

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repetition of the conduct or comparable conduct by others similarly situated.”). Sanctions may 

include a defendant’s attorneys’ fees and costs. See Fed. R. Civ. P. 11(c)(2) (“[T]he court may 

award to the prevailing party the reasonable expenses, including attorney’s fees, incurred for the 

motion.”); Skidmore, 455 F.3d at 568 (awarding all defense costs). 

The Court should sanction ZT and its counsel and award VMware’s fees and costs here. 

ZT and its counsel did not conduct an adequate pre-filing investigation. They failed to discover 

readily available, public materials showing that the accused functionality predates the ’583 

patent and has long since been removed. Even after VMware brought these materials to their 

attention, ZT and its counsel ignored those materials and instead maintained this lawsuit. 

Based on ZT’s decisions, VMware was forced to unnecessarily incur fees and costs 

defending itself, preparing and filing a motion to dismiss under Rule 12(b)(6), and in bringing 

this motion. And the Court must waste precious resources assessing why ZT filed—and 

persisted with—an infringement action involving an invalid patent and no recoverable damages. 

Having been chastised for filing and maintaining a similarly frivolous lawsuit in the past, ZT’s 

counsel knew that all of these things are wrong. 

Should the Court agree that ZT and its counsel have violated Rule 11, VMware asks that 

the Court also determine this case to be “exceptional” under 35 U.S.C. § 285. See Brooks 

Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005) overruled on 

other grounds by Octane, 572 U.S. at 555 (“A case may be deemed exceptional when there has 

been some material inappropriate conduct related to the matter in litigation, such as . . . conduct 

that violates [Rule 11] or like infractions.”). That would provide another basis for awarding 

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VMware its attorneys’ fees. See 35 U.S.C. § 285 (“The court in exceptional cases may award 

reasonable attorney fees to the prevailing party.”).4

Note that while ZT finally dismissed its complaint on July 18, 2002, it did so only after 

more than 21-days from when VMware served ZT with a copy of a Rule 11 motion substantially 

identical to this motion. By failing to dismiss the Complaint until after the safe harbor period 

expired, ZT failed to cure its Rule 11 violation in the time allowed under Rule 11. FED. R. CIV.

P. 11(c)(2) (Rule 11 motion can be filed unless “the challenged paper, claim, defense, 

contention, or denial is withdrawn or appropriately corrected within 21 days after service”); 

Grynberg v. Ivanhoe Energy, Inc., 663 F. Supp. 2d 1022, 1026 (D. Colo. 2009) (noting that by 

making a filing “outside of the safe harbor period, it did not cure the Rule 11 violations”). 

V. CONCLUSION 

ZT never should have filed this lawsuit, and it can offer no “sound excuse” or identify 

any “considerable mitigating circumstances” for maintaining it. View Eng’g, Inc., 208 F.3d at 

986. As ZT’s conduct is of the sort that “should ordinarily result in the district court expressing 

its broad discretion in favor of Rule 11 sanctions,” id. the Court should find that ZT has violated 

Rule 11 and sanction ZT and its counsel. The Court also award VMware its fees and costs 

totaling approximately $104,915 to date.5

 

 

4

 As a Rule 11 motion “must be made separately from any other motion,” VMware files 

its exceptional case motion separately. Fed. R. Civ. P. 11(c)(2). 

5

 Should the Court agree that VMware is entitled to its fees and costs, VMware will 

submit additional information relating to the work by its outside counsel, their hourly rates, and 

incurred costs. 

Case 3:22-cv-00970-X Document 25 Filed 08/01/22 Page 16 of 18 PageID 415
13 

August 1, 2022 s/Richard S.J. Hung .

Richard S.J. Hung 

Diek Van Nort 

Davis P. Clark (pro hac vice forthcoming) 

MORRISON & FOERSTER LLP 

425 Market Street, Suite 3500 

San Francisco, California 94105 

P (415) 268-7000 

F (415) 268-7522 

rhung@mofo.com 

dvannort@mofo.com 

dclark@mofo.com 

Berkeley Fife (pro hac vice forthcoming) 

MORRISON & FOERSTER LLP 

755 Page Mill Road 

Palo Alto, California 94304-1018 

P: (650) 813-5600 

F: (650) 494-0792 

bfife@mofo.com 

Caleb Wood 

MORRISON & FOERSTER LLP 

2100 L Street, NW Suite 900 

Washington, DC 20037 

P: (202) 887-1500 

F: (202) 887-0763 or (202) 887-0764 

calebwoods@mofo.com 

STEVEN CALLAHAN

Texas State Bar No. 24053122 

CHARHON CALLAHAN 

ROBSON & GARZA, PLLC 

3333 Lee Parkway, Suite 460 

Dallas, Texas 75219 

P: (214) 521-6400 

F: (214) 764-8392 

scallahan@ccrglaw.com 

Attorneys for Defendant VMware, Inc. 

Case 3:22-cv-00970-X Document 25 Filed 08/01/22 Page 17 of 18 PageID 416
14 

CERTIFICATE OF SERVICE 

The undersigned counsel for VMware, Inc. hereby certifies that a true and correct copy of 

a motion substantially identical to the above and foregoing document was served on counsel of 

record for Plaintiff ZT IP, LLC on June 21, 2022 via personal service. (Van Nort Decl. Ex. 4.) 

Pursuant to the safe-harbor provision of FED. R. CIV. P. 11(c)(2), VMware filed this Motion more 

than 21 days after service. 

s/Richard S.J. Hung 

Richard S.J. Hung 

CERTIFICATE OF SERVICE 

I hereby certify that, on August 1, 2022, I filed the foregoing document via the Court’s 

ECF system, which will send notice of the filing to counsel for Plaintiff. 

 . 

s/Steven Callahan 

Steven Callahan 

CERTIFICATE OF CONFERENCE 

The undersigned counsel for VMware hereby certifies that attorneys (including Richard 

Hung, Steven Callahan, and Diek Van Nort) for VMware met and conferred with attorneys from 

ZT (including William Ramey) on July 18, 2022 before VMware filed this motion. Agreement 

was not reached. At the end of the meet and confer, VMware stated it would file its motion for 

Rule 11 sanctions and fees. ZT indicated that it was continuing to consider VMware’s position. 

s/Richard S.J. Hung 

Richard S.J. Hung 

Case 3:22-cv-00970-X Document 25 Filed 08/01/22 Page 18 of 18 PageID 417