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 AN EXCEPTIONAL CASE FINDING 

AND ITS ATTORNEYS’ FEES UNDER 35 U.S.C. § 285 

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TABLE OF CONTENTS

Page

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

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

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

B. VMware Releases the Accused Product in 2002. .................................................. 3

C. The ’583 Patent Is Filed in 2003. ........................................................................... 3

D. ZT Files Suit, Relying Extensively on the 2002 ESX 1.5 User Manual. ............... 4

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

Are Unavailable. .................................................................................................... 6

F. ZT Finally Dismisses Its Complaint. ..................................................................... 7

III. LEGAL STANDARD ........................................................................................................ 8

IV. ARGUMENT ................................................................................................................... 10

A. This Case Is Exceptional. ..................................................................................... 10

1. ZT Did Not Adequately Review Public Materials Showing that 

ESX 1.5 Predates the ’583 Patent. ........................................................... 10

2. ZT Did Not Adequately Review Public Materials Showing 

VMware Removed the Service Console Essential to its 

Infringement Theory. ............................................................................... 12

3. ZT Ignored the Proof of Non-Infringement and No Damages. ............... 13

4. ZT’s Unreasonable Litigation Conduct Further Supports Finding 

the Case Exceptional and Awarding Fees. ............................................... 14

5. ZT’s Counsel’s History of Unreasonable Patent Litigation Also 

Supports an Exceptional Case Finding and Fee Award Here. ................. 15

6. VMware Is the Prevailing Party. .............................................................. 16

V. CONCLUSION ................................................................................................................ 16

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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)............................................................................................9, 10

Carroll v. Jaques Adm. Law Firm, P.C., 

110 F.3d 290 (5th Cir. 1997) ...................................................................................................14 

Gigamon Inc. v. Apcon, Inc., 

No. 2:19-CV-00300-JRG, 2022 WL 949962 (E.D. Tex. Mar. 29, 2022) ................................10 

Google LLC v. IPA Techs., 

34 F.4th 1081 (Fed. Cir. 2022) ................................................................................................11 

Hyosung TNS, Inc. v. Diebold Nixdorf, Inc., 

No. 3:16-CV-0364-N, 2021 WL 1597903 (N.D. Tex. Mar. 19, 2021) ......................................9 

Intellect Wireless, Inc. v. Sharp Corp., 

45 F. Supp. 3d 839 (N.D. Ill. 2014) ...........................................................................................8 

Kilopass Tech., Inc. v. Sidense Corp., 

738 F.3d 1302 (Fed. Cir. 2013)..............................................................................................1, 8 

Marrin v. Griffin, 

599 F.3d 1290 (Fed. Cir. 2010)................................................................................................11 

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 

572 U.S. 545 (2014) ......................................................................................................... passim

Oplus Techs., Ltd. v. Vizio, Inc., 

782 F.3d 1371 (Fed. Cir. 2015)................................................................................................14 

Polaroid Corp. v. Eastman Kodak Co., 

789 F.2d 1556 (Fed. Cir. 1986)................................................................................................10 

Raniere v. Microsoft Corp., 

887 F.3d 1298 (Fed. Cir. 2018)................................................................................................16 

Romag Fasteners, Inc. v. Fossil, Inc., 

866 F.3d 1330 (Fed. Cir. 2017)................................................................................................16 

Soar Tools, LLC v. Mesquite Oil Tools, Inc., 

No. 5:19-CV-243-H, 2022 U.S. Dist. LEXIS 83887 (N.D. Tex. Feb. 9, 2022) ......................13 

Case 3:22-cv-00970-X Document 27 Filed 08/01/22 Page 3 of 22 PageID 535
iii 

Stewart v. RCA Corp., 

790 F.2d 624 (7th Cir. 1986) ...................................................................................................13 

Tinnus Enters., LLC v. Telebrands Corp., 

369 F. Supp. 3d 704 (E.D. Tex. 2019) .....................................................................................10 

Traxcell Techs., LLC. v. AT&T Corp., 

No. 2:17-CV-00718-RWS-RSP, 2022 WL 949949 (E.D. Tex. Mar. 29, 2022) ..................9, 13 

Trover Grp., Inc. v. Dedicated Micros USA, 

No. 2:13-CV-1047-WCB, 2015 WL 4910875 (E.D. Tex. Aug. 17, 2015)..............................16 

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

208 F.3d 981 (Fed. Cir. 2000)............................................................................................11, 16

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 ..............................................................................................................................11 

35 U.S.C. § 102(b) .........................................................................................................................11 

35 U.S.C. § 285 ...................................................................................................................... passim

35 U.S.C. § 286 ..........................................................................................................................1, 12 

Other Authorities 

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

Fed. R. Civ. P. 41(a)(2) ..................................................................................................................16 

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I. INTRODUCTION 

The Federal Circuit has explained “that the aim of [an award] § 285 is to compensate a 

defendant for attorneys’ fees it should not have been forced to incur.” Kilopass Tech., Inc. v. 

Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013). Here, VMware, Inc. (“VMware”) should 

be compensated for having to defend itself against an unreasonable suit that ZT IP, LLC (“ZT”) 

and its counsel filed and maintained knowing that it was fatally defective in view of 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 (or would invalidate the patent if it did). 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 acted unreasonably 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) (finding case exceptional and awarding $179,622 in attorneys’ fees where counsel 

“conducted 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

 

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 in Support of VMware’s Motion for Rule 11 Sanctions (“Van Nort 

Decl.”). 

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

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 VMware’s 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 prepared and filed a motion to dismiss, 

after VMware prepared and 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 $105,915 in attorneys’ fees preparing and filing its motion to dismiss, 

preparing and serving its Rule 11 motion, and repeatedly 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 

its maintenance of this suit despite VMware’s repeated requests to dismiss, VMware asks that 

the Court find this case to be exceptional under 35 U.S.C. § 285 and award VMware its 

attorneys’ fees and costs.2

 

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 market2

 VMware files its Rule 11 motion separately from this motion, although both motions rely on 

the same set of facts. See Fed. R. Civ. P. 11 (c)(2) (“A motion for sanctions must be made 

separately from any other motion. . . .”). For convenience, all citations to declarations in this 

motion are to the declarations submitted with VMware’s Rule 11 motion. 

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leading cloud computing and virtualization technology company based in Palo Alto, California. 

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

B. VMware Releases the Accused Product in 2002. 

VMware commercially released the accused product, ESX version 1.5 (“ESX 1.5”), on 

May 13, 2002. (Van Nort Decl. Ex. 8 at 1-2.) Upon its release, VMware made available a user 

manual describing its features and functionality. (ECF No. 13-3 (“2002 ESX 1.5 User 

Manual”).) That manual, which bears a 2002 copyright date, confirms ESX 1.5’s public 

availability in 2002. 

(Id. at 2; see also id. at 13 (“Thank you for choosing VMwareTM ESX ServerTM, the virtual 

machine software for consolidating and partitioning servers in high-performance 

environments.”).) 

At its launch, ESX 1.5 included a “Service Console” functionality. That functionality was 

discontinued from its hypervisor product in 2010. (Van Nort Decl., Ex. 8 at 2, Ex. 10; Lin Decl. 

¶¶ 8-9.).) VMware discontinued the ESX platform in 2012 in favor of its “ESXi” platform. 

(Van Nort Decl., Ex. 11.) 

C. The ’583 Patent Is Filed in 2003. 

The application for the asserted patent was filed on May 20, 2003: 

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(ECF No. 1-2 at Cover.) That filing date is more than a year after ESX 1.5’s release. 

D. 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. 

(ECF No. 1 ¶ 9.) ZT appended a claim chart to the Complaint to illustrate ESX 1.5’s alleged 

infringement. (ECF No. 1-1, Ex. A.) The chart cites extensively—and solely—to the 2002 ESX 

1.5 User Manual to show VMware’s alleged infringement: 

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(Id. at 1.) The chart specifically accuses ESX 1.5’s “Service Console” of infringement, referring 

to it seventeen times: 

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(Id. at 9.) Neither the Complaint nor the claim chart refers to any product besides ESX 1.5 or to 

any documentation besides the 2002 ESX 1.5 User Manual. 

E. 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 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. ¶ 6.) 

On June 21, 2022, VMware served a draft of its Rule 11 motion on ZT. (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 meant that damages were unavailable. (ECF No. 13 at 1, 4 n.2.) ZT and its counsel still 

did not respond. (Van Nort Decl. ¶ 5.) 

F. 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 initially did not respond. (Id.) After additional 

prodding on July 15, 2022—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. ¶¶ 7-9.) In 

response, VMware’s counsel explained that both parties’ counsel were obligated not to file 

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

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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 Rule 11 motion. (Van Nort Decl. ¶ 10; id. Exs. 6-7; 

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

III. LEGAL STANDARD

Under 35 US.C. § 285, “[t]he court in exceptional cases may award reasonable attorney 

fees to the prevailing party.” “The purpose of Section 285 is not to punish the losing party, but 

rather, to compensate the prevailing party for the costs incurred due to the losing party’s 

‘unreasonable conduct.’” Intellect Wireless, Inc. v. Sharp Corp., 45 F. Supp. 3d 839, 848 (N.D. 

Ill. 2014) (citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 555 

(2014)); accord Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013) 

(“[I]t is clear that the aim of § 285 is to compensate a defendant for attorneys’ fees it should not 

have been forced to incur.”). 

“[A]n ‘exceptional’ case is simply one that stands out from others with respect to the 

substantive strength of a party’s litigating position (considering both the governing law and the 

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facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, , 

572 U.S. at 554. The standard of proof is a preponderance of the evidence. Id. at 557-58. 

“[D]istrict courts [can] consider a nonexclusive list of factors, including frivolousness, 

motivation, objective unreasonableness (both in the factual and legal components of the case) 

and the need in particular circumstances to advance considerations of compensation and 

deterrence.” Id. at 554 n.6 (citation and quotation marks omitted). A Rule 11 violation is 

sufficient for an exceptional case finding and attorneys’ fee award under Section 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.”). 

A Rule 11 violation, however, is not a prerequisite to an exceptional case finding and an 

attorneys’ fee award; lesser conduct may suffice. Octane, 572 U.S. at 555 (“[S]anctionable 

conduct is not the appropriate benchmark. . . . [A] district court may award fees in the rare case 

in which a party’s unreasonable conduct—while not necessarily independently sanctionable—is 

nonetheless so ‘exceptional’ as to justify an award of fees.”). A case may be exceptional because 

a party’s litigation position was weak or its approach to litigation was unreasonable. See id. at 

555; Hyosung TNS, Inc. v. Diebold Nixdorf, Inc., No. 3:16-CV-0364-N, 2021 WL 1597903, at *2 

(N.D. Tex. Mar. 19, 2021) (case deemed exceptional where “litigating position was substantively 

weak considering the governing law and facts of the case”); Traxcell Techs., LLC. v. AT&T 

Corp., No. 2:17-CV-00718-RWS-RSP, 2022 WL 949949, at *5 (E.D. Tex. Mar. 29, 2022) (case 

found exceptional based on unreasonable claim construction positions, infringement theories, 

and assertion of invalid claims). 

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Neither bad faith nor litigation misconduct is required for an exceptional case finding. 

See Gigamon Inc. v. Apcon, Inc., No. 2:19-CV-00300-JRG, 2022 WL 949962, at *1 (E.D. Tex. 

Mar. 29, 2022) (“Notably, it is not necessary that the litigation conduct at issue be independently 

sanctionable, e.g., because it involves bad faith or some other misconduct.”); Tinnus Enters., 

LLC v. Telebrands Corp., 369 F. Supp. 3d 704, 744 (E.D. Tex. 2019) (“To be considered 

exceptional, conduct need not be ‘independently sanctionable.’ Nor is a finding of bad faith 

required.”) (internal citations omitted). 

IV. ARGUMENT

A. This Case Is Exceptional. 

 VMware asks that the Court determine that this case is “exceptional” under 35 U.S.C. § 

285. See Brooks, 393 F.3d at 1381; Octane, 572 U.S. at 554 (“[A]n ‘exceptional’ case is simply 

one that stands out from others with respect to the substantive strength of a party’s litigating 

position (considering both the governing law and the facts of the case) or the unreasonable 

manner in which the case was litigated.”). 

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. Not only did ZT and its 

counsel fail to conduct a reasonable pre-suit investigation, but they continued to pursue their 

frivolous claims despite notice of their case’s defects from VMware. ZT’s litigation positions 

were meritless, and ZT litigated this case in an unreasonable manner. 

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). For that reason, if 

an accused product predates the allegedly infringed patent, there can be no infringement, and any 

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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.) 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. 1-1, Ex. A (citing ECF No. 13-3 (“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, Inc. v. Robotic Vision Sys., Inc., 

208 F.3d 981, 986 (Fed. Cir. 2000). 

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, 

3

 Under 35 U.S.C. § 102(b), “[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., 34 F.4th 

1081, 1084 n.1 (Fed. Cir. 2022); 35 U.S.C. § 100 (note). 

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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 WPEM, 2020 WL 555545 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 

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.” Id. 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. 1-1, 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 . . . .”) (emphasis added).) 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 

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investigate whether, in fact, damages are available independently shows this case is exceptional. 

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 

investigating the merits of its infringement claim. The law does not permit such an approach. 

Cf. 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. 

Although ZT ultimately dismissed its lawsuit with prejudice, ZT’s pursuit of its frivolous claims 

forced VMware “to file an unnecessary motion to dismiss and serve [plaintiff] with a draft Rule 

11 motion for sanctions.” Soar Tools, LLC v. Mesquite Oil Tools, Inc., No. 5:19-CV-243-H, 

2022 U.S. Dist. LEXIS 83887, at *28-29 (N.D. Tex. Feb. 9, 2022) (finding case exceptional and 

awarding fees where plaintiff refused to dismiss case despite defendant’s repeated requests). 

ZT’s clearly meritless claims and its refusal to drop them support an exceptional case finding and 

attorneys’ fee award. See Octane, 572 U.S. at 555 (explaining that “a case presenting either 

subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from minerun cases to warrant a fee award” under Section 285); Traxcell, 2022 WL 949949, at *5 

Case 3:22-cv-00970-X Document 27 Filed 08/01/22 Page 17 of 22 PageID 549
14 

(assertion of invalid claims supported exceptional case finding). 

4. ZT’s Unreasonable Litigation Conduct Further Supports 

Finding the Case Exceptional and Awarding Fees. 

Even if one ignores ZT’s stubborn pursuit of its meritless claims, its (and its counsel’s) 

conduct and apparent motivation in bringing this case support awarding fees and costs. See 

Octane, 572 U.S. at 554 (“unreasonable manner in which [a] case [i]s litigated” conduct may 

justify fee award); id. at 554 n.6 (“motivation” relevant to fee award determination). 

As noted, throughout this action, ZT continuously refused to engage and participate in its 

own litigation. After VMware explained why the ’583 patent was invalid and damages were 

unavailable via a Zoom call on June 1, 2022, ZT’s counsel skipped the follow-up meeting. ZT 

then ignored VMware’s follow-up letters (on June 9 and 13, 2022), VMware’s motion to dismiss 

(on June 21, 2022), and VMware’s draft Rule 11 motion (on July 8, 2022). 

In the lone instance in which ZT’s counsel did engage with VMware’s outside counsel, 

ZT’s counsel was openly hostile. During the July 18, 2022 meet and confer, VMware’s counsel 

noted VMware’s pending motion to dismiss, its intent to move for sanctions, and the similarities 

with the prior WPEM case. (Van Nort Decl. ¶¶ 7-9.) In response, ZT’s counsel cursed at 

VMware’s counsel and accused VMware of threatening him. (Id.) 

Courts have cited similar misconduct and unprofessional behavior as justifying awarding 

sanctions, fees, and costs. Cf. Carroll v. Jaques Adm. Law Firm, P.C., 110 F.3d 290, 294 (5th 

Cir. 1997) (upholding sanctions for attorney who used profanity and was insulting during 

deposition); see also Oplus Techs., Ltd. v. Vizio, Inc., 782 F.3d 1371, 1373 (Fed. Cir. 2015) 

(vacating denial of fee award under Section 285 where counsel’s behavior was “inappropriate, 

unprofessional, and vexatious”). 

Case 3:22-cv-00970-X Document 27 Filed 08/01/22 Page 18 of 22 PageID 550
15 

5. ZT’s Counsel’s History of Unreasonable Patent Litigation Also 

Supports an Exceptional Case Finding and Fee Award Here. 

ZT’s counsel is a prolific patent filer. Per his website, in the first four months of 2021 

alone, ZT’s counsel filed 79 new patent cases and was “poised to be a top 5 patentee law firm in 

2021.” (Van Nort Decl., Ex 12; see also id. Ex. 13 (“For 2022, a goal for Bill and his Firm is to 

be in the top ten law firms filing new patent cases across the United States.”).) Since 2021, ZT’s 

counsel has filed over 300 patent cases in Texas federal district courts. (Van Nort Decl., Ex. 14 

(253 cases in the Western District, 25 cases in the Eastern District, 23 cases in the Northern 

District, and 9 cases in the Southern District).) 

Unfortunately, such a large volume of filings substantially increases the likeliood the risk 

that one will not pay careful attention to each case on one’s docket—or that one will have filed a 

case that one should never have filed at all. Both occurred here. 

As noted above, the Eastern District of Texas previously awarded $179,000 in fees 

against ZT’s counsel’s client for filing and maintaining a lawsuit on an invalid patent. WPEM, 

2020 WL 555545, at *3-6, 8. In WPEM, as here, ZT’s counsel failed to conduct an adequate prefiling investigation. Id. at *7. In WPEM, as here, ZT’s counsel filed a lawsuit alleging that the 

prior art infringed a patent—a legal impossibility. Id. at *4-5. In WPEM, as here, ZT’s counsel 

was advised of the issues with this case repeatedly. Id. at *1. And in WPEM, as here, ZT’s 

counsel dismissed its claims with prejudice to try to avoid an exceptional case finding. Id. at *2. 

ZT’s counsel’s lack of care and his motivation in filing and persisting with this lawsuit 

warrant an exceptional case finding and fee award here. Octane, 572 U.S. at 554 n.6 (factors 

supporting an exceptional case finding include “frivolousness, motivation, [and] objective 

unreasonableness (both in the factual and legal components of the case).” So, too, does “the 

need in particular circumstances to advance considerations of compensation and deterrence.” Id. 

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16 

Despite the exceptional case finding and fee award against his client just two years ago in 

WPEM, ZT’s counsel has made the same careless and preventable error yet again. “[T]hat this 

misconduct has already been sanctioned should be weighed more heavily, rather than be 

excluded, in the 35 U.S.C. § 285 analysis.” Romag Fasteners, Inc. v. Fossil, Inc., 866 F.3d 1330, 

1340 (Fed. Cir. 2017). 

6. VMware Is the Prevailing Party. 

VMware undisputedly is a “prevailing party” under Section 285, as ZT dismissed this 

case with prejudice (ECF No. 17, 18). See Raniere v. Microsoft Corp., 887 F.3d 1298, 1301 

(Fed. Cir. 2018) (“[D]ismissal with prejudice alters the relationship between the parties and is 

sufficient to confer prevailing party status for purposes of considering a claim for fees under 

section 285.”) (internal quotations omitted); Trover Grp., Inc. v. Dedicated Micros USA, No. 

2:13-CV-1047-WCB, 2015 WL 4910875, at *1 (E.D. Tex. Aug. 17, 2015) (“When a party seeks 

dismissal of an action under Rule 41(a)(2) unilaterally, rather than as part of a settlement, the 

opposing party is ordinary regarded as the prevailing party.”). 

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. VMware asks that the Court find this case to be exceptional and award VMware its fees 

and costs totaling approximately $104,915 to date.4

 

 

4

 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 27 Filed 08/01/22 Page 20 of 22 PageID 552
17 

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 27 Filed 08/01/22 Page 21 of 22 PageID 553
18 

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 

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 

Case 3:22-cv-00970-X Document 27 Filed 08/01/22 Page 22 of 22 PageID 554