Corus Realty Holdings, Inc v. Zillow Group, Inc et al, No. 2:2018cv00847 - Document 154 (W.D. Wash. 2020)
Court Description: ORDER denying Zillow's 145 Motion for Attorney Fees signed by Judge James L. Robart.(TH)
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Corus Realty Holdings, Inc v. Zillow Group, Inc et al Doc. 154 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 1 of 13 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 CORUS REALTY HOLDINGS, INC., 10 ORDER DENYING DEFENDANTS’ MOTION FOR ATTORNEYS’ FEES 11 Plaintiff, 12 v. 13 CASE NO. C18-0847JLR ZILLOW GROUP, INC., et al, 14 Defendants. 15 I. INTRODUCTION 16 Before the court is Defendants Zillow Group, Inc., Zillow, Inc., and Trulia, LLC’s 17 (collectively, “Defendants” or “Zillow”) motion for attorneys’ fees pursuant to 35 U.S.C. 18 § 285, 28 U.S.C. § 1927, and/or the court’s inherent authority. (Mot. (Dkt. # 145).) 19 Plaintiff Corus Realty Holdings, Inc. (“Corus”) opposes the motion. (Resp. (Dkt. 20 # 150).) The court has considered the motion, the parties’ submissions in support of and 21 // 22 ORDER - 1 Dockets.Justia.com Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 2 of 13 1 in opposition to the motion, the relevant portions of the record, and the applicable law. 2 Being fully advised, 1 the court DENIES Zillow’s motion. 3 4 5 II. A. BACKGROUND Factual Background The facts of this case have been set forth in prior orders (see, e.g., MSJ Order 6 (Dkt. # 138)), so the court here provides only a limited summary of the facts relevant to 7 this motion. This is a trademark infringement case in which Corus sued Zillow for 8 infringing on its U.S. Patent No. 6,636,803 (“the ’803 Patent”), entitled “Real-Estate 9 Information Search and Retrieval System.” (See Compl. (Dkt. # 1) ¶ 1; see also id. ¶ 16, 10 Ex. A.) The Patent covers systems and methods that use digital technology to locate 11 property and provide information in connection with a real-estate transaction (“the 12 Invention”). (See, e.g., ’803 Patent at B1 4:4-6.) Corus alleged that Zillow infringed on 13 the ’803 Patent through developing, advertising, and making available the Zillow Real 14 Estate mobile application, the Trulia Real Estate mobile application, the Zillow Rentals 15 mobile application, the Trulia Rentals mobile application, and the HotPads mobile 16 1 17 18 19 20 21 22 Zillow does not request oral argument (see Mot. at 1), but Corus does (see Resp. at 1). Oral argument is not necessary where the non-moving party suffers no prejudice. See Houston v. Bryan, 725 F.2d 516, 517-18 (9th Cir. 1984); Mahon v. Credit Bureau of Placer Cty. Inc., 171 F.3d 1197, 1200 (9th Cir. 1999) (holding that no oral argument was warranted where “[b]oth parties provided the district court with complete memoranda of the law and evidence in support of their respective positions,” and “[t]he only prejudice [the defendants] contend they suffered was the district court’s adverse ruling on the motion.”). “When a party has an adequate opportunity to provide the trial court with evidence and a memorandum of law, there is no prejudice [in refusing to grant oral argument].” Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998) (quoting Lake at Las Vegas Inv’rs Grp., Inc. v. Pac. Malibu Dev. Corp., 933 F.2d 724, 729 (9th Cir. 1991)) (alterations in Partridge). Here, the issues have been thoroughly briefed by the parties, and oral argument would not be of assistance to the court. See Local Rules W.D. Wash. LCR 7(b)(4). Accordingly, the court DENIES Corus’s request for oral argument. ORDER - 2 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 3 of 13 1 application (collectively, “the Zillow Apps”). (See Stark Decl. (Dkt. # 59) ¶ 6, Ex. 4 2 (“Corus Infringement Contentions”) at 3.) Zillow denied Corus’s infringement 3 allegations and counterclaimed for declaratory judgments of noninfringement and 4 invalidity. (See generally Answer (Dkt. # 18).) 5 B. Procedural Background 6 The Court issued its claim construction order on July 2, 2019. (See CC Order (Dkt. 7 # 51).) During claim construction the parties agreed that “database” should be construed 8 as “a collection of data arranged for search and retrieval.” (See Joint Claim Chart (Dkt. 9 # 35) at 5.) The court construed the term “cellular-based location data” as “location data 10 from a cellular-based positioning system capable of tracking the position of a device in an 11 area of interest.” (CC Order at 49-50.) 12 On October 30, 2019, Zillow moved to exclude several of Corus’s infringement 13 theories and portions of Dr. Martin’s expert report that were untimely disclosed. (See 14 Mot. to Exclude Infring. Theories (Dkt. # 58) at 1.) The court granted the motion on 15 January 30, 2020. (See 1/30/2020 Order (Dkt. # 114) at 24.) Accordingly, the court did 16 not consider the untimely infringement theories or the excluded portions of Dr. Martin’s 17 report in deciding the parties’ summary judgment motions. (See Mot. to Exclude Infring. 18 Theories at 19-20.) 19 The court granted summary judgment in favor of Zillow on Corus’s infringement 20 claims (see MSJ Order at 41-42) and dismissed without prejudice Zillow’s counterclaim 21 for declaratory judgments of noninfringement and invalidity (id. at 44-45). With respect 22 to the “database” limitations, the court concluded (1) that Corus’s infringement ORDER - 3 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 4 of 13 1 contentions stated that the Zillow Apps “store a database relating to the property 2 information” but failed to describe the structure or functionality of the alleged databases 3 on the Zillow Apps. (Id. at 18-19 (citing Stark Decl. (Dkt. # 59) ¶ 6, Ex. 4 (“Corus 4 Infringement Contentions”) at 16.) The court further held that even if Corus’s 5 infringement contentions explained Corus’s database theories in detail, Corus presented 6 insufficient evidence to establish a genuine dispute of material fact that the Zillow Apps 7 utilize a local “database” as defined by the ’803 Patent’s claims. (Id. at 20-22.) 8 9 With respect to the “cellular-based location data” limitation, the court held that the ’803 Patent’s specification and the reexamination history showed that the cellular-based 10 location data limitations in the ’803 Patent’s independent claims disclaimed the use of 11 non-cellular sources of location data. (Id. at 33.) The court then held that Corus 12 presented evidence only that the Zillow Apps used “fused” or “crowd-sourced” forms of 13 location data but did not submit evidence that the Zillow Apps obtained location data 14 from a cellular-based positioning system. (Id. at 33-31.) 15 16 The court entered judgment on March 31, 2020 (Judgment (Dkt. # 144)), and Zillow timely filed its motion for fees on April 14, 2020 (see Mot. at 15). 17 III. 18 ANALYSIS Zillow seeks attorneys’ fees under three sources of authority: (1) 35 U.S.C. § 285, 19 (2) 28 U.S.C. § 1927, and (3) the court’s inherent authority. (See Mot. at 1.) The court 20 sets forth the relevant legal standards for awarding attorneys’ fees before addressing 21 Zillow’s motion on the merits. 22 // ORDER - 4 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 5 of 13 1 2 A. Legal Standards Under 35 U.S.C. § 285, the court “in exceptional cases may award reasonable 3 attorney fees to the prevailing party” in a patent infringement suit. See 35 U.S.C. § 285. 4 “[A]n ‘exceptional’ case is simply one that stands out from others with respect to the 5 substantive strength of a party’s litigating position (considering both the governing law 6 and the facts of the case) or the unreasonable manner in which the case was litigated.” 7 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). “District 8 courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their 9 discretion, considering the totality of the circumstances.” Id. The United States Supreme 10 Court has suggested that district courts may consider a nonexclusive list of factors that 11 include “frivolousness, motivation, objective unreasonableness (both in the factual and 12 legal components of the case) and the need in particular circumstances to advance 13 considerations of compensation and deterrence.” Id. at 554 n.6 (quoting Fogerty v. 14 Fantasy, Inc., 510 U.S. 517, 524 n.19 (1994)). The Supreme Court has rejected as 15 “overly rigid” a formula under which a case is exceptional “only if a district court either 16 finds litigation-related misconduct of an independently sanctionable magnitude or 17 determines that the litigation was both ‘brought in subjective bad faith’ and ‘objectively 18 baseless.’” Id. at 554. However, improper motivations and frivolity remain factors the 19 court may consider in assessing a motion for fees. See id. at 554 n.6. 20 Additionally, the court may award fees under 28 U.S.C. § 1927 or under its 21 inherent authority. Under 28 U.S.C. § 1927, the court may only award fees if Corus 22 acted in subjective bad faith, which is present if Corus “knowingly or recklessly raise[d] ORDER - 5 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 6 of 13 1 a frivolous argument, or argue[d] a meritorious claim for the purpose of harassing an 2 opponent.” In re Keegan Mgmt. Co. Sec. Litig., 78 F.3d 431, 436 (9th Cir. 1996). This 3 standard is similar to the standard the Ninth Circuit applies to requests for fees under the 4 court’s inherent authority. See B.K.B. v. Maui Police Dep’t, 276 F.3d 1091, 1108 (9th 5 Cir. 2002). 6 Finally, district courts may award sanctions in the form of attorney’s fees under 7 their inherent equitable powers if the court finds bad faith or “conduct tantamount to bad 8 faith.” Id. (quoting Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001)) (internal quotation 9 marks omitted). “Sanctions are available for a variety of types of willful actions, 10 including recklessness when combined with an additional factor such as frivolousness, 11 harassment, or an improper purpose.” Id. (quoting Fink, 239 F.3d at 994) (internal 12 quotation marks omitted). The decision to impose sanctions rests in the sound discretion 13 of the district court. See Air Separation v. Underwriters at Lloyd’s of London, 45 F.3d 14 288, 291 (9th Cir. 1994). 15 Inherent powers must be used only with restraint and discretion. Leon v. IDX Sys. 16 Corp., No. C03-1158 P, 2004 WL 5571412, at *3 (W.D. Wash. Sept. 30, 2004), aff’d, 17 464 F.3d 951 (9th Cir. 2006) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991)). 18 If conduct can be sanctioned adequately under existing rules, a court ordinarily should 19 rely on the rules rather than on its inherent power to impose sanctions. Herrera v. Singh, 20 103 F. Supp. 2d 1244, 1256 (E.D. Wash. 2000) (citing Chambers, 501 U.S. at 50). 21 However, “if in the informed discretion of the court, neither the statute nor the rules are 22 // ORDER - 6 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 7 of 13 1 up to the task, the court may safely rely on its inherent power.” Chambers, 501 U.S. at 2 50. 3 The court’s inherent power to sanction bad-faith conduct is based “not on which 4 party wins the lawsuit, but on how the parties conduct themselves during the litigation.” 5 See id. at 53. “Sanctions are available for a variety of types of willful actions, including 6 recklessness when combined with an additional factor such as frivolousness, harassment, 7 or an improper purpose.” B.K.B., 276 F.3d at 1108 (quoting Fink, 239 F.3d at 994) 8 (internal quotation marks omitted). 9 B. 10 Zillow’s Motion Zillow contends that it is entitled to attorneys’ fees and costs because 11 Corus’s case “should never have been filed or, at the least, should not have been pursued 12 after the [c]ourt’s claim construction order and/or its order excluding Corus’s untimely 13 infringement theories.” (Mot. at 4.) Zillow argues that “Corus and its counsel knew, or 14 should have known, when they filed this lawsuit that there was no merit to the 15 infringement claim.” (Id. at 11.) Corus rests its assertions on three grounds: (1) that 16 Corus’s counsel knew when it filed this lawsuit “that its claims did not encompass 17 devices that rely on real-time access to a remote database of property information”; (2) 18 that Corus’s counsel knew “that Zillow maintained its database of property information 19 on remote servers, and its apps cannot work without real-time access to the remote 20 database”; and (3) that Corus’s counsel knew or should have known that the positions 21 between its infringement expert and its invalidity expert were irreconcilable. (Id.) 22 // ORDER - 7 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 8 of 13 1 In response, Corus contends that its “infringement claims were reasonable and 2 consistent.” (Resp. at 8.) Corus points to the expense it incurred to engage in 3 reexamination of the ’803 Patent before filing suit. (Id.) Corus further contends it was 4 reasonable to interpret the court’s claim construction order to agree with Corus that 5 “infringement could occur even if remote data were downloaded to the local database.” 6 (Id. at 9.) Corus further argues that its experts’ positions were not inconsistent, but even 7 if they were, such inconsistency does not justify a fee award—particularly when one of 8 their experts “had little time” to review reams of source code and to rebut Zillow’s 900 9 pages of invalidity contentions and 640 pages of expert reports. (Id. at 12.) 10 1. 35 U.S.C. § 285 11 Zillow points to three primary cases it contends are analogous to the present case 12 and under which Zillow is entitled to fees under 35 U.S.C. § 285. (See Mot. at 12-14 13 (citing AdjustaCam, LLC v. Newegg, Inc., 861 F.3d 1353, 1360-61 (Fed. Cir. 2017), 14 Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1327-28 (Fed. Cir. 2013), and 15 IPS Grp., Inc. v. Duncan Solutions, Inc., No. 15-CV-1526-CAB (MDD), 2018 WL 16 2215418, at *2 (S. D. Cal. May 14, 2018).) In AdjustaCam, the Federal Circuit Court of 17 Appeals held that the district court’s finding that a patent licensee’s litigation position 18 was not exceptional was clearly erroneous. See AdjustaCam, 861 F.3d at 1360-61. The 19 court held that the plaintiff had filed a “weak” infringement lawsuit, but that the lawsuit 20 became “baseless” after the district court’s claim construction order. Id. at 1360. 21 Specifically, the plaintiff’s patent for a computer camera clip specified that it rotated over 22 a single axis, whereas there was no dispute that the defendant’s accused product rotated ORDER - 8 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 9 of 13 1 “about at least two axes.” Id. at 1361. In addition, the court determined that the plaintiff 2 had litigated the case in an unreasonable manner, repeatedly using “after-the-fact” 3 declarations, serving a new expert report on the date of that expert’s deposition, and filing 4 supplemental declarations making new infringement arguments for the first time to the 5 Federal Circuit on appeal. Id. Finally, the court reviewed the plaintiff’s approach to 6 damages, which included “assert[ing] nuisance-value damages against many defendants, 7 settl[ing] with them for widely varied royalty rates, and continu[ing] to press baseless 8 infringement contentions well past an adverse Markman order and expert discovery.” Id. 9 The court made clear that it based its clearly erroneous finding on “the totality of these 10 11 case-specific circumstances.” Id. at 1362. In Taurus IP, the Federal Circuit affirmed an award of fees under 35 U.S.C. § 285 12 where the written description of a claim limitation “provide[d] no support for [the 13 plaintiff’s] unreasonably broad construction.” Taurus IP, 726 F.3d at 1327 (“When 14 patentees have sought unreasonable claim constructions divorced from the written 15 description, this court has found infringement claims objectively baseless.”). The court 16 further reinforced the rule that “a party cannot assert baseless infringement claims and 17 must continually assess the soundness of pending infringement claims, especially after an 18 adverse claim construction.” Id. at 1328. 19 Finally, in IPS Group, the Southern District of California awarded fees under 35 20 U.S.C. § 285 where the plaintiff all but ignored a dispositive claim limitation. IPS 21 Group, 2018 WL 2215418, at *2. Specifically, the patent at issue had an independent 22 claim limitation that required that the surface of a cover panel to a parking meter have a ORDER - 9 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 10 of 13 1 “plurality of buttons that operate the parking meter upon manipulation by a user,” but the 2 allegedly infringing meter “quite obviously does not have any buttons on its cover panel.” 3 Id. (“Indeed, this obvious deficiency with [the plaintiff’s] infringement claim was 4 apparent in IPS’s infringement contentions that completely failed to identify this claim 5 limitation on the accused device.”). 6 This case is distinguishable from the above cases. Although Zillow ultimately 7 prevailed on summary judgment, this was not a case, like IPS Group, in which Corus 8 completely ignored a claim limitation or pressed its infringement claim with no support 9 in the specification. Here, the court does not find evidence of frivolousness or 10 baselessness. The definition for one of the claim limitations at issue, the “database” 11 limitation, was agreed by the parties during the claim construction process, and a dispute 12 about the scope of that agreed construction arose only just before and during the 13 summary judgment stage. (See MSJ Order at 21-22 (indicating that further construction 14 was necessary to resolve the parties’ dispute about the difference between “search” and 15 “retrieval”).) True, Corus’s infringement contentions failed to identify the specific 16 “database” allegedly at issue in the accused Zillow apps, but that is a far cry from, for 17 example, simply ignoring the claim limitation as the plaintiffs did in AdjustaCam and IPS 18 Group. See See AdjustaCam, 861 F.3d at 1360-61; IPS Group, 2018 WL 2215418, at *2. 19 Corus addressed the “database” limitations in its contentions, and its failure to 20 specifically identify the structure and function of the alleged databases is better evidence 21 of an oversight than of pursuing a baseless claim. In sum, although Corus’s position 22 // ORDER - 10 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 11 of 13 1 ultimately did not prevail on the “database” limitations, it was not frivolous or objectively 2 baseless. 3 The story is the same with respect to the “cellular-based location data” limitation. 4 Although the court’s construction, based on the specification and reexamination history, 5 construed the limitation to disclaim non-cellular sources of location data, Corus’s 6 ultimately unsuccessful position that the capability to use “fused” or “crowd-sourced” 7 data that interacted with cellular data in some way was not frivolous or baseless. 8 9 Zillow argues that at the latest, Corus should have abandoned its infringement claim after the court struck portions of Dr. Martin’s report that addressed untimely 10 theories with respect to the “database” limitations. (See Mot. at 11.) However, the court 11 struck those theories on January 30, 2020, after the parties filed their summary judgment 12 motions and less than three weeks before the court granted summary judgment in favor of 13 Zillow on February 18, 2020. (See 1/30/2020 Order; MSJ Order.) Even if the court 14 considered Corus’s position baseless as of January 30, 2020, the fact that it failed to 15 withdraw its claims between that date and the court’s February 18, 2020, summary 16 judgment order, is a far cry from the conduct of the plaintiffs in the cases upon which 17 Zillow relies. For example, in AdjustaCam, the court determined that the plaintiff’s claim 18 became baseless after the court’s claim construction order, yet the plaintiffs continued to 19 litigate that case for months. See 861 F.3d at 1360. 20 Nor does the court find evidence of the kind of improper motivation that exists in 21 the cases upon which Zillow relies. Zillow’s evidence of improper motivation is that 22 Corus apparently used a litigation financier to finance its litigation costs. (Mot. at 1.) ORDER - 11 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 12 of 13 1 However, Zillow submits no evidence of improper conduct on behalf of Corus vis-à-vis 2 the litigation financier. (See generally id.) That a separate entity may have paid some or 3 all of Corus’s litigation expenses, without more, in insufficient to find bad faith. 4 In sum, the court concludes that the factors of frivolity, motivation, baselessness, 5 and the need for deterrence or compensation all weigh against an award of fees under 35 6 U.S.C. § 285. Therefore, under the totality of the circumstances, the court declines to 7 award fees. 8 2. 28 U.S.C. § 1927 and Inherent Authority 9 The standards to award fees under Section 1927 and under the court’s inherent 10 authority are more stringent than the standards under 35 U.S.C. § 285. See Octane 11 Fitness, 572 U.S. at 557. In rejecting a more demanding standard for 35 U.S.C. § 285, 12 the Supreme Court has determined that such a standard would render 35 U.S.C. § 285 13 “largely superfluous” given the court’s authority under Section 1927 and the court’s 14 inherent authority to award fees under more stringent standards. See Octane Fitness, 572 15 U.S. at 557. As the court has not found frivolity, baseless claims, or improper 16 motivation, the court also concludes that it does not find evidence of recklessness 17 “combined with an additional factor such as frivolousness, harassment, or an improper 18 purpose.” See B.K.B., 276 F.3d at 1108 (quoting Fink, 239 F.3d 989 at 994). Therefore, 19 the court declines to award fees under 28 U.S.C. § 1927 and the court’s inherent 20 authority. 21 // 22 // ORDER - 12 Case 2:18-cv-00847-JLR Document 154 Filed 07/17/20 Page 13 of 13 1 2 3 4 IV. CONCLUSION For the foregoing reasons, the court DENIES Zillow’s motion for attorneys’ fees (Dkt. # 145). Dated this 17th day of July, 2020. 5 6 A 7 JAMES L. ROBART United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ORDER - 13
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