IP Law Daily, PATENT—N.D. Cal.: Apple's motion for attorney fees and sanctions denied in a patent infringement case, (Dec 4, 2023)

By Saurabh Kashyap

The court ruled that Apple Inc. failed to show that the plaintiff's conduct in the original lawsuit merited an exceptional case finding.

Despite acknowledging the lack of merit in a patent owner’s complaint, a federal district court in California denied Apple Inc.'s motion for attorney fees and sanctions, concluding that Apple had failed to demonstrate convincingly that the plaintiff’s conduct warranted an exceptional case finding. Furthermore, Apple’s request to seal its own documents was granted, but the motion to seal plaintiff's material was denied due to its failure to provide necessary justification (ALD Social, LLC v. Apple, Inc., December 1, 2023, Corley, J.).

Background. ALD Social (ALD) had filed a patent infringement lawsuit against Apple Inc. (Apple) alleging infringement of two patents related to crowd safety detection systems U.S. Patent Nos. 9,198,054 (the ’054 patent) and 9,402,158 (the ’158 patent). The court dismissed the complaint, finding that Apple’s accused products did not meet two claim limitations. As a result, ALD amended its complaint to focus solely on the ’054 patent. Despite this amendment, ALD Social abruptly dropped its claims against both patents, first without prejudice and then with prejudice, just hours before a scheduled court hearing. Apple then filed a motion for attorney fees, sanctions, sealing of its own material, and an administrative motion to consider whether ALD's material should be sealed.

Attorney fees. The court noted that the Patent Act permits the award of attorney fees to a prevailing party in an exceptional case. An exceptional case finding is based on the substantive strength of a party's position or the unreasonable manner of litigation, considering factors such as frivolousness, motivation, and the need for compensation and deterrence. Apple claimed entitlement to attorney fees as the prevailing party under 35 U.S.C. 285, 28 U.S.C. 1927, and the court's inherent authority. Apple claimed the case was exceptional, citing ALD 's inadequate pre-suit investigation and inappropriate venue selection.

Aggregation of current locations. In the original lawsuit, the court had addressed ALD's allegations about the ’158 patent, which involved the aggregation of wireless device current locations in relation to a potential viral event. ALD's complaint initially failed to persuade the court that the accused product met the patent's requirements because it did not aggregate current locations of devices associated with COVID-19 diagnoses. It instead used previous proximity data and reported diagnoses to determine exposure. As a result, in its response to Apple's motion to dismiss, ALD failed to address the “current locations” requirement adequately. After Apple's dismissal request and the court's preliminary ruling, ALD eventually dropped the ’158 patent claim from its complaint. Despite Apple's claim that ALD did not conduct a thorough pre-suit investigation, the court was unconvinced, noting that ALD's decision to withdraw the claim did not necessarily support an exceptional case determination.

Crowd risk determinant. The court had dismissed ALD's initial complaint, finding no plausible allegation of infringement on the asserted patents' “crowd risk determinant” limitation, particularly regarding COVID-19 exposure. Despite this, ALD amended its complaint, still alleging violations of the ’054 Patent, which included the same limitation. In response to this reassertion, Apple deemed it unfounded and sought sanctions under Rule 11 of the Federal Rules of Civil Procedure, arguing that the case was exceptional. On the other hand, ALD followed Rule 11's safe-harbor provision by dismissing its case, which challenged Apple's request for sanctions.

Choice of venue. Apple challenged ALD's decision to file the original lawsuit in the Western District of Texas. Apple argued that ALD failed to establish that Apple's Exposure Notification system was made or offered in this district, thus challenging the venue choice under 28 U.S.C. 1400(b). ALD initially claimed that Apple engaged in relevant infringing activities in the district. On the other hand, Apple refuted this, citing ALD's refusal to transfer the case to the Northern District of California and their failure to oppose Apple's motion for transfer. The court ultimately determined that ALD Social's venue selection and conduct were insufficient to make the case exceptional, thus not warranting sanctions.

Apple’s cited authorities. The court found Apple's cited authorities inapplicable for sanctioning purposes and noted that none of the referenced cases warranted sanctions under similar conditions. While some cases involved Rule 11 sanctions, the current scenario differed significantly.

The Case is No. 3:23-cv-02695-JSC.

Attorneys: Susan S.Q. Kalra (Ramey LLP) for ALD Social, LLC. Asim Zaidi (Desmarais LLP) for Apple, Inc.

Companies: ALD Social, LLC; Apple, Inc.

Cases: Patent Covid19 CaliforniaNews