IP Law Daily, PATENT—N.D. Cal.: Netflix secures $3 million attorney fee award after inventor's patent suit deemed exceptional, (Jul 14, 2026)

By Mandavi Singh, LL.M.

The patent owner pursued infringement claims despite lacking ownership of one asserted patent and continued litigating after its own expert concluded that Netflix did not infringe either patent.

Netflix Inc. has secured a $3 million attorney-fee award after a California district court found that a patent infringement suit brought by an inventor constituted an "exceptional case" under 35 U.S.C. § 285. The court concluded that the inventor knowingly pursued claims based on a patent he did not own, advanced ownership theories contrary to binding Finnish and U.S. law, concealed material information during discovery, and continued litigating despite his own expert determining that Netflix did not infringe either asserted patent. The court also held that the inventor’s attorney acted in bad faith by continuing the litigation after learning of the ownership defect and ruled that he and his law firm would be jointly and severally liable for a portion of the fee award, with the amount to be determined later (Valjakka v. Netflix, Inc., No. 4:22-cv-01490-JST (N.D. Cal. Jul. 13, 2026)).

Dispute. The plaintiff, Lauri Valjakka, a Finnish inventor, filed this lawsuit against Netflix Inc. in the Western District of Texas in 2021. The case was later transferred to the Northern District of California. The dispute involved U.S. Patent Nos. 8,495,167 (the ’167 patent) and 10,726,102 (the ’102 patent). Both patents relate to technologies for transporting digital content over computer networks. Valjakka alleged that Netflix's content delivery and streaming systems infringed both patents.

Netflix challenged Valjakka's ownership of the ’167 patent, his standing to sue, and the sufficiency of his infringement claims. It argued that the case was exceptional because Valjakka asserted the ’167 patent despite lacking ownership, concealed material information concerning ownership and licensing rights, pursued objectively baseless infringement theories, and engaged in unreasonable litigation conduct. After obtaining summary judgment on multiple issues, Netflix moved for approximately $3 million in attorney fees under 35 U.S.C. § 285, sanctions under 28 U.S.C. § 1927, and the court's inherent authority.

Exceptional case. Finding that Valjakka pursued infringement claims despite knowing he did not own one of the asserted patents, the court concluded that the litigation stood out from ordinary patent cases. According to the record, Valjakka had transferred rights in the underlying patent application to a Finnish company years earlier. Finnish courts subsequently rejected his claim that ownership reverted to him following the company's bankruptcy. Nevertheless, he obtained issuance of the patent from the U.S. Patent and Trademark Office without disclosing those Finnish decisions and later relied on the same ownership theory in federal court.

The district court rejected Valjakka's argument that opinions from Finnish lawyers and legal scholars rendered his ownership position objectively reasonable. Instead, it found that competent Finnish courts had already resolved the issue against him and that his alternative theory—based on abandonment and revival of the patent application—was likewise foreclosed under U.S. patent law. The court concluded that the substantive weakness of the ownership claim strongly supported an exceptional-case finding under Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014).

Ownership defect. The court also sanctioned Valjakka's attorney, William Ramey, under 28 U.S.C. § 1927 and its inherent authority. Evidence showed that Ramey became aware of the ownership problem shortly after taking over the representation in late 2021. Internal communications reflected his acknowledgment that Finnish appellate decisions appeared to resolve ownership against Valjakka. Despite that knowledge, he continued litigating for nearly three years.

The court further found that Ramey helped conceal the ownership issue by failing to disclose key documents relating to the Finnish proceedings and by settling another infringement action after the opposing party threatened to alert other defendants to the ownership defect. Unlike the Federal Circuit's recent decision in mCom IP, LLC v. City National Bank of Florida, 175 F.4th 1370 (Fed. Cir. 2026), where the record did not support findings of bad faith, the district court concluded that Ramey's conduct demonstrated both bad faith and an unreasonable multiplication of the proceedings.

Additional litigation misconduct. Further, the court identified several additional circumstances supporting the fee award. Valjakka transferred valuable licensing and enforcement rights in both asserted patents to a Finnish entity he controlled, but failed to timely disclose those agreements despite repeated discovery requests. The court found that Netflix incurred significant additional litigation costs pursuing counterclaims to protect its ability to recover any future fee award.

Criticizing Valjakka's infringement theories, the court noted that allegations concerning one patent remained largely conclusory despite repeated requests for greater specificity. More significantly, after reviewing Netflix's source code, Valjakka's own technical expert concluded that Netflix did not infringe either of the asserted patents. Rather than dismissing the remaining claims, Valjakka replaced the expert with another willing to support the infringement claim.

Furthermore, the court found that attorneys associated with litigation funder AiPi extensively drafted pleadings, infringement contentions, and briefing despite not being admitted to practice before the court. It concluded that Valjakka and Ramey concealed AiPi's role and facilitated the unauthorized practice of law, conduct that further supported an exceptional-case determination under Section 285.

$3 million award. Concluding that the litigation was "objectively baseless," the court awarded Netflix $3 million in attorney's fees against Valjakka. It also held that Ramey and Ramey LLP would be jointly and severally liable for the portion of those fees causally connected to their misconduct. The parties were directed to submit proposals regarding that amount within 28 days. The court separately denied Ramey's motion to strike evidence supporting Netflix's fee request, concluding that he had waived any applicable privilege by failing to object when given the opportunity during related proceedings. It likewise denied Netflix's motion to strike evidence submitted in opposition to the fee motion as moot.

The Case is No. 4:22-cv-01490-JST.

Judge: Tigar, J.

Attorneys: Lauri Valjakka, pro se. Sarah E. Piepmeier (Perkins Coie LLP) for Netflix, Inc.

Companies: Netflix, Inc.

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