IP Law Daily, PATENT—S.D.N.Y.: TiVo sanctioned for failure to heed court warning, (Nov 6, 2014)

By Jody Coultas, J.D.

TNS Media Research, LLC has been awarded attorneys’ fees and non-taxable expenses as the prevailing party in an infringement case filed against TiVo Research and Analytics, Inc. by the federal district court in New York City (TNS Media Research, LLC v. TiVo Research and Analytics, Inc., November 4, 2014, Scheindlin, S.). The court held that the case was exceptional based on TiVo’s actions at trial and filing of baseless trade secret claims.

TNS sought a declaratory judgment of non-infringement of U.S. Patent No. 7,729,940 (the ‘940 patent). TiVo counterclaimed for patent infringement of the ‘940 patent, misappropriation of trade secrets, aiding and abetting breach of fiduciary duty, and breach of contract. TiVo also alleged infringement of two of its patents. The patents relates to the goal of “cross-referencing huge amounts of data from a variety of sources in order to determine which television programs are the best match for an advertiser seeking to market specific products, while protecting the privacy interests of television viewers.”

The court granted TNS summary judgment of the non-infringement, trade secrets, and non-patent damages. The parties stipulated to nominal damages of $1 for TiVo’s breach of contract and fiduciary duty claims. TNS moved for attorneys’ fees and non-taxable expenses.

Courts may award reasonable attorneys’ fees to the prevailing party in exceptional patent cases. An “exceptional” case is one that stands out from others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated.

The “totality of the circumstances” rendered the case exceptional for attorneys’ fee purposes, according to the court. TiVo even ignored an express warning from the court not to take certain action. TiVo proposed a claim construction that could not be supported by any correct application of the rules of grammar. The length and placement of an argument did not dictate its level of frivolity, nor did a belated reasonable argument make up for the previous frivolous argument. The court noted in a status conference that TNS alleged that one of the experts for TiVo ignored the court’s claim construction, and warned that TiVo could face sanctions.

TiVo deserved to be sanctioned for proposing a construction of a term the court later held “render[ed] meaningless the amendments [TiVo] added after the [Patent and Trademark Office] rejected the original versions of the claim language[,]” according to the court. The decision to flout the court’s claim construction was evidence that the case was “exceptional,” warranting an award of attorneys’ fees. TiVo pressed a baseless judicial estoppel argument, and exercised poor judgment in attempting to assert a doctrine of equivalents theory.

The court also found that TiVo’s five trade secret claims were baseless and brought in bad faith, thus satisfying the standard for an award of attorneys’ fees. TiVo argued that its pending appeal in the Federal Circuit divested the court of jurisdiction to determine whether TNS may collect attorneys’ fees. However, district courts retain jurisdiction to decide motions for attorneys’ fees even if the underlying merits decision has been appealed.

The case is No. 11 Civ. 4039 (SAS).

Attorneys: Marc Rachman and Andrew Keisner (Davis & Gilbert LLP) and Michael A. Albert, John Strand, Charles Steenburg, and Eric Rutt (Wolf, Greenfield & Sacks, P.C.) for TNS Media Research, LLC. Perry Mark Goldberg, Kevin S. Rosenberg, and Mark Paluch (Goldberg, Lowenstein & Weatherwax LLP) for TiVo Research and Analytics, Inc.

Companies: TNS Media Research, LLC; TiVo Research and Analytics, Inc.

Cases: Patent TradeSecrets NewYorkNews