Tag Archives: Attorney Fees

8th Circuit Court of Appeals: Suing an IP address subscriber is reasonable

In the case of Killer Joe Nevada v. Leaverton, Killer Joe Nevada, LLC sued internet subscriber Leigh Leaverton for infringement under the Copyright Act for the download and distribution of the motion picture Killer Joe. When on investigation it appeared Leaverton was only the subscriber who paid for the Internet service and not the infringer, Killer Joe moved to voluntarily dismiss its suit. Leaverton objected and demanded her attorney’s fees. The court dismissed the suit and denied Leaverton’s requests for attorney’s fees.

Leaverton appealed and the key issue on appeal was whether or not it was reasonable for a subscriber to be sued solely for being the party responsible for the internet service used by the infringer and whether the District Court abused its discretion in denying her attorney fees.

As per the Court of Appeals:

[Leaverton] argues that the district court erroneously ruled it was reasonable and not frivolous for Killer Joe Nevada to sue the subscriber for the IP address. Leaverton believes it is unreasonable for a Copyright Act plaintiff to sue the subscriber without first investigating whether the subscriber was responsible for the infringement.
          . . .
Leaverton cites no binding authority that a Copyright Act suit based on the infringer’s IP address is frivolous or unreasonable. The district court thus did not abuse its discretion by concluding that Killer Joe Nevada’s acts were reasonable.
          . . .
…because Killer Joe Nevada promptly dismissed its lawsuit once it learned Leaverton was not the infringer, Killer Joe Nevada had proper motives to sue the subscriber.

If nothing else, this case stands for the principal that providing internet service alone, though it may not make you liable for infringing activity, reasonably exposes you to potential litigation.

Full Text: Killer Joe Nevada v. Leaverton, No. 14-3274, 8th Circuit Court of Appeals, Dec. 4, 2015

Lying is Still Bad

In the long fought BitTorrent infringement case of Malibu Media v. Tashiro, (S.D. Indiana) the court appears to be close to closing this case with a resolution in favor of Malibu Media. As with just about every other case that has gone through substantive proceedings, the results appear to be either a finding of infringement, or defendants who lie and destroy evidence, resulting in a verdict in favor of the plaintiff.

This case, fought longer and harder than most, has resulting in a few extra points, one being with respect to a long fight about Plaintiff’s expert Patrick Page and efforts to discredit Mr. Paige. Curiously, these seem to have backfired as the court found Plaintiff’s expert Mr. Paige more credible than the expert offered by Defendants.

Based on the relative credentials of the parties’ experts, the Court concludes that Patrick Paige’s testimony is more accurate and more credible. As such, the Court finds it highly likely that thousands of files were deleted and were unrecoverable. This confirms that Defendant Charles did not temporarily delete relevant evidence; instead, he permanently destroyed that evidence. As a result, Charles is liable for spoliation.

But the real substance of this case relates to a husband and wife who the court found lied and destroyed evidence. Much has been written on this case about the lack of evidence, but the heart of the case deals with why the evidence was missing. As summarized by the Court:

Discovery in the federal system is intended “make a trial less a game of blind man’s bluff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent.” United States v. Procter & Gamble Co., 356 U.S. 677, 682 (1958) (emphasis added). The rules governing discovery contemplate that parties will “obtain the fullest possible knowledge of the issues and facts before trial,” such that “civil trials in the federal courts no longer need be carried on in the dark.” Hickman v. Taylor, 329 U.S. 495, 501 (1947).

[Defendant’s] conduct is simply not consistent with these principles. By deleting files from the Stover drive, [Defendant] chose to conceal—not disclose—potentially relevant information. And by doing so, [Defendant] deprived Plaintiff of the ability to gain the “fullest possible knowledge” of the facts relevant to Plaintiff’s underlying copyright claim. [Defendant] thus flouted the important principles underpinning litigation carried on before this Court and other courts in the federal system, and his decision to do so cannot go unpunished.

In this case it was more than just the husband that got in trouble, but the Court specifically found the wife at fault as well.

[Defendant Wife’s] own testimony thus demonstrates that she repeatedly failed to discharge her duty to reasonably investigate whether her discovery responses were complete and accurate, and sanctions against [Defendant Wife] are therefore appropriate.

Additionally, [Defendant Wife’s] failure to investigate was especially egregious in light of her attorney’s representations to the contrary. … These misrepresentations are hardly consistent with a party’s duties to investigate and disclose relevant facts, confirming that sanctions against [Defendant Wife] are appropriate.

In essence, the court found the husband-wife team acted together on many fronts and they were liable for the bad acts of the other.  Protecting a family member may seem like a good idea, there are consequences when doing so involves lying or hiding evidence.

Based on these considerations, the Court concludes that the [Defendants] have the sort of “close family relationship,” Sebastian, 2008 WL 2875255, at *33, that would support extending a Fifth Amendment adverse inference from one party to another. Thus, when Plaintiff’s counsel asked whether [Defendant] had agreed with his wife to hide the truth in this case, the Court may infer that [Defendant] refused to answer not only to protect himself, but also to protect his wife.

And while the court found also fault with the Defendants’ attorney, he managed to escape without sanctions.

[Defendant’s attorney’s] conduct in this case borders on sanctionable. …. In these circumstances, the Court will exercise its discretion to refrain from sanctioning [Defendant’s attorney].

In summation, the court found the Defendants guilty of perjury with respect to hiding evidence, hiding hard drives and lying about the use of BitTorrent and directed that both husband and wife be found liable under Plaintiff’s claims.

Here, the Court finds by clear and convincing evidence that Defendants have engaged in a similar pattern of misconduct. Defendants spoiled evidence, committed perjury, and failed to discharge their duties to conduct discovery reasonably and in good faith. They lied to the opposing party; they withheld the existence of material evidence; and they deleted potentially damaging computer files the very night before they were to relinquish such files for discovery. Just as in the cases cited above, this extensive pattern of conduct warrants the harshest of sanctions, and the Magistrate Judge accordingly recommends that the Court enter default judgment against both Defendants.

Based on the long record of this case and likely hundreds of thousands in attorney fees, this may result in one of the most significant awards against defendants in any BitTorrent litigation.

 

The case and relevant opinion: Malibu Media, LLC v. Tashiro, et al. 1:13-cv-00205, (S.D. Indiana, May 18, 2015)

 

Internet Subscriber Liability For BitTorrent Use

In a default judgment opinion, Judge Robert M. Dow, Jr., carefully scrutinized and questioned plaintiff’s motives and actions. After reviewing a number of the criticisms against BitTorrent infringement claims the Judge concluded:

Plaintiff, however, does more than merely identify Defendant as the account holder at the relevant IP address. It also offers evidence linking that IP address to bit-exchanges involving hundreds of digital media files in just three months. Taken together, these facts plausibly suggest that Defendant—the controlling account holder of an IP address associated with frequent BitTorrent use—is the infringing user. See Malibu Media, LLC v. Doe, 2015 WL 857408, at *4 (D. Md. Feb. 26, 2015) (“That the Defendant’s IP address was used to obtain 2,034 other third party files through BitTorrent over an 18–month period supports the reasonable inference that the Defendant-and not some other person using the Defendant’s IP address—was the infringer.”). The Court therefore finds a plausible claim of direct copyright infringement.

The court went on to find that even if the infringer was not the defendant, the defendant was still liable as the subscriber finding:

Plaintiff also states a plausible claim for contributory copyright infringement. “A defendant is liable for contributory copyright infringement when it with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another.” Monotype Imaging, Inc. v. Bitstream, Inc., 376 F. Supp. 2d 877, 883 (N.D. Ill. 2005) (citations and internal quotation marks omitted); see also PHE, 2014 WL 1856755, at *2.

And while declining to find willful infringement, contra Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008)(In a default, “all factual allegations in the complaint are deemed true, including the allegation of [] willful infringement …”) the court did award all costs and fees and entered an injunction against the defendant and awarded plaintiff $11,525.00.

Once again the courts continue to extend liability for BitTorrent infringement to the account holders and subscribers.  The lesson: If you pay the bill, make sure no one is using BitTorrent.

The full opinion is: Malibu Media v. Funderburg, 1:13-cv-02614, N.D. Ill. (April 24, 2014)

### UPDATE:  On review of the Amended Complaint it appears the Judge’s finding of contributory infringement was not plead by plaintiff.  The Judge appears to have brought an alternative finding of contributory infringement to this opinion on their own based on the evidence.

The filed Amended Complaint is: Amended Complaint : Malibu Media v. Funderburg, 1:13-cv-02614, N.D. Ill.

Naming IP Address Subscriber “Objectively Reasonable”

The 11th Circuit Court of Appeals has issued a ruling that naming an IP address subscriber as a defendant is “objectively reasonable.”

In the case of Malibu Media v. Pelizzo the defendant demanded costs and fees after being named in a BitTorrent copyright case. A key issue was whether or not Malibu Media named the defendant in good faith when his IP address was shown to have been the source of notable infringing activity. Later evidence indicated that Pelizzo himself might not be the infringer.   Once it appeared Pelizzo might not be the infringer, Malibu offered to dismiss the case but Pelizzo rejected Malibu’s offer and demanded costs and fees. The District Court denied Pelizzo his attorney fees under the Copyright Act and Pelizzo appealed. The 11th Circuit Court of Appeals upheld the District Court and stated:

We find no abuse of discretion in the district court’s conclusion … that Malibu’s subjective motivation for filing suit was not improper or that the suit was not frivolous… To whomever the subject IP address was subscribed, it is undisputed that a genuinely phenomenal number of films was being downloaded using it. …   Because of the nature of the films, Pelizzo justly was ashamed to be a part of the litigation, but the magistrate judge found no record evidence that Malibu sued him for that reason, and Pelizzo has not presented any such evidence. Using detection methods it had used hundreds of times before, Malibu determined that the IP address apparently assigned to Pelizzo was the vehicle for the infringements and acted accordingly.

We also find no abuse of discretion in the district court’s conclusion that Malibu, up to a point, acted in an objectively reasonable manner and in a manner that served the purposes of the Copyright Act: compensation and deterrence. Contrary to Pelizzo’s assertion, Malibu could not have been expected simply to take his word for the fact that he had not infringed Malibu’s copyrights, given the substantial evidence implicating Pelizzo.

 A ruling that Pelizzo should be awarded $6,815.50, for what the Court called a “knee-jerk” reaction to Pelizzo’s initial demand for fees was not changed, but the court verified that the $24,000 in attorney fees sought by Pelizzo was properly denied.

The case is Malibu Media v. Leo Pelizzo, 14-11795 (11th Cir, 2015)
(S.D. FL. D.C. Docket No. 1:12-cv-22768-PAS)

BitTorrent Litigation: Court Threatens Sanctions Against Vexatious Doe Defendant

Judge Richard A. Jones has had about enough of the boilerplate and Internet sourced self-help Motions to Quash being filed by defendants in Washington and on March 11, 2015 issued an order threating one “Mr. Doe” with monetary sanctions.

Initially this “Mr. Doe” or John Doe No. 4 filed a motion to quash arguing many of the standard boilerplate arguments. The court was not impressed.

[Mr. Doe] asserts that Plaintiff has improperly joined ten “John Doe” defendants in this case. He also asserts (without providing evidence) that he has learned from “prior defendants” that Plaintiff follows up the identification of a Comcast subscriber with “forceful correspondence, persistent phone calls and other methods asking for money to avoid their lawsuit.” He asserts that he has never heard of the Dallas Buyers Club movie and he has never unlawfully downloaded it.

The court rejected the improper joinder arguments and the denial of liability as a basis for quashing the subpoena, and pointed out that allegations of “strong-arm tactics” were without any actual evidence. (“Mr. Doe has not, however, given the court a basis to conclude Plaintiff is actually using those tactics.”)

However, not satisfied, “Mr. Doe” proceeded to file further objections and motions. After a third try, the court had enough and stated:

This is the third motion Mr. Doe has filed targeting the same subpoena issued to Comcast. Just as the court has denied the previous two motions, it denies this one. If Mr. Doe persists in filing motions attacking the subpoena, the court will terminate those motions without further notice. It may also issue an order to show cause why it should not designate Mr. Doe as a vexatious litigant and issue monetary sanctions against him.

As a caution, it appears Judge Jones’ patience with BitTorrent infringers is wearing thin.

The case is Dallas Buyers Club, LLC v. John Does 1-10, W.D. Washington, 14-cv-01819-RAJ.

The relevant orders of the court:

Order Denying Motion 14-cv-01819-RAJ_Doc_16

Order Re Sanctions 14-cv-01819-RAJ_Doc_21

MISGUIDED BITTORRENT DEFENSES / OHIO AND OREGON MISFIRES

A standard defense in BitTorrent cases is that the defendant is the victim of abuse by the copyright holder and the whole process is nothing more than a shakedown scheme and a fraud on the courts with plaintiffs filing cases and settling for money. But there is a problem with this, and that is that our entire litigation system is based on reasonable people settling most cases and this overlooks the fundamental facts of the case: a copyright claim is premised on the defendant being the bad actor – for the case to exist the defendant must have first stolen from the plaintiff.

This trend of defenses that try to paint the plaintiff as the bad guy in an effort to divert attention from their own copyright theft sounds good to someone looking for an easy way out, but it does not hold up to scrutiny and the courts are shutting this defense down with painful results for some defendants. Thousands of dollars are being spent on these arguments and in the end, the defendants who might have been able to settle their clams for $5,000, have to pay not only their own attorneys thousands more, but as per the copyright law, also have to pay more to the rights holders that brought the case. A bad defense quickly turns a $5,000 case into a $50,000 case, and that is starting to sound like abuse, but for defendants who run up the legal bills, it is self-inflicted.

Two recent cases point this out. One in Ohio and a second in Oregon.

In Malibu v Doe, S.D. Ohio, 14-cv-00821, the defendant tried to assert counterclaims, arguing the copyright holder (Malibu) had committed bad acts and therefore could not enforce its claims and that the claims of Malibu were abusive and brought in bad faith.

As per the opinion –

[Defendant] alleges that Malibu brought the claim to humiliate him and extract money from him. … [but] even if Malibu brought the lawsuit with the intention of settling the case short of litigating it to conclusion, that purpose is not an ulterior motive because many claims are settled. A successful copyright lawsuit would result in money damages, so seeking a settlement by filing a complaint does not qualify as an ulterior motive…[the defendant] does not identify any act committed during the process that was improper …

 In other words, the defendant argued that Malibu was a bad person and that Malibu’s methodology of filing suit and demanding settlements for money was somehow improper. As the court correctly points out, there is not only nothing improper about Malibu’s conduct, but this is exactly how things should work when someone commits copyright theft.

In another recent case, Voltage v. Revitch, Oregon, 14-cv-00301, the defendant argued essentially the same type of thing, but brought in a lot of additional accusations claiming copyright misuse and unfair business practices, raised the “IP address is not a person defense,” and making several accusations related to the investigators and other parties working with Voltage. One of the key elements in the counterclaims of the defendant was an argument that Voltage had an improper claim that the defendant, by paying for Internet service was liable for providing the Internet access to another person who might be the actual infringer.

As per the opinion –

Defendant’s claim seeks to resolve the “continuing threat posed . . . by plaintiffs’ theory that their copyright registration imposes on [defendant] a “duty to police” the internet access he obtains as an Oregon consumer.” As noted above, plaintiffs’ allegations seek to hold defendant liable for alleged willful copying and distribution and do not assert some sort of strict liability. To the extent defendant asserts that plaintiffs have engaged in such conduct with others and that conduct bars enforcement of the copyright against him, the claim stretches the theory of copyright misuse beyond its contours.

. . .

This is not to say the issue of whether defendant is in fact liable for copyright violations engaged in by others may not be litigated, only that defendant may not properly allege a counterclaim for copyright misuse. Accordingly, defendant’s counterclaim for copyright misuse is dismissed.

Both cases support plaintiff’s right to legitimately enforce their copyrights and discard the copyright misuse defense. And in an interesting turn of events, the “IP address is not a person” defense has now been discarded so thoroughly that the courts are recognizing that someone that pays for Internet service may be “liable for copyright violations engaged in by others.”

Relevant court orders:

Malibu v Doe, S.D. Ohio, 14-cv-00821, Feb. 4, 2015

Voltage v. Revitch, Oregon, 14-cv-00301, Jan. 23, 2015

 

Defendant’s Motion to Quash “Demonstrates A Lack of Understanding” of Basic Rules

No Traction With Empty Allegations In Northern District of Illinois

Following the growing trend of judges nationwide, District Judge John W. Darrah has summarily dismissed a defendant’s claims that a subpoena related to a complaint filed for copyright infringement via BitTorrent was part of a “fishing expedition,” a “bogus lawsuit,” and “troll case” for extortion that undermined the judicial process.

The court summarily rejected all of the arguments as hollow and made clear:

The information sought is particularly discoverable, as Plaintiff would “otherwise be unable to maintain . . . litigation, as it has no other way of identifying the defendants.” TCYK, LLC v. Does 1-87, at *2. Any argument that the subpoena should be quashed because the information will not identify infringing parties “demonstrates a lack of understanding of the basic scope of discovery under federal rules… Relevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” reFX Audio Software, Inc. v. Does 1-111, 13-cv-1795, 2013 WL 3867656 (N.D. Ill. July 23, 2013) (citing Fed.R.Civ.P. 26(b)(1)).

The outcome of this: Due to defendant’s (or their attorney’s) “lack of understanding” the costs and fees associated with this case went up. Defendants who willfully infringe as occurs with BitTorrent infringement, pay all costs and fees for both sides. As such a defendant is now likely going to have to pay not only for their own “lack of understanding,” but they will likely have to pay the costs and fees of the plaintiff as well.

Worth reading for an appreciation of exactly what is going on are the Motion to Quash (Docket 15), the Opposition (Docket 19) and the Memorandum Opinion and Order of the court (Docket 26.)

14-cv-1381 – Docket 15 : Motion to Quash

14-cv-1381 – Docket 19 : Opposition to Motion to Quash

14-cv-1381 – Docket 26 : Memorandum Opinion and Order

LYING IS STILL BAD – Indiezone v. Rooke

Indiezone, Inc., et al. v. Todd Rooke, et al., 13-cv-4280 (N.D. Ca.)

In 2013 Indiezone filed suit against a number of former employees claiming they stole certain intellectual property. An arbitration agreement would have required the parties to arbitrate instead of bring their claims in court. To avoid arbitration Indiezone brought in co-plaintiff eoBuy which was not a party to the arbitration agreement. The only problem was eoBuy did not exist and was apparently fabricated for the sole purpose of avoiding arbitration.

In January several of the defendants filed to dismiss eoBuy and argued that arbitration was proper. Rather than concede that eoBuy did not exist Indiezone dug the hole deeper and began to fabricate evidence and make other claims that eventually unraveled under scrutiny. The result was severe sanctions from the court.

It is important to note that Indiezone may have had valid claims against the defendants but in their efforts to avoid arbitration they lied to the Court and as a result their claims were denied.

Judge Chhabria did not pull any punches:

The Court finds that the plaintiffs submitted multiple misleading and false declarations and fraudulent documents… Bad faith of this degree easily supports an award of sanctions under the Court’s inherent powers. See Chambers v. NASCO, Inc., 501 U.S. 32, 47 (1991).

The Court went on to find both the plaintiffs and their counsel liable for costs and fees,

Counsel for the plaintiffs also participated in this bad faith conduct. Despite having been put on notice that eoBuy did not exist … [counsel] continued to file the plaintiffs’ bad faith motions and to support and adopt [Indiezone’s] misrepresentations in his own declarations and through motion and oral argument. [Counsel’s] misrepresentations to the Court far exceed the ethical bounds of advocacy and constitute bad faith. At a minimum, [counsel] has been reckless regarding the truth of his representations to the Court. [Counsel’s] actions throughout this litigation also demonstrate his intent to unreasonably and vexatiously multiply and manipulate the proceedings, including filing numerous motions to amend, filing numerous requests for extension of time, and failing to abide by court order on multiple occasions. Sanctions are therefor appropriate … under the Court’s inherent authority, as well as 28 U.S.C. § 1927.

This case is also dismissed with prejudice, pursuant to the Court’s inherent power, because the plaintiffs have “engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings” and “willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice.” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (quoting Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 347, 348 (9th Cir. 1995)). Dismissal is warranted in a case such as this one where a party has knowingly submitted false and misleading documents. See Combs v. Rockwell Int’l Corp., 927 F.2d 486, 488-89 (9th Cir. 1991). Moreover, consideration of the five factors discussed in Leon warrants dismissal. See Leon, 464 at 958. The public’s interest in expeditious resolution of litigation and the Court’s need to manage its docket both support dismissal, because the sanctionable conduct has unnecessarily prolonged this case and wasted a tremendous amount of the Court’s time. Given the Court’s finding of bad faith and issuance of sanctions under its inherent authority, a showing of prejudice to the defendants is not needed (although the defendants have certainly labored under the misconduct of the sanctioned parties). Nursing Home Pension Fund v. Oracle Corp., 254 F.R.D. 559, 564-65 (N.D. Cal. 2008) (explaining that “a district court need not consider prejudice to the party moving for sanctions” when acting pursuant to its inherent authority).

 The lesson: Lying is (still) bad. Win a case on the merits.

Related documents:

Motion to Compel Arbitration and Dismiss eoBuy: Indiezone, Inc., et al. v. Todd Rooke, et al., Dkt. 29, 13-cv-4280 (N.D. Ca., Jan. 1, 2014)

Motion for Sanctions: Indiezone, Inc., et al. v. Todd Rooke, et al., Dkt. 104, 13-cv-4280 (N.D. Ca., May 1, 2014)

Order for Sanctions: Indiezone, Inc., et al. v. Todd Rooke, et al., Dkt. 145, 13-cv-4280 (N.D. Ca., Sept. 2, 2014)

 

JOINED BITTORRENT COPYRIGHT SUITS GO FORWARD IN HAWAII

Hawaii now joins the majority of states which allow joined BitTorrent copyright enforcement cases.  In early 2013 the Prenda scam was uncovered where a group of attorneys were revealed to be using shell games to operate a honeypot scheme for people that downloaded porn via BitTorrent.  In response courts across the nation clamped down on all BitTorrent cases as a precaution.   As the courts have become better educated they are recognizing the Prenda scam was unique and that joined BitTorrent copyright litigation is the most efficient and best way to enforce copyrights, especially in light of the massive scale of BitTorrent related infringement.

Single party cases are still being filed in many jurisdictions, but some studies put the average costs and attorney fees for copyright litigation at $300,000 to $2,000,000+ *. (Note, this is a National average for all copyright cases and many cases are resolved for significantly less.)   However the courts, and many wise defendants, recognize that by permitting joinder costs can be reduced dramatically, permitting rights enforcement and allowing cases to be economically resolved for less than 10% of the national average.

Related:

Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 20, Case No. 1:14-cv-00330
Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 22, Case No. 1:14-cv-00331

 

Opinions of the court allowing discover in the joined case to proceed:

Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 20, Dkt. 10, Case No. 1:14-cv-00330, (D. Haw. Aug. 28, 2014), Order allowing subpoenas.
Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 22, Dkt. 9, Case No. 1:14-cv-00331, (D. Haw. Aug. 28, 2014), Order allowing subpoenas.

 

* Amer. Intl. Prop. L. Assoc’n, Report of the Economic Survey.

LYING IS STILL BAD – Tesco V. Weatherford

Case: Tesco Corporation
 v.
 Weatherford International, Inc. et al, 4:08-02531 (S.D. Tx. Aug. 8, 2014)

Patent Infringement / Court’s Inherent Authority To Sanction

After a long (6 year) drawn out battle related to patent infringement in the oil drilling industry, it all goes away because of a lie.   In the Southern District of Texas, Judge Ellison has thrown out all claims by plaintiff Tesco in a rare application of the inherent powers of the court.

In short, Tesco claimed it had a patent on a piece of oil drilling equipment and sued Weatherford (and others) for infringement. One of the key issues related to an old brochure. There was some question as to whether or not the document contained an image of the patented invention and therefore invalidated the patent. (Publication of the invention more than one year before filing invalidates a patent.) To get through the point, Tesco’s attorney told the court:

The animators that actually did the brochure and that actually did the rendering are prepared to swear and testify that this is not [the] invention; and in fact, there is no doubt it’s not [the] invention.

. . .

[T]hat is what [the illustrator is] going to say; and he’s going to say unequivocally that this is not it. And so is [the other illustrator] who also worked on the rendering. Two individuals, same rendering, both will say that.

However there were irregularities with the case and even after the jury found in favor of Tesco, at least in part, the judge allowed post-trial discovery to look into certain matters, including some possible misconduct by Tesco’s attorneys. In the post-trial proceedings it was revealed that Tesco’s counsel blatantly misrepresented notable facts related to the brochure and the illustrators had no idea whether or not the invention was depicted in the brochure.

While facing nine (9) separate motions, Judge Ellison cut to the heart of the case and decided that all pending motions were moot and decided that due to the blatant fraud on the court by Tesco’s counsel Tesco’s claims were dismissed with prejudice.  At the time of the court’s ruling, no pending motion on the docket appears to have been seeking this specific relief.

After first acknowledging the Supreme Court has warned that “[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion,” Judge Ellison went on to make clear:

 …the Court has an independent obligation to safeguard its own integrity and those of the proceedings before it…the Court reluctantly concludes that Tesco’s representations amount to an abuse of the judicial system; they are most certainly “acts which degrade the judicial system.” citing Amsted Indus. Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 379 (Fed. Cir. 1994)

…not every lawyer who lies to a court will be caught, so when such deliberate and advantage-seeking untruthful conduct is uncovered, the penalty must be severe enough to act as a deterrent. Awarding attorney’s fees – even if they were to be paid by Tesco’s counsel alone – is insufficient. citing Hull v. Municipality of San Juan, 356 F.3d 98, 102 (1st Cir. 2004)

Just as with witnesses testifying truthfully under oath, the proper administration of justice depends upon counsel being completely forthright with the Court.

Judge Ellison has invited defendants to submit motions for attorney fees, and as he has already made clear that the sanction of dismissal is warranted because an award of fees would not be enough, it is anticipated that there will be a notable award of fees.

The simple lesson is that if you lie about what you have and how you got it, then odds are you do not have anything. While this case was about patents, similar rules apply to copyrights and trademarks.

In the law, as with most things, lying, cheating and stealing are (still) bad.

For the full text of the opinion: Tesco Corporation 
v.
 Weatherford International, Inc. et al, 4:08-02531 (S.D. Tx. Aug. 8, 2014)