United States Court of Appeals for the Federal Circuit - Law.com

2021-1484, 1485, 1518, 1519

United States Court of Appeals for the Federal Circuit

REALTIME ADAPTIVE STREAMING LLC,

Plaintiff–Appellant,

v.

NETFLIX, INC., NETFLIX STREAMING SERVICES, INC.,

Defendants–Cross-Appellants.

Appeals from the United States District Court for the

Central District of California in No. 2:19-cv-06359-GW-JC and 2:19-CV-06361-GW-JC, Judge George H. Wu

OPENING AND RESPONSE BRIEF OF CROSS-APPELLANTS NETFLIX, INC. AND NETFLIX STREAMING SERVICES, INC.

J. DAVID HADDEN [email protected] SAINA S. SHAMILOV [email protected] JOSHUA M. STEIN [email protected] FENWICK & WEST LLP 801 California Street Mountain View, CA 94041 (650) 988-8500

TODD R. GREGORIAN [email protected] FENWICK & WEST LLP 555 California Street 12th floor San Francisco, CA 94104 (415) 875-2300

Counsel for Defendants-Cross-Appellants Netflix, Inc. and Netflix Streaming Services, Inc.

Case: 21-1484 Document: 31 Page: 1 Filed: 06/28/2021

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CERTIFICATE OF INTEREST

Counsel for Netflix, Inc. and Netflix Streaming Services, Inc. certifies the

following pursuant to Federal Circuit Rule 47.4:

1. The full name of every party or amicus represented by me is:

Netflix, Inc.

Netflix Streaming Services, Inc.

2. The name the real party in interest (if the party named in the caption is not the real party in interest) represented by me is:

None.

3. All parent corporations and any publicly held companies that own 10 percent or more of the stock of the party or amicus curiae represented by me are:

Netflix, Inc.: None.

Netflix Streaming Services, Inc. is a wholly owned subsidiary of Netflix, Inc.

4. The names of all law firms and the partners or associates that appeared for the party or amicus now represented by me in the trial court or agency or are expected to appear in this court (and who have not or will not enter an appearance in this case) are:

Law Firm Attorney

Fenwick & West LLP Ravi R. Ranganath Sapna S. Mehta Earl Mah Dargaye C. Churnet

5. Other than the originating case number(s), the title and number of any case known to counsel to be pending in this or any other court or agency that will directly affect or be directly affected by this court’s decision in the pending appeal:


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None

6. All information required by Federal Rule of Appellate Procedure 26.1(b) and (c) that identifies organizational victims in criminal cases and debtors and trustees in bankruptcy cases:

None

June 28, 2021 FENWICK & WEST LLP

By: /s/ Todd R. Gregorian Todd R. Gregorian

Attorneys for Defendants-Cross-Appellants Netflix, Inc. and Netflix Streaming Services, Inc.


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TABLE OF CONTENTS Page

CERTIFICATE OF INTEREST ................................................................................ I

STATEMENT OF RELATED CASES ..................................................................... 1

JURISDICTIONAL STATEMENT .......................................................................... 2

INTRODUCTION ..................................................................................................... 3

STATEMENT OF THE ISSUES............................................................................... 5

STATEMENT OF THE CASE .................................................................................. 7

A. Realtime filed suit in Delaware only to voluntarily dismiss the case when an adverse ruling was imminent and refile the same claims in a more favorable forum the next day. .................................................... 7

B. Realtime voluntarily dismissed its claims a second time, after Netflix briefed a motion to transfer the dispute back to the Delaware court and requested reimbursement of its costs. ................. 12

C. The district court found the case exceptional but awarded Netflix its reasonable attorney fees for the California actions alone. .................. 14

SUMMARY OF THE ARGUMENT ...................................................................... 16

ARGUMENT ........................................................................................................... 18

I. STANDARD OF REVIEW ........................................................................... 18

II. NETFLIX IS A PREVAILING PARTY ELIGIBLE TO RECOVER ITS FEES UNDER 35 U.S.C. § 285. ................................................................... 19

A. Realtime’s voluntary dismissal with prejudice was a final adjudication of the merits that made Netflix the prevailing party. ..... 21

B. Realtime’s arguments to the contrary lack merit. ............................... 23


TABLE OF CONTENTS (Continued)

Page

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III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY FINDING THIS CASE EXCEPTIONAL UNDER § 285 ............................ 28

A. Realtime did not challenge the ruling that it knew or should have known its claims were baseless before it filed in California............... 29

B. Realtime abused the judicial process by dismissing when an adverse ruling was imminent and refiling in a different court. ........... 32

C. Realtime’s opposition to transfer back to Delaware was groundless and an additional reason to find the case exceptional. ........................ 33

D. This case is not merely about Rule 41 dismissal or a plaintiff’s initial selection of a forum. ................................................................. 36

E. Independent grounds in the record unaddressed by Realtime support the district court’s exceptional case ruling. ............................ 38

IV. THE COURT SHOULD AFFIRM THE DISTRICT COURT’S ALTERNATIVE RULING UNDER THE INHERENT POWER TO SANCTION ................................................................................................... 40

A. The Court should affirm the district court even in absence of an explicit recitation that Realtime acted in “bad faith.” ......................... 41

B. The district court made express findings of improper conduct tantamount to bad faith sufficient to support sanctions under its inherent power. .................................................................................... 43

V. THE COURT SHOULD REVERSE THE DISTRICT COURT’S DECISION NOT TO AWARD FEES INCURRED IN THE RELATED IPR PROCEEDINGS ............................................................................................ 45

A. § 285 allows a prevailing party to recover its fees incurred in related Patent Office proceedings. ...................................................... 45

B. The district court erred by requiring Netflix to show that Realtime knew its original claims in Delaware were baseless. .......................... 51


TABLE OF CONTENTS (Continued)

Page

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VI. THE COURT SHOULD REVERSE THE DISTRICT COURT’S DECISION THAT NETFLIX WAS INELIGIBLE TO RECOVER THE DELAWARE FEES....................................................................................... 53

CERTIFICATE OF COMPLIANCE ....................................................................... 56


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TABLE OF AUTHORITIES Page(s)

Cases

AdjustaCam, LLC v. Newegg, Inc., 861 F.3d 1353 (Fed. Cir. 2017) ............................................................... 29, 31, 53

Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143 (1987) ............................................................................................. 37

Amneal Pharm. LLC v. Almirall, LLC, 960 F.3d 1368 (Fed. Cir. 2020) ..................................................................... 47, 51

Anderson v. George, 2 F. App’x 799 (9th Cir. 2001) ............................................................................. 41

AntiCancer, Inc. v. Pfizer, Inc., 769 F.3d 1323 (Fed Cir. 2014) ...................................................................... 19, 41

Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) ............................................................................ 51

Arunachalam v. International Business Machines Corp., 989 F.3d 988 (Fed. Cir. 2021) .............................................................................. 19

Automated Bus. Cos., Inc. v. NEC Am., Inc., 202 F.3d 1353 (Fed. Cir. 2000) ..................................................................... 51, 54

B.E. Tech., L.L.C. v. Facebook, Inc., 940 F.3d 675 (Fed. Cir. 2019) ....................................................................... 21, 26

B.K.B. v. Maui Police Dept., 276 F.3d 1091 (9th Cir. 2002) ....................................................................... 41, 42

Bender v. Newell Window Furnishings, Inc., 560 F. App’x 469 (6th Cir. 2014) ......................................................................... 54

Blackbird Tech LLC v. Health in Motion, 944 F.3d 910 (Fed. Cir. 2019) .............................................................................. 52

Boyer v. BNSF Rwy. Co., 832 F.3d 699 (7th Cir. 2016) ................................................................................ 44


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Brickwood Contractors, Inc. v. United States, 288 F.3d 1371 (Fed. Cir. 2002) ............................................................................ 25

Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001) .................................................. 14, 16, 19, 20, 22, 24, 25, 26

BWP Media USA, Inc., v. Gossip Cop Media, No. 13-CV-07574 (KPF), 2014 WL 12783172 (S.D.N.Y. Mar. 18, 2014) ................................................... 24

Cadkin v. Loose, 569 F.3d 1142 (9th Cir. 2009) ............................................................................... 23

Carter v. Inc. Vill. of Ocean Beach, 759 F.3d 159 (2d Cir. 2014) .................................................................................. 22

Chambers v. NASCO, Inc., 501 U.S. 32 (1991) ............................................................................................... 40

China Healthways Inst., Inc. v. Hsin Ten Enter. USA, Inc., No. CV 02-5493 LGB (JWJx), 2003 WL 21982477 (C.D. Cal. Mar. 12, 2003) . 44

Citi Trends, Inc. v. Coach, Inc., 780 F. App’x 74 (4th Cir. 2019) ........................................................................... 36

City of Burlington v. Dague, 505 U.S. 557 (1992) ............................................................................................. 47

Click-to-Call Techs., LP v. Inegnio, Inc., 899 F.3d 1321 (Fed. Cir. 2018) vacated, 810 F. App’x 881 (Fed. Cir. 2020) . 9, 49

Comm’r v. Jean, 496 U.S. 154 (1990) ............................................................................................. 47

Commercial Space Management Co., Inc. v. Boeing Co., Inc., 193 F.3d 1074 (9th Cir. 1999) .............................................................................. 27

Cooter & Gell v. Hartmax Corp., 496 U.S. 384 (1990) ...................................................................................... 21, 26

CRST Van Expedited, Inc. v. EEOC, 136 S. Ct. 1642 (2016) .................................................... 16, 20, 21, 22, 23, 25, 26


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Deep Sky Software, Inc. v. Sw. Airlines Co., 2015 WL 10844231 (S.D. Cal. Aug. 19, 2015) ................................................... 50

Designing Health, Inc. v. Erasmus, Nos. CV 98-4578 LGB (CWx), CV 99-9088 LGB (CWx), 2003 WL 25902463 (C.D. Cal. May 1, 2003) (Baird, J) ....................................................................... 35

Eli Lilly & Co. v. Los Angeles Biomedical Rsch. Inst. at Harbor-UCLA Med. Ctr., 849 F.3d 1073 (Fed. Cir. 2017) ............................................................................... 7

El-Sheikh v. United States, 177 F.3d 1321 (Fed. Cir. 1999) ............................................................................ 43

Fink v. Gomez, 239 F.3d 989 (9th Cir. 2001) ................................................................... 40, 41, 43

First Time Videos, LLC v. Oppold, 559 F. App’x 931 (11th Cir. 2014) (per curiam) .................................................. 25

Fox v. Vice, 563 U.S. 826 (2017) ............................................................................................. 52

G & G Fire Sprinklers, Inc. v. Bradshaw, 156 F.3d 893 (9th Cir. 1998), vacated, 526 U.S. 1061 (1999), and opinion reinstated, 204 F.3d 941 (9th Cir. 2000) .......................................... 53

Galitski v. Samsung Telecommc’ns Am., LLC, No. 8:CV-12-00903-CJC (JPRx), 2012 WL 12830000 (C.D. Cal. Nov. 21, 2012) ................................................... 35

Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d 1318 (Fed. Cir. 2008) ............................................................................ 26

Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 414 (3d Cir. 1993) ................................................................................. 54

Gyler v. Hampton, 234 F. App’x 693 (9th Cir. 2007) ......................................................................... 42

Hall v. Cole, 412 U.S. 1 (1973) ................................................................................................. 40


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Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) ................................................................................ 34

Hensley v. Eckerhart, 461 U.S. 424 (1983) ...................................................................................... 47, 51

Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559 (2014) ...................................................................................... 18, 36

Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027 (Fed. Cir. 2006) ............................................................... 19, 22, 23

Homeland Housewares, LLC v. Sorensen Rsch. & Dev. Trust, 581 F. App’x 877 (Fed. Cir. 2014) ....................................................................... 52

Indep. Fed’n of Flight Attendants v. Zipes, 491 U.S. 754 (1989) ............................................................................................. 47

Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318 (Fed. Cir. 2004) ............................................................................ 21

Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372 (Fed. Cir. 2017) ............................................................................ 30

Jeffrey C. Stone Inc. v. Greenberg Traurig LLP, 467 F. App’x 582 (9th Cir. 2012) ......................................................................... 43

John Akridge Co. v. Travelers Cos., 944 F. Supp. 33, (D.D.C. 1996), aff’d, 1997 WL411654 (D.C. Cir. June 30, 1997)................................................ 44

Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302 (Fed. Cir. 2013) ..................................................................... 50, 54

Kutten v. Bank of Am., NA, Nos. 4:04-0244 (PAM), 4:06-0937 (PAM), 2008 WL 4838152 (E.D. Mo. Nov. 6, 2008) ....................................................... 44

Lennard v. Yeung, No. CV 10-09322, 2011 WL 13217925 (C.D. Cal. Aug. 16, 2011) ................................................... 44


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Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006) ................................................................................ 41

Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d 479 (Fed. Cir. 2016) ....................................................................... 29, 31

Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178 (Fed. Cir. 1996) ................................................................. 18, 23, 27

Mathis v. Spears, 857 F.2d 749 (Fed. Cir. 1988) .............................................................................. 51

McCuin v. Texas Power & Light Co., 714 F.2d 1255 (5th Cir. 1983) .............................................................................. 37

Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943 (Fed. Cir. 2010) .............................................................................. 45

Menjivar v. City of Santa Monica, 176 F.3d 483 (9th Cir. 1999) ................................................................................ 42

Merck & Cie v. Gnosis S.P.A., 820 F.3d 432 (Fed. Cir. 2016) (O’Malley, J. concurring) .................................... 48

Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) ............................................................................ 38

Monolithic Power Sys., Inc. v. O2 Micro International Ltd., 726 F.3d 1359 (Fed. Cir. 2013) ............................................................... 33, 45, 52

Munchkin, Inc. v. Luv n’ Care, Ltd., 960 F.3d 1373 (Fed. Cir. 2020) ............................................................................ 45

Netflix, Inc. v. Realtime Adaptive Streaming LLC, IPR2018-01817 (P.T.A.B. Mar. 30, 2020) .................................................... 10, 30

Network-1 Techs., Inc. v. Hewlett-Packard Co., 981 F.3d 1015 (Fed. Cir. 2020) ............................................................................ 49

Newell Co. v. Kenney Mfg. Co., 864 F.2d 757 (Fed. Cir. 1988) .............................................................................. 46


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NEXUS Servs., Inc. v. Moran, 2018 WL 1461750 (W.D. Va. Mar. 23, 2018) aff’d per curiam, 750 F. App’x 241 (4th Cir. 2019), cert. denied, 140 S. Ct. 45 (2019) ............................................... 23

O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, 955 F.3d 990 (Fed. Cir. 2020) ................................................................. 21, 22, 23

Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545 (2014) ............................................................................................. 28

Optyl Eyewear Fashion Int’l Corp. v. Style Companies, Ltd., 760 F.2d 1045 (9th Cir. 1985) .............................................................................. 42

Perkins v. Cross, 728 F.2d 1099 (8th Cir. 1984) .............................................................................. 54

Pilot Freight Carriers, Inc. v. International Brotherhood of Teamsters, 506 F.2d 914 (5th Cir. 1975) ................................................................................ 36

Plymouth Rubber Co. v. Minn. Min. & Mfg. Co., 203 F. Supp. 595 (D. Mass. 1962) aff’d and modified, 321 F.2d 151 (1st Cir. 1963) ..................................................................................................................... 37

Power Mosfet Techs., L.L.C. v. Siemens AG, 378 F.3d 1396 (2004) ............................................................................................ 22

PPG Industries, Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565 (Fed. Cir. 1988) ................................... 6, 15, 18, 45, 46, 47, 48, 50

Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644 (9th Cir. 1997) ......................................................................... 41, 43

Raniere v. Microsoft Corp., 887 F.3d 1298 (Fed. Cir. 2018) ............................................................... 21, 25, 28

Realtime Adaptive Streaming LLC v. Google LLC, No. 2:18-cv-03629-GW-JC (C.D. Cal. Oct. 25, 2018) ......................................... 11

Realtime Adaptive Streaming LLC v. Sling TV L.L.C., No. 1:17-cv-02097-RBJ (D. Colo. Mar. 7, 2018) .................................................. 7


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Realtime Data, LLC v. Actian Corp., No. 6:16-cv-00088-RWS-JDL (E.D. Tex. Nov. 1, 2016) ...................................... 7

RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322 (Fed. Cir. 2017) ............................................................................ 31

Refac Int’l, Ltd. v. Hitachi, Ltd., 921 F.2d 1247 (Fed. Cir. 1990) ............................................................................ 33

RFR Indus., Inc. v. Century Steps, Inc., 477 F.3d 1348 (Fed. Cir. 2007) ............................................................... 22, 23, 24

Rice Servs., Ltd. v. United States, 405 F.3d 1017 (Fed. Cir. 2005) ............................................................................ 25

Rothschild Connected Devices Innovations, LLC v. Guardian Prot. Servs., Inc., 858 F.3d 1383 (Fed. Cir. 2017) (Mayer, J. concurring) ............................... 30, 39

Schweiker v. Hogan, 457 U.S. 569 (1982) ............................................................................................. 39

Seattle Box Co. v. Industrial Crating & Packing Inc., 756 F.2d 1574 (Fed. Cir. 1985) ............................................................................ 19

Shum v. Intel Corp., 629 F.3d 1360 (Fed. Cir. 2010) ............................................................................ 18

SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1319 (Fed. Cir. 2006) .................................................................. 30

Southland Corp. v. Keating, 465 U.S. 1 (1984) ................................................................................................. 38

Sullivan v. Hudson, 490 U.S. 877 (1989) ...................................................................................... 47, 48

Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306 (Fed. Cir. 2013) ............................................................................ 29

Therasense, Inc. v. Becton, Dickinson & Co., 745 F.3d 513 (Fed. Cir. 2014) .............................................................................. 51


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Thermolife Int’l LLC v. GNC Corp., 922 F.3d 1347 (Fed. Cir. 2019) ............................................................................ 28

Vanda Pharm. Inc. v. West-Ward Pharm. Int’l Ltd., 887 F.3d 1117 (Fed. Cir. 2018) ............................................................................ 39

Webb v. Dyer Cnty. Bd. of Educ., 471 U.S. 234 (1985) ...................................................................................... 50, 54

Yesh Music v. Lakewood Church, 727 F.3d 356 (5th Cir. 2013) ................................................................................ 26

Statutes

28 U.S.C. § 1400 ........................................................................................................ 7

28 U.S.C. § 2412 ...................................................................................................... 47

35 U.S.C. § 101 ............................................................................... 10, 11, 14, 30, 31

35 U.S.C. § 103 ....................................................................................... 4, 18, 49, 52

35 U.S.C. §§ 251-252 (1982) ................................................................................... 50

35 U.S.C. § 285 ................................................................................................ passim

35 U.S.C. § 315(b) .............................................................................................. 9, 48

Rules

Fed. R. Civ. P. 41 .............................................................................................. 27, 38

Fed. R. Civ. P. (a)(1) ............................................................................................ 5, 26

Fed. R. Civ. P. 41(a)(1)(A)(i) ................................................................................... 11

Fed. R. Civ. P. (a)(1)(B) .............................................................. 5, 14, 21, 23, 25, 27

Fed. R. Civ. P. 41(d) .......................................................................................... 12, 16

Fed. R. Evid. 412 .............................................................................................. 40, 41


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Other Authorities

157 Cong. Rec. S1052-01, S1053 (daily ed. Mar. 1, 2011) ..................................... 48

157 Cong. Rec. S1323-02, S1326 (daily ed. Mar. 7, 2011) (Sen. Sessions) ........... 48

157 Cong. Rec. S1360-02, S1376 (daily ed. Mar. 8, 2011) (Sen. Kyl) ................... 48

157 Cong. Rec. S5319-03, S5319 (daily ed. Sept. 6, 2011) (Sen. Kyl) .................. 48

Changes to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered Business Method Patents, 77 F. Reg. 48680-01, 48680 (Aug. 14, 2012) (codified at 37 C.F.R. §§ 42.100 et seq.) ................................................................ 9


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TABLE OF ABBREVIATIONS

’046 patent U.S. Patent No. 7,386,046







DI Decision Regarding Institution

Fallon Patents ’046, ’477, ’535, and ’907 patents

FWD Final Written Decision

IPR inter partes review

ITC International Trade Commission

Netflix Netflix, Inc., Netflix Streaming Services, Inc.

OB Opening Brief of Appellant Realtime Adaptive Streaming LLC

Patent Office or PTO United States Patent and Trademark Office

PTAB or Board Patent Trial and Appeal Board

Realtime Realtime Adaptive Streaming LLC


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STATEMENT OF RELATED CASES

No other appeal in or from the same civil actions was previously before this

or any other appellate court. Netflix and others challenged the asserted patents in a

series of IPR proceedings. The Board’s final written decisions were or are at issue

in the following appeals:

20-2164: appeal of Realtime from IPR208-01817, where the Board held

that claims 1-14 of the ’907 patent are invalid. Realtime moved to

dismiss its appeal voluntarily, and the Court granted the motion.

20-1603: appeal of Realtime from IPR2018-01169, where the Board

held that claims 1-14 of the ’535 patent are invalid. Realtime moved to

dismiss its appeal voluntarily, and the Court granted the motion.

20-1809: appeal of Realtime from IPR2018-01342, where the Board

held that claims 1-6, 8-12, 14 of the ’535 patent are invalid. Realtime

moved to dismiss its appeal voluntarily, and the Court granted the

motion.

20-1602: appeal of Sling TV LLC., Sling Media, LLC, DISH Network

LLC, and DISH Technologies LLC from IPR2018-01342, where the

Board held that claims 1-6, 8-12, 14 of the ’535 patent are invalid. The

Court dismissed the appeal as “moot because, in separate proceedings,

all patent claims at issue in this matter have already been finally


2

determined to be unpatentable (Realtime dropped its appeals from the

Board decisions so determining).” Id. at Dkt. 23.

20-2281: appeal of Comcast Communications, LLC from IPR2019-

00209, where the Board held that claims 1, 4, 8, 10, 11, 13, 14, 16, 17,

19, 21, 23, 24, 26, 27, 29-32, 34, 35 in the ’046 patent were not shown

to be unpatentable. This appeal remains pending.

21-1545: appeal of Google LLC from IPR2019-01033, where the Board

held that claims 1, 23 in the ’046 patent were not shown to be

unpatentable. This appeal remains pending.

Counsel for Netflix is aware of no other cases pending in this or any other

court or agency that will directly affect or be directly affected by the Court’s decision

in this appeal.

JURISDICTIONAL STATEMENT

Netflix agrees with Realtime’s jurisdictional statement.


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INTRODUCTION

Realtime, the plaintiff below, attempted to avoid invalidation of its patents by

switching courts with a dispositive ruling imminent. The district court penalized it

for this and other exceptional behavior with a fee award under 35 U.S.C. § 285 and

the district court’s inherent powers. The parties’ combined appeals concern whether

the district court abused its discretion by doing so, and whether its award should

have included fees for the entirety of the case, including work at the Patent Office

and in the related district court case that resolved the dispute.

Realtime originally filed suit in Delaware but dismissed that case after 20

months of litigation. It did so after Netflix briefed multiple motions and filed eight

petitions for inter partes review of the asserted patents. And it did so also only after

the magistrate judge recommended invalidating four of those patents, and mere

hours after Netflix gave notice that the presiding district judge had, in a parallel case,

invalidated similar Realtime patents on the pleadings without leave to amend. The

very next day, Realtime refiled the dispute as two new lawsuits in the Central District

of California, where the district court had ruled more favorably for Realtime, and

even though Realtime had previously opposed a transfer from Delaware to

California.

When Netflix provided notice that it would seek its costs and fees incurred in

Delaware and a transfer back to that court, Realtime amended its complaints to


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replace two patents Netflix had challenged in IPRs with a related patent, in an

attempt to introduce a distinction between the Delaware and California disputes. It

then filed a groundless opposition to the transfer motion that mischaracterized its

motive for changing forums. And finally, on the eve of the motion to transfer

hearing, after Netflix had once again expended significant resources in its defense,

Realtime dismissed both cases.

Realtime asks the Court to hold that Netflix did not prevail in the litigation,

but by rule its dismissal adjudicated its claims on the merits, with the same effect as

a final judgment after a full trial. There can be no doubt that Netflix prevailed by

rebuffing Realtime’s challenge, and that it did so in the litigation, i.e., through the

judicial process and not outside of it. Moreover, the award should stand regardless

of how the Court rules on this first question, as the district court rightly called out

Realtime’s conduct as an abuse of the judicial system that not only made the case

exceptional under § 285, but also sanctionable under the court’s inherent powers.

Finally, the Court should clarify that the IPR and Delaware fees are

recoverable under § 285. As to the IPR fees, it should apply the same standard that

it has used to award fees for other Patent Office proceedings. The district court here

believed that Netflix’s request for reimbursement of such fees was on “shaky

ground,” based on the Court’s recent decision to reserve judgment on the same

question. But the IPRs here substituted fully for litigation of Netflix’s § 103


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invalidity defenses in this exceptional case. That is all the Court has required, or

should, for such fees to be recovered. The district court had authority to award such

fees and, based on its exceptional case finding and the arguments advanced by

Netflix, should have awarded them. As to the Delaware fees, the Court should

follow the other Circuits, which have held uniformly that a party may recover fees

for work in a related action that contributed to the result in the present case. Here,

the Delaware litigation was part of the same exceptional “case” and Netflix’s work

there spurred Realtime into its forum-shopping and led to the ultimate resolution of

the dispute. Ruling that such fees are eligible to be recovered is important to ensure

that § 285 remains an effective deterrent.

STATEMENT OF THE ISSUES

Realtime’s appeal:

1. A second notice of voluntary dismissal under Rule 41(a)(1)(B) is an

adjudication on the merits that precludes the plaintiff from reasserting its claims.

Realtime voluntarily dismissed the same claims twice, foreclosing any new action

against Netflix on those claims. Did the district court correctly decide that Netflix

was the “prevailing party” in the litigation, eligible to recover its attorney fees under

35 U.S.C. § 285?

2. Did the district court abuse its discretion by finding this case

exceptional where Realtime brought claims that it knew or should have known were


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baseless, dismissed its case with an adverse dispositive ruling imminent, refiled the

same claims the next day in a more favorable forum, resisted transfer back to its

chosen forum, dismissed again with transfer and a potential costs award imminent,

and misrepresented the reasons for its conduct to the district court?

3. Did the district court abuse its discretion by holding in the alternative

that it would award attorney fees based on its inherent power to sanction?

Netflix’s cross-appeal:

4. Did the district court err in denying reimbursement of fees that Netflix

incurred in IPR proceedings challenging the asserted patents by: (a) failing to apply

the test from PPG Industries, Inc. v. Celanese Polymer Specialties Co., 840 F.2d

1565 (Fed. Cir. 1988), which provides that parties may recover fees incurred in

Patent Office administrative proceedings that serve as a “substitute for the litigation”

for the issues that those proceedings address; and (b) requiring instead that Netflix

prove that Realtime should have known its claims where baseless when it filed the

original Delaware complaint?

5. Whether § 285 authorizes the recovery of fees for work in related

litigation, here the Delaware case, where it is part of the same dispute giving rise to

the district court’s exceptional case finding, and the work contributed to the ultimate

resolution of that dispute.


7

STATEMENT OF THE CASE

A. Realtime filed suit in Delaware only to voluntarily dismiss the case when an adverse ruling was imminent and refile the same claims in a more favorable forum the next day.

Realtime filed its original complaint against Netflix in Delaware in November

2017, alleging infringement of six patents. Appx3672-3742. The case against

Netflix was part of a nationwide campaign against a disparate group of technology

companies. Appx3747. Realtime tried to centralize a dozen of these cases, including

the Netflix case, in a district where it or its affiliates had received favorable rulings.

Appx3744.1 This was, in effect, an end-run around the limits in the patent venue

statute, 28 U.S.C. § 1400, as several defendants were not subject to suit in Realtime’s

preferred districts. The Judicial Panel on Multidistrict Litigation denied

centralization because Realtime had asserted different groups of patents against

unrelated products. Appx3745.

1 See Realtime Data, LLC v. Actian Corp., No. 6:16-cv-00088-RWS-JDL, Dkt. 84 (E.D. Tex. Nov. 1, 2016) (denying motion for summary judgment of indefiniteness); Realtime Data LLC v. Echostar Corp., No. 6:17-CV-00084-JDL, Dkt. 247 (E.D. Tex. Oct. 16, 2018) (denying motion for summary judgment to limit pre-suit damages); Realtime Adaptive Streaming LLC v. Sling TV L.L.C., No. 1:17-cv-02097-RBJ, Dkt. 74 (D. Colo. Mar. 7, 2018) (denying motion to dismiss and motion for judgment on the pleadings). To the extent these or other cited orders do not appear in the record below, Netflix requests judicial notice of them. See Eli Lilly & Co. v. Los Angeles Biomedical Rsch. Inst. at Harbor-UCLA Med. Ctr., 849 F.3d 1073, 1076 n.3 (Fed. Cir. 2017) (“we can properly take judicial notice of the records of related district court proceedings.”).


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For its part, Netflix moved to transfer the Delaware case against it to the

Northern District of California, where Netflix has its principal place of business,

keeps its records, and where most of its witnesses work. Appx3791-3794. Realtime

had no connections to Delaware, but opposed transfer, arguing that it had “no ties to

California,” and that a transfer there “would lead to greater expense, additional

travel, and more work for Realtime.” Appx3813-3814. The district court deferred

to Realtime’s choice of forum and denied transfer. Appx3875-3891.

The asserted patents each concern some aspect of video compression. All but

one are invalid; several of them on multiple grounds. The Fallon patents, for

example, claim variations on the idea of selecting an encoder based on some

parameter or characteristic such as throughput. Appx3754-3755. But none contain

any technology for doing so; rather, they instruct the reader to design a system to

perform the idea. Appx3754-3767. Moreover, the prior art teaches selecting data

encoders based on throughput and other parameters, in some cases years before the

patents’ effective filing date. E.g., Appx6827-6829. The ’462 and ’298 patents

similarly claim methods for encoding and decoding video data. Appx75-105.

As part of its defense, Netflix sought inter partes review of the asserted

patents. Appx4510 ¶3; Appx4704-4739 (’046 DI); Appx4769-4795 (’777 DI);

Appx4740-4768 (’535 DI); Appx4796-4836 (’298 DI); Appx4609-4642 (’907 DI);

Appx4643-4703 (’477 DI). Congress created IPRs “to create a timely, cost-effective


9

alternative to litigation.” See Changes to Implement Inter Partes Review

Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered

Business Method Patents, 77 F. Reg. 48680-01, 48680 (Aug. 14, 2012) (codified at

37 C.F.R. §§ 42.100 et seq.). But a defendant has only one year after service of a

complaint alleging patent infringement to petition for IPR, after which the petition

is time-barred. 35 U.S.C. § 315(b). At the time of Realtime’s suit, that statutory bar

applied even if the plaintiff voluntarily dismissed the lawsuit during the one-year

period. Click-to-Call Techs., LP v. Inegnio, Inc., 899 F.3d 1321, 1335 (Fed. Cir.

2018) (“[T]he appropriate question is whether the voluntary, without prejudice

dismissal of a civil action in which a complaint had been served nullifies an

administrative time bar that is triggered by service of that complaint. It does not”),

vacated, 810 F. App’x 881 (Fed. Cir. 2020) (per curiam). Realtime’s filing suit

therefore forced Netflix to either petition for IPR or waive that right.

Beginning in January 2019, the Board instituted review on all challenged

patents. Appx4609-4836, Appx4841-4878.2 It issued final written decisions

2 IPR2018-01169, instituted 1/17/19 (Appx4740-4768, Appx6005-6033); IPR2018-01227, instituted 1/30/19 (Appx4796-4836, Appx6061-6101); IPR2018-01189, instituted 1/22/19 (Appx4769-4795, Appx6034-6060); IPR2018-01187, instituted 2/4/19 (Appx4841-4878, Appx6106-6143); IPR2018-01817 instituted 4/15/19 (Appx4609-4642, Appx5874-5907); IPR2018-01630, instituted 4/19/19 (Appx4643-4703, Appx5908-5968); IPR2019-00209, instituted 5/30/19 (Appx4704-4739, Appx5969-6004).


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beginning in early 2020, ruling that all the challenged claims in four of the patents

were unpatentable as obvious. Appx6445-6482 (’777 FWD); Appx6374-6409 (’535

FWD); IPR2018-01817 (’907 FWD)3; Appx6779-6842 (’477 FWD). Realtime

appealed as to the ’907 patent and certain claims of the ’535 patent, but voluntarily

dismissed its appeals without filing an opening brief. See Appeal No. 20-1603, Dkt.

29; Appeal No. 20-2164, Dkt. 15.

Netflix also moved to dismiss the Delaware case on the grounds that (1) the

Fallon patents claimed ineligible subject matter under § 101; and (2) Realtime had

failed to allege facts to state a claim for infringement of the ’298 patent or the ’462

patent. Appx3749-3774. In December 2018, the magistrate judge recommended

that the district court grant the motion as to the Fallon patents. Appx3912,

Appx3928. Once adopted by the district court, this ruling would have precluded

Realtime from asserting the Fallon patents against other defendants. Realtime

therefore responded aggressively. It first objected to the magistrate judge’s

recommendation. Appx3930-3959. Then in June 2019, with its objection still

pending, Realtime moved for leave to amend its complaint to allege facts that it

contended would establish § 101 eligibility and moot the magistrate judge’s ruling.

Appx3961-3974.

3Netflix, Inc. v. Realtime Adaptive Streaming LLC, IPR2018-01817, Paper 35 (P.T.A.B. Mar. 30, 2020).


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Just one month later, however, Realtime shifted its strategy. Realtime had

relied on related patents owned by its parent to argue for the § 101 eligibility of the

Fallon patents. Appx3967-3968. But on July 19, 2019, the same district judge

presiding over the Netflix case not only ruled those related patents ineligible under

§ 101, but it also denied as futile a request for leave to amend the complaint.

Appx3994-3996. On July 22, 2019, Netflix submitted that order to the magistrate

judge as supplemental authority supporting denial of Realtime’s motion for leave.

Appx3998. Later that same day, Realtime voluntarily dismissed the Delaware case

under Fed. R. Civ. P. 41(a)(1)(A)(i). Appx4000. And the next day, Realtime filed

two new complaints in California alleging infringement of the same patents by the

same Netflix products and services. Appx53-73, Appx106-149. For the refiled

cases, Realtime targeted the district court in the Central District of California

because that court had previously denied a § 101 motion to dismiss as to two of the

Fallon patents (without prejudice to a later § 101 motion), and had granted Realtime

leave to amend its complaint to allege additional facts regarding the otherwise-

ineligible ’535 patent. Realtime Adaptive Streaming LLC v. Google LLC, No. 2:18-

cv-03629-GW-JC, Dkt. 36 (C.D. Cal. Oct. 25, 2018); see also Appx11.


12

B. Realtime voluntarily dismissed its claims a second time, after Netflix briefed a motion to transfer the dispute back to the Delaware court and requested reimbursement of its costs.

After refiling in California, Realtime waited more than two months before

serving the complaints on Netflix. Appx47. During that time, Netflix notified

Realtime that it would request transfer back to Delaware and reimbursement of its

costs under Fed. R. Civ. P. 41(d). Appx613. A week after the parties conferred on

these motions, Realtime amended both complaints, replacing two patents subject to

pending IPRs, the ’298 patent and the ’907 patent, with the ’879 patent:

Delaware California - original complaints ’046 patent ’535 patent ’477 patent ’907 patent ’462 patent ’298 patent

’046 patent ’535 patent ’477 patent ’907 patent

’777 patent (reissue of ’462 patent) 4 ’298 patent

California - amendments after Netflix made its costs request

’046 patent ’535 patent ’477 patent Dropped ’907 patent Added ’879 patent from same family5

’777 patent (reissue of ’462) Dropped ’298 patent

4 U.S. Patent No. 8,634,462 re-issued as U.S. Patent No. RE46,777 on April 3, 2018, with minor changes. 5 The ’879 patent is a continuation of the ’046 patent and has the same specification. The independent claims (1 and 10) of the ’879 patent are a near copy of claim 1 of the ’535 patent. Appx4474-4475.


13

Appx352-365, Appx388-430. Netflix filed its motions in October 2019. Appx38,

Appx46-47. Realtime had no reasonable grounds to oppose transfer and filed a

meritless opposition. Appx3349-3371, Appx3461-3487. Realtime had already

argued to the Delaware court that the convenience of witnesses and location of

evidence favored Delaware and had secured a ruling in its favor. Appx3887,

Appx3890-3891. Realtime also could not identify any meaningful connection

between its cases and the Central District of California. No party is headquartered

there, and Realtime did not identify any witness or evidence in the district.

Appx3363-3365. Instead, it argued that the district court should again “defer” to

Realtime’s new choice of forum. Appx3361.

Realtime was also not candid with the district court about its change in forum.

It pressed an argument that it had refiled in California because it was dissatisfied

with the speed at which the Delaware district judge had ruled. Appx3354-3355;

Appx6177. But that explanation made no sense: Realtime had never requested a

scheduling conference or hearing from the Delaware court; starting over in

California caused more delay, not less; and Realtime itself waited more than two

months to serve the California complaints, doing so only after Netflix prompted it

by moving to transfer. Appx47. Realtime continued to seek relief from the Delaware

court up until a month before its dismissal and only dismissed after the district judge


14

issued the unfavorable § 101 ruling in the parallel case that reflected that it would

soon rule in favor of Netflix. Appx4000.

On November 14, 2019, just days before the district was set to hear oral

argument regarding the motion to transfer, Realtime dismissed both California cases.

Appx39, Appx48.

C. The district court found the case exceptional but awarded Netflix its reasonable attorney fees for the California actions alone.

Netflix moved for its attorney fees and costs. Appx3620. The district court

granted the motion in part. Appx1-17. It first held that Netflix was the prevailing

party under § 285. A defendant does not prevail where the plaintiff dismisses

voluntarily without prejudice. But a second voluntary dismissal by rule is with

prejudice and an adjudication on the merits of the dismissed claims. Appx4. The

district court held that this satisfies the requirement, from Buckhannon Board &

Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532

U.S. 598 (2001), that a party prevail in the litigation itself:

Here, where the judicially created Fed. R. Civ. P. 41(a)(1)(B) specifically states that filing for the dismissal of previously-voluntarily-dismissed claims operates as an “adjudication on the merits,” the Federal Rule itself requires the conclusion that such a dismissal carries a sufficient judicial imprimatur for a defendant to be awarded prevailing party status .…

Appx8.


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The district court then held that this was an exceptional case under § 285,

resting its decision on three grounds. It ruled first that Realtime knew or should have

known that its claims were baseless when it filed the California cases. Appx10. It

found next that Realtime’s decision to dismiss in Delaware and refile in California

was “exceptional and improper.” Appx11. Specifically, it was “not a close call”

that Realtime knew “that its lawsuit in Delaware was undeniably tanking,” and “its

decision to run off to another jurisdiction in hopes of getting a more favorable forum

was totally unjustified.” Appx10. Finally, while the district court found that the

forum-shopping merited an exceptional case finding standing alone, it “was also

exceptional” for Realtime to oppose transfer back to Delaware, contradicting its past

arguments. Appx12. Based on these findings (and without reaching other potential

grounds for exceptional case that Netflix had raised), the district court awarded

Netflix $409,402.50 for all work incurred in the California cases. Appx15. The

court also ruled that, even if Netflix was not a “prevailing party” under § 285, it

would still award those fees under its inherent power to sanction. Appx17.

The district court denied Netflix fees for work in the Delaware case and the

IPRs. Appx12-14. It first reasoned that no precedent established its authority to

award those fees under § 285. Appx12. But on this point, the court did not address

Netflix’s argument that PPG, 840 F.2d 1565, controls and permits an award of at

least the IPR fees. See id.; Appx7434. The court then ruled that even if such fees


16

were recoverable as a general matter, it would be “error” to award them here without

first finding that Realtime knew or should have known the weakness of its claims

when it filed originally in Delaware. Appx13-14.6

Realtime appealed on December 23, 2020, and Netflix cross-appealed on

January 4, 2021. Appx7405-7425, Appx7428-7429.

SUMMARY OF THE ARGUMENT

Netflix prevailed in the litigation and thus could recover fees under § 285.

The Supreme Court has set forth two requirements for determining the “prevailing

party” under fee-shifting statutes. The party must achieve its goal through the

judicial process and not through its opponent’s conduct outside the litigation.

Buckhannon, 532 U.S. at 603-05. And a defendant prevails when—whether on the

merits or for procedural reasons—it “rebuffs” the plaintiff’s claims, thus altering the

legal relationship between the parties. CRST Van Expedited, Inc. v. EEOC, 136 S.

Ct. 1642, 1651 (2016). Here, by rule Realtime’s second voluntary dismissal was a

final adjudication on the merits of its claims in the litigation, precluding it from ever

reasserting those claims in another court. Netflix is free from any future allegation

that it infringes on Realtime’s rights, and so won the litigation itself. It is a

“prevailing party.”

6The district court also exercised its discretion to deny Netflix its costs for the Delaware action under Rule 41(d). Appx14. Netflix does not appeal this ruling.


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Moreover, the district court did not abuse its discretion in finding the case

exceptional. The district court found that Realtime filed claims in the California

cases that it knew or should have known were baseless, a finding that Realtime failed

to challenge on appeal; that forfeiture alone requires affirmance. The district court

also acted within its discretion to find the case exceptional based on Realtime’s

forum-shopping—dismissing its Delaware case after 20 months of litigation with an

adverse dispositive ruling imminent and refiling the next day in a different court—

and also its filing a groundless, self-contradicting opposition to Netflix’s motion to

transfer the case back to the original forum.

Even if this Court decides that Netflix did not prevail in the case, it should

still affirm the award, because the district court ruled alternatively that it would

sanction Realtime for the same misconduct and award the same amount of fees using

its inherent powers. Again, the district court did not abuse its discretion in so ruling.

Ninth Circuit law, which governs here, requires only that the district court base its

sanction on an explicit finding of bad faith or conduct “tantamount” to bad faith.

Although the court did not expressly recite the words “bad faith” in its opinion, the

conduct at issue met the relevant standard and the reasons for the court’s ruling are

clear in the record, which is all that is required to affirm.

The prevailing party in an exceptional case may recover its fees for related

administrative proceedings at the Patent Office that “substitute” for litigation of the


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issues that those proceedings address. PPG, 840 F.2d at 1569. The IPRs here

substituted for litigation of Netflix’s § 103 invalidity defenses, just as Congress

designed. Once the district court ruled this case exceptional, Netflix was eligible to

recover its associated IPR fees (or some portion of them), without further having to

show that Realtime knew its original Delaware complaint was baseless. Similarly,

the Court should hold that a prevailing party may recover fees for work in a related

action that contributed to the result in the exceptional case, and should remand to

allow the district court to consider an award in light of that holding.

ARGUMENT

I. STANDARD OF REVIEW

Determination of the prevailing party is a question of law reviewed de novo.

Shum v. Intel Corp., 629 F.3d 1360, 1366 (Fed. Cir. 2010). In deciding this question,

the Court applies Federal Circuit law, as “[b]y establishing a single definition of

prevailing party in the context of patent litigation, [it] promote[s] uniformity in the

outcome of patent trials.” Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d

1178, 1182 (Fed. Cir. 1996).

The Court reviews a district court’s decision to award fees under § 285 for

abuse of discretion. Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559,

561 (2014). “Abuse of discretion may be established by showing that the district

court either made an error of law, or a clear error of judgment, or made findings


19

which were clearly erroneous.” Seattle Box Co. v. Industrial Crating & Packing

Inc., 756 F.2d 1574, 1581 (Fed. Cir. 1985).

The Court reviews a district court’s award of attorney fees under its inherent

power to impose sanctions for abuse of discretion, Arunachalam v. International

Business Machines Corp., 989 F.3d 988, 996 (Fed. Cir. 2021), applying the law of

the regional circuit, AntiCancer, Inc. v. Pfizer, Inc., 769 F.3d 1323, 1328 (Fed Cir.

2014).

II. NETFLIX IS A PREVAILING PARTY ELIGIBLE TO RECOVER ITS FEES UNDER 35 U.S.C. § 285.

The Patent Act provides that “The court in exceptional cases may award

reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. The first step in

deciding whether to award fees is to determine which party prevailed in the case.

Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1035 (Fed. Cir. 2006). Two

Supreme Court cases set forth the relevant considerations.

The first, Buckhannon, concerned a plaintiff’s attempt to recover fees based

on the “catalyst” theory, i.e., the argument that even though the plaintiff had not

prevailed on its claims, filing the lawsuit had inspired the defendant to change its

conduct, thereby achieving the plaintiff’s goal. 532 U.S. at 601. The Court held that

to be eligible for a fee award the plaintiff must “prevail” in the litigation itself—by

achieving some “judicially sanctioned change in the legal relationship of the

parties.” Id. at 603-05. It identified a judgment on the merits and a consent decree


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as examples of outcomes that would make the plaintiff a prevailing party. Id. at 604.

A defendant’s voluntary change in its behavior outside of the litigation, by contrast,

“lacks the necessary judicial imprimatur on the change.” Id. at 605.

In CRST Van, the Supreme Court explained that this reasoning does not fully

explain how to determine a prevailing defendant. In that case, the defendant had

secured dismissal of harassment claims based on the Equal Employment

Opportunity Commission’s failure to conduct a sufficient pre-suit investigation, and

the lower court had awarded fees. 136 S. Ct. at 1649. The Court rejected an

argument that the defendant had not “prevailed” because the plaintiff’s claims were

not disposed of on the merits. “Plaintiffs and defendants come to court with different

objectives. A plaintiff seeks a material alteration in the legal relationship between

the parties. A defendant seeks to prevent this alteration to the extent it is in the

plaintiff’s favor.” Id. at 1651. The Court therefore held instead that a defendant

prevails “whenever the plaintiff’s challenge is rebuffed,” irrespective of the grounds.

Id.

The Court went on to explain that its construction of “prevailing party” was

necessary to avoid situations where “significant attorney time and expenditure may

have gone into contesting the claim” but the nature of defendants’ relief did not

easily reflect a statutory definition crafted to identify successful plaintiffs. Id. at

1653. “Congress could not have intended to bar defendants from obtaining


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attorney’s fees... on the basis that, although the litigation was resolved in their favor,

they were nonetheless not prevailing parties.” Id.

Following the Supreme Court’s guidance, this Court has held a defendant who

receives “at least some relief on the merits, which alters... the legal relationship of

the parties” is a prevailing party. Raniere v. Microsoft Corp., 887 F.3d 1298, 1304

(Fed. Cir. 2018) (citing Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1320 (Fed.

Cir. 2004)). And after CRST Van, it has held that the defendant prevailed where it

secured dismissal for lack of standing, id., and for mootness, B.E. Tech., L.L.C. v.

Facebook, Inc., 940 F.3d 675, 679 (Fed. Cir. 2019), but not where the plaintiff had

dismissed its claims voluntarily without prejudice, O.F. Mossberg & Sons, Inc. v.

Timney Triggers, LLC, 955 F.3d 990 (Fed. Cir. 2020).

A. Realtime’s voluntary dismissal with prejudice was a final adjudication of the merits that made Netflix the prevailing party.

Applying these standards to the facts here, Netflix prevailed in the case and

was eligible to recover its fees. A second voluntary dismissal is, by rule, a dismissal

with prejudice, and the notice itself resolves the case in the defendant’s favor:

[I]f the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.

Fed. R. Civ. P. 41(a)(1)(B); see also Cooter & Gell v. Hartmax Corp., 496 U.S. 384,

394 (1990). Such a dismissal effects a change in the legal relationship between the

parties no differently than if the parties had litigated to a final judgment. In this


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circumstance, the defendant has met the requirements of both CRST Van and

Buckhannon. It has rebuffed the plaintiff’s claims entirely, altering the legal

relationship of the parties, and has done so through the litigation. Here, Realtime

voluntarily dismissed the same claims twice, in the original Delaware case and in

the California cases. Appx4000; Appx39, Appx48. Because the second dismissal

by rule “adjudicated” Realtime’s claims, it provided Netflix with total relief in the

litigation. The district court’s ruling that Netflix prevailed was correct.

A holding that Netflix prevailed because Realtime’s claims were adjudicated

and cannot be reasserted would be consistent with the Court’s precedent. The Court

has held that a dismissal without prejudice does not alter the legal relationship of the

parties because the plaintiff is free to refile. See O.F. Mossberg, 955 F.3d at 993;

RFR Indus., Inc. v. Century Steps, Inc., 477 F.3d 1348, 1353 (Fed. Cir. 2007). But

a dismissal with prejudice makes the defendant the prevailing party unless the parties

have otherwise agreed. See Highway Equip., 469 F.3d at 1035-36 (dismissal with

prejudice pursuant to consent decree); Power Mosfet Techs., L.L.C. v. Siemens AG,

378 F.3d 1396, 1416-17 (2004) (dismissal with prejudice on plaintiff’s motion).

Other Circuits, too, treat the plaintiff’s ability (or lack thereof) to reassert its

claims as a key factor for determining whether the defendant prevailed. See Carter

v. Inc. Vill. of Ocean Beach, 759 F.3d 159, 166 (2d Cir. 2014) (“[b]ecause Plaintiffs

cannot refile, the judgment has materially altered the parties’ legal relationship”);


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Cadkin v. Loose, 569 F.3d 1142, 1150 (9th Cir. 2009) (“defendant is a prevailing

party following dismissal of a claim if the plaintiff is judicially precluded from

refiling the claim against the defendant in federal court”); NEXUS Servs., Inc. v.

Moran, 2018 WL 1461750, at *13 (W.D. Va. Mar. 23, 2018) (“the notice of dismissal

here is an ‘adjudication on the merits,’ and Federal Rule of Civil Procedure

41(a)(1)(B) so provides”) aff’d per curiam, 750 F. App’x 241 (4th Cir. 2019), cert.

denied, 140 S. Ct. 45 (2019). Indeed, were the Court to hold otherwise here it would

create a unique and nonsensical result: a defendant could prevail entirely on the

merits and yet not be considered to have “won” the case for purposes of fee-shifting.

The Court should follow its own more common-sense approach: “In those cases in

which one party wins completely on every claim at issue, determining which party

has prevailed is a straightforward task.” Manildra Milling, 76 F.3d at 1182.

B. Realtime’s arguments to the contrary lack merit.

Realtime argues that Netflix cannot be a prevailing party under the Court’s

precedent concerning dismissals. OB17-19 (citing O.F. Mossberg, 955 F.3d 990

and RFR Indus., 477 F.3d 1348). However, the Court’s past cases deal exclusively

with first voluntary dismissals, which by rule are without prejudice. See id. As

discussed above, whether the dismissal is with or without prejudice is a key

consideration for determining whether a party has “prevailed.” E.g., CRST Van, 136

S. Ct. at 1650; Highway Equip., 469 F.3d at 1034. And this Court has based its


24

holdings expressly on this distinction: a voluntary dismissal without prejudice does

not change the legal relationship of the parties “because the plaintiff is free to refile

its action.” RFR, 477 F.3d at 1353. Nowhere in these past cases did the Court

purport to rule as to the facts before it here, where a plaintiff’s claims have been

finally adjudicated through a second voluntary dismissal.

Realtime also argues that the same precedent establishes that a defendant does

not prevail in a litigation unless the case is resolved by a “court order.” OB17;

OB20-21. But the Supreme Court in Buckhannon did not state that a court order is

necessary, though it could have done so easily had it wanted to impose that

requirement. Instead, it required an act with sufficient “judicial imprimatur” that

alters the parties’ legal relationship, reflecting the Court’s concern that the fee-

seeking party must prevail in the litigation itself, rather than outside of it. 532 U.S.

at 604-05.7 To be sure, where the court orders a particular result, there is no

difficulty in concluding that standard is met. But it is also met here, where Rule 41

7 Realtime argues that the district court misquoted Buckhannon and therefore misapplied it. OB20. But this was a mere typographical error, one that others have made, see Def. Mem. Supp. Mot. Attys’ Fees, BWP Media USA, Inc., v. Gossip Cop Media, No. 13-CV-07574 (KPF), 2014 WL 12783172, at section IV.A. (S.D.N.Y. Mar. 18, 2014), and which had no bearing on the outcome here because the court applied the correct standard.


25

recites that there has been an “adjudication” of plaintiff’s claims by the filing of the

notice. Fed. R. Civ. P. 41(a)(1)(B).8

Moreover, the decisions purporting to require a court order all either

themselves came before CRST Van or rely on statements of law from before that

case. E.g., Brickwood Contractors, Inc. v. United States, 288 F.3d 1371, 1380 (Fed.

Cir. 2002); Rice Servs., Ltd. v. United States, 405 F.3d 1017, 1018 (Fed. Cir.

2005), abrogated by Raniere, 887 F.3d 1298; see also First Time Videos, LLC v.

Oppold, 559 F. App’x 931, 932 (11th Cir. 2014) (per curiam). CRST Van clarified

that the key consideration for determining a prevailing defendant is whether the

defendant rebuffed the plaintiff’s challenge in the litigation, not whether that came

in the form of a court order.

Realtime also argues that the district court lacked jurisdiction to decide the

preclusive effect of its voluntary dismissal. OB23-26. Specifically, Realtime argues

that once it filed the dismissal, the district court lacked the power to take any further

8 As noted above, Buckhannon called out “judgments on the merits” and “court-ordered consent decrees” as two examples of results that provide the requisite material alteration in the parties’ legal relationship. 532 U.S. at 599. This Court first read this language as suggesting a court order requirement, see Rice 405 F.3d at 1023 (noting that Buckhannon “indicated” that a court order was required), and later relied on its own reading, see Raniere, 887 F.3d at 1304 (arguing that Rice “clarified” Buckhannon). Nonetheless, now that the issue is squarely presented, the Court should decline to read a court-order requirement into the Buckhannon opinion where none exists.


26

action with respect to it. See id. And because Realtime labeled the dismissal as

“without prejudice,” that meant that the district court could not rule otherwise, and

any question about whether the dismissal precluded Realtime from reasserting

claims can only be decided if and when Realtime files a new lawsuit. OB26.9

But this argument is misguided. All the district court did once the dismissal

was filed was assess whether it should award attorney fees and impose sanctions,

acts that remain within its jurisdiction following a voluntary dismissal. See Cooter,

496 U.S. at 395-96 (holding that Rule 41(a)(1) dismissal does not divest court of

jurisdiction to adjudicate matters such as court costs, attorney fees, contempt

charges, and Rule 11 sanctions); see also Yesh Music v. Lakewood Church, 727 F.3d

356, 363 (5th Cir. 2013) (ruling it “well-settled” that “voluntary dismissals do not

deprive courts of the jurisdiction to award attorneys’ fees.”). The prevailing party

issue did require the court to ask whether the dismissal had caused a “judicially

sanctioned change in the legal relationship of the parties.” Buckhannon, 532 U.S. at

605. But it just as clearly did not require the court to make a ruling about preclusion

in a future case. See CRST Van, 136 S. Ct. at 1653; B.E. Tech., 940 F.3d at 679

9 Realtime never raised this argument below and has not offered any reasons that the Court should entertain it for the first time on appeal. The Court should thus deem it waived. See Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d 1318, 1322-23 (Fed. Cir. 2008) (“[I]t is the general rule... that a federal appellate court does not consider an issue not passed upon below.”).


27

(holding dismissal for mootness made the defendant the prevailing party, over

plaintiff’s objection that “mootness has no preclusive effect and could not alter the

legal relationship between the parties”), cert. denied, 141 S. Ct. 618 (2020). In

awarding fees, the district court did not purport to impose conditions on the dismissal

itself or rule in advance on preclusion issues that could arise in a future suit.10

Moreover, Realtime never contested below (or before this Court) that the

claims it brought in California were “based on or including the same claim[s]” as

those in Delaware. By the plain language of the rule, the filing of the notice of

dismissal operated “as an adjudication on the merits.” Fed. R. Civ. P. 41(a)(1)(B).

Whatever a later court may rule about a new set of claims asserted by Realtime in

any contemplated “third action” (OB25), Rule 41 required and Realtime conceded

that the dismissals finally adjudicated its twice-asserted claims. Netflix prevailed

through the judicial process, not outside of it, and is thus eligible for fees.

10 Realtime’s invocation of Commercial Space Management Co., Inc. v. Boeing Co., Inc., 193 F.3d 1074 (9th Cir. 1999) is irrelevant for this reason. Aside from the fact that it applied Ninth Circuit law, which does not control here (see Manildra Milling, 76 F.3d at 1182), the Boeing case concerned a defendant’s attempt to use a Rule 59(e) motion to amend the judgment to have the district court order that the plaintiff’s voluntary dismissal was with prejudice. Id. at 1076. The Ninth Circuit held that the court lacked jurisdiction to add conditions to the dismissal or to pre-decide the scope of the dismissal’s preclusive effect. Id. That decision has no bearing here.


28

III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY FINDING THIS CASE EXCEPTIONAL UNDER § 285

An exceptional case is simply one that “stands out from others with respect to

the substantive strength of a party’s litigating position (considering both the

governing law and the facts of the case) or the unreasonable manner in which the

case was litigated.” Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S.

545, 554 (2014). Factors relevant to this inquiry include “frivolousness, motivation,

objective unreasonableness... and the need in particular circumstances to advance

considerations of compensation and deterrence.” Id. n.6. “Because the district court

lives with the case over a prolonged period of time, it is in a better position to

determine whether a case is exceptional and it has discretion to evaluate the facts on

a case-by-case basis.” Raniere, 887 at 1308. Thus, the Court “generally ‘give[s]

great deference to the district court’s exercise of discretion in awarding fees.”

Thermolife Int’l LLC v. GNC Corp., 922 F.3d 1347, 1356 (Fed. Cir. 2019) (internal

citations omitted) (emphasis in original).

Realtime frames the district court as holding that the mere choice to file in a

favorable forum can make a case exceptional. OB29-34. But that is neither what

the district court ruled nor an accurate characterization of the record. The district

court in fact found that this case was exceptional for multiple reasons: (1) Realtime

filed claims in California that it knew or should have known were baseless; (2)

Realtime abused the judicial process by voluntarily dismissing its claims once it


29

knew that an adverse ruling was imminent and by refiling them in a more favorable

court; and (3) Realtime opposed Netflix’s motion to transfer back to Delaware

without grounds to do so and in contradiction of its past positions. Appx10-12,

Appx27.

Moreover, the record contains additional reasons to find the case exceptional

that the district court did not reach. There are therefore ample grounds to affirm,

particularly considering the deference the Court gives to a lower court’s exceptional

case ruling.

A. Realtime did not challenge the ruling that it knew or should have known its claims were baseless before it filed in California.

A case is exceptional where the plaintiff filed baseless claims. Lumen View

Tech. LLC v. Findthebest.com, Inc., 811 F.3d 479, 483 (Fed. Cir. 2016). The Court

has also frequently affirmed exceptional case findings where a party had continued

to litigate claims that became baseless in view of rulings after the complaint was

filed. See, e.g., AdjustaCam, LLC v. Newegg, Inc., 861 F.3d 1353, 1360 (Fed. Cir.

2017); Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 1326-29 (Fed. Cir.

2013). Here, the district court ruled that by the time Realtime filed its claims again

in California it knew or should have known that they were baseless. Appx9-10.

Realtime did not challenge this ruling on appeal. Instead it simply denied that

the district court ruled as it did (OB29 n.5; OB47), arguing incorrectly that the court

ruled based “on only one finding: ‘impermissible forum-shopping.’” OB29.


30

Realtime has thus waived any ability to assign error to the district court’s ruling.

SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1319 (Fed. Cir. 2006).

The record supports the district court’s finding of objective baselessness.

Realtime’s complaints asserted patents that are invalid on multiple grounds.

Appx3893-3928; Appx4769; Appx4740, Appx4837; Appx4609; Appx4645;

Appx4841; Appx6445-6482 (’777 FWD); Appx6374-6409 (’535 FWD); IPR2018-

01817 (’907 FWD);11 Appx6779-6842 (’477 FWD). Realtime either knew or should

have known of the weakness of these claims, and should never have asserted them,

let alone in serial and wasteful lawsuits. See, e.g., Rothschild Connected Devices

Innovations, LLC v. Guardian Prot. Servs., Inc., 858 F.3d 1383, 1391 (Fed. Cir.

2017) (Mayer, J. concurring) (where patentee filed claims that were invalid under

§ 101, “[t]his suit never should have been filed, and [the defendant] deserves to be

fully compensated for the significant attorneys’ fees it has incurred.”); Inventor

Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 1377 (Fed. Cir. 2017)

(affirming fee award “based solely on the weakness of [plaintiff’s] post-Alice patent

eligibility arguments.”).

This was in fact evident before Realtime filed the original Delaware case.

With respect to the ’535 patent, for example, the Delaware court noted that

11 Netflix, Inc. v. Realtime Adaptive Streaming LLC, IPR2018-01817, Paper 35 (P.T.A.B. Mar. 30, 2020).


31

RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322 (Fed. Cir. 2017) had held that a

patent claiming a “process that started with data, added an algorithm, and ended with

a new form of data” was ineligible as directed to an abstract idea. Appx3905. But

here, the asserted ’535 patent did not disclose even an algorithm, Appx3915, and

thus had far less of a claim to eligibility than the patent in the published Federal

Circuit decision. Appx3916-3919. Realtime itself then all but conceded it had no

viable claim based on the ’535 patent when in January 2019 it voluntarily canceled

all claims of that patent that had been challenged in an IPR. Appx4837-4838. And

yet, six months later, Realtime still reasserted the remaining claims of the ’535 patent

against Netflix in this case. Appx53-105. The district court here ruled

conservatively, finding only that Realtime should have known that it had asserted

baseless claims after the Delaware and the PTAB had placed it on notice through

multiple adverse rulings under § 101 and in the IPRs. Appx10.

Because baselessness is sufficient, standing alone, to establish an exceptional

case (Lumen View Tech., 811 F.3d at 483; AdjustaCam, 861 F.3d at 1361),

Realtime’s waiver is fatal to its appeal of the exceptional case ruling and the Court

must affirm.


32

B. Realtime abused the judicial process by dismissing when an adverse ruling was imminent and refiling in a different court.

The district court further found that Realtime’s conduct was abusive of the

judicial process, calling its decision to dismiss its Delaware case and refile in

California “totally unjustified.” Appx10.

The record supports that determination. Realtime resisted transfer from

Delaware to California and litigated there for over 20 months, forcing Netflix to

incur the cost of multiple motions and eight IPR petitions. Appx3813-3814.

Realtime dismissed its Delaware case mere hours after Netflix gave notice that the

presiding district judge had invalidated several other Realtime patents in a parallel

case. Appx4000. It refiled in California the next day, where the court had ruled

favorably for Realtime, even though Realtime previously opposed a transfer to

California. Appx43, Appx45, Appx3813-3814. When Netflix gave notice that it

would seek transfer back to Delaware and reimbursement of its costs, Realtime

amended its complaints to make the disputes appear different. Appx352-365,

Appx388-430. And finally, Realtime dismissed its cases again on the eve of the

transfer hearing, after forcing Netflix to incur the cost of that motion practice as well.

Appx3614-3616, Appx3617-3619.

This record supports an exceptional case finding. In fact, Realtime acted

similarly to the plaintiffs in Monolithic Power Sys., Inc. v. O2 Micro International

Ltd., where this Court affirmed an exceptionality finding based in part on the


33

wastefulness of the plaintiff’s conduct. 726 F.3d 1359, 1369-70 (Fed. Cir. 2013).

The plaintiff there “withdrew and dismissed its claims only after substantial

litigation had taken place” and “only after [Defendants] completed their filings for

the parties’ impending pretrial conference—causing a waste of substantial

resources.” Id. at 1364 (internal quotation marks omitted). The plaintiff also filed

numerous baseless motions and “needlessly prolong[ed] the litigation.” Id.

Realtime likewise caused a waste of substantial judicial and party resources, and the

district court did not abuse its discretion when it deemed Realtime’s conduct “totally

unjustified” and thus exceptional. Appx10.

C. Realtime’s opposition to transfer back to Delaware was groundless and an additional reason to find the case exceptional.

The district court also found Realtime’s opposition to the request to transfer

back to Delaware was itself unreasonable. It did not abuse its discretion in doing so.

Filing or opposing motions without a valid basis has long provided a reason for the

district court to rule a case exceptional. See Refac Int’l, Ltd. v. Hitachi, Ltd., 921

F.2d 1247, 1256 (Fed. Cir. 1990). Here, Realtime’s opposition to returning the

dispute to Delaware, where that court had already invested time to resolve the patent

eligibility issues, was such an opposition for two reasons.

First, Realtime took diametrically opposed positions from those it took when

it had earlier resisted transfer from Delaware. Appx3813-3814. Previously it had


34

argued that it had no connections to California, and that Delaware was the more

convenient forum. In California, it said the opposite:

Appx3806, Appx3813, Appx3817, Appx3816; Appx6162, Appx3363; Appx6162-

6163; Appx3365. Realtime went beyond arguing about any changed circumstance

or relevant distinction to directly contradict itself. Moreover, Realtime had already

prevailed on its arguments in Delaware, and was thus judicially estopped from

arguing against its past positions in the manner in which it did. Appx1561-1562; see

Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 783 (9th Cir. 2001) (holding

that judicial estoppel bars litigants from taking inconsistent positions in two different

cases).


35

Second, Realtime misrepresented its reasons for dismissing the Delaware case

and filing in California.12 Appx3355, Appx3360, Appx3362. While it never

expressly denied that the adverse rulings in Delaware motivated it to change forums,

Realtime offered a full-throated argument, supported by a sworn declaration from

its attorney, Appx6177-6178, that the “delays” in receiving rulings there was the true

cause. But Realtime could have voluntarily dismissed the Delaware case at any point

during the nearly two-year period it was pending. Instead, it opposed transfer and a

motion to dismiss, and waited while the Delaware court invested time in resolving

those motions and Netflix filed IPR petitions. Realtime did not raise the issue of

purported “case delays” at any hearings in Delaware and never even asked that court

for a scheduling conference. And Realtime waited six months to move for leave to

amend its complaint, doing so only one month before its eventual dismissal.

Appx5244. In short, Realtime continued to litigate in Delaware right up until it

received notice that indicated how the Delaware district court would rule.13

12 This was relevant to the transfer motion because the fact that Realtime had moved its case to avoid an invalidity ruling in its originally chosen forum meant that its new choice of venue was in fact entitled to no deference. See, e.g., Galitski v. Samsung Telecommc’ns Am., LLC, No. 8:CV-12-00903-CJC (JPRx), 2012 WL 12830000, at *2-3 (C.D. Cal. Nov. 21, 2012). 13 Lower courts have ruled that misrepresentations to the court support an exceptional case finding. See Designing Health, Inc. v. Erasmus, Nos. CV 98-4578 LGB (CWx), CV 99-9088 LGB (CWx), 2003 WL 25902463, at *16 (C.D. Cal. May 1, 2003) (Baird, J) (misrepresentation made to the court “constitutes additional evidence that the case regarding the Patent Act claims was ‘exceptional’”);


36

D. This case is not merely about Rule 41 dismissal or a plaintiff’s initial selection of a forum.

Realtime contends that other Circuits prohibit basing an exceptional case

determination on “forum shopping.” OB31-33. None of its cited authorities so hold.

Pilot Freight Carriers, Inc. v. International Brotherhood of Teamsters, 506 F.2d

914, 917 (5th Cir. 1975), holds simply that a plaintiff is entitled to voluntarily

dismiss its complaint for the first time without leave of court, as long as the

defendant has not filed an answer or moved for summary judgment yet. Id. at 916.

Realtime’s other cited authorities are similarly inapposite, as they concern a

plaintiff’s right to choose a forum in the first instance, rather than switching courts

(to one in the same as state as a court to which Realtime had previously opposed

transfer) on the eve of an adverse ruling after more than a year of litigation. In Citi

Trends, Inc. v. Coach, Inc., 780 F. App’x 74 (4th Cir. 2019), for example, plaintiffs

knew that defendants intended to file a lawsuit by a particular date and moved to file

first in a preferred forum. The Fourth Circuit held that “rac[ing] to the courthouse

to file suit in the district in which the opposing parties are incorporated” did not

make the case exceptional. Id. at 82.

Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., No. 4:03-CV-1384-Y, 2015 WL 6777377, at *2 (N.D. Tex. June 23, 2015) (misrepresentations to the court regarding a transfer motion made case exceptional).


37

McCuin v. Texas Power & Light Co., 714 F.2d 1255, 1261-62 (5th Cir. 1983)

was about a ploy by defendants to obtain a different judge by hiring as counsel the

brother-in-law of the judge they hoped to avoid. Id. at 1261. While the McCuin

court did note, as Realtime quotes, that counsel may “select the forum that he

considers most receptive to his cause,” that language concerned the plaintiff’s initial

decision concerning where to sue. Id. at 1261-62. The Fifth Circuit still deemed the

defendants’ conduct potentially sanctionable. See id. at 1265-66.

In short, none of its cases support Realtime’s claim that it has an inviolable

“right to shop for a friendlier judge,” OB31, or that its conduct in this case was in

any respect “fundamental to our federal system.” OB32. In advancing that

argument, Realtime also misstates the law, as forum shopping of the type Realtime

engaged in can support a fee award. See Plymouth Rubber Co. v. Minn. Min. & Mfg.

Co., 203 F. Supp. 595, 601 (D. Mass. 1962) (awarding attorney fees under Section

285 and noting that defendant was “forum shopping with a vengeance” where it

“again [] unsuccessfully assert[ed] contentions rejected many times previously by

other Federal courts”), aff’d and modified, 321 F.2d 151 (1st Cir. 1963).

Indeed, Realtime’s conduct is precisely the type of abuse that the Supreme

Court has warned against. Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483

U.S. 143, 154 (1987) (noting the “danger of forum shopping”). Moreover, the

Supreme Court has refused to interpret statutes in ways that would “encourage and


38

reward” such behavior. Southland Corp. v. Keating, 465 U.S. 1, 16 (1984).

Similarly, this Court in Micron Technology, Inc. v. Rambus Inc., was confronted

with a party that waited years for the case to be transferred, moved to transfer just

months before trial, filing its transfer motion shortly after receiving a favorable

ruling by the proposed transferee court. 645 F.3d 1311, 1332 (Fed. Cir. 2011). The

district court had referred to the motion to transfer “as clear and obvious a case of

forum shopping as has probably ever existed in the federal judiciary,” id. at 1331,

and the Court affirmed the denial of the motion, ruling that “[t]his forum-shopping

should be discouraged.” Id. at 1332. Realtime’s claim of error ultimately rests on

the assertion that it had a right: (1) under Rule 41 to dismiss each of its cases; and

(2) to litigate in the forum of its choosing. But the record reflects (and the district

court recognized) much more than that. The district court’s exceptional case finding

was therefore not in error or an abuse of discretion.14

E. Independent grounds in the record unaddressed by Realtime support the district court’s exceptional case ruling.

The record also contains additional evidence supporting an exceptional case

finding that this Court may rely upon to affirm. In the district court, Netflix argued

14 Realtime also claims that Netflix’s “misconduct” supports reversal of the district court’s ruling. OB46-47. The example Realtime offers is that Netflix would not agree to “streamline” the case. But those offers in fact reflect conduct the Court should deter. Realtime had a singular focus on persuading Netflix to terminate the IPRs that the Patent Office had instituted, leaving Realtime free to assert its invalid patents against others. Appx6306.


39

that Realtime’s history as a patent speculator and its other abusive litigation reflected

conduct that § 285 was meant to deter and supported an award. See Appx3642

(“Realtime filed similar claims against more than two-dozen other defendants, and

without an effective deterrent, will no doubt continue doing so in the future because

its business model relies on such large-scale litigation campaigns.”); see also

Appx3635. The Court has ruled that the district court should consider such conduct

in evaluating a fee award. See Rothschild, 858 F.3d at 1387-1390 (district court

should have considered arguments about plaintiff’s misconduct in other cases).

Here, Realtime built its business around using the expense of litigation to

extract settlements of weak claims and abandoning those claims when that fails. See,

e.g., Appx6484-6492. Realtime also misrepresented to the district court its reasons

for seeking a transfer when it claimed that “delays” were the reason. Appx3355,

Appx3360, Appx3362. While the district court identified more than sufficient

reason to find this case exceptional, the record also reflects these additional grounds

that the Court could rely upon to affirm the award. See Schweiker v. Hogan, 457

U.S. 569, 585 n.24 (1982) (“an appellee may rely upon any matter appearing in the

record in support of the judgment below”); see also Vanda Pharm. Inc. v. West-Ward

Pharm. Int’l Ltd., 887 F.3d 1117, 1139 (Fed. Cir. 2018) (same). This Court should

therefore affirm the district court’s exceptional case finding because the record

amply supports it.


40

IV. THE COURT SHOULD AFFIRM THE DISTRICT COURT’S ALTERNATIVE RULING UNDER THE INHERENT POWER TO SANCTION

“[F]ederal courts, in the exercise of their equitable powers, may award

attorneys’ fees when the interests of justice so require.” Hall v. Cole, 412 U.S. 1, 4-

5 (1973). A litigant sanctioned under these powers must have engaged in bad faith

conduct. Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001) (citing Chambers v.

NASCO, Inc., 501 U.S. 32, 46-47 (1991)). But “bad faith” is “a shorthand term” for

a broad range of conduct. Id. The court’s power to sanction still extends to the “full

range of litigation abuses.” Id. at 994.

Here, the district court chose to sanction Realtime, ruling that it would

alternatively award attorney fees in the same amount using its inherent powers.

Appx17. Realtime raises two arguments against this ruling on appeal. The first is

that this Court must reverse because the district court did not expressly recite in its

opinion that Realtime’s misconduct amounted to “bad faith.” OB41-42. The

second, mirroring its argument against the exceptional case finding, is that the court

could not sanction Realtime for its forum shopping and groundless opposition to

Netflix’s motion to transfer. OB42-48. Neither of these arguments has merit, and


41

the Court should therefore affirm the district court’s fee award even if it rules that

Netflix did not prevail in the case under § 285.15

A. The Court should affirm the district court even in absence of an explicit recitation that Realtime acted in “bad faith.”

The district court must make an explicit finding of bad faith to sanction a party

under its inherent powers. See Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d

644, 648 (9th Cir. 1997); Leon v. IDX Sys. Corp., 464 F.3d 951, 961 (9th Cir. 2006).

However, in applying its rule, the Ninth Circuit merely requires that the district court

expressly identify wrongdoing that fits within the range of sanctionable conduct. A

finding of “bad faith” per se is not required. B.K.B. v. Maui Police Dept., 276 F.3d

1091, 1095 (9th Cir. 2002); see also Anderson v. George, 2 F. App’x 799, 800 (9th

Cir. 2001) (“the words ‘bad faith’ are not talismans required for affirmance.”).

Sanctions are available whenever a party’s objective conduct is “tantamount to bad

faith.” Fink, 239 F.3d at 994; see also AntiCancer, 769 F.3d at 1329.

In B.K.B., for example, counsel offered evidence of the plaintiff’s sexual

predisposition in violation of Fed. R. Evid. 412. See 276 F.3d at 1098. The district

court “declined to conclude that defense counsel had acted in ‘bad faith,’” but still

15 Realtime raised a third argument, that § 285 sets forth the conditions under which a court may award full fees for a patent case, which the district court may not “circumvent” by sanctioning Realtime for its misconduct. OB48-50. But nothing in the text of § 285 purports to limit the district court’s use of its inherent powers, and no court has so held.


42

found the conduct sanctionable. Id. at 1106. The Ninth Circuit affirmed on the

grounds that, “regardless of whether defense counsel’s behavior constituted bad faith

per se,” counsel’s conduct was “tantamount to bad faith” and therefore sanctionable.

Id. at 1108.

Consistent with this approach, the Ninth Circuit has also held that an explicit

finding of bad faith is simply not required where “the bad faith is patent from the

record. If the record provides sufficient evidence of bad faith and specific findings

are unnecessary to understand the issue giving rise to the sanctions, [the court] may

infer the necessary finding of bad faith.” Menjivar v. City of Santa Monica, 176 F.3d

483 (9th Cir. 1999); see also Gyler v. Hampton, 234 F. App’x 693, 694 (9th Cir.

2007) (finding no abuse of discretion because “[t]he record supports” that counsel

engaged in “conduct tantamount to bad faith.”) (citing Optyl Eyewear Fashion Int’l

Corp. v. Style Companies, Ltd., 760 F.2d 1045, 1051 (9th Cir. 1985). This makes

eminent sense. Where the record supports the sanction ordered by the district court

and the reasons for its ruling are clear, it serves no purpose to remand only to have

that court append the words “bad faith” or “tantamount to bad faith” to its order.

Therefore, even assuming the Court here determines that the district court

failed to meet a requirement to recite that Realtime acted “in bad faith” or that its

conduct was “tantamount to bad faith,” it should affirm the award on the basis that

the record supports such a finding, as that is expressly permitted by Ninth Circuit


43

law and is consistent with the Court’s own practice. See El-Sheikh v. United States,

177 F.3d 1321, 1326 (Fed. Cir. 1999) (“Of course, we may affirm a judgment of the

trial court on any ground supported by the record, whether or not that basis was given

by the court or urged by a party.”).

B. The district court made express findings of improper conduct tantamount to bad faith sufficient to support sanctions under its inherent power.

While the district court did not repeat its findings in the portion of the order

discussing sanctions, it relied on the same express findings concerning Realtime’s

conduct on which it had based the § 285 award. Appx17. It found that Realtime

knew or should have known that its claims were baseless when it filed in California,

and “that its lawsuit in Delaware was undeniably tanking and its decision to run off

to another jurisdiction in hopes of getting a more favorable forum was totally

unjustified.” Appx10.

These findings support sanctions under Ninth Circuit law. They detail

intentional improper conduct that abused the judicial process—i.e., conduct that is

at least “tantamount” to bad faith. Fink, 239 F.3d at 994. Notably, Realtime did not

even contest the district court’s finding that it had filed baseless claims. Under Ninth

Circuit law, that is sufficient alone to support sanctions. E.g., Jeffrey C. Stone Inc.

v. Greenberg Traurig LLP, 467 F. App’x 582, 583 (9th Cir. 2012) (citing Primus,

115 F.3d at 648).


44

Realtime repeats its argument that a voluntary dismissal alone cannot be

sanctionable. OB44-45. But as the district court found and as the record shows, its

conduct was more abusive than Realtime portrays it, and other courts have

sanctioned parties for similar conduct. In John Akridge Co. v. Travelers Cos., 944

F. Supp. 33, (D.D.C. 1996), aff’d, 1997 WL411654 (D.C. Cir. June 30, 1997), the

plaintiff lost a motion to dismiss in federal court and, with an appeal pending, refiled

in state court to circumvent the dismissal. Id. at 34. The plaintiff then opposed

removal because of the “knowledge that once the case made its way back” to the

original court, “it would be immediately dismissed.” Id. The court held that this

“blatant forum shopping” was bad faith conduct subject to sanction. Id. Rather than

distinguish its facts, Realtime suggests that the Akridge court made a more express

finding of bad faith (OB42), but as discussed above, the district court made sufficient

findings here. Moreover, Akridge is hardly the only case of its kind.16

16 See, e.g., Boyer v. BNSF Rwy. Co., 832 F.3d 699, 700-02 (7th Cir. 2016) (imposing sanctions for “willfully abusing the judicial process and/or pursuing a bad-faith litigation strategy by initiating this litigation in a patently inappropriate forum”); Kutten v. Bank of Am., NA, Nos. 4:04-0244 (PAM), 4:06-0937 (PAM), 2008 WL 4838152, at *4 (E.D. Mo. Nov. 6, 2008) (sanctioning plaintiff for voluntarily dismissing action to avoid “unfavorable rulings” and then refiling); China Healthways Inst., Inc. v. Hsin Ten Enter. USA, Inc., No. CV 02-5493 LGB (JWJx), 2003 WL 21982477, at *13 (C.D. Cal. Mar. 12, 2003) (sanctioning defendant for filing an anticipatory suit in an inconvenient forum); c.f. Lennard v. Yeung, No. CV 10-09322, 2011 WL 13217925, at *6 (C.D. Cal. Aug. 16, 2011) (cited at OB45) (“Simply re-filing the same claim in a separate court, without more, does not rise to the level of vexatious litigation.”)(emphasis added).


45

Finally, Realtime argues that sanctions require conduct that is “sufficiently

beyond” what establishes an exceptional case under § 285. OB43 (citing Medtronic

Navigation, Inc. v. BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943,

966 (Fed. Cir. 2010)). But although the bar for sanctions is admittedly higher,

Realtime failed to establish that its conduct falls short. Realtime also cites cases

involving arguably more egregious conduct than here. OB44-45. But that there are

parties guilty of worse conduct does not excuse Realtime here or demonstrate that

its conduct is not sanctionable. The district court did not abuse its discretion in

sanctioning Realtime, and the Court should therefore affirm the district court’s

award.

V. THE COURT SHOULD REVERSE THE DISTRICT COURT’S DECISION NOT TO AWARD FEES INCURRED IN THE RELATED IPR PROCEEDINGS

A. § 285 allows a prevailing party to recover its fees incurred in related Patent Office proceedings.

This Court has reserved the specific question of whether § 285 allows a

prevailing party to recover fees it incurred in an IPR. See Munchkin, Inc. v. Luv n’

Care, Ltd., 960 F.3d 1373, 1380 n. 2 (Fed. Cir. 2020). But an earlier panel of the

Court has effectively answered this question, holding that fees are available for

Patent Office proceedings that substitute for litigation of the issues that they

address. See PPG, 840 F.2d at 1569; see also Monolithic Power, 726 F.3d at 1369


46

(affirming fee award for discovery work in parallel ITC action that substituted for

district court discovery).

In PPG, discovery revealed that the plaintiff knew about prior art that it had

failed to disclose during prosecution. 840 F.2d at 1566. The plaintiff sought a stay

of the case, which the district court granted, and reissue, which the Patent Office

eventually denied due to plaintiff’s inequitable conduct. Id. The district court then

found the case exceptional and awarded the defendant fees for the litigation but not

for opposing reissue at the Patent Office. Id. at 1567-68. On appeal, the Federal

Circuit held that the district court had abused its discretion. It noted that, given the

then “unique” nature of inter partes reissue, those proceedings were “clearly

intended to replace the district court litigation,” and would “shorten or possibly

obviate the need for a trial.” Id. at 1568. The Court held ultimately that the

defendant could recover fees for them because they “substituted for the district court

litigation on all issues considered by the PTO and the Board.” Id. at 1569.

A prior panel decision is binding unless overruled. See Newell Co. v. Kenney

Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988). Moreover, the Supreme Court has

confirmed both before and after PPG that its holding was correct: federal fee-shifting

statutes allow recovery of fees incurred in related administrative proceedings. See,


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e.g., Sullivan v. Hudson, 490 U.S. 877, 878, 888-89 (1989) (collecting cases);

Comm’r v. Jean, 496 U.S. 154, 161-62 (1990).17

In Sullivan, for example, the Social Security Administration denied the

plaintiff social security benefits. The plaintiff challenged the denial in district court,

and ultimately at the Eleventh Circuit, which vacated the denial. 490 U.S. at 878.

On remand, the agency awarded benefits and the district court dismissed the action

because the plaintiff had secured her requested relief through the administrative

proceeding. Id. at 881-82. The plaintiff sought her attorney fees under a statute

authorizing them for the “prevailing party in any civil action” against a United States

agency. 28 U.S.C. § 2412. The Supreme Court held that fees for work in the related

administrative proceeding “should be considered part and parcel of the action,” and

recoverable where they “are intimately tied to the resolution of the judicial action”

and “are necessary to the attainment of the results Congress sought to promote by

providing for fees.” Sullivan, 490 U.S. at 878, 888; see also Amneal Pharm. LLC v.

Almirall, LLC, 960 F.3d 1368, 1371 (Fed. Cir. 2020) (noting that PPG is consistent

17 While these cases address fee-shifting statutes other than § 285, the Supreme Court instructs lower courts to construe such statutes consistently. See City of Burlington v. Dague, 505 U.S. 557, 562 (1992) (case law construing “reasonable” fee applies to all federal fee-shifting statutes); Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983) (same as to case law construing “prevailing party”); see also Indep. Fed’n of Flight Attendants v. Zipes, 491 U.S. 754, 758, n. 2 (1989) (“We have stated in the past that fee-shifting statutes’ similar language is ‘a strong indication’ that they are to be interpreted alike.”).


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with Sullivan, and that § 285 may authorize fees “incurred during, in close relation

to, or as a direct result of, judicial proceedings”).

The Court is thus bound by PPG, and under its holding Netflix is eligible to

recover its IPR fees. IPRs substitute entirely for litigation of the invalidity issues

that they address. This is true by design—Congress not only hoped that parties

would turn to IPRs as a litigation-substitute,18 it structured IPRs so that they

necessarily work that way. Once served with a complaint alleging patent

infringement, the defendant must petition for IPR within a year. 35 U.S.C. § 315(b).

This ensures that in most cases an IPR will occur contemporaneously with the

parallel district court litigation and may resolve it entirely. And more important, an

instituted IPR estops the petitioner from asserting invalidity in the litigation on any

ground that the petitioner raised or reasonably could have raised in the IPR.

Network-1 Techs., Inc. v. Hewlett-Packard Co., 981 F.3d 1015, 1027 (Fed. Cir.

18 See Merck & Cie v. Gnosis S.P.A., 820 F.3d 432, 434-35 (Fed. Cir. 2016) (O’Malley, J. concurring)(collecting references); 157 Cong. Rec. S1360-02, S1376 (daily ed. Mar. 8, 2011) (Sen. Kyl) (“[I]f an inter partes review is instituted while litigation is pending, that review will completely substitute for at least the patents-and-printed-publications portion of the civil litigation.”); 157 Cong. Rec. S5319-03, S5319 (daily ed. Sept. 6, 2011) (Sen. Kyl) (“[T]he bill creates an inexpensive substitute for district court litigation...”); 157 Cong. Rec. S1052-01, S1053 (daily ed. Mar. 1, 2011) (Sen. Whitehouse) (“[T]he bill will improve administrative processes so that disputes over patents can be resolved quickly and cheaply without patents being tied up for years in expensive litigation.”); 157 Cong. Rec. S1323-02, S1326 (daily ed. Mar. 7, 2011) (Sen. Sessions) (“This will allow invalid patents… to be fixed early in their life, before they… result in expensive litigation.”).


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2020). This ensures that the IPR will substitute for litigation on those invalidity

issues—the defendant may raise its invalidity defenses in district court or in an IPR,

but not in both—and it will do so regardless of whether the district court stays the

case pending the outcome of the IPR. See PPG, 840 F.2d at 1566.

On the facts of this case as well, the IPRs substituted for litigation. Once

Realtime filed suit against Netflix, that forced Netflix to avail itself of the IPR

process within one year or forfeit forever its right to do so.19 The IPRs substituted

fully for the litigation of Netflix’s § 103 defenses presented in the petitions. As a

practical matter, too, the IPRs were intimately tied with the resolution of the case.

Once the Board instituted review of the ’535 patent, Realtime disavowed the

challenged claims. Appx4837-4840, Appx6102-6105. Realtime amended its

California complaints to drop claims based on the ’298 patent while the IPR

concerning that patent remained pending. Appx352-365. And Realtime’s

“streamlining” proposals to Netflix were also all focused on securing dismissal of

the IPRs that threatened its broader litigation campaign. Appx6241-6242;

Appx6245-6267.

19 At the time that Netflix petitioned for the IPRs at issue here, the one-year time bar applied even when a case was dismissed without prejudice. See Click-to-Call Techs., LP v. Inegnio, Inc., 899 F.3d 1321, 1335 (Fed. Cir. 2018), vacated by 810 F. App’x 881 (Fed. Cir. 2020). Once Realtime filed, Netflix had no way to preserve its right to challenge the patents in an IPR other than by filing a timely petition.


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The Court in PPG did note that it viewed defendant’s participation in the inter

partes reissue for which it awarded fees as required rather than voluntary. 840 F.2d

at 1569. The Supreme Court, however, has stated that the voluntary nature of an

administrative proceeding has no bearing on whether fees are recoverable—instead,

work performed in “optional administrative proceedings” may be recoverable where

it is “both useful and of a type ordinarily necessary to advance” the kind of litigation

for which Congress has authorized fees. See Webb v. Dyer Cnty. Bd. of Educ., 471

U.S. 234, 243 (1985). Moreover, although the PPG defendant had a strong incentive

to join reissue proceedings to press its inequitable conduct argument, its presence

was not strictly required. 35 U.S.C. §§ 251-252 (1982). A party who has already

been sued and is thus subject to the one-year time limit to petition for IPR faces

similar compulsion.20

More broadly, holding that a party prevailing in litigation may recover fees

from a related IPR would serve the remedial purposes of § 285. It would ensure both

that the defendant is compensated for “attorneys’ fees it should not have been forced

to incur,” Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir.

2013), and that the plaintiff is appropriately deterred from the “‘improper bringing

20 While the district courts have taken a less than uniform approach to recovery of fees for Patent Office proceedings, several have applied the PPG standard. E.g., Deep Sky Software, Inc. v. Sw. Airlines Co., 2015 WL 10844231, at *2 (S.D. Cal. Aug. 19, 2015) (awarding fees for reexamination proceedings because they “essentially substituted for work that would otherwise have been done”).


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of clearly unwarranted suits’ for patent infringement,” by making such a plaintiff

bear the full cost of its misconduct, see Automated Bus. Cos., Inc. v. NEC Am., Inc.,

202 F.3d 1353, 1355 (Fed. Cir. 2000) (quoting Mathis v. Spears, 857 F.2d 749, 754

(Fed. Cir. 1988)). And finally, the Court has already held that litigants cannot

recover their IPR fees in a direct appeal from the IPR itself. Amneal 960 F.3d at

1372. Should the Court also deny recovery here, it would incentivize defendants to

litigate their invalidity defenses in district court, where they can potentially recover

their associated fees, rather than petition for IPR before the Board, where they could

not. That would frustrate deeply Congress’s intent in establishing IPRs to unburden

the courts. See Aqua Prods., Inc. v. Matal, 872 F.3d 1290, 1308 (Fed. Cir. 2017)

(court should construe statutes consistent with the legislative purpose). The Court

should therefore hold that § 285 authorizes recovery of the IPR fees in this case.

B. The district court erred by requiring Netflix to show that Realtime knew its original claims in Delaware were baseless.

The district court here also held that it could not award Netflix fees for the

IPR proceedings unless it found that Realtime knew or should have known that its

Delaware complaint was baseless when filed. Appx13-14. But having found the

case exceptional based on the totality of the circumstances, the district court could

award fees for “the entire case” without such a showing. See Therasense, Inc. v.

Becton, Dickinson & Co., 745 F.3d 513, 517 (Fed. Cir. 2014) (quoting Hensley, 461

U.S. at 437); see also Blackbird Tech LLC v. Health in Motion, 944 F.3d 910, 918-


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19 (Fed. Cir. 2019) (affirming full fees award without finding that plaintiff filed

baseless claims); Homeland Housewares, LLC v. Sorensen Rsch. & Dev. Trust, 581

F. App’x 877, 881 (Fed. Cir. 2014) (district court may award full fees where it finds

the case exceptional). And, as discussed above, that award could include the IPR

fees because the IPRs substituted for litigation of Netflix’s § 103 invalidity defenses

in the exceptional case.

Further, while a district court may exercise its discretion to adjust the amount

of an award based on its view of the case, that is not what the court did here. Instead,

it concluded that Netflix was ineligible to recover fees from the IPR—it held that “it

would be error” to award those fees without first establishing that the Delaware

complaint was baseless. Appx13-14. There is no such requirement, and for that

reason the Court should reverse and remand for consideration of an award of the IPR

fees.21

21 To the extent the district court took its requirement from Fox v. Vice, 563 U.S. 826 (2017), the court’s own order (at Appx13 n.11) explains why it does not apply. Fox concerned a fee award in civil rights litigation under 42 U.S.C. § 1988. Under that statute, a prevailing defendant may recover fees only for frivolous claims, and thus it requires the court to apportion fees between frivolous (i.e., baseless) and non-frivolous claims brought in the same lawsuit. See Fox, 563 U.S. at 840-41. “In contrast, the situation here concerns the allocation of fees incurred in separate, but parallel, proceedings” under § 285, Monolithic, 726 F.3d at 1369, which requires only an exceptional case.


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And finally, if the district court had wanted to apportion IPR fees attributable

to misconduct or exceptional aspects of the case, it would have had to take two

additional steps. The first would be to square any apportionment with its own

finding that Realtime’s claims were baseless as of July 2019 (Appx10-11), such as

by awarding Netflix its IPR fees incurred after that date (or alternatively after

institution of each IPR). The second would be to rule on Netflix’s other arguments

in support of an exceptional case finding that it passed over (compare Appx9 to

Appx3639-3642, Appx6349-6352 (raising alternative grounds), as those are relevant

to determining an appropriate award. AdjustaCam, 861 F.3d at 1360 (“While [a]

district court need not reveal its assessment of every consideration of § 285 motions,

it must actually assess the totality of the circumstances.”); see also Elec. Commc’n

Techs., LLC v. ShoppersChoice.com, LLC, 963 F.3d 1371, 1378-79 (Fed. Cir. 2020).

VI. THE COURT SHOULD REVERSE THE DISTRICT COURT’S DECISION THAT NETFLIX WAS INELIGIBLE TO RECOVER THE DELAWARE FEES

The district court stated that it had not located any “binding authority authorizing it

to award attorney’s fees and costs for the Delaware action…” Appx13. Yet, the

circuit courts that have considered whether fees in related litigation are recoverable

under fee-shifting statutes have uniformly decided that they are. See G & G Fire

Sprinklers, Inc. v. Bradshaw, 156 F.3d 893, 907–08 (9th Cir. 1998), vacated, 526

U.S. 1061 (1999), and opinion reinstated, 204 F.3d 941 (9th Cir. 2000); Perkins v.


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Cross, 728 F.2d 1099, 1100 (8th Cir. 1984); Gulfstream III Assocs., Inc. v.

Gulfstream Aerospace Corp., 995 F.2d 414, 420 (3d Cir. 1993); see also Bender v.

Newell Window Furnishings, Inc., 560 F. App’x 469, 474 (6th Cir. 2014). These

Circuits require at most that the party seeking reimbursement show that the related

case fees represent work that contributed to the ultimate outcome of the dispute. See

Perkins, 728 F.2d at 1100 (related case fees recoverable “to the extent, if any, that

[work]… proved directly relevant to the successful prosecution of [their] later civil

rights claims.”). And the Supreme Court has directed that that fees in related

proceedings are recoverable if useful and “of a type ordinarily necessary” to secure

the ultimate result. See Webb, 471 U.S. at 243; see also Gulfstream III, 995 F.2d at

420 (3d Cir. 1993) (noting that while Webb concerned administrative proceedings,

it did not limit its discussion to such proceedings).

The Court should hold similarly here. An award under § 285 is meant to

compensate parties for incurring fees they should not have had to incur and to deter

bad actors who pursue claims lacking merit or litigate unreasonably. See Kilopass

Tech., 738 F.3d at 1313; Automated Bus., 202 F.3d at 1355. Because “exceptional”

cases are rare by definition, the entire case should be awardable, to make the

prevailing party whole and fully discourage exceptional litigating at any point in the

dispute. Here, the work done in Delaware concerned identical claims and ultimately

led to Netflix prevailing in California. The Court should thus clarify that the district


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court had the authority to award fees that Netflix incurred in the Delaware case, and

remand to allow the district court the opportunity to consider whether to award them.

CONCLUSION

The Court should affirm the district court on the grounds challenged by

Realtime and reverse and remand to the district court on the grounds challenged by

Netflix.





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CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Federal Circuit

Rule 32(a). This brief contains 13,048 words, excluding the parts of the brief

exempted by Federal Rule of Appellate Procedure 32(f) and Federal Circuit Rule

32(b).

2. The brief complies with the typeface requirements of Federal Rule of

Appellate Procedure 32(a)(5) and the type style requirements of Federal Rule of Civil

Procedure 32(a)(6). The brief has been prepared in a proportionally spaced typeface

using Microsoft Office Word Version 2010 in 14-point Times New Roman.





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