News
Fee Award Shows Risks of Exposing Threadbare Patents to Light of Litigation
Fee Award Shows Risks of Exposing Threadbare Patents to Light of Litigation
Henry Gottlieb New Jersey Law Journal October 23, 2008
In a rare grant of legal fees in a patent case, a federal judge in New Jersey has held a plaintiff clothing company liable for up to $2.5 million it cost competitors and retailers to defeat an infringement claim over a garment for nursing mothers.
Glamourmom LLC of Rye, N.Y., and its founder, Line Rothman, spent two years trying to prove that competitors Leading Lady and Motherwear and giant chains like Sears and Target infringed a 2005 patent for a stretchable nursing tank top with invisible breast support.
Glamourmom lost last year when a jury found that the patent was invalid by deception. The company’s intellectual property lawyer didn’t tell the U.S. Patent and Trademark Office that approval could be affected by an existing design or disclose that the bra and tank top combo was so obvious it wasn’t worthy of a patent, the jury found.
That made Glamourmom guilty of inequitable conduct and warrants a fee award, U.S. District Judge Garrett Brown Jr. ruled on Oct. 8 in Line Rothman v. Target Corp., 3:05-cv-4829.
He set no amounts, pending a Nov. 21 hearing, but a lawyer for Glamourmom says the defendants’ fee requests are so big they would put the privately held company in a dire financial situation if granted.
The beneficiaries would be:
Glamourmom competitor Leading Lady of Beachwood, Ohio, and retailers represented by Christopher Torkelson of Sterns & Weinroth in Princeton, N.J., and Rader, Fishman & Grauer of Bloomfield, Mich. They have applied for $2.05 million.
Riker, Danzig, Scherer, Hyland & Perretti of Morristown, N.J., which requested $237,000 for work for Motherwear of Florence, Mass.
Ostrolenk, Faber, Gerb and Soffen in New York and local counsel Kaplan, Gilman, Gibson & Dernier in Woodbridge, N.J., which submitted a request for $234,000 on behalf of Kmart and Sears.
Brown’s decision to exercise his discretion to award fees demonstrates the danger patent holders face when their infringement claims turn into referendums on whether the original invention deserved protection in the first place and whether the patent was obtained by inequitable conduct.
Critics of the inequitable conduct doctrine say it causes unnecessary litigation because accusations of sneaky patent prosecutions have become routine and often meritless defenses in infringement cases. Proponents, including commissioners of the Patent and Trademark Office, say the doctrine and its potential for fee switching deters misconduct by patent applicants.
Even so, awards like the one contemplated by Brown are infrequent, says Motherwear counsel Robert Schoenberg at Riker Danzig.
Glamourmom argued that a fee award would be premature because the verdict is being appealed. Even if the appeal on the substance fails, fees are unwarranted and the requests are bloated, the plaintiff argued.
“A party cannot be liable for attorney fees simply for enforcing a presumptively valid patent, even if the patent is later invalidated in the suit,” Glamourmom argued in a brief. Fees are awarded only in exceptional cases, and this one isn’t, the company contended.
But Brown said in his opinion that “the jury’s finding of inequitable conduct by clear and convincing evidence renders this case exceptional.”
The innovation suggested in the patent for Glamourmom’s nursing tank top was its combination of fabric, openings, straps and soft cups that allowed a mother to nurse her baby with breast support and do so modestly without exposing her stomach.
According to the company’s complaint, Leading Lady and seven retailers infringed the patent by making or selling Motherwear products, or Leading Lady Nursing Bra Tank, Nursing Tank with Full Sling or Drop Cup Nursing Camisole. Kmart and Sears infringed too, with New Additions Maternity Cami, the suit said.
During the 11-day trial last November, the jury found that all the defendants except Motherwear did, indeed, infringe some of the claims in Glamourmom’s patent.
But those findings were nullified by the jury’s additional decision that the Glamourmom patent was invalid because its key claims were anticipated by prior designs, including two by Leading Lady.
Leading Lady had made an equivalent product in 1998 and the Glamourmom tank top was unpatentable because the design would have been obvious to a person of ordinary skill in the art, the jury found.
Finally, the jury said there was clear and convincing evidence that the plaintiffs had committed inequitable conduct in dealing with the U.S. Patent Office by withholding material information with intent to deceive the patent examiner.
Brown noted in an opinion upholding the jury verdict that the evidence showed that the lawyer handling Glamourmom’s patent application starting in 2003, Richboro, Pa., solo Allan Jacobson, knew about the garment that Leading Lady designer Haidee Johnstone had created and was seeking to patent.
Jacobson referred to that design in his application but dismissed it as irrelevant without doing any research to support that conclusion, Brown said.
The judge said Jacobson’s failure to disclose the existence of prior art to the patent office constituted inequitable conduct for which fees are appropriate. “Despite learning of the Johnstone patent application, Jacobson testified that he did not contact defendant to inquire into defendant’s claimed invention,” Brown said.
According to the plaintiff’s case, Jacobson didn’t give the patent office a sense that the Leading Lady design was material to his application because he had every reason to believe it wasn’t.
The defendants not only failed to prove that the Leading Lady design was the same, it failed to prove it was invented before Rothman’s, Glamourmom argued.
Jacobson said on Friday he is upset about the accusation against him in the suit. He said he had no intent to mislead the office and that Leading Lady misrepresented the facts about when it had told him about its product.
All that will be hashed out in the appeal. So will Glamourmom’s argument that it would be unfair to make Line Rothman and her company suffer a fee award in a case that hinges on their lawyer’s dealing with the patent office.
Rothman invented the tank top in 2000 after she began nursing the first of her three children, and it was her first attempt to get an invention patented, John Sweeney of New York’s Morgan & Finnegan says in a brief opposing the fee requests.
“Line Rothman and her company, Glamourmom LLC, should not be punished for the mistakes or oversights of her patent attorney by having to satisfy a seven-figure judgment for attorneys’ fees and costs, which would place both her company in a dire financial situation,” Sweeney argued.
“An award of attorney’s fees against the plaintiffs in this case would be unjustly punitive when there is no record of bad faith or intentional deceptive action on the part of the plaintiffs themselves,” Sweeney argued.
Glamourmom general counsel Thomas Montagnino says any small company the size of his 15-employee outfit would be in jeopardy of bankruptcy if it took a $2.5 million hit for legal fees.
As for the fee requests, they don’t include evidence that the fees are reasonable, Sweeney argued. They may include double billing and impermissible charges for expert witnesses, he said.
He questioned the fairness of billing for conferences among lawyers for five firms serving as co-counsel and for 19 depositions, most of which were never used at the trial.
But Schoenberg suggests in his fee application on behalf of Motherwear that unrealistic settlement demands by Glamourmom’s made the fees high.
He says Glamourmom demanded 70 percent of Motherwear’s gross revenues for prior sales, a sum totaling $400,000. Glamourmom dropped that demand to $150,000 plus 20 percent royalty on prior sales, but even that was “bad faith and overreaching in this litigation,” Schoenberg’s application says.