PTAB Issues Sanctions for Attempted Extortion During “Settlement Negotiations”

By Owen Carpenter, Lisa Furby, and Dave Maiorana –

Director Vidal recently issued sanctions against OpenSky Industries (“OpenSky”) for attempted extortion during settlement negotiations and abuse of the IPR process for US Patent 7,725,759 and awarded $413,264.15 to VLSI Technology LLC (“VLSI”).

Previously, (as we covered here), Director Vidal determined that OpenSky “abused the inter partes review process in an attempt to extract payment from both Patent Owner VLSI and Petitioner Intel, who was joined to the proceeding.” As a result, OpenSky was sanctioned by Director Vidal. Exh. 2094, IPR2021-01064. VLSI then submitted its motion for fees, and OpenSky lodged its objections to the evidence VLSI used to prove its fees related to the sanctions.

In support of its fee award request, VLSI submitted a table of billing statements for a total request of $489,511.15, which VLSI attested it prepared by reviewing “contemporaneous billing entries of attorneys at two law firms and listed the appropriate records in the Billing Statement.” OpenSky objected on hearsay, relevance, authentication, completeness, and best evidence grounds. Order at 5-10. Director Vidal found this method appropriate and rejected OpenSky’s evidentiary objections.

OpenSky then objected to VLSI’s declaratory affidavits regarding the billing statements as improper expert testimony. Director Vidal rejected this objection under Lock Realty Corp. IX v. U.S. Health because “the affidavit taken as a whole amply demonstrated that the affiant had personal knowledge of the facts presented in the affidavit and was competent to testify to them.” F.3d 764, 773 (7th Cir. 2013); Order at 10. Thus, the Director found that the affidavits for the billing statements were lay witness testimony, not expert testimony.

After overruling OpenSky’s evidentiary objections, Director Vidal separated the bill into six different periods within the IPR process: (1) pre-institution activities; (2) precedential opinion panel (“POP”) request for review; (3) settlement negotiations; (4) ethical research; (5) director review process; and (6) attorney fees briefing.  Director Vidal awarded VLSI the full fee amount requested for five of the six periods, but excluded VLSI’s pre-institution activities because this activity involved “responding to the merits of the case.” Order at 19. After excluding the pre-institution activities, Director Vidal awarded VLSI $413,264.15 in fees.

Takeaway:

In reviewing attorneys’ fees resulting from sanctions, the PTAB applies the lodestar method to calculate the appropriate attorneys’ fees.  Requests for attorneys’ fees are properly supported by billing statements and supporting affidavits prepared by attorneys with personal knowledge.