Giesecke & Devrient GmbH v. United States

• Decision Date: 10 June 2022
• Docket Number: 17-1812
• Court: U.S. Claims Court
• Parties: GIESECKE & DEVRIENT GMBH, Plaintiff, v. THE UNITED STATES, Defendant. IDEMIA IDENTITY & SECURITY USA, LLC, Third-Party Defendant, GEMALTO, INC., Third-Party Defendant, HID GLOBAL CORP., Noticed Nonparty.

GIESECKE & DEVRIENT GMBH, Plaintiff,
v.
THE UNITED STATES, Defendant.

IDEMIA IDENTITY & SECURITY USA, LLC, Third-Party Defendant, GEMALTO, INC., Third-Party Defendant, HID GLOBAL CORP., Noticed Nonparty.

No. 17-1812

United States Court of Federal Claims

June 10, 2022^[*]

Patent Infringement; Motion for Attorneys' Fees; Rule 11; Inherent Authority to Sanction; Equal Access to Justice Act ("EAJA"); Bad Faith; Presuit Investigation.

John G. Flaim, with whom were Yoon Chae, both of Baker & McKenzie LLP, Jay F. Utley and Bart Rankin, both of Forrest Weldon, all of Dallas, TX, for plaintiff.

Phillip Charles Sternhell, with whom were Michel Souaya, Brian M. Boynton, Acting Assistant Attorney General, Gary L. Hausken, Director, U.S. Department of Justice, Commercial Litigation Branch, Civil Division, of Washington, DC, for defendant.

Lionel M. Lavenue, with whom was Ben Cassidy, both of Finnegan, Henderson, Farabow, Garrett & Dunner LLP, of Reston, VA, for HID Global Corporation.

OPINION AND ORDER

1

RYAN T. HOLTE JUDGE

Plaintiff Giesecke & Devrient GmbH ("Giesecke") filed the present action alleging the government infringed U.S. Patent No. 7, 837, 119 (the " '119 patent"). HID Global Corporation is a noticed nonparty under Rule 14 of the Rules of the Court of Federal Claims ("RCFC") and, after receiving the Court's notice, filed a motion to dismiss for failure to state a claim. Giesecke amended its complaint to remove allegations of infringement implicating HID-origin products, rendering HID's motion to dismiss moot and preventing HID from joining the case as a third-party defendant. HID moved for an award of attorneys' fees resulting from its involvement in the case. After bifurcating the issues of entitlement to, and quantum of, attorneys' fees, this court issued an opinion granting HID entitlement to attorneys' fees pursuant to 35 U.S.C. § 285. Following transfer of this case to the undersigned judge, the Court found it lacked jurisdiction to award attorneys' fees pursuant to § 285 and vacated the previous opinion. The Court ordered supplemental briefing and held oral argument on HID's alternative arguments concerning entitlement to attorneys' fees under legal theories other than § 285 and the quantum of fees. For the following reasons, the Court finds HID is not entitled to attorneys' fees and denies HID's motion. The Court also denies as moot HID's motion for quantum of fees.

1. Factual and Procedural History

A. Plaintiff's Patent Infringement Claim

Plaintiff is a German technology company and owner of U.S. Patent No. 7, 837, 119, titled "Contactless Data Carrier." See First Am. Compl. ¶¶ 2, 12, ECF No. 13. The '119 Patent "generally describes apparatuses and methods for reliably determining the deliberate use of a contactless data carrier," which are defined as "all arrangements[] which have a microchip and an antenna connected to [them] and are adapted to exchange data with a suitable reading device." Id. ¶ 12; Ex. A at 7, ECF No. 13-1. The contactless data carriers "include 'contactlessly readable identification documents, such as passports and identity cards with built-in microchip as well as . . . RFID [Radio Frequency Identification] labels.' " Op. & Order ("Order on Att'y Fees") at 2, ECF No. 137 (quoting Ex. A at 7). Giesecke alleged the government's "electronically enabled machine-readable travel documents (eMRTDs) . . . such as . . . United States Passport Cards, Permanent Resident Cards (a.k.a. Green Cards), and Global Entry cards" infringe the '119 Patent. Id. (quoting First Am. Compl. ¶ 20). This implicates HID because HID "provides the United States with . . . Permanent Resident Cards . . . and Global Entry cards." Id.

B. Plaintiff's Action Pursuant to 28 U.S.C. § 1498

On 4 April 2018, HID was notified of this litigation (along with thirty-four other third parties) as an interested party under RCFC 14(b). See Mot. for Notice to Third Parties Pursuant to Rule 14(b) at 1, ECF No. 7 ("[The government] moves this Court to issue a notice to the following third parties to appear, if they so desire, as parties and assert whatever interest they may have in this action."); Order, ECF No. 10; Notice to Third Parties Pursuant to Rule 14(b)(1) at 5, ECF No. 11 ("If you have an interest in the subject matter of this case . . . you may file a complaint or answer herein in accordance with Rule 14."). HID filed a first motion for an

2

extension of time to respond to the notice under RCFC 14(b) on 21 May 2018, ECF No. 24, and a second motion for an extension of time on 18 June 2018, ECF No. 35. On 9 July 2018, HID filed a Rule 12(b)(6) motion to dismiss "all allegations in the First Amended Complaint." HID's Rule 12(b)(6) Mot. to Dismiss ("HID MTD") at 1, ECF No. 41. HID argued plaintiff "fail[ed] to allege any facts to support the claims of infringement." Id. at 7. HID also "reserve[d] the right" to file a motion for sanctions against plaintiff under Rule 11 for failing to conduct an adequate prefiling investigation under Rule 11(b), but never filed a Rule 11 motion. Id. at 8 n.3.^[2] On 6 August 2018, plaintiff responded in opposition to HID's motion, affirming its claim HID's card-based products infringed the '119 Patent. See Pl. Giesecke's Resp. in Opp'n to HID MTD ("Pl. Opp'n to MTD") at 12, ECF No. 44.

The parties held informal discussions regarding plaintiff's infringement contentions shortly after briefing on HID's motion to dismiss was complete. Oral Arg. on Attys' Fees Tr. ("Tr.") at 36:10-21, ECF No. 238; see also Joint Preliminary Status Report, ECF No. 46. During those discussions, the government made certain representations regarding technical aspects of the card-based products that would allegedly establish noninfringement of the '119 Patent. Tr. at 37:7-17. After those discussions, plaintiff proposed it would amend its complaint if the government would provide a declaration confirming those facts. HID's Resp. in Opp'n to Pl.'s Mot. for Leave to Amend Ex. 1 at 1, ECF No. 54-1; Tr. at 37:7-17. Two days later, HID served plaintiff with a letter laying out its theory of noninfringement and further threatening to pursue sanctions under Rule 11. See Pl.'s Opposed Mot. for Leave to Am. Compl. Ex. 2, ECF No. 52-2. Within three weeks of receiving HID's letter, plaintiff filed a motion for leave to file a second amended complaint to withdraw the claims against the card-based products. See Pl.'s Opposed Mot. for Leave to Am. Compl., ECF No. 52.

HID opposed plaintiff's motion to amend its complaint and requested this court rule on HID's motion to dismiss or, in the alternative, dismiss plaintiff's claims with prejudice. See HID's Resp. to Pl.'s Mot. for Leave to Am. at 1, ECF No. 54. This court granted plaintiff's motion for leave to file a second amended complaint on 28 December 2018, dismissed the relevant claims without prejudice, denied as moot HID's motion to dismiss, and did not join HID to the suit as a third-party defendant. See Op. & Order at 4, ECF No. 59. This court denied HID's request that plaintiff's claims be dismissed with prejudice because "dismissal of the withdrawn claims with prejudice [would] be inappropriate given that no adjudication of these claims had occurred." Order on Att'y Fees at 6 (citing Power Mosfet Techs., L.L.C. v. Siemens AG, 378 F.3d 1396, 1416 (Fed. Cir. 2004)).

C. HID's Bifurcated Motions for Attorneys' Fees

On 28 January 2019, HID filed a motion for attorneys' fees and costs resulting from its involvement in this case. See HID's Mot. for Att'ys Fees and Costs, ECF No. 63. HID sought to recover its "attorney fees and costs under 35 U.S.C. § 285, or, in the alternative, this Court's inherent authority." Order on Att'y Fees at 6. This court heard oral argument on the issue of entitlement to attorneys' fees on 8 July 2019. See Fee Hr'g Tr., ECF No. 111. At oral argument,

3

the court raised jurisdictional concerns regarding "disputes solely involving private entities for money damages" before determining "if the Court doesn't have the authority to issue an opinion in this case, it would really eviscerate the authority of the Court to control its own docket . . . [and] discourage" frivolous cases. Id. at 86:5-24. In "an off-record colloquy," this court granted HID's motion as to entitlement to attorneys' fees. Order on Att'y Fees at 6.

On 29 July 2019, this case was reassigned to the undersigned Judge. See Order, ECF No. 116. Also on 29 July 2019, "counsel for HID and Giesecke informed the Court they wished to pursue settlement as to the quantum of any Section 285 fees [with Judge Mary Ellen Coster Williams, the previous judge assigned to the case, ] through the Court of Federal Claims' Alternative Dispute Resolution ('ADR') program." Order on Att'y Fees at 7 (citing Order, EFC No. 118). Accordingly, HID's motion for attorneys' fees was referred to Judge Williams for ADR proceedings. See Order, ECF No. 118. ADR proceedings proved unsuccessful. Order on Att'y Fees at 7. On 24 January 2020, Judge Williams issued an opinion memorializing her July 2019 ruling from the bench granting HID entitlement to attorneys' fees, finding "HID is entitled to attorney fees under Section 285." Order on Att'y Fees at 13 n.12 ("HID is entitled to fees under Section 285, [so] the Court does not reach HID's argument seeking attorney fees based on the Court's inherent authority."). The 24 January order did "not address the issue of quantum" of attorneys' fees. Id. at 7.

On 10 February 2020, with ADR complete and the entirety of the case now before the undersigned Judge, HID filed its motion for quantum of attorneys' fees and costs. See HID's Mot. for Quantum of Att'ys Fees and Costs, ECF No. 140. On 9 March 2020, plaintiff filed its response to HID's motion. See Pl.'s Resp. to Mot. for Quantum of Att'ys' Fees and Costs, ECF No. 145. In response, plaintiff raised the question of this Court's jurisdiction to award attorneys'...