Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Astornet Technologies Inc. v. BAE Systems, Inc.

United States District Court, D. Maryland

August 4, 2016

ASTORNET TECHNOLOGIES, INC., Plaintiff
v.
BAE SYSTEMS, INC., Defendant.

          MEMORANDUM OPINION

          ROGER W. TITUS UNITED STATES DISTRICT JUDGE

         On September 17, 2015, the Federal Circuit affirmed this Court’s decision to grant Defendant BAE Systems, Inc.’s (“BAE”) Motion to Dismiss the Complaint filed against it by Plaintiff Astornet Technologies, Inc. (“Astornet”). Astornet’s Complaint alleged that BAE had induced the Transportation Security Administration (“TSA”) to infringe on Astornet’s patented technology through BAE’s bids and subsequent contracts with the TSA. Astornet Technologies, Inc. v. BAE Systems, Inc., 802 F.3d 1271 (Fed. Cir. 2015). Both this Court and the Federal Circuit found that 28 U.S.C. § 1498 limited Astornet’s remedy to an action against the United States in the Court of Federal Claims. See Id. at 1273.

         On November 9, 2015, BAE filed a Renewed Motion for Attorneys’ Fees. ECF No. 45. BAE seeks to recover its attorneys’ fees based on two discretionary statutes, 28 U.S.C. § 1927 and 35 U.S.C. § 285. For the reasons that follow, the motion shall be granted in part and denied in part as moot with leave to refile.

         BACKGROUND

         Astornet alleges that it is the sole exclusive licensee of United States Patent No. 7, 649, 844 (hereinafter the ‘844 patent). ECF No. 13 at 3. Astornet’s sole owner, Michael Haddad (“Haddad”), is listed in the patent as the sole inventor. Id. Astornet was retained by the Transportation Security Administration in 2007 to develop a system to improve airport gate security. Id. at 2-3. In 2009, TSA solicited bids to build a new security-related system, the Credential Authentication Technology-Boarding Pass Scanning System (hereinafter the “CAT/BPSS”). Id. at 5. Astornet submitted a bid but was unsuccessful. Id. BAE, NCR Government Systems, LLC (“NCR”), and MorphoTrust USA, LLC (“MorphoTrust”) were awarded trial CAT/BPSS contracts. Astornet, 802 F.3d at 1274.

         On January 27, 2014, [1] Astornet filed a Complaint against BAE, NCR, and MorphoTrust in this Court based on indirect patent infringement. ECF No. 1. BAE and NCR filed motions to dismiss, arguing that 28 U.S.C. § 1498 limited Astornet’s remedy to an action against the United States in the Court of Federal Claims.[2] ECF Nos. 14, 22. The motions were granted, Astornet appealed, and the Federal Circuit affirmed, holding, as did this Court, that Astornet’s exclusive remedy for the alleged infringement was a suit against the United States in the Court of Federal Claims under 28 U.S.C. § 1498. See Astornet, 802 F.3d at 1283.

         On November 9, 2015, BAE submitted a motion for attorneys’ fees that included those fees incurred on appeal. ECF No. 45. Following a hearing on the motion on January 21, 2016, the Court ordered Geoffrey Mason, then counsel for Astornet, to submit a complete and accurate financial statement under oath. ECF No. 50. Mason submitted a declaration and, pursuant to an agreement between the parties, a second supplemental declaration containing specifics regarding his ability to pay sanctions under 28 U.S.C. § 1927. ECF Nos. 51, 54. In response, BAE withdrew its Renewed Motion for Attorneys’ Fees as to the award against Mason under 28 U.S.C. § 1927 (but not under 35 U.S.C. § 5285) with the option to refile should BAE later discover that the declarations were incomplete or inaccurate. ECF No. 56.

         ANALYSIS

         BAE seeks to recover its attorneys’ fees in this litigation based on two discretionary statutes, 28 U.S.C. § 1927 and 35 U.S.C. § 285. The crux of BAE’s argument is that (1) 28 USC. § 1498 clearly provides that Astornet’s exclusive remedy for the alleged infringement was a suit against the United States in the Court of Federal Claims; (2) this was indicated to Astornet many times; (3) Astornet never reasonably argued that it did not apply; and (4) it was frivolous to bring and maintain the case in this Court rather than in the Court of Federal Claims. Astornet, meanwhile, opposes paying any attorneys’ fees under these statutes because it argues that the case was not decided on the merits, nor was it brought in bad faith because it was similar to prior cases based on similar facts.

         I. Attorneys’ Fees Under 28 U.S.C. § 1927

         Section 1927 provides that “[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” The United States Court of Appeals for the Federal Circuit reviews a court’s decision on a motion for sanctions “under 28 U.S.C. § 1927 pursuant to the law of the regional circuit.” Nystrom v. TREX Co., 424 F.3d 1136, 1141 (Fed. Cir. 2005) (citing Phonometrics, Inc. v. Westin Hotel Co., 350 F.3d 1242, 1246 (Fed. Cir. 2003)). A court considering the propriety of a § 1927 award must focus on the conduct of the litigation and not on its merits. DeBauche v. Trani, 191 F.3d 499, 511 (4th Cir. 1999). An award of fees under § 1927 requires “a finding of counsel’s bad faith as a precondition to the imposition of fees.” TREX, 424 F.3d at 1150 (citing Chaudhry v. Gallerizzo, 174 F.3d 394, 411 n.14 (4th Cir. 1999)). Bad faith may be found “when it becomes evident that a claim lacks merit but an attorney persists in litigating the claim nonetheless.” Shank v. Eagle Techs., Inc., No. CIV. A. RWT-10-2231, 2013 WL 4442033, at *2 (D. Md. Aug. 15, 2013) (quoting Blue v. U.S. Dep’t of Army, 914 F.2d 525, 537 (4th Cir.1990)).

         BAE argues that Astornet’s attorney, Geoffrey Mason, should be sanctioned under § 1927 because he had actual notice since the start of the litigation that 28 U.S.C. § 1498 barred the claim, yet he continued the litigation through the appeal. BAE points to a series of e-mails and filings that explicitly indicate that Mason was on notice of this issue. BAE’s attorney sent Mason two letters to this effect. ECF No. 45-3 (“[T]he plaintiff’s action can only properly be maintained against the Government in the Court of Federal Claims. Your client has been advised on this fact several times.”); ECF No. 45-4 (“[W]here the Government uses a patented invention, the patentee’s sole and exclusive remedy is an action against the Government in the Court of Federal Claims.”). In the letters, BAE outlined in some detail the problems with Astornet’s claim and offered not to seek attorneys’ fees and costs if Astornet agreed to dismiss the action. Id.

         On August 27, 2014, this Court granted BAE’s Motion to Dismiss based on § 1498, stating in a ruling from the bench that “Section 1498 of Title 28 of the United States Code is fairly simple to read” and “pretty straightforward.” ECF No. 35, at 61-62. Nevertheless, and despite BAE’s continued attempts to end the litigation by offering not to pursue attorneys’ fees, ECF No. 45-1, at 9, Mason filed an appeal on Astornet’s behalf. ECF No. 38. Even after being dismissed by this Court on that very ground, the Appellant’s Brief filed by Mason only mentions the statute in two of its forty-four pages, and indirectly at that. ECF No. 45-5, at 40-42. The United States filed an amicus curiae brief in support of BAE in the appeal, reiterating that § 1498 precludes an action for indirect infringement against a Government contractor premised upon the Government’s use of the patented invention. ECF No. 45-6, at 17-19. On March 12, 2015, BAE brought this to Mason’s attention in an e-mail. ECF No. 45-7.

         Mason attempts to challenge the motion by arguing that he was reasonable in continuing the litigation. In its Complaint, Astornet first accused BAE of inducing and/or contributing to TSA’s infringement on the patent. ECF No. 13. However, it has been long settled that when the United States uses a patented invention, the patentees’ exclusive remedy is an action against the United States. 28 U.S.C. § 1498(a); see e.g. Richard Screw Anchor Co. v. United States, 275 U.S. 331, 343-46. Later, in its opposition to BAE’s Motion to Dismiss, Astornet argued that BAE lacked the Government’s authorization and consent for its conduct that allegedly induced the Government to practice the patent. ECF No. 25, at 13-20. But Astornet (and Mason) knew that the Government had specifically expressed its authorization and consent to BAE’s allegedly infringing conduct in this suit. See ECF No. 45-2. In its Opposition to BAE’s Motion for Attorneys’ Fees, ECF No. 46, Mason argues on behalf of Astornet that he pursued this case in good faith based on Nextec Applications v. Brookwood Cos., 703 F.Supp.2d 390 (S.D.N.Y. 2010), and Morpho Detection Inc. v. Smiths Detection, Inc., No. 2:11cv498, 2013 WL 5701522 (E.D. Va. Oct. 17, 2013). However, those cases involved claims of direct infringement, as BAE pointed out in its March 12, 2015 e-mail. ECF No. 45-7. Astornet and Mason failed to ever directly address the impenetrable legal barrier to their claims established by § 1498.

         In light of all the evidence outlined above, it is apparent that Mason had actual notice about insurmountable legal problems with the claim. See Salvin v. Am. Nat. Ins. Co., 281 F. App’x 222, 225 (4th Cir. 2008). “Sanctions are appropriate for pursuing a case after it becomes clear that the case is without merit.” Blue, 914 F.2d at 573. Mason knew or should have known the problems with the claim in February 2014, and his continued pursuit unreasonably and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.