Litigation Misconduct

Mark Michels All Articles - Law Technology News August 12, 2011

The Court of Appeals for the Federal Circuit recently affirmed, inEon-Net LP v. Flagstar Bancorp, No. 2009-1308 (Fed. Cir., July 29, 2011), a U.S. District Court for the Western District of Washington decision that assessed almost $500,000 in attorneys fees against a patent licensing and litigation firm for litigation misconduct, including failure to preserve documents.

In patent litigation the court in exceptional circumstances may award reasonable attorney fees to the prevailing party.” (See 35 U.S.C. §285.) One such exceptional circumstance is litigation misconduct — if the prevailing party proves by clear and convincing evidence that its opponent engaged in litigation misconduct the district court may award attorneys fees.

Eon-Net and related entities were, according to Eon-Net’s principal, patent enforcement companies involved in the business of litigation. Eon-Net began filing patent infringement cases in 1996. Eon-Net (and its counsel) eventually destroyed all inventor and non-public prosecution records after discovery closed in these initial cases, and also initiated a data retention policy in which the entity kept no records whatsoever. Eon-Net undertook these actions notwithstanding the fact that there were other ongoing and contemplated patent infringement actions.

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