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.

Polyzen, Inc. v. Radiadyne, LLC

United States District Court, E.D. North Carolina, Western Division

November 2, 2017

POLYZEN, INC., Plaintiff,
v.
RADIADYNE, LLC, Defendant.

          ORDER

          JAMES C. DEVER III Chief United States District Judge

         On September 23, 2016, the court dismissed without prejudice Polyzen, Inc.'s ("Polyzen") claim against RadiaDyne, LLC ("RadiaDyne") alleging infringement of U.S. Patent 7, 976, 497 ("the '497 patent") [D.E. 297]. The court held that it lacked subject-matter jurisdiction over the claim after concluding that RadiaDyne was at least a co-owner of the '497 patent, depriving Polyzen of standing to sue for infringement. See Id. at 15-18. The remaining claims proceeded to a jury trial. On April 20, 2017, a jury found both Polyzen and RadiaDyne liable for breach of contract, and Polyzen liable for conversion, trespass to chattels, and unfair competition. See [D.E. 373]. The jury also concluded that RadiaDyne did not misappropriate any trade secret of Polyzen's and that Polyzen did not commit fraud against RadiaDyne. See id.

         After the court entered judgment on the jury's verdict and the summary judgment rulings [D.E. 383], both parties filed various motions, including RadiaDyne's motion for attorneys' fees [D.E. 390], Polyzen's "motion for clarification of entry of judgment" [D.E. 405], RadiaDyne's motions asking the court to consider untimely filings [D.E. 416, 421], Polyzen's motion for leave to file a surreply [D.E. 424], Polyzen's motion to strike RadiaDyne's surreplies [D.E. 426], and RadiaDyne's motion for leave to file surreplies [D.E. 427]. [1] As explained below, the court denies RadiaDyne's motion for attorneys' fees, denies Polyzen's motion for clarification, and denies the remaining motions.

         I.

         RadiaDyne makes two separate fee requests, one concerning Polyzen's patent-infringement claim and one concerning Polyzen's trade-secret misappropriation claim. See [D.E. 390, 391]. For defending against Polyzen's patent-infringement claim, RadiaDyne requests $751, 292 in attorneys' fees and $9, 468 in recoverable travel expenses under 35 U.S.C. § 285. For defending against Polyzen's trade-secret misappropriation claim, RadiaDyne requests $65, 603 in attorneys' fees and $48, 917 in expert-witness fees under N.C. Gen. Stat. § 66-154(d).

         A.

         On September 23, 2016, the court dismissed Polyzen's patent-infringement claim without prejudice for lack of subject-matter jurisdiction after concluding that RadiaDyne was at least a co-owner of the '497 patent, depriving Polyzen of standing to sue for infringement. See [D.E. 297] 15-18. RadiaDyne now seeks attorneys' fees and travel expenses incurred in defending against Polyzen's infringement claim under 35 U.S.C. § 285. See [D.E. 390].

         Section 285 of the Patent Act states that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. "By its terms, the statute requires that the recipient of attorney fees be a 'prevailing party.'" RFR Indus., Inc. v. Century Steps. Inc., 477 F.3d 1348, 1353 (Fed. Cir. 2007); see Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1319-20 (Fed. Cir. 2004) ("The question in this case is whether USX is a 'prevailing party' and thus potentially eligible for the award of attorney fees and costs.")- "In a patent case, Federal Circuit law governs the determination of which party has prevailed" for purposes of determining whether a fee award is available under 35 U.S.C. § 285. See SSL Servs., LLC v. Citrix Sys., Inc., 769 F.3d 1073, 1086 (Fed. Cir. 2014). To be a "prevailing party, " the Federal Circuit requires: "(1) that the party received at least some relief on the merits, and (2) that relief must materially alter the legal relationship between the parties by modifying one party's behavior in a way that directly benefits the opposing party." Id. (alteration and quotations omitted); see Farrar v. Hobby, 506 U.S. 103, 111-12 (1992) ("[A] plaintiff 'prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.").

         Two aspects of the court's order dismissing Polyzen's patent-infringement claim interact to preclude "prevailing party" status for RadiaDyne on the patent claim. First, "lack of standing is not an issue that goes to the merits of the underlying patent issues." H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1384 (Fed. Cir. 2002); see Media Techs. Licensing, LLC v. Upper Deck Co., 334F.3d 1366, 1370 (Fed. Cir. 2003) ("Because standing is jurisdictional, lack of standing precludes a ruling on the merits."). Second, dismissals without prejudice are not equivalent to a victory on the merits-they "do [] not constitute a change in the legal relationship of the parties because the plaintiff is free to refile its action." RFR Indus., Inc., 477 F.3d at 1353. Thus, dismissals without prejudice due to lack of standing are not adjudications on the merits and cannot confer "prevailing party" status under section 285. See SPH Am., LLC v. AT&T Mobility LLC, No. 3:13-CV-2318-CAB-KSC, 2017 WL 3021025, at * 1-2 (S.D. Cal. July 14, 2017) (unpublished); HomeSafe Inspection, Inc. v. Haves, No. 3:14-CV-209-SSA, 2016 WL 867008, at *2 (N.D. Miss. Mar. 2, 2016) (unpublished); Orbit Irrigation Prods., Inc. v. SunHills Int'1. LLC, No. 1:10-CV-113 TS, 2015 WL 7574766, at * 1-2 & n.7 (D. Utah Nov. 25, 2015) (unpublished); Climb Tech. LLC v. Reeves, No. A-05-CA-864-LY, 2009 WL10670211, at *3 (W.D. Tex. Aug. 20, 2009) (unpublished); Mars. Inc. v. JCM Am. Corp., No. 05-3165 RBK/JS, 2009 WL 2356834, at *4-5 (D.N.J. July 30, 2009) (unpublished); cf Raniere v. Microsoft Corp., No. 3:15-CV-0540-M, 2016 WL 4626584, at *1-4 (N.D. Tex. Sept. 2, 2016) (unpublished), affd, 673 Fed.Appx. 1008 (Fed. Cir. 2017) (per curiam) (unpublished). Here, the court dismissed the patent-infringement claim without prejudice for lack of subject-matter jurisdiction because Polyzen lacked standing to sue RadiaDyne for infringing the '497 patent. See [D.E. 297] 15-18. This dismissal did not reach the merits of Polyzen's infringement claim. Accordingly, RadiaDyne is not a prevailing party on that claim and cannot recover attorneys' fees under 35 U.S.C. §285.

         B.

         RadiaDyne requests $65, 603 in attorneys' fees and $48, 917 in expert-witness fees under N.C. Gen. Stat. § 66-154(d) for successfully defending against Polyzen's trade-secret misappropriation claim. Section 66-154(d), which is part of North Carolina's Trade Secrets Protection Act, states that "[i]f a claim of misappropriation is made in bad faith or if willful and malicious misappropriation exists, the court may award reasonable attorneys' fees to the prevailing party." Bruning & Federle Mfg. Co. v. Mills, 185 N.C.App. 153, 157, 647 S.E.2d 672, 675 (2007). Where a "willful and malicious appropriation exists, " fees are available to a party who prevailed on its misappropriation claim. See Silicon Knights, Inc. v. Epic Games, Inc., 917 F.Supp.2d 503, 518 (E.D. N.C. 2012), affd, 551 Fed.Appx. 646 (4th Cir. 2014) (per curiam) (unpublished). Where, as here, the defendant prevails on the plaintiff s misappropriation claim, fees are available to the defendant if the claim was "made in bad faith." Reichhold Chems., Inc. v. Goel, 146 N.C.App. 137, 158, 555 S.E.2d281, 294 (2001).

         "Bad faith cannot be defined with mathematical precision, but certainly it implies a false motive or a false purpose." RLM Commc'ns. Inc. v. Tuschen, No. 5:14-CV-250-FL, 2015 WL 1268283, at *4 (E.D. N.C. Mar. 19, 2015) (alteration and quotations omitted). "[A] finding of bad faith does not follow simply because a claimant proceeded with legal malice so long as the claimant had 'a good faith belief that the [claim] has legitimate basis.'" Velocity Sols., Inc. v. BSG. LLC, No. 14 CVS 557, 2015 WL 3385399, at *8 ( N.C. Super. May 26, 2015) (unpublished) (quoting Reichhold Chems., Inc., 146 N.C.App. at 158, 555 S.E.2d at 294). Whether to award attorneys' fees under section 66-154(d) is committed to this court's sound discretion. See Silicon Knights, Inc., 917 F.Supp.2d at 519; Bruning & Federle Mfg. Co., 185 N.C.App. at 155, 647 S.E.2d at 674.

         Polyzen based its misappropriation claim on allegations that RadiaDyne transmitted to a third party four documents Polyzen claimed contained its trade secrets. When ruling on the parties' summary judgment motions, the court held that RadiaDyne owned three of the documents and granted RadiaDyne summary judgment on Polyzen's misappropriation claim concerning disclosure of those documents. See [D.E. 142] 13-14. As for the fourth document (DIE 279), the court concluded that RadiaDyne owned some of it, but that a genuine issue of material fact existed as to whether RadiaDyne owned a discrete portion of that document-"Note 1"-and whether Note 1 was Polyzen's trade secret. See Id. at 14-18. At trial, the jury found that Note 1 was not Polyzen's trade secret. See [D.E. 373] 2; [D.E. 383] 1.

         RadiaDyne claims entitlement to fees because Polyzen pressed its misappropriation claim despite lacking evidence of actual damages. In support, RadiaDyne notes that in a deposition, Polyzen's corporate representative testified to being unaware of what harm Polyzen had suffered because of the alleged misappropriation of Note 1 of DIE 279. See [D.E. 109-18] 7. Moreover, before trial, the court excluded Polyzen's expert offered to testify concerning damages arising from the alleged misappropriation of Note 1 of DIE 279. See [D.E. 297] 23-24. Furthermore, at the pretrial conference, Polyzen's counsel asserted that Polyzen would present trial testimony showing alleged damages of "around $30, 000" on the misappropriation claim concerning Note 1 of DIE 279 [D.E. 362] 6, but that testimony never came. Instead, after denying RadiaDyne's Rule ...


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.