Defendant's misconduct in patent suit necessitated finding of exceptional case

Anthoula Pomrening Sep. 8, 2010, 6:12am

In ReedHycalog UK Ltd. and ReedHycalog LP v. Diamond Innovations Inc., a case from the Eastern District of Texas, the defendant's litigation misconduct and willfulness necessitated a finding of exceptional case and an award of attorneys' fees and enhanced damages.

ReedHycalog filed suit against Diamond Innovations alleging infringement of nine related patents directed to partially-leached polycrystalline diamond elements used for drill bits.

These same patents had been extensively litigated in the past few years, the prior cases having settled "for significant sums and ongoing license agreements."

ReedHycalog offered a no royalty supply agreement to Diamond Innovations, the same agreement it had offered to other cutter manufacturers, but Diamond Innovations rejected it. The case was tried before a jury, which found the patents not anticipated, not invalid, and literally and willfully infringed.

Most notable among the post-trial motions was ReedHycalog's Motion for an Order Finding Exceptional Case and Awarding Enhanced Damages and Attorneys' and Expert's Fees.

The court considered the numerous instances of Diamond Innovations' bad faith and litigation misconduct. For example, Diamond Innovations improperly concealed and withheld an opinion of counsel concerning the validity of ReedHycalog's patents, although it had waived attorney client privilege and work product immunity when it relied upon another opinion of counsel as a defense to willfulness.

The concealed opinion was produced only after the court ordered Diamond Innovations to do so. Further, during the pendency of the case, Diamond Innovations burdened the court with unnecessary motion practice, such as a motion to reconsider that simply restated the same arguments made previously.

Other examples of litigation misconduct included repeatedly interrupting deposition testimony with improper objections, improperly conferring with its expert during a deposition break, and failing to mediate in good faith.

The court expressed its concern with defendant's actions. "Diamond Innovations' conduct throughout this case falls far below the Court's standards for professionalism and collegiality."

In view of Diamond Innovations' behavior and the finding of willful infringement, the court concluded this was an exceptional case and awarded attorneys' fees in the amount of $5,266,884 and expert fees in the amount of $3,043,267.

Based on the totality of the circumstances, the Court also found that enhanced damages in the amount of $4,500,000 were justified.

This case serves as a good example of the real consequences that may flow from a party's litigation misconduct.

Anthoula Pomrening is a partner with McDonnell Boehnen Hulbert & Berghoff LLP in Chicago, Ill. She has experience in all areas of patent and trademark practice. She can be contacted at (312)935-2366 (direct) or

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