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Patent firm avoids sanctions

U.S. District Judge Leonie Brinkema decided today not to sanction SPH America LLC, a Reston-based company that attempts to enforce patents on mobile phone technology, even though she said the suit it filed against the national law firm of Foley & Lardner LLP was groundless.

SPH accused the law firm of disclosing confidential information that it had obtained in litigation representing companies that SPH had sued. However, it withdrew the suit under Fed.R.Civ.P. 41(a)(1)(A)(i) after Brinkema denied a motion to seal the suit – and after several legal publications had reported it – but before the firm filed its response.

As we noted here, Brinkema cited SPH’s “unusual record of filing complaints in this district and then dismissing them … , strongly suggesting that the plaintiff does not have the intention or ability to pursue the merits of its claims.”
She ordered SPH to show why the complaint against Foley should not be dismissed with prejudice and the law firm awarded its costs as a prevailing party “[t]o ensure that the plaintiff is not filing vexatious lawsuits and that this law firm defendant has not been unduly prejudiced.”

SPH contended, and Foley acknowledged, that the federal rules give it an absolute right to a dismissal without prejudice if the dismissal occurs before the other party responds. It also said one of the suits Brinkema cited had been settled, another was delayed by a standstill agreement and three others are still pending, one of which subsumed an earlier complaint.

Brinkema said she found it very unusual for a law firm to be sued and even more unusual to have such a suit dismissed so quickly. But she ruled that SPH had a right to the voluntary dismissal without prejudice and rejected Foley’s suggestion that she nevertheless use her inherent authority to impose sanctions.

She told SPH’s attorneys that it can’t refile anywhere but the Eastern District and warned that it would have to pay Foley’s reasonable costs in defending itself in the dismissed action.

She asked for a ballpark figure on how much that had been. “About $150,000” was the response. “That shocks me, too,” she said. “That’s way out of whack.” Brinkema said she would require SPH to pay $10,000 if it refiled.
By Alan Cooper

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