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Blackbird Tech LLC v. Health In Motion LLC

United States Court of Appeals, Federal Circuit

December 16, 2019

BLACKBIRD TECH LLC, DBA BLACKBIRD TECHNOLOGIES, Plaintiff-Appellant
v.
HEALTH IN MOTION LLC, DBA INSPIRE FITNESS, LEISURE FITNESS EQUIPMENT LLC, Defendants-Appellees

          Appeal from the United States District Court for the Central District of California in No. 2:17-cv-03488-R-GJS, Senior Judge Manuel L. Real.

          Jeffrey Ahdoot, Blackbird Tech LLC, Boston, MA, argued for plaintiff-appellant. Also represented by Wendy Verlander; Stamatios Stamoulis, Stamoulis & Weinblatt LLC, Wilmington, DE.

          Willmore F. Holbrow, III, Buchalter, A Professional Corporation, Los Angeles, CA, argued for all defendants-appellees. Defendant-Appellee Health In Motion LLC also represented by Christina Le Trinh, Irvine, CA.

          Before Prost, Chief Judge, Wallach and Hughes, Circuit Judges.

          Wallach, Circuit Judge.

         Appellant Blackbird Tech LLC ("Blackbird") sued Appellees Health In Motion LLC ("HIM") and Leisure Fitness Equipment LLC ("Leisure") (together, "Appellees") in the U.S. District Court for the District of Delaware, and later transferred to the U.S. District Court for the Central District of California, for infringement of U.S. Patent No. 6, 705, 976 ("the '976 patent") owned by Blackbird. After more than nineteen months of litigation, Blackbird voluntarily dismissed its suit with prejudice and executed a covenant not to sue, after which Appellees were granted attorney fees and expenses in the amount of $363, 243.80. Blackbird Tech LLC v. Health In Motion LLC, No. 2:17-cv-03488-R-GJS (C.D. Cal. Sept. 10, 2018) (Order) (J.A. 17- 20).

         Blackbird appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (2012). We affirm.

         Background

         In October 2016, Blackbird sued Appellees in the U.S. District Court for the District of Delaware ("Delaware District Court") for infringement of the '976 patent. J.A. 418- 28 (Original Complaint).[1] The '976 patent relates to "exercise equipment," '976 patent col. 1 l. 11, and more particularly to "[e]xercise equipment including a housing having a structural surface defining an arcuate path" and "multiple pairs of pulleys positioned along the arcuate path, each pair of pulleys having passed between them a cable the proximal end of which is located outside the curved path, the distal end of the cable being coupled to a source of resistance within the housing," id., Abstract.

         In March 2017, Appellees filed a motion to transfer to the U.S. District Court for the Central District of California ("District Court"). J.A. 28. The Delaware District Court granted Appellees' motion to transfer in April 2017. Blackbird Tech LLC v. TuffStuff Fitness, Int'l, Inc., No. 1:16-cv-00733-GMS, 2017 WL 1536394, at *1 (D. Del. Apr. 27, 2017) (J.A. 536, 547); see id. at *1 n.2 (explaining that "HIM has incorporated by reference TuffStuff's arguments in its motion to transfer . . ., therefore the court's memorandum and order will apply to both cases").

         In June 2017, Blackbird offered to settle its case against Appellees for $80, 000. J.A. 2069. Appellees declined Blackbird's offer, explaining that Blackbird's "infringement allegations lack[ed] merit" "[i]n view of the substantial differences between what is claimed in the [']976 [p]atent and the accused device," viz., HIM's M1 Multi-Gym. J.A. 2070; see J.A. 1176, 1185-86 (User Manual for the M1 Multi-Gym).[2] Appellees also explained that they "believe[d] there [was] a strong likelihood" that Blackbird would be ordered to pay Appellees' attorney fees, and countered with a settlement offer that included, inter alia, Blackbird "mak[ing] a payment of $120, 000" to Appellees. J.A. 2070. In October 2017, Blackbird made another settlement offer, this time for $50, 000. J.A. 2241; see J.A. 1440 ("Blackbird's counsel . . . made an oral offer to settle the case if [Appellees] paid Blackbird $50, 000."). Again, Appellees declined. J.A. 1140, 2241. In April 2018, Blackbird offered to settle yet again, this time for $15, 000. J.A. 1440. Appellees once again declined, "maintain[ing] their request that Blackbird pay a portion of [Appellees'] expenses[.]" J.A. 1440. Later that same month, and again the following month (May 2018), Blackbird offered "a 'walk-away' settlement whereby [Appellees] would receive a license to the ['976] patent for zero dollars, and the case would be dismissed." J.A. 2239 (describing the April 2018 offer), 2539 (describing the May 2018 offer). Once again, Appellees declined. J.A. 2239; see J.A. 2239-40 (Blackbird's Vice President and Head of Litigation stating that "[Appellees], through counsel, have rejected all settlement offers by Blackbird . . ., including the zero-dollar 'walkaway' offer. . . . I understand the reasoning for this to be that [Appellees] have a belief that they will ultimate[ly] be awarded their legal fees after judgment in this matter").

         In May 2018, shortly before discovery was scheduled to end, Appellees filed a motion for summary judgment. J.A. 555-75 (Motion for Summary Judgement). Blackbird opposed, J.A. 1215-45, but, after Appellees' motion was fully briefed, and without notifying Appellees in advance, Blackbird filed a notice of voluntary dismissal with prejudice, J.A. 1338-39 (Notice of Voluntary Dismissal), executed a covenant not to sue, J.A. 1334-35 (Covenant Not to Sue), and filed a motion to dismiss for lack of subject matter jurisdiction, J.A. 1323-28 (Motion to Dismiss).[3] See J.A. 1441 (Appellees' lead counsel explaining that "Blackbird's counsel never mentioned that he intended to file a covenant not to sue. . . . Blackbird surprisingly filed a Notice of Dismissal, Covenant Not to Sue[, ] and Motion to Dismiss"); Oral Arg. at 20:19-20:38 (Appellees' counsel stating that Appellees "didn't even get a call from Blackbird, [Appellees] just saw . . . on the [CM/]ECF [system] that [Blackbird] had filed these documents dismissing the case").

         In June 2018, the District Court dismissed Blackbird's claims with prejudice and denied Blackbird's Motion to Dismiss, while authorizing Appellees to "seek to recover their costs, expenses, and/or attorney[] fees." J.A. 1383- 85. That same month, Appellees filed a motion for attorney fees and expenses, J.A. 1386-87 (Motion for Attorney Fees and Expenses), 1390-1417 (Memorandum in Support of Motion for Attorney Fees and Expenses), requesting $357, 768.50 in attorney fees and $5, 475.30 in expenses, J.A. 1417. In September 2018, the District Court issued its Order granting Appellees' Motion for Attorney Fees and Expenses for the total requested amount of $363, 243.80. J.A. 17-20.

         Discussion

         I. Standard of Review ...


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