REALTIME ADAPTIVE STREAMING v. NETFLIX, INC.

Realtime sued Netflix for infringement in Delaware asserting six patents. Netflix filed seven petitions for inter partes review (IPR) of many of the asserted claims and moved to dismiss the complaint, arguing that four of the six asserted patents were ineligible under 35 U.S.C. § 101. Netflix fully briefed, and Realtime full responded to, those patent-ineligibility theories. Following institution of all seven IPRs and a recommendation from the Delaware magistrate judge finding claims of four of the patents ineligible under § 101, Realtime voluntarily dismissed the Delaware action. The next day, Realtime filed two infringement actions against Netflix in California (despite having previously argued when Netflix moved to transfer the case that transferring the action to California would be inconvenient and an unfair burden on Realtime), splitting the four patents found to be patent ineligible into a separate case. Netflix moved for attorneys’ fees and to transfer the cases back to Delaware. Prior to a decision on either motion, Realtime voluntarily dismissed both California cases. Netflix then renewed its motion for attorneys’ fees for the California actions, the related Delaware action, and the IPR proceedings. The district court awarded fees for the California actions, but declined to award fees for the Delaware action or the IPR. Realtime appeals and Netflix cross-appeals the court’s denial of fees for the related proceedings.  The CAFC finds that the blatant gamesmanship presented by the facts of this case constitutes a willful action for an improper purpose, tantamount to bad faith, and therefore within the bounds of activities sanctionable under a court’s inherent power, and (finding nothing erroneous in the district court’s conclusion that Realtime impermissibly and  unjustifiably engaged in forum-shopping in attempt to avoid or delay an adverse ruling), holds that the district court did not abuse its discretion in awarding fees pursuant to its inherent equitable powers. With respect to the cross-appeal, the CAFC finds that the district court’s fact findings support differentiating the related proceedings, and holds that the district court did not abuse its discretion in declining to award attorneys’ fees for the related actions. The CAFC therefore affirms the district court’s award of attorneys’ fees for both California actions and denial of fees for the related Delaware action and the IPR proceedings.

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