Appeals from the United States District Court for the
Northern District of Texas in Nos. 3:15-cv-00540-M,
3:15-cv-02298-M, Chief Judge Barbara M.G. Lynn.
Dale Crockett, Crockett & Associates, Santa Clarita, CA,
argued for plaintiff-appellant. Also represented by Chase
Tajima, Lisa Dearden Trepanier.
Stephen Blake Kinnaird, Paul Hastings LLP, Washington, DC,
argued for defendants-appellees. Defendant-appellee AT&T
Corp. also represented by Igor Victor Timofeyev; Christopher
Wood Kennerly, Palo Alto, CA.
Constantine L. Trela, Jr., Sidley Austin LLP, Chicago, IL,
for defendant-appellee Microsoft Corporation. Also
represented by Richard Alan Cederoth, Douglas Lewis; Joshua
John Fougere, Washington, DC.
Lourie, O'Malley, and Wallach, Circuit Judges.
O'Malley, Circuit Judge.
Raniere ("Raniere") appeals from the district
court's decisions awarding attorney fees and costs to
Microsoft Corporation and AT&T Corporation (together,
"Appellees"). Raniere v. Microsoft Corp.,
Nos. 15-0540 & 15-2298, 2016 WL 4626584 (N.D. Tex. Sept.
2, 2016) (Fees Decision); Raniere v. Microsoft
Corp., Nos. 15-0540 & 15-2298, slip op. (N.D. Tex.
Dec. 22, 2016) (J.A. 34-40). Because the district court did
not err in finding that Appellees are prevailing parties
under 35 U.S.C. § 285 (2012), and did not abuse its
discretion in awarding attorney fees and costs under that
provision, we affirm.
sued Appellees for patent infringement, asserting five
patents against AT&T (U.S. Patent Nos. 6, 373, 936, 6,
819, 752, 7, 215, 752 ("the '5752 patent"), 7,
391, 856, and 7, 844, 041 ("the '041 patent"))
and two of these five patents against Microsoft (the
'5752 patent and the '041 patent). Fees
Decision, 2016 WL 4626584, at *1.
1995, Raniere and the other named inventors of the patents at
issue assigned all rights in these patents to Global
Technologies, Inc. ("GTI"). Id. at *2.
Raniere is not listed on GTI's incorporation documents as
an officer, director, or shareholder. GTI was
administratively dissolved in May 1996. Id.
December 2014, Raniere executed a document on behalf of GTI,
claiming to be its "sole owner, " that purportedly
transferred the asserted patents from GTI to himself.
Id. Raniere's suits against Appellees identified
himself as the owner of the patents at issue.
2015, Microsoft moved to dismiss Raniere's suit for lack
of standing, noting that the PTO's records indicated that
Raniere did not own the patents at issue. Raniere's
counsel represented to the district court that GTI's
ownership passed to Raniere in its entirety at some point,
and that Raniere properly transferred ownership of the
patents from GTI to himself. Id. The court ordered
Raniere to produce documentation proving these
representations. Id. Raniere produced various
documents that, according to the district court, failed to
indicate that Raniere had an ownership interest in GTI at any
time or that Raniere had the right to assign the patents at
issue from GTI to himself. Id. at *3. Given
Raniere's failure to produce evidence to support his
standing, the district court permitted Appellees to conduct
limited discovery into the standing issue and stayed the
cases pending its resolution. Id.
suspended discovery when the parties began negotiating terms
of settlement, but Raniere refused to finalize the
settlement. Id. AT&T then filed a motion for an
order to show cause why the action should not be dismissed
under Federal Rule of Civil Procedure 41(b) for lack of
standing. Id. AT&T also noted that Raniere was
seeking third-party discovery in violation of the district
court's discovery order. Id. Raniere informed
the district court that he could produce evidence to
establish his standing, but he required a subpoena to obtain
evidence from Alan Rubens, a Washington state attorney.
Id. The district court permitted this limited
discovery request and ordered Rubens to produce all relevant
documentation. Id. Rubens's documents showed the
GTI shareholders' consent to a transfer of shares from
Raniere's ex-girlfriend-who owned 75% of GTI's
shares-to Raniere. The documents Raniere proffered did not
indicate that any such transfer was ever completed, however,
and did not establish that Raniere owned the patents at
light of these documents, Appellees filed a renewed motion to
dismiss for lack of standing. Id. In response,
Raniere filed a motion seeking the court's permission to
submit additional evidence showing that he had sole ownership
over GTI. Id. The district court granted-in-part and
denied-in-part this motion, stating that Raniere had received
"more than a fair opportunity to adduce evidence to
establish his standing." J.A. 2340.
district court held a hearing on Appellees' motion to
dismiss. Fees Decision, 2016 WL 4626584, at *4.
Rani-ere testified, over Appellees' objection, that the
other inventors had disavowed any interest in GTI and given
their ownership interests to Raniere. Id. Raniere
also testified that his ex-girlfriend held her shares in the
corporation in trust for him, based on a side letter executed
between these parties, but he did not have possession of that
letter nor did he know where the letter could be.
Id. The district court found that Raniere's
testimony surrounding the alleged transfer contradicted
Raniere's earlier representation that the shares had
already been transferred to him and was "wholly
incredible and untruthful." Id.
district court concluded that Raniere was unlikely to be able
to cure the standing defect, and dismissed the case with
prejudice. Id.; J.A. 2362. The district court
also stated that it dismissed with prejudice because it found
that Raniere's conduct demonstrated "a clear history
of delay and contumacious conduct." Fees
Decision, 2016 WL 4626584, at *4.
appealed the district court's decision on standing. We
summarily affirmed the district court's dismissal with
prejudice of Raniere's action for lack of standing.
Raniere v. Microsoft Corp., 673 Fed.Appx. 1008 (Fed.
the merits appeal was pending, Appellees filed a motion
seeking attorney fees and costs pursuant to 35 U.S.C. §
285. The district court concluded that, because it dismissed
Raniere's claims with prejudice, Appel- lees were
prevailing parties for the purposes of § 285. Fees
Decision, 2016 WL 4626584, at *4. Although Raniere
disputed that dismissal for lack of standing with prejudice
was sufficient to confer prevailing-party status on
Appellees, the district court explained that "[a]
dismissal with prejudice alters the relationship between the
parties and is sufficient to confer prevailing party status
for purposes of considering a claim for fees under section
285." Id. The district court also concluded
that dismissal with prejudice is an appropriate remedy where
it is unlikely that the plaintiff will be able to cure the
standing defect. On this point, the district court explained
that it had given Rani-ere multiple opportunities to cure the
identified standing defect, but "[n]one of the evidence
produced or arguments advanced by [Raniere] in support of his
alleged standing gave the Court any reason to believe that
the problem could be cured." Id. at 2.
district court next concluded that this case was exceptional
because it stood out from other cases "with respect to
the unreasonable manner in which it was litigated.
[Raniere]'s conduct throughout this litigation,
culminating in his untruthful testimony at the hearing on the
motion to dismiss, demonstrates a pattern of obfusca-tion and
bad faith." Id. at *5. The district court noted
that Raniere promised repeatedly that he could produce
evidence that would cure the standing defect identified by
Appellees and the district court. Id. But Raniere
failed to satisfy these promises, according to the district
court, as "[d]espite numerous representations, [Raniere]
failed to produce any written document or other credible
evidence that he had an interest in GTI that would allow him
to transfer the patents to himself." Id.
Raniere's conduct required Appellees "to expend
significant resources to oppose [Raniere]'s arguments,
which the Court now finds were made in bad faith to
vexatiously multiply these proceedings and avoid early
dismissal." Id. The district court rejected
Raniere's attempts to recharacterize his conduct as
"zealous pursuit of his good faith claim of ownership,
" noting its finding that Raniere "made false and
misleading representations to Defendants and the Court that
resulted in, among other things, prejudice to Defendants in
the form of significant legal fees incurred in defending this
action." Id. The district court awarded fees
and non-taxable costs for the period of time between the
Federal Rule of Civil Procedure 16 conference and the
district court's order of dismissal. Id.
alternative, the district court sanctioned Rani-ere's
conduct under its inherent authority. Id. The
district court reiterated that Raniere had "acted in bad
faith and vexatiously multiplied these proceedings" by
failing to seize on any of the multiple opportunities to
correct the standing issue. Id. "From the
inception of the litigation, [Raniere] engaged in a pattern
of obfuscation, offering inconsistent theories and arguments
and promising to produce evidence that never
materialized." Id. The district court noted
that Raniere failed to voluntarily dismiss the case when
confronted with the fatal standing defect, instead imposing
expenses on both Appellees and the district court.
Id. According to the district court, "[t]his
deplorable conduct constitutes an abuse of the judicial
process and warrants an imposition of sanctions under the
Court's inherent powers." Id.
Raniere argued that his conduct was not sufficiently
egregious to justify imposition of sanctions under the
district court's inherent powers, the district court
rejected Raniere's characterization of his actions,
noting that it "requires full candor on all matters from
the parties who come to it seeking relief. [Raniere]'s
submission of a document that contained a knowingly false
representation constitutes an abuse of the judicial process
that warrants sanctions." Id. The district
court found "that an award of fees is the least ...