Jessica Karmasek Sep. 21, 2015, 1:54pm


SAN FRANCISCO (Legal Newsline) - A California federal judge, in a scathing order filed earlier this month, awarded more than $1 million in attorneys’ fees and costs to Zynga, the social video game company best known for Facebook games, including the popular FarmVille.

Judge Vince Chhabria, for the U.S. District Court for the Northern District of California, didn’t hold back much in his Sept. 10 order against a company called Segan LLC.

In the 1990s, Segan invented a system for people to browse the Internet.

As Chhabria noted in his 12-page order, even though people don’t browse the Internet while playing Zynga games on Facebook, Segan proceeded to sue Zynga for patent infringement in 2011.

Segan lost at summary judgment because no reasonable juror could conclude that Zynga’s games infringe Segan’s patent -- U.S. Patent No. 7,054,928.

The patent, for a “system for viewing content over a network and method therefor,” was issued to Marc Segan and co-inventor Gene Lewin by the U.S. Patent and Trademark Office in 2006.

In turn, Zynga asked the court to deem the case “exceptional” and that Segan should pay its attorneys’ fees and costs. It also asked the court to sanction the law firm of Blank Rome LLP, which represented Segan in the case, for filing and pursuing a frivolous lawsuit.

An “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.

Chhabria said the case is indeed exceptional and Segan is required to pay Zynga’s fees and costs -- $1,188,773.93 total to the San Francisco law firm of Durie Tangri LLP -- because the lawsuit was “objectively baseless from the start.”

The judge explained that, among its various infringement theories, Segan asserted that when Facebook communicates information to the service provider, it is somehow “accessing” user records from Zynga.

“Segan might as well have argued that the sky is the ground,” Chhabria wrote. “Even in the world of patent law, where lawyers and experts often take great liberties with words, this proposed construction of ‘access’ stands out as exceptional.”

Chhabria said the requested fee amount is reasonable and, in his opinion, “on the low side” for such a case. The judge noted the length of the litigation and the “difficulty” Segan put Zynga through.

The judge also agreed to sanction Blank Rome, headquartered in Philadelphia.

Sanctions are warranted if the complaint is legally or factually baseless from an objective perspective, and the attorneys failed to conduct a reasonable and competent inquiry before signing and filing the complaint.

“This was not a case in which attorneys investigated a potential claim on behalf of their client and concluded it had merit based on partial information, only later to learn that their information was wrong,” Chhabria wrote. “For example, there is no indication the attorneys received bad information from their client. Nor is there an indication that the attorneys lacked notice about how the accused products worked.

“This case was objectively baseless from the start, and no amount of lawyer activity prior to filing suit could have changed that.”

The judge said a sanction holding Blank Rome jointly and severally liable with Segan for $100,000 worth of Zynga’s fee award, coupled with the reprimand that a sanctions award represents, is “sufficient” to deter the law firm from bringing frivolous patent infringement suits in the future.

The award, Chhabria noted, should put similarly-situated attorneys “on notice” of the possibility that they could be held jointly and severally liable for an “entire” fee award if they file such baseless patent litigation in the future.

“Though a greater award could better ensure that Zynga is adequately reimbursed, ‘[t]he main objective of the Rule [11] is not to reward parties who are victimized by litigation; it is to deter baseless filings and curb abuses,’” the judge explained.

To read Chhabria’s complete order, click here.

According to the case docket, Segan filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit in May. The Federal Circuit hears all U.S. patent appeals.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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