EDekka LLC, a Plano, Texas-based non practicing entity that brought more than 200 infringement actions against online retailers who offer a shopping cart feature to their e-commerce websites was found to be a candidate for exceptional case fees by Judge Rodney Gilstrap of the U.S. District Court in Marshall, Texas.

In a ruling issued Thursday, Dec. 17, Judge Gilstrap said he took “no pleasure” in finding that eDekka should pay exceptional case fees because its multiple infringement actions were based on weak patents and its strategies were designed to extort nuisance settlements.

EDekka “has sued a large number of defendants in this Court alleging infringement of U.S. Patent No. 6,266,674 titled ‘Random Access Information Retrieval Utilizing User-Defined Labels.’”

The ’674 patent relates to storing and labeling information and discloses a preferred embodiment that includes a cassette tape recorder with multiple buttons, a microphone,
and a speaker.

In 2014, eDekka filed lawsuits against approximately 130 defendants alleging infringement of the ’674 Patent. In April and May 2015, eDekka filed lawsuits against 89 additional defendants alleging infringement of the ’674 Patent.

Judge Gilstrap noted that numerous defendants in the two consolidated actions filed motions to dismiss under 35 U.S.C. Section 101, contending that the ’674 patent was directed to unpatentable subject matter under Alice Corp. Pty. Ltd. v. CLS Bank International.

After hearing defendants section 101 motions, Judge Gilstrap on September 21 granted defendants’ motions and held that the claims of the ’674 patent were patent ineligible under section 101, after which the defendants filed the motion for exceptional case fees.

Judge Gilstrap noted that not all defendants have asked for exceptional case fees and some who joined earlier have later withdrawn their joinder.

“The Court notes that the ’674 Patent is demonstrably weak on its face, despite the initial presumptions created when this patent was issued by the PTO,” Judge Gilstrap said.

“The Court did not need the benefit of claim construction to find that the claims were directed to an abstract idea. The ’674 Patent claims were clearly directed toward unpatentable subject matter, and no reasonable litigant could have reasonably expected success on the merits when defending against the numerous Section 101 motions filed in this case.”

The judge said that “rather than acknowledging the inherent weaknesses of the ’674 Patent, eDekka proffered completely untenable arguments to the Court throughout the Section 101 briefing process and at the September 10, 2015 hearing.”

For example, the judge said “eDekka asserted that the patented claims ‘improve the functioning of technology’ by reducing ‘the time to retrieve information and the amount of information that must be retrieved.’”

“The Court finds that eDekka repeatedly offered insupportable arguments on behalf of an obviously weak patent. This causes the Court to question whether eDekka engaged in a reasonable and thorough pre-suit investigation regarding the section 101 standard and relevant authority before filing a significant number of lawsuits. In these particular and focused circumstances, the Court identifies a clear need to advance considerations of deterrence."

Judge Gilstrap found that eDekka’s litigation history in the Eastern District of Texas—which includes filing strikingly similar lawsuits against over 200 defendants—reflects an aggressive strategy that avoids testing its case on the merits and instead aims for early settlements falling at or below the cost of defense.

“Based upon the record of the above-captioned cases, as well as the Court’s in camera review of eDekka’s ’674 Patent settlements to date, the Court finds a pattern of defendants that agreed to settlements at relatively early points in the litigation for amounts significantly below the cost of
taking a patent case to trial. Further, on September 8, 2015, just two days before the September 10, 2015 Section 101 hearing, counsel for eDekka contacted numerous defendants with offers to settle their cases for three-thousand dollars each. These offers represent extraordinarily low amounts.

“Such offers remained open until they were withdrawn during the evening of September 9, 2015. This clearly suggests an intent to settle with the remaining defendants rather than defend the ’674 Patent claims in court.

“The Court finds that it is reasonable to conclude that eDekka acted with the goal of ‘exploiting the high cost to defend complex litigation”’to extract ‘nuisance value settlement[s]’
from defendants.”

Judge Gilstrap said he “takes no pleasure in reaching the above conclusions. This Court does not view every plaintiff’s loss as an automatic indicator that the case is exceptional. A finding of exceptionality is something that this Court arrives at reluctantly, lest we unintentionally narrow the public’s access to the courts by chilling future decisions to seek redress for a case in which success is not guaranteed. However, the threshold of exceptionality has been crossed by eDekka in this case. A fair reading of the facts and the law in this specific context compels the Court to find that this is an ‘exceptional’ case.”

Judge Gilstrap granted the defendants consolidated motion for attorneys’ fees and gave them 14 days to submit their reasonable fees and expenses.

Attorneys for eDekka couldn't be reached for comment.

—-To reach the reporter responsible for this story please contact Dan Lonkevich at 707 318-7899 or dan@thepatentinvestor.com