Northern District of Texas Blog

On March 23, 2021, the Northern District of Texas entered a decision in SAP America, Inc. v. InvestPic, LLC (available here). In the case, the Court granted Plaintiff’s motion for judgment on the pleadings asserting that all of the claims of the patent-in-suit were invalid because they did not meet the subject matter requirements of 35 U.S.C. § 101. While the case was on appeal, the Court granted Plaintiff’s motion to find the case exceptional under 35 U.S.C. § 285 and awarded Plaintiff its reasonable and necessary attorney’s fees. The Federal Circuit affirmed. In post-judgment discovery, Plaintiff found that Defendant is judgment proof and operated as a shell company.

Plaintiff argued that the Court should re-open the case under Federal Rule of Civil Procedure 60(b) for newly discovered evidence, for fraud or misconduct, and under a general catch-all provision. The Court agreed based on the newly discovered evidence: “This post-judgment evidence indicates that [Defendant] is a sham or shell entity that is designed and intended to avoid liability. . . . [This evidence] is more than sufficient to meet [Plaintiff’s] burden with respect to setting aside the judgment. . . . [This evidence] is material and likely would have produced a different result if before the Court at the time the final judgment and related ordered were entered.” The Court noted that Plaintiff had asked to find two individuals liable for attorney’s fees who had ownership interests in Defendant and allegedly made the case exceptional, but the Court declined under the mistaken belief that a judgment against Defendant would flow through to these individuals.

Plaintiff further argued that the Court should allow joinder under Federal Rules of Civil Procedure 19 and 20 of (i) parties with an ownership interest in Defendant and (ii) Defendant’s law firm who was responsible for making the case exceptional. The Court agreed to join the majority of the requested parties under both Rules.

In regards to the parties with an ownership interest in Defendant:

As for Rule 19, joinder is necessary because in the absence of joinder, [Plaintiff] would be forced to take action against these parties in another manner, which would possibly subject [Plaintiff] to double, multiple, or inconsistent results. Without joinder of these parties with an ownership interest, [Plaintiff] would not be able to seek complete relief. Joinder is also permissible under Rule 20. [Plaintiff] seeks joint, several, or alternative liability against these parties as they all have an ownership interest in [Defendant] and [Plaintiff] intends to attempt to pierce [Defendant’s] corporate veil. The claims will involve overlapping questions of law and fact. Each of these parties has an ownership interest in [Defendant] and allegedly had a hand in establishing and operating [Defendant] as a judgment-proof company.

In regards to Defendant’s law firm:

The Court also finds that they, along with [Defendant’s law firm], are proper and necessary parties under Rule 19 and Rule 20 based on their alleged actions causing this case to be exceptional. [Plaintiff’s] asserted claim is that each of these parties should be held liable for attorneys’ fees under § 285. Without joinder of these parties, [Plaintiff] is unable to seek full relief from [Defendant]. Joinder of a party who is an active participant in the alleged wrong-doing is proper and necessary under Rule 19. [citation omitted]. In addition, joinder under Rule 20 is also proper because the claims against each of these parties asserts liability jointly, severally, or in the alternative with respect to or arising out of the same transactions, occurrence, or series of transactions or occurrences and have overlapping questions of both law and fact.