Argument Preview

As we reported yesterday, five cases being argued in April at the Federal Circuit attracted amicus briefs. One of those cases is Gorge Design Group LLC v. Xuansheng, a patent case. In this case, the Federal Circuit will review a determination by a district court that Gorge’s claims against NeoMagic were not frivolous and NeoMagic was not entitled to attorneys’ fees. This is our argument preview.

NeoMagic, in its opening brief, first argues “that each of Gorge’s four claims for relief are facially frivolous” and “that Gorge engaged in bad faith litigation, vexatious litigation, and litigation misconduct.” Neomagic asserts “Gorge’s trademark infringement claim is frivolous because Gorge’s own evidence submitted with the complaint demonstrates that NeoMagic did not use any of the three words in Gorge’s unregistered common law trademark ‘Ultimate Ground Anchor.'” Further, it contends, “Gorge’s copyright claim is frivolous because Gorge does not hold a copyright registration.” Moreover, it argues, “Gorge’s unfair competition claim is frivolous because Gorge did not plead facts showing secondary meaning or confusion related to uncopyrighted photos.” And, finally, Neomagic asserts “Gorge’s patent infringement claim is facially frivolous because NeoMagic’s product only has a single thread wrapped around the shaft, but every claim of the patent requires a plurality of threads.” NeoMagic contends Gorge’s litigation was “designed to create a pattern of oppression to force defendants to pay extortionate settlement demands rather than litigate.”

In its response brief, Gorge first argues “NeoMagic asserted its claim under at least nine different statutes or sources of authority” and these “statutes and sources of authority vest almost unbridled discretion in the district court to determine whether sanctions are warranted.” Furthermore, Gorge contends, “many of these statutes only make attorney’s fees potentially available to a ‘prevailing party.'” But, “because Gorge Design voluntarily dismissed NeoMagic under Rule 41(a)(l)(A)(i) before the court made any rulings on the merits, NeoMagic did not prevail.” Moreover, it argues, “Gorge Design was more than justified in suing NeoMagic” because “it does not deny that that it sold counterfeit products using images it copied from Gorge Design’s website.”

NeoMagic, it is reply brief, argues that, “[i]f the Gorge and its attorneys are not sanctioned in this case, then truly the sanctions regime has failed.” This failure, NeoMagic continues, “will allow plaintiffs and their attorneys to file entirely frivolous cases, employ litigation misconduct and vexatious litigation tactics, and base their filings on sworn, but false, affidavits without any risk of consequences.”

Professor Lorianne Updike Toler filed an amicus brief in favor of neither party. The brief indicates she

“has an interest in the Court having an informed understanding of the constitutional history for the Due Process Clause, particularly as it relates to notice, the Patent Clause, and the Takings Clause as applied to regulatory seizure.” Her brief, she explains, “exclusively addresses this constitutional history, leaving legal conclusions based on that history to the Court.”

This case will be argued on Tuesday, April 4. We will report on any developments.