case4:08-cv-04567-cw document418 filed07/15/10 page1 of …san francisco, california 94105...

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O2 MICRO OPPO TO MPS/ASUS FEE MTN CASE NO. C 08-4567 CW

Henry C. Bunsow (SBN 060707) [email protected] K.T. Cherian (SBN 133967) [email protected] Duane H. Mathiowetz (SBN 111831) [email protected] Robert Harkins (SBN 179525) [email protected] HOWREY LLP 525 Market Street, Suite 3600 San Francisco, California 94105 Telephone: (415) 848-4900 Facsimile: (415) 848-4999 Attorneys for Defendant-Counterclaimant O2 Micro International Limited

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

MONOLITHIC POWER SYSTEMS, INC.,

Plaintiff,

v. O2 MICRO INTERNATIONAL LIMITED,

Defendant.

Case No. C 08-4567 CW OPPOSITION OF O2 MICRO INTERNATIONAL LIMITED TO MPS AND ASUSTEK’S MOTION FOR ATTORNEY’S FEES AND NON-TAXABLE COSTS PURSUANT TO 35 USC § 285 AND FED. R. CIV. P. 54(d)(2) AND 37(c)(2)

O2 MICRO INTERNATIONAL LIMITED,

Counterclaimant,

v. MONOLITHIC POWER SYSTEMS, INC., ASUSTEK COMPUTER INC., ASUSTEK COMPUTER INTERNATIONAL AMERICA,

Counterclaim-Defendants.

Date: August 5, 2010 Time: 2:00 p.m. Place: Courtroom 2, 4th Floor Judge: Honorable Claudia Wilken

Case4:08-cv-04567-CW Document418 Filed07/15/10 Page1 of 32

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O2 MICRO OPPO TO MPS/ASUS FEE MTN -i- CASE NO. C 08-4567 CW

TABLE OF CONTENTS

Page(s)

I. INTRODUCTION........................................................................................................................1

II. MPS AND ASUSTEK HAVE NO BASIS IN LAW TO BRING THEIR CURRENT MOTION FOR ATTORNEYS’ FEES AND NON-TAXABLE COSTS ......................................................................................................................2

A. Absent “Gross Injustice” Constituting “An Egregious Abuse Of The Judicial Process,” A Patentee’s Unsuccessful Infringement Claim Is Not Exceptional .................................................................................................2

B. O2 Micro Is Presumed To Have Asserted Its Claims in Good Faith ...............................3

C. Claims Are Not “Objectively Baseless” When Summary Judgment Is Denied...........................................................................................................................3

D. A Patentee Should Not Be Forced To Pay Fees Simply For Defending Against A Declaratory Judgment Claim.........................................................4

III. O2 MICRO HAS NOT ENGAGED IN LITIGATION MISCONDUCT ....................................4

A. MPS and ASUSTeK Blatantly Mischaracterize The Litigation History Between The Parties, Which Is Legally Irrelevant To Their Current Motion .................................................................................................................4

B. O2 Micro Did Not Engage In Misconduct Regarding the ‘519 Patent Family....................................................................................................................7

1. There Was No Inequitable Conduct Regarding The ‘519 Patent Family........................................................................................................7

2. O2 Micro’s Denials of MPS’s RFAs Were Proper ..............................................9

C. O2 Micro Did Not Engage In Litigation Misconduct Regarding the ‘382 Patent......................................................................................................................10

1. O2 Micro Did Not Engage In Inequitable Conduct............................................10

a. The Patent Examiner Considered the MP1010 References that O2 Micro Is Accused of Burying..................................10

b. Dr. Lin’s PTO Declaration Did Not Contain False Statements...............................................................................................11

2. O2 Micro’s Assertion Of A February 1998 Priority Date Was Not Baseless ...............................................................................................11

3. Neither O2 Micro Nor Any of Its Witnesses Ever Lied in Court, in Deposition, or in Responses to Discovery Requests..............................................................................................................12

4. There Is No Basis for MPS’s Spoliation of Evidence Accusation ..........................................................................................................13


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O2 MICRO OPPO TO MPS/ASUS FEE MTN ii CASE NO. C 08-4567 CW

5. MPS Failed to Establish That Any O2 Micro Motion Was Frivolous.............................................................................................................13

6. O2 Micro’s Denial Of MPS’s RFAs Was Reasonable, And Neither MPS Nor ASUS Have Any Basis For Seeking Fees Under Rule 37(c)(2) ...........................................................................................14

IV. O2 MICRO’S CLAIMS HAD REASONABLE BASIS, AS CONFIRMED BY THE COURT WHEN IT TWICE DENIED MPS’S MOTION FOR SUMMARY JUDGMENT.........................................................................................................14

A. O2 Micro’s Pre-Filing Preparation Was More Than Adequate......................................15

B. The Court Has Already Twice Confirmed That O2 Micro Had A Reasonable Basis For Its Infringement Case In Spite Of “Squegging” ...................................................................................................................16

1. O2 Micro’s Infringement Theory Was Demonstrably Reasonable..........................................................................................................17

2. The Mere Fact That The ITC And Dr. Perreault Disagreed With O2 Micro’s Assertions Does Not Make This An Exceptional Case ................................................................................................19

V. MPS AND ASUSTEK’S FEE PETITION IS DEFICIENT AND UNREASONABLE....................................................................................................................20

A. Fees Related to the ITC Investigation Are Not Recoverable .........................................21

B. MPS and ASUSTeK Have Failed to Provide Adequate Documentation to Support Their Request for $13, 507,643.50 in Fees.................................................................................................................................22

1. The Failure to Provide More Than Cumulative Totals Precludes The Court From Substantively Analyzing the Reasonableness of the Fee Request ....................................................................22

2. Even if MPS and ASUSTeK Were Entitled to a Fee Award, the Amount Sought Is Extraordinary and Should Be Slashed................................................................................................................24

VI. CONCLUSION ..........................................................................................................................25


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TABLE OF AUTHORITIES

Page(s)

O2 MICRO OPPO TO MPS/ASUS FEE MTN

-iii- CASE NO. C 08-4567 CW

CASES

Advance Transformer Co. v. Levinson, 837 F.2d 1081 (Fed. Cir. 1988), overruled on other grounds, ....................................................4

Amsted Industries Inc. v. Buckeye Steel Castings Co., 23 F.3d 374 (Fed. Cir. 1993) ......................................................................................................25

Aspex Eyewear, Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305 (Fed. Cir. 2010) ....................................................................................................7

Brooks Furniture Mfg., Inc. v. Dutailer Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005) ....................................................................................................3

California Eastern Labs. Inc. v. Gould, 896 F.2d 400 (9th Cir. 1990) ......................................................................................................21

Cambridge Prods., Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048 (Fed. Cir. 1992) ...................................................................................................3

Cardinal Chem. Co. v. Morton Int’l, 508 U.S. 83 (1993) .......................................................................................................................4

Certain Concealed Cabinet Hinges and Mounting Plates, Inv. No. 337-TA-289, 1989 ITC LEXIS 236 (July 18, 1989)....................................................15

Codex Corp. v. Milgo Electronic Corp., 717 F.2d 622 (1st Cir. 1983) ......................................................................................................22

Costello v. IBM, 2006 U.S. Dist. LEXIS 57390 (S.D.N.Y. Aug. 16, 2006)..........................................................13

Eltech Sys. Corp., v. PPG Indus., Inc., 903 F.2d 805 (Fed. Cir. 1990) ....................................................................................................16

Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324 (Fed. Cir. 2003) ..............................................................................................3, 21

Gem Acquisitionco, LLC v. Sorenson Group Holdings, 2010 U.S. Dist. LEXIS 40175 (N.D. Cal. Apr. 5, 2010).............................................................9

Immersion Corp. v. Sony Computer Entertainment America, Inc., 2005 U.S. Dist. LEXIS 4777 (N.D. Cal. Jan. 10, 2005)...............................................................9

Lam, Inc. v. Johns-Manville Corporation, 718 F.2d 1056 (Fed. Cir. 1983) ..................................................................................................22

Leviton Mfg. Co. v. Universal Sec. Instruments, Inc., 606 F.3d 1353 (Fed. Cir. 2010) ....................................................................................................4

Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577...............................................................................................................................23


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TABLE OF AUTHORITIES (cont.)

Page(s)

O2 MICRO OPPO TO MPS/ASUS FEE MTN -iv- CASE NO. C 08-4567 CW

Martin Marietta Mats., Inc. v. Bedford Reinforced Plastics, Inc., 2007 U.S. Dist. LEXIS 32228, (W.D. Penn. May 1, 2007) .....................................................10

Medtronic Navigation, Inc. v. BrainLAB Medizinische Comput-Ersysteme GMBH, 603 F.3d 943 (Fed. Cir. 2010) ...................................................................................3, 14, 15, 17

Micromesh Tech. Corp. v. American Recreation Prods., Inc., 2007 U.S. Dist. LEXIS 64241 (N.D. Cal., Aug. 30, 2007) ........................................................15

Moran v. Selig, 447 F.3d 748, (9th Cir. 2006) ......................................................................................................7

Padco Inc. v. Newell Companies Inc., 13 U.S.P.Q.2d 1607 (E.D. Wisc. 1988), aff’d, 878 F.2d 1445 (Fed. Cir. 1989)...........................................................................................................................................24

Phillip M. Adams & Assocs., LLC v. Dell, Inc., 2007 U.S. Dist. LEXIS 3913 (D. Utah Jan. 11, 2007) .................................................................9

ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010) ................................................................................................3, 14

Shepherd v. Crawford, 2010 U.S. Dist. LEXIS 3634 (E.D. Cal. Jan. 6, 2010) ................................................................9

Springs Window Fashions LP v. Novo Indus., L.P., 323 F.3d 989 (Fed. Cir. 2003) .....................................................................................................3

SRI Int’l v. Advanced Tech. Lab., 127 F.3d 1462 (Fed. Cir. 1997) .................................................................................................15

Sulzer Textil A.G. v. Pi-Canol N.V., 358 F.3d 1356 (Fed. Cir. 2004) ..............................................................................................3, 14

Sun-Tek Indus., Inc. v. Kennedy Sky Lites, Inc., 929 F.2d 676 (Fed. Cir. 1991) .....................................................................................................3

Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316 (Fed. Cir. 2008) ....................................................................................................7

Ultra-Temp Corp. v. Advanced Vacuum Sys, 189 F.R.D. 17 (D. Mass. 1999) ............................................................................................14, 16

United States v. Capener, 2010 U.S. App. LEXIS 12147, (9th Cir. June 9, 2010)................................................................4

United States v. Kitsap Physicians Serv., 314 F.3d 995 (9th Cir. 2002) ......................................................................................................13

United States v. Manchester Farming P’Ship, 315 F.3d 1176 (9th Cir. 2003) ......................................................................................................4


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TABLE OF AUTHORITIES (cont.)

Page(s)

O2 MICRO OPPO TO MPS/ASUS FEE MTN -v- CASE NO. C 08-4567 CW

University of Pittsburgh v. Hedrick, 573 F.3d 1290 (Fed. Cir. 2009) ..................................................................................................11

Veteran Med. Prods., Inc. v. Bionix Dev. Corp., 2009 U.S. Dist. LEXIS 52991 (S.D. Mich., Mar. 31, 2009) .....................................................20

Water Tech. Corp. v. Calco Ltd., 1 U.S.P.Q.2d 1872 (N.D. Ill. 1987), aff’d in part, rev’d in part, vacated in part & remanded, 850 F.2d 660 (Fed. Cir. 1988) ..............................................................23, 24

Wedgetail, Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302 (Fed. Cir. 2009) ...........................................................................................1, 3, 7

West Virginia Univ. Hosp., Inc. v. Casey, 499 U.S.83 (1991) .....................................................................................................................25

White v. Imperial Adjustment Corp., 2005 U.S. Dist. LEXIS 1338 (E.D. La. June 28, 2005) .............................................................13

STATUTES

19 C.F.R. § 210.9-10 ..............................................................................................................................15

19 U.S.C. § 1337 ....................................................................................................................................21

35 U.S.C. § 285 ...............................................................................................................................passim

Fed. R. Civ. P. 11 ...................................................................................................................................14

Fed. R. Civ. P. 30 ...................................................................................................................................22

Fed. R. Civ. P. 33 ...................................................................................................................................22

Fed. R. Civ. P. 37 ...............................................................................................................................9, 14

OTHER AUTHORITIES

Section 337 Investigations: Answers to Frequently Asked Questions, USITC Pub. 4105 (Mar. 2009) ...................................................................................................15


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O2 MICRO OPPO TO MPS/ASUS FEE MTN - 1 - CASE NO. C 08-4567 CW

I. INTRODUCTION

This motion for fees and costs by MPS and ASUSTeK (collectively referred to as MPS) is

utterly without merit. MPS appears to forget that it sued O2 Micro, not the other way around, and

further neglects to mention that O2 Micro’s patent infringement claims were evaluated by the Office of

Unfair Import Investigations (“OUII”) of the International Trade Commission (“ITC”), which found

them credible prior to the ITC launching its investigation. Judge Gildea, the ITC Administrative Law

Judge, weighed the facts after a full evidentiary hearing regarding the ‘382 patent and affirmed validity

and enforceability. The Court twice denied MPS’s motion seeking summary judgment of

noninfringement. This case is a far, far cry from the type of case that courts deem exceptional.

There are only two ways that a patent case can be deemed exceptional under 35 U.S.C. § 285:

(1) the claim must be both objectively baseless and brought in subject bad faith; or (2) there must be

litigation misconduct and/or the patentee must have committed inequitable conduct before the PTO.

Wedgetail, Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302, 1305 (Fed. Cir. 2009). Neither of those

prerequisites exists here. Instead, MPS makes wild, unsubstantiated allegations, mischaracterizes the

procedural facts pertaining to prior litigation, and fails link its allegations to legal bases for its motion.

O2 Micro performed a thorough pre-suit investigation. It prepared claim charts analyzing

representative products using MPS’s own product datasheets, reverse engineered schematics of actual

products O2 Micro had purchased, and testing. That analysis was also confirmed by a well-qualified

expert witness before O2 Micro filed its claims. MPS did not dispute that its products satisfy all of the

claim limitations except one – the timer circuit limitation, and for many months the defense as to that

limitation was based on the strange “two predetermined durations” claim construction that this Court

later rejected. It was not until August 2009, after O2 Micro’s initial expert report and near the close of

discovery, that MPS provided a new theory of defense based on a notion called “squegging.” Even

then, O2 Micro’s expert testified that squegged waveforms exceed the predetermined threshold for the

predetermined duration as required by the claims. O2 Micro also submitted evidence – in fact, an

admission from MPS’s chief design engineer – that not all of MPS’s products exhibit squegging. The

Court ruled that infringement was for the jury to decide, which as a matter of law demonstrates that the

claim was not baseless. Moreover, MPS has presented no evidence of subjective bad faith.


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MPS also makes multiple baseless allegations regarding O2 Micro’s litigation conduct and its

conduct before the PTO. Its accusations of inequitable conduct are belied by the fact that the ITC,

after a full hearing, rejected that contention. MPS’s claim of vexatious litigation by O2 Micro is

equally groundless, as O2 Micro has only pursued claims when it had a good faith basis for doing so,

and has in fact received jury verdicts and judgments against multiple defendants with respect to patents

in the same family, as well as verdicts in its favor against MPS.

In the truest sense, this is not a motion – it is a lottery ticket. MPS seeks an incredible $13.5

million in fees and costs, none of it supported by documentation that would permit the Court to

evaluate the reasonableness of the request. Given the absence of legal support for the motion, MPS’s

chances of success are miniscule, but the requested payoff is large enough to press the issue anyway.

But by presenting this request, MPS demonstrates not only vindictiveness but also greed, since the vast

majority of requested fees were not incurred in this case at all, but in the ITC investigation, and are not

recoverable. Since MPS has failed to segregate any fees for this case, there would be no way to

calculate an appropriate award even if this case were exceptional, which clearly it is not. Accordingly,

the motion should be denied.

II. MPS AND ASUSTEK HAVE NO BASIS IN LAW TO BRING THEIR CURRENT MOTION FOR ATTORNEYS’ FEES AND NON-TAXABLE COSTS

A. Absent “Gross Injustice” Constituting “An Egregious Abuse Of The Judicial Process,” A Patentee’s Unsuccessful Infringement Claim Is Not Exceptional

MPS’s motion is essentially devoid of any legal analysis, setting out the standards in one page

but then failing to apply them to the rest of its argument. There is good reason for this – American

jurisprudence does not normally permit an award of legal fees to the prevailing party. Section 285,

permitting attorneys’ fees only in exceptional patent cases, is a narrow exception intended to award

fees to prevent “gross injustice” to an accused infringer:

In interpreting § 285, we have been mindful of the limited circumstances in which an award of attorney fees is appropriate. . . . Indeed, we have recognized that § 285 is an exception to the American Rule and a change to the pre-1946 practice of not awarding attorney fees based upon equitable considerations in patent cases. . . . In the context of fee awards to prevailing accused infringers, we have observed that § 285 is limited to circumstances in which it is necessary to prevent “a gross injustice” to the accused infringer, and have upheld findings of exceptionality to prevent such an injustice only when the patentee has procured its patent in bad faith (i.e., committed inequitable conduct before the Patent


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Office) or has litigated its claim of infringement in bad faith.

Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1329 (Fed. Cir. 2003) (citations omitted). Section

285 is only to be used in the event of “an egregious abuse of the judicial process” where there is a

showing of “bad faith.” Sun-Tek Indus., Inc. v. Kennedy Sky Lites, Inc., 929 F.2d 676, 678 (Fed. Cir.

1991) (internal quotation marks and citations omitted). The Federal Circuit “has rejected an expansive

reading of § 285.” Wedgetail, Ltd. v. Huddleston Deluxe, Inc., 576 F.3d 1302, 1305 (Fed. Cir. 2009).

There are only two bases to find a case exceptional and award attorneys’ fees against the

patentee: (1) the claim must be both objectively baseless and brought in subjective bad faith; or (2) the

case must show litigation misconduct or inequitable conduct before the U.S. Patent and Trademark

Office. Id. The party requesting a determination of exceptional case against a patentee must not only

prove the alleged misconduct, but prove it by clear and convincing evidence. Cambridge Prods., Ltd.

v. Penn Nutrients, Inc., 962 F.2d 1048, 1050 (Fed. Cir. 1992). The instant motion fails to show any

bases for deeming the current case “exceptional,” let alone to the high clear and convincing standard.

B. O2 Micro Is Presumed To Have Asserted Its Claims in Good Faith

As an initial matter, under Federal Circuit authority, “there is a presumption that an assertion of

infringement of a duly granted patent is made in good faith.” Medtronic Navigation, Inc. v. BrainLAB

Medizinische Comput-Ersysteme GMBH, 603 F.3d 943, 954 (Fed. Cir. 2010). See also Brooks

Furniture Mfg., Inc. v. Dutailer Int’l, Inc., 393 F.3d 1378,1382 (Fed. Cir. 2005); Springs Window

Fashions LP v. Novo Indus., L.P., 323 F.3d 989, 999 (Fed. Cir. 2003). This presumption can only be

overcome by clear and convincing evidence that the patentee knew the claims to be completely

baseless, but pursued them anyway. See Medtronic, 603 F.3d at 954; Forest Labs., 339 F.3d at 1329-

30. Here, there is no evidence of subjective bad faith.

C. Claims Are Not “Objectively Baseless” When Summary Judgment Is Denied

The denial of a motion for summary judgment in a patent case means the claim is not

objectively baseless and therefore not amenable to a Section 285 exceptional case designation. See

Medtronic, 603 F.3d at 954 ; ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 875 (Fed. Cir. 2010);

Sulzer Textil A.G. v. Pi-Canol N.V., 358 F.3d 1356, 1370 (Fed. Cir. 2004). Here, MPS and ASUSTeK

brought a summary judgment motion for noninfringement and invalidity, and the Court denied that


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motion. (See Dkt. 285, at 15-17.) The Court also denied MPS and ASUSTeK’s attempt to re-raise its

motion. (Dkt. 373). Thus, as a matter of law, O2 Micro’s case cannot be objectively baseless.

D. A Patentee Should Not Be Forced To Pay Fees Simply For Defending Against A Declaratory Judgment Claim

It is proper to take into account “the additional factor whereby a declaratory judgment action is

brought against a patentee” and whether proof was presented that the declaratory judgment plaintiff

was threatened and, if so, if there was a basis for that threat. Advance Transformer Co. v. Levinson,

837 F.2d 1081, 1085 (Fed. Cir. 1988), overruled on other grounds, Cardinal Chem. Co. v. Morton

Int’l, 508 U.S. 83 (1993). A patentee is not liable for attorneys’ fees where its positions are “not

totally without substance,” and it must be taken into account that patents are presumed valid. Id. Here

MPS sued O2 Micro for declaratory judgment and presented no evidence that it was threatened.

III. O2 MICRO HAS NOT ENGAGED IN LITIGATION MISCONDUCT

A. MPS and ASUSTeK Blatantly Mischaracterize The Litigation History Between The Parties, Which Is Legally Irrelevant To Their Current Motion

MPS makes many unsubstantiated allegations and repeatedly mischaracterizes the record in its

attempt to hit the jackpot. The parties have been involved in multiple lawsuits, but O2 Micro’s

involvement in them has not been unfounded or vexatious. Most of the cited lawsuits were filed by

MPS, not by O2 Micro. O2 Micro did not pursue any case frivolously to harass MPS, which is

required to support a vexatious litigation charge. “‘Vexatious’ has both a subjective and objective

element: subjectively, the [accused party] must have acted maliciously or with an intent to harass [the

party seeking sanctions or fees]; objectively, the suit must be deficient or without merit.” United States

v. Manchester Farming P’Ship, 315 F.3d 1176, 1182 (9th Cir. 2003). See also United States v.

Capener, 2010 U.S. App. LEXIS 12147, *18 (9th Cir. June 9, 2010) (vexatious litigation must be

baseless; mere faulty judgment insufficient); Leviton Mfg. Co. v. Universal Sec. Instruments, Inc., 606

F.3d 1353 (Fed. Cir. 2010) (a dozen lawsuits regarding the same patent family still not vexatious).

The history of litigation shows that O2 Micro’s actions were justified. First, on November 11,

2000, O2 Micro filed a declaratory judgment action in this Court to counter MPS’s marketplace

assertions of infringement. O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc. Case No. 00-4071 CW


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(N.D. Cal.). O2 Micro prevailed, obtaining a judgment that MPS’s patent was invalid and not

infringed. (See Declaration of Robert Harkins in Support of Opposition To MPS And ASUSTeK’s

Motion For Attorney’s Fees [“Harkins Decl.”], Ex. 1 [citations to “Ex.” are to the Harkins Decl. unless

otherwise noted].) O2 Micro also prevailed against MPS on a trade secret theft claim. Id.

After MPS accessed O2 Micro’s confidential information, MPS offered new products that O2

Micro determined infringed its patents. This led to subsequent litigation, far from a vexatious intent on

O2 Micro’s part. O2 Micro sued MPS in this Court for infringement of U.S. Patent No. 6,259,615 (the

‘615 patent). The Court granted summary judgment of noninfringement, but not because the case was

baseless, which MPS implicitly recognized when it did not seek a declaration of exceptional case. On

appeal, the Federal Circuit did not deny that O2 Micro’s VSENSE infringement theory had a basis, but

upheld this Court’s decision that the attempted amendment to add the theory to O2 Micro infringement

contentions came too late. O2 Micro Int’l Ltd. v. Monolithic Power Sys., Inc. 467 F.3d 1355 (Fed. Cir.

2006). The appeal was determined not to be frivolous either, as no costs were awarded. Id., at 1370.

O2 Micro also prevailed at trial in its infringement suit regarding U.S. Patent No. 6,396,722

(the ‘722 patent) against MPS’s customer, Taiwan Sumida. O2 Micro Int’l Ltd. v. Taiwan Sumida,

Case No. 2:03-CV-007-TJW (E.D. Tex.). (Ex. 2.) Then MPS sued O2 Micro in this Court regarding

the ‘722 patent. Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., Case No. C 04-2000 CW (N.D.

Cal.). (Ex. 3.) The Court denied MPS’s summary judgment motion. (Ex. 4.) O2 Micro received a jury

verdict that some ‘722 patent claims were infringed, but the jury found the asserted claims invalid due

to an unknown combination of on-sale bar and obviousness. (Ex. 5.)1 MPS and ASUSTeK asserted

inequitable conduct, but they lost that claim. Id. This is a far cry from a baseless case.

On May 1, 2007, MPS also sued O2 Micro for declaratory judgment regarding U.S. Patent No.

6,804,129 (the ‘129 patent). Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., Case No. 4:07-cv-

1 The ‘722 invalidity judgment ultimately meant that the Sumida verdict had to be vacated as moot. MPS also complains that O2 Micro resisted a motion to transfer a case from Texas that was ultimately consolidated into Case No. C 04-2000, but that case in Texas involved the ‘722 patent, which had been at issue in the Sumida litigation and had not previously been litigated before this Court. Disputing proper venue is not vexatious, and MPS cites no law to support such a theory.


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02363-CW (N.D. Cal.). (Ex. 6.) O2 Micro moved to dismiss for lack of case or controversy, and when

the Court denied the motion, the parties stipulated to a dismissal. (Ex. 7.) MPS did not seek

exceptional case status or attorneys’ fees. (Harkins Decl., ¶ 75.) Given the reasonable bases for the

other cases filed by O2 Micro, and the fact that MPS initiated the remaining litigation, a review of the

procedural history shows no basis for MPS to claim vexatious litigation.

Finally, in the current case, MPS sued O2 Micro. On October 1, 2008, MPS filed suit against

O2 Micro for declaratory judgment regarding U.S. Patent Nos. 6,856,519, 6,900,993, and 7,120,035

(collectively the ‘519 patent family). Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., Case No.

4:08-cv-04567-CW (N.D. Cal.). (Dkt. No. 1.) MPS alleges that it had to file the action because O2

Micro was threatening its customers, but fails to substantiate that claim with any evidence. MPS

subsequently amended its complaint to add a declaratory judgment claim regarding U.S. Patent No.

7,417,382 (the ‘382 patent). (Dkt. No. 5.) Thus, MPS asks the Court to deem a case exceptional when

O2 Micro defended itself against MPS’s complaint and counterclaimed in line with that defense.

After undertaking its own independent review of O2 Micro’s complaint and pre-suit

investigation evidence, the ITC decided to initiate an investigation, so the complaint clearly was not

baseless. MPS, not O2 Micro, originally sued on the ‘519 patent family, but subsequently O2 Micro

discovered infringement by a BenQ product, and BenQ was named as a direct infringer. (Dkt No. 25.)

Then, in June 2009, O2 Micro and BenQ reached a settlement (see Ex. 69), removing the sole direct

infringer from the case. As a result, O2 Micro promptly dismissed the ‘519 patent family from both

the ITC investigation (Ex. 70) and this case (Dkt. No. 100). O2 Micro’s actions were timely and

appropriate – the opposite of litigation misconduct. Also, this all occurred prior to any substantial

discovery, and MPS also failed to show that it expended any resources devoted specifically to the ‘519

patent family, so the Court would have no way to award fees even if there was inequitable doncut or

baseless allegations regarding the ‘519 patent family, which there were not.

Regarding the ‘382 patent, O2 Micro made a timely, proper decision to avoid wasting judicial

resources given the late-stage submission of the Perreault report. The Court ordered the parties to hire

Dr. David Perreault, an independent expert, to reach his own conclusions regarding infringement and

validity in this case and to testify to the jury as to his conclusions. His report did not issue until June


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14, 2010. (Dkt. No. 376.) His opinions were unfavorable to O2 Micro, and although the report was

heavily flawed and O2 Micro had a reasonable basis to go to trial, O2 Micro concluded that a jury

would likely follow a Court-appointed expert’s opinions over those of retained experts. O2 Micro filed

its covenant and motion to dismiss on June 18, 2010, only four days after receiving the Perreault

report. (See Dkt. No. 385.) The Federal Circuit has held that issuing a covenant not to sue after a late-

stage event such as claim construction order is not only permissible, but appropriate, and does not

expose the patentee to a finding that the case is exceptional. See Wedgetail, 576 F.3d at 1306. O2

Micro’s action here was appropriate in light of the Perrault report.

B. O2 Micro Did Not Engage In Misconduct Regarding the ‘519 Patent Family

1. There Was No Inequitable Conduct Regarding The ‘519 Patent Family

MPS’s contention that Dr. Lin committed inequitable conduct by allegedly failing to disclose

the OZ960A / OZ962 to the PTO ignores both the relevant law and facts. “Inequitable conduct resides

in failure to disclose material information … with an intent to deceive, and those two elements,

materiality and intent, must be proven by clear and convincing evidence.” Aspex Eyewear, Inc. v.

Clariti Eyewear, Inc., 605 F.3d 1305 (Fed. Cir. 2010). “Intent to deceive cannot be inferred from even

a high degree of materiality, but must be separately proved by clear and convincing evidence.” Id.

Also, a “cumulative reference is not material for inequitable conduct purposes.” Tech. Licensing Corp.

v. Videotek, Inc., 545 F.3d 1316, 1337 (Fed. Cir. 2008).

Here, there is no materiality or intent to deceive. MPS’s cites its First Amended Answer as

alleged support, but it is unverified and therefore not evidence that the Court can consider. See Moran

v. Selig, 447 F.3d 748, 759 & n.16 (9th Cir. 2006) (unverified complaint is not evidence). MPS asserts

materiality based on its argument O2 Micro’s infringement contentions as to the MP1009 should apply

equally to O2 Micro’s OZ962 / OZ960A, but that argument is incorrect. The OZ962 / OZ960A

products are not material because they fail to disclose the multifunctional pin to which the ‘519

family’s claims are directed.

The ‘519 family of patents claim a reduced inverter controller pin count by combining multiple

functions with a single pin. (See, e.g., Ex. 11 [‘519 Patent] at 1:5-8].) O2 Micro alleged that pin 4 of

the MP1009 was configured to receive at least two “independent input signals,” e.g., soft start and


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compensation. (Dunlavey Decl., Ex. 3 at 2.) In clear contrast, the OZ962 / OZ960A have separate pins

for soft start and compensation, labeled SST (pin 9) and CMP (pin 7), respectively. (See, e.g.,

Dunlavey Decl., Exs. 5 & 6 at Fig. 1; compare Harkins Decl., Ex. 12 (MP1009 Datasheet) at 4-5, 8

(COMP pin 4; no separate soft start pin).)

MPS argues that pin 7 in the OZ962 / OZ960A receives an “independent input signal” for soft-

start, but that is clearly wrong: pin 9 receives the soft start signal, not pin 7. MPS asserts that there is

an internal connection to pin 7 from pin 9, but that is wrong and would not meet the purpose of the

‘519 patent, which is to reduce pin count via a multifunction pin, not to send the same signal to

multiple pins. MPS points to a high-level block diagram for the OZ960A to makes its argument, but

that diagram lacks the details necessary for a proper analysis. OZ960A is the same OZ962 (Ex. 13

[Lin Tr.] at 362:5 – 363:4), and the OZ962 datasheet, which shows the internal functional structure of

the OZ960A / OZ962, invalidates MPS’s argument. (See Dunlavey Decl., Ex. 6 at Fig. 2.) MPS

argues that the “CMP pin connected internally to soft start signal ‘SST’ through 30k resistor” (Dkt. at

33), but Figure 2 of the OZ962 datasheet, which shows that SST connects to the “gate” of a MOSFET

transistor below the 30K resistor, contradicts that. (Ex. 14 [MPS’s 4/27/09 Invalidity Contentions, Ex.

C.18] at 3 (“This SST signal is supplied to the gate of the pchannel MOSFET”) (emphasis added). In

a MOSFET, the signal at the gate can, under certain circumstances, induce a channel between the other

transistor contacts, which means it can sometimes provide an electrical path to connect the circuitry

above and below the transistor. (See Ex. 15 [B. Van Zeghbroeck, Principles of Semiconductor Devices

(2007), http://ecee.colorado.edu/~bart/book/book/ contents.htm, at 7.1].) The gate (and hence the SST

signal) is separated, however, from the source and drain contacts and channel by a gate oxide that

blocks current flow. Id. at 7.1 (“gate covers the region between source and drain, but is separated from

the semiconductor by the gate oxide;” “the gate oxide blocks any carrier flow”). Thus, the CMP pin

does not receive the SST signal, as required by the ‘519 patent claims.

Additionally, MPS fails to show that the OZ962 / OZ960A was prior art at all. O2 Micro never

sold the OZ962 / OZ960A in the United States, only in Asia, so there is no proof of on-sale bar. Also,

O2 Micro did not sell entire circuits, just chips, and there is no proof of the chips actually being used in

any particular configuration. O2 Micro’s datasheets were confidential documents and not publications


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under 35 U.S.C. § 102(b).

Furthermore, the OZ962 / OZ960A products are cumulative of the many references already

before the Patent Office. (See, e.g., Ex. 11 [‘519 Patent] at pp. 1-3.) For example, O2 Micro disclosed

to the PTO U.S. Patent No. 5,619,402, which is representative of the OZ962 design. (See, e.g., Ex. 16

[IDS]; Ex. 17 [O2 v. MPS Tr.] at 699:5-17.)

Evidence of any intent to deceive is also lacking. For example, Dr. Lin believed he had

disclosed the design of the OZ962 / OZ960A to the Patent Office when he submitted the ‘402 patent.

Id. (indicating that the OZ962 is merely the commercial embodiment of the ‘402 patent).2

2. O2 Micro’s Denials of MPS’s RFAs Were Proper

MPS also faults O2 Micro for denying certain RFAs, but this argument also lacks merit.3 MPS

proposed that many ‘519 patent family claim terms should be construed by the Court. (Ex. 18 [MPS

list of claim terms for construction].) The bulk of RFAs at issue seek O2 Micro admissions that these

unconstrued claim limitations are met, e.g., “as that term is used in U.S. Patent No. 6,856,519.”

(Dunlavey Decl., Ex. 7 at RFA 186; see also, id., RFAs 158, 168, 170, 172, 174, 175, 177, 178, 183,

184, 186, 188, 189, 192-194, 197.) Thus, they were not appropriate RFAs. See Phillip M. Adams &

Assocs., LLC v. Dell, Inc., 2007 U.S. Dist. LEXIS 3913 (D. Utah Jan. 11, 2007); Gem Acquisitionco,

LLC v. Sorenson Group Holdings, 2010 U.S. Dist. LEXIS 40175 (N.D. Cal. Apr. 5, 2010) (“legal

conclusions are not a proper subject of a request for admission”). O2 Micro cannot be faulted for

denying RFA’s that were improperly drawn in the first place.

Also, MPS RFAs discuss Figure 2 of the OZ962 datasheet as if the figure depicted all of the

2 MPS’s inequitable conduct claims as to the ‘519 patent family and ‘382 patent are wholly lacking, and MPS cannot possibly meet its burden of proving what amounts to fraud on the Patent Office by clear and convincing evidence. However, because the result of such a finding under Section 285 is as devastating to the patentee as such a finding after a full trial, were the Court inclined to find the case exceptional based on this motion, O2 Micro requests a full evidentiary hearing prior to such a finding. 3 The remedy for not admitting RFAs is that the propounding party is entitled to cost of having to prove the truth of the specific RFAs, not fees for the entire case. See Immersion Corp. v. Sony Computer Entertainment America, Inc., 2005 U.S. Dist. LEXIS 4777, at *34-35 (N.D. Cal. Jan. 10, 2005); Shepherd v. Crawford, 2010 U.S. Dist. LEXIS 3634, *24-*25 (E.D. Cal. Jan. 6, 2010); Fed. R. Civ. P. 37(c)(2). MPS failed to identify any cost specific to proving the truth of any particular RFAs, so in any event there would be no basis to award such cost.


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circuitry in an OZ962 chip. (See, e.g., Dunlavey Decl., Ex. 7 at RFAs 181-184, 186, 187-190, and

193-197.) But Figure 2 is only a “Functional Block Diagram.” (Dunlavey Decl., Ex. 6 at 2.) As such,

it clearly does not show all of the circuitry in an actual product nessary for a correct analysis, and O2

Micro properly denied those RFAs. Moreover, nearly all of the requests fall outside the ambit of a

proper RFA in that they require review and analysis of outside materials. See Martin Marietta Mats.,

Inc. v. Bedford Reinforced Plastics, Inc., 2007 U.S. Dist. LEXIS 32228, *7 (W.D. Penn. May 1, 2007).

O2 Micro’s denials of the other RFAs were also reasonable. For example, RFAs 159-161 seek

the admission that the OZ962 was “on sale in the United States.” It was not; O2 Micro only sold the

OZ962 in Asia, not in the United States. O2 Micro’s response to RFAs 162, 192, 195, 196, and 198

were also appropriate. Dr. Lin testified that the datasheet did not accurately reflect the operation of the

OZ960A / OZ962. (See Dunlavey Decl., Ex. 1 at 705:5-18.)

C. O2 Micro Did Not Engage In Litigation Misconduct Regarding the ‘382 Patent

MPS and ASUSTeK raise the same allegations of inequitable conduct and false testimony

allegations that they made to the ITC and that the ITC rejected. (See Ex. 19 [4/19/10 ID] at 155-68);

Ex. 20 [6/23/10 Commission Opinion] at 13-14). The Court should also reject them.

1. O2 Micro Did Not Engage In Inequitable Conduct

a. The Patent Examiner Considered the MP1010 References that O2 Micro Is Accused of Burying

In the ITC proceeding, the Judge Gildea correctly rejected MPS’s claim that O2 Micro engaged

in inequitable conduct by either “burying” the patent examiner with too many documents or failing to

disclose information regarding the MP1010 and also rejected MPS’s invalidity arguments, including

those based on the MP1010. (See Ex. 19 at 163-68, 126, 150.) O2 Micro did not “bury” the MP1010-

related references, but in fact specifically pointed them out to the examiner multiple times. In a

September 8, 2005 Information Disclosure Statement (“IDS”), O2 Micro disclosed a preliminary

datasheet and application note for the MP1010 and called the examiner’s attention to these references

in the accompanying transmittal letter. (Ex. 21 [O2ITC 000678-83] at O2ITC 000679, O2ITC

000682). In fact, the datasheet disclosed in this IDS was one relied on by Dr. Perreualt in his analysis.

Compare Dkt. No. 376-1 at 6 with Ex. 21 [O2ITC 000678-83] at O2ITC 000679, O2ITC 000682). On


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December 12, 2005, the examiner signed off on the IDS form and wrote his initials by the MP1010

references, indicating that he had considered them. (Ex. 22 [O2ITC 001346-48] at O2ITC 001347,

001348). Later, in a November 20, 2006 IDS, O2 Micro disclosed additional MP1010 and MP1011

datasheets to the PTO and specifically called these references to the examiner’s attention in the

accompanying transmittal letter. (Ex. 23 [O2ITC 002074-80] at O2ITC 002075, 002079). Thus, there

is ample evidence that O2 Micro specifically directed the examiner to MP1010-related references

during prosecution, and that the examiner considered these materials.4

b. Dr. Lin’s PTO Declaration Did Not Contain False Statements

MPS has no evidence suggesting that Dr. Lin engaged in inequitable conduct by submitting a

purportedly false declaration to the PTO during prosecution. At the ITC, Judge Gildea rejected this

inequitable conduct claim. (See Ex. 19 at 157-63). In his declaration, Dr. Lin stated his belief that he

conceived of the inventions claimed in the ‘382 patent in February 1998, and attached a set of circuit

schematics that he believed corroborated the claimed invention date. (See Dunlavey Decl., Ex. 14).

The statements were not false or misleading; he did create them on that date. MPS also argues that the

circuit schematics are insufficient corroboration, but that irrelevant to the issue of veracity; the absence

of a corroborating witness does not mean that the inventor is lying about the date. MPS has not

identified any misrepresentation made to the PTO, let alone any intent to deceive it.

2. O2 Micro’s Assertion Of A February 1998 Priority Date Was Not Baseless

Contrary to MPS’s claim, O2 Micro had grounds to assert a February 1998 priority date for the

‘382 patent. MPS irrelevantly argues that the “Feb., 18, 1998” schematics do not contain all elements

of the asserted ‘382 claims, but conception need not be proven by a single document containing all

patent claim elements. See University of Pittsburgh v. Hedrick, 573 F.3d 1290, 1298 (Fed. Cir. 2009).

4 The examiner’s comment about the large volume of documents submitted was raised in response to an October 9, 2007 IDS, nearly two years after the examiner had indicated that he had considered several MP1010-related references. (See Dunlavey Decl., Ex. 13 at O2ITC 015742). These also were litigation-related documents, which O2 Micro filed after MPS had accused it in the ‘722 patent litigation of inequitable conduct for failing to provide all such documents to the PTO. MPS also asserts MP1010 schematics dated October 2, 1998 and introduced into evidence in the parties’ 2007 trial were never disclosed to the PTO, but those were also cumulative of the other MP1010 materials that O2 Micro submitted to the PTO. There also is no evidence of any intent to deceive the PTO.


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Also, Dr. Lin provided detailed testimony about what elements were present in the schematics and how

one could tell. (See Ex. 24 [10/19/09 ITC Tr.] at 405:5-25, 412:6-415:1, 416:2-417:2, 428:17-430:6;

Ex. 25 [10/20/09 ITC Tr.] at 677:2-17). Expert Ray Mercer testified consistently with Dr. Lin. (See

Ex. 26 [10/30/09 ITC Tr.] at 2865:12-17, 2865:25-2866:20).

MPS also ignores other evidence that O2 Micro presented on these issues, such as other circuit

designs from mid-1998 showing Dr. Lin’s continuing work on his invention, and documents and

testimony from other O2 Micro witnesses regarding Dr. Lin’s reduction to practice. (See Ex. 27 [CX-

2105C]; Ex. 28 [CX-2106C]; Ex. 25 [10/20/09 ITC Tr.] at 516:10-517:7, 518:1-520:15 (Lin

testimony); Ex. 29 [10/21/09 ITC Tr.] at 874:12-879:10, 881:6-884:15 (Kuo testimony); Ex. 30 [CX-

393]; Ex. 31 [10/22/09 ITC Tr.] at 1041:18-1045:23 (Keim testimony); see also Dkt Nos. 281 & 281-1

– 281-9). O2 Micro’s position on the priority date of the ‘382 patent was reasonable.

3. Neither O2 Micro Nor Any of Its Witnesses Ever Lied in Court, in Deposition, or in Responses to Discovery Requests

MPS makes completely groundless accusations that Dr. Lin and others provided false

testimony or false discovery responses regarding the dating of the “Feb., 18, 1998” schematics. Dr.

Lin candidly admitted at the ITC hearing that prior to the expert report of Dr. Herniter, he had always

believed that the software program he used automatically inserted the “Feb., 18, 1998” date, because

every version of the program he recalled using worked that way. (See Ex. 25 [10/20/09 ITC Tr.] at

550:12-552:5). Dr. Herniter testified that it appears O2 Micro began using software that automatically

generated dates by May 1998, so it is no surprise that Dr. Lin’s recollection ten years later would be

that the program he used generated the date. (See Ex. 32 [Herniter Dep. Tr. 53:5-55:9, 83:18-84:25];

Ex. 33 [Herniter Depo. Ex 7].) When Dr. Lin and Mr. Badgett testified in the 2007 trial, they had a

good faith (albeit mistaken) belief that the “Feb., 18, 1998” date was automatically generated. (See Ex.

32-33.) Upon receipt of the Herniter report, O2 Micro conducted a thorough investigation of the issue,

including hiring its own PSPICE expert. (Ex. 25 at 550:20-25.) Based on this investigation, O2 Micro

concluded that the “Feb., 18, 1998” date must have been manually inserted, and it amended its

interrogatory responses to reflect this newly discovered information. (See id. at 551:1-4; Dunlavey

Decl., Ex. 29 at 7-8). There was no conspiracy to cover up any evidence here.


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MPS also mischaracterizes the deposition testimony of O2 Micro’s IT Director, Steve Krems,

on this issue. Mr. Krems truthfully testified that his opinion was that “Feb., 18, 1998” would have

been automatically generated based on his tests using a current version of OrCAD; he admitted that he

did not know what version of software Dr. Lin had used to create his schematics. (See Ex. 34 [7/21/09

Krems Depo.] at 47:15-48:16, 67:12-68:10). And as soon as O2 Micro determined that the date must

have been manually entered, it immediately amended its interrogatory responses to correct any errors.

(See Dunlavey Decl., Ex. 29 at 7-8).5

4. There Is No Basis for MPS’s Spoliation of Evidence Accusation

With absolutely no proof, MPS has also accused O2 Micro of destroying Dr. Lin’s old

computer in order to conceal evidence regarding the February 18, 1998 schematics. O2 Micro gave an

interrogatory response and Rule 30(b)(6) testimony explaining the supposed destruction of the

computer was not related to litigation, and the computer was replaced a year before any litigation.

(See Dunlavey Decl., Ex. 26 at 7; Harkins Decl., Ex. 34 [7/21/09 Krems Depo.] at 33:6-34:13). The

notice requirement for a spoliation claim also is absent. See United States v. Kitsap Physicians Serv.,

314 F.3d 995, 1001 (9th Cir. 2002) (notice required for spoliation of evidence claim).6

5. MPS Failed to Establish That Any O2 Micro Motion Was Frivolous

O2 Micro’s motion to strike the Herniter report and summary judgment motion regarding the

‘382 patent invention date were not frivolous, and had factual and legal support. (See Dkt Nos. 135-

136, 157-159, 201, 224.) A motion is not frivolous simply because it is denied. See White v. Imperial

Adjustment Corp., 2005 U.S. Dist. LEXIS 1338, at *35 (E.D. La. June 28, 2005). O2 Micro’s

collateral estoppel argument was made in good faith. Accord Costello v. IBM, 2006 U.S. Dist. LEXIS

57390, at *14-15 (S.D.N.Y. Aug. 16, 2006) (collateral estoppel arguments not in bad faith, given

5 MPS also wrongly accuses O2 Micro of inappropriately denying RFAs regarding the conception date. However, O2 Micro’s asserted conception of the ‘382 patent was based not only on the OrCAD document, but the other documentation it submitted, for example, at the ITC hearing. 6 Also, MPS’s assertion that O2 Micro produced no documents referring to “multiple power supplies” during discovery is irrelevant and false. MPS’s counsel conceded that O2 Micro had produced at least two such documents. (See Harkins Decl., Ex. 35 [6/17/09 Lin Depo. Tr.] at 168:12-16).


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flexibility of the doctrine). MPS’s argument is belied by its own collateral estoppel motion. (See Dkt.

No. 285 at 14-15.) Also, single pleadings are actionable under Rule 11 rather than Section 285.

Accord Ultra-Temp Corp. v. Advanced Vacuum Sys., 189 F.R.D. 17 (D. Mass. 1999). (pleading

sanctionable under Rule 11 not enough for § 285 award). MPS made no Rule 11 motion.

6. O2 Micro’s Denial Of MPS’s RFAs Was Reasonable, And Neither MPS Nor ASUS Have Any Basis For Seeking Fees Under Rule 37(c)(2)

O2 Micro’s denials of MPS RFAs was proper. As discussed above, O2 Micro reasonably

denied RFAs regarding the ‘519 patent. O2 Micro also reasonably denied MPS’s RFAs regarding the

February 1998 schematics. At the time of its response, O2 Micro was aware of individuals who could

potentially corroborate the existence of the “Feb., 18, 1998” schematics prior to June 24, 1999, so

denial of RFA Nos. 235-238 was proper. (See Ex. 25 [10/20/09 ITC Tr.] at 542:2-544:18, 548:10-24,

564:18-565:15, 567:1-8, 568:21-569:11). O2 Micro also properly denied RFA No. 243 because it

could not confirm that Dr. Lin’s old computer had been destroyed even after conducting an

investigation. (See Ex. 34 [7/21/09 Krems Depo.] at 33:6-20). O2 Micro properly denied RFA No.

241 because it was still investigating the extent to which backups of Dr. Lin’s files existed on its

computer systems. Furthermore, MPS failed to prove up any particularized costs related to these

RFAs, as it must under Fed. R. Civ. P. 37(c)(2).

IV. O2 MICRO’S CLAIMS HAD REASONABLE BASIS, AS CONFIRMED BY THE COURT WHEN IT TWICE DENIED MPS’S MOTION FOR SUMMARY JUDGMENT

Patent infringement allegations that survive summary judgment cannot be deemed objectively

baseless. See Medtronic, 603 F.3d at 954; ResQNet.com, 594 F.3d at 875; Sulzer, 358 F.3d at 1370.

Here, MPS and ASUSTeK brought a summary judgment motion for and invalidity due to collateral

estoppel and for noninfringement, and the Court denied that motion.7 (Dkt. 285 at 15-17.) MPS then

sought reconsideration, which the Court also denied. (Dkt. 373.) MPS did not even bother to seek

7 O2 Micro also hereby incorporates the arguments and evidence in its opposition to MPS’s summary judgment motion. (See Dkt. Nos. 224 -224-4; 250 – 251-6; 281 – 281-9.) O2 Micro also hereby incorporates its arguments and proof as presented to the ITC and that show reasonable bases for its claims. (Ex. 36 [ITC Post-Hearing Brf.]; Ex. 37 [Proposed Findings of Fact]; Ex. 38 [ITC Post-Hearing Reply Brf.]; Ex. 39 [Petition for Review]; Ex. 40 [Reply to Petition for Review].)


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summary judgment for substantive invalidity or inequitable conduct; that fact alone is itself evidence

that O2 Micro’s defenses as to those issues were not baseless. See Medtronic, at 957. Additionally,

O2 Micro’s patent is presumed valid and enforceable. See SRI Int’l v. Advanced Tech. Lab., 127 F.3d

1462, 1464 (Fed. Cir. 1997). As a matter of law, the present case cannot be objectively baseless.

A. O2 Micro’s Pre-Filing Preparation Was More Than Adequate

O2 Micro clearly conducted an appropriate pre-filing investigation. Prior to filing its ITC

Complaint, O2 Micro analyzed and tested an exemplary MPS product, then compared the product to

asserted independent claims on a limitation-by-limitation basis citing an MPS datasheet, pictures, a

schematic, and test results. (See Ex. 41.) A technical expert reviewed the analysis prior to O2 Micro

filing its ITC complaint. (See Ex. 42 [Flasck Depo. Tr.] at 52:13 – 53:5.)

Additionally, O2 Micro’s reasonable basis was confirmed by the ITC when it instituted a full

investigation after its own review of claim charts, schematics and testing submitted by O2 Micro. (See

Ex. 8 [ITC Complaint] at 19-20; Exs. 9 & 41 [complaint exhibits]; Ex. 10 [ITC Notice of

Investigation]. The ITC “shall examine a complaint for sufficiency” and “determine whether the

complaint is properly filed and whether an investigation should be instituted on the basis of the

complaint.” 19 C.F.R. § 210.9-10, (Ex. 71); see also Section 337 Investigations: Answers to

Frequently Asked Questions, USITC Pub. 4105, at 15 (Mar. 2009) (Ex. 72); Certain Concealed

Cabinet Hinges and Mounting Plates, Inv. No. 337-TA-289, Order No. 103, 1989 ITC LEXIS 236

(July 18, 1989) (Ex. 73) (explaining the OUII’s role in examining and evaluating a complaint). Thus,

an objective third-party concluded that the O2 Micro had a reasonable basis for its assertions.

The cases that MPS cites as the legal basis for declaring the present action exceptional bear no

resemblance to this case and do not even remotely suggest a deficiency with O2 Micro’s pre-filing

investigation. The plaintiff in Micromesh Tech. Corp. v. American Recreation Prods., Inc., 2007 U.S.

Dist. LEXIS 64241 (N.D. Cal., Aug. 30, 2007), for example, was a patent licensing company that

“fail[ed] to identify any tests it conducted or any process undertook in investigating the infringement

claims” and which relied upon “essentially worthless” and generic “fill in the blank for each new case”

type claim charts against makers of a variety of different products. Micromesh, 2007 U.S. Dist. LEXIS

64241, *10, 15-17. In contrast, O2 Micro provided detailed allegations and claim charts tailored to the


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accused products that were based on a technical datasheets, schematics, and product testing, clearly a

good faith filing according to Micromesh. See id. at *9. Eltech Sys. Corp., v. PPG Indus., Inc., 903

F.2d 805, 810-11 (Fed. Cir. 1990), is also far afield. There, the plaintiff’s testing on relevant material

definitively proved that there was no possible infringement. The plaintiff withheld an expert report

undermining its infringement position, and performed no testing on the accused products. Id. None of

those factors are present here, where O2 Micro’s testing supported its infringement theory.

Additionally, MPS’s reliance on the pre-suit investigation is misplaced, since “a failure to conduct an

adequate investigation, without more, is not grounds for finding a case ‘exceptional’ under 35 U.S.C.

§ 285.” Ultra-Temp, 189 F.R.D. at 21.

MPS further complains that O2 Micro did not specifically test for squegging, even though it

points to no reason why O2 Micro would have thought there was such a phenomenon present in MPS’s

products. Indeed, MPS itself did not identify squegging until late in the case. (Ex. 43 [MPS’s 2nd

Supplemental Responses to O2 Micro Interrogatories 1-72] at 56-57 [failing to mention squegging as a

basis for noninfringement].) Also, MPS’s testing performed on the time scale normally associated

with testing did not show squegging. Only after MPS’s Chief IC Design Engineer, James Moyer,

testified at deposition that he had designed the MPS circuits to ignore what he called “discontinuities”

(i.e., “squegging”) in the first voltage signal did MPS itself decide to test using a greatly expanded time

scale (approximately 4,000 times normal), which led to its new noninfringement theory that every

cycle must exceed the predetermined threshold. (Ex. 39 [O2 Micro Pet. for Review] at 38-40; Exs. 44-

45, 49, 52, 55, 59-65 [evidence therein].) Even then, Mr. Moyer admitted that MPS’s own testing of

the MP1010B showed no discernable squegging. (Exs. 36 [O2 Micro’s ITC Post-Hrg Reply Brf at 13-

14]; Exs.44 [Dr. Silzars’ test results]; Ex. 45 [Moyer’s ITC hearing testimony] at 1956:11-15 & 1907-

08, 1942-48; Ex. 46 [MP1010B waveform].) The law does not require O2 Micro to accurately predict

as part of its pre-filing investigation every possible argument a defendant might imagine. And O2

Micro had a basis for its infringement allegations even in view of “squegging.”

B. The Court Has Already Twice Confirmed That O2 Micro Had A Reasonable Basis For Its Infringement Case In Spite Of “Squegging”

MPS contended that O2 Micro’s infringement claims were baseless in view of “squegging,” but


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the Court reviewed and rejected this exact point in twice denying MPS’s summary judgment motion.

Dkt. 285 at 16-17; Dkt. 373; see also Medtronic, 603 F.3d at 953-54 (district court that had denied pre-

trial summary judgment motions but later granted a post-trial JMOL “committed clear error in finding

[the] case to be exceptional”). The Court correctly recognized that, “[t]here is a genuine issue… on

whether a person having ordinary skill in the art would find that the accused products meet the ‘382

patent’s claim limitations, even though… MPS’s products squeg.” (Dkt. 285 at 16-17 [emphasis

added]; see also, Dunlavey Decl., Ex. 34 [Flasck Decl.], ¶4.)

MPS’s further arguments to the contrary are unavailing. For example, Dr. Mercer’s testimony

that the claimed “voltage signal” must “remain above the threshold” for the predetermined duration is

entirely consistent with O2 Micro’s infringement theory because, as the Court recognized, O2 Micro

had a reasonable basis for asserting infringement as to a squegged waveform, and the squegged

waveforms identified by MPS persist throughout the predetermined duration. (See, e.g, Exs. 38 [O2

Micro Pet. for Review at 40-43]; Exs. 47 [Silzars rebuttal report] at 35, ¶61; Ex. 48 [test results].)

1. O2 Micro’s Infringement Theory Was Demonstrably Reasonable

MPS’s attack on O2 Micro’s infringement theory consists of little more than conclusory

disparagements and mischaracterizations that ignore the evidence. Although too voluminous to repeat

here in its entirety, O2 Micro articulated the basis for its assertions in some detail in, e.g., its

opposition to MPS’s motion for summary judgment and even more fully in its Petition for Review to

the ITC. See Dkt. 224 [O2 Micro’s Opp. to MPS’s SJM] at 9-17; Ex. 39 [O2 Micro’s Pet. for Review]

at 30-62. Those filings demonstrate more than a reasonable basis for O2 Micro’s allegations.

As for MPS’s attack on Mr. Flasck, O2 Micro’s position that the time-varying AC waveform

must be evaluated over time using peak-to-peak values is well supported by expert testimony. O2

Micro reasonably relied on Mr. Flasck’s expert opinion that the proper way to evaluate the claimed

voltage signal is not by its instantaneous voltage, but rather by evaluating the waveform over time,

using peak-to-peak values. (See Exs. 39 & 49-56 [O2 Micro’s Pet. for Review at 50-53 & supporting

evidence].) That opinion is consistent with Drs. Perreault and Silzars’ agreement that instantaneous

voltage is not the proper way to measure the voltage signal. (Dkt No. 376-1 [Perreault Report] at 6 [“it

is not the instantaneous voltage but the amplitude of the voltage (or something related to it) that must


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have the characteristic “exceeds and continues to exceed a voltage value”]; Ex. 55 [Silzars testimony]

at 2145:13 – 2146:17.) In agreeing that the claimed “voltage signal” can “continue to exceed” the

threshold even though the waveform’s instantaneous voltage may fall below the threshold level for the

signal, the experts acknowledged the difference between the claimed “voltage signal” and the changing

voltage level of the “waveform” that carries or represents the signal. (See also, e.g., Ex. 52 [Mercer,

Tr.] at 2655:17 – 2656:19; Ex. 49 [Flasck, Tr.] at 1792:15-19.)

Thus, the dispute centers on how to appropriately evaluate a squegged waveform. While MPS

alleges that the waveform should be evaluated based on the peaks of each individual cycle, O2 Micro

and its experts believed that the peak-to-peak voltage should be evaluated based on the peaks of each

squeg. (Ex. 39 [O2 Micro Pet. for Review] at 50-53; Ex. 49 [Flasck, Tr.] at 1792:7-1793:3.) O2

Micro’s assertion faithfully comports with the industry-respected IEEE (“The Institute of Electrical

and Electronics Engineers”) dictionary’s definition for “peak to peak,” which is, “[p]ertaining to the

value of the difference between the extrema of the specified waveform.” (Ex. 56 [emphasis added].)

This is because, in a squegged waveform, the extrema occur at the peaks of each squeg, not the peaks

of each cycle. (See Ex. 39 at 50-53.) Thus, Mr. Flasck’s statement that it “is not correct to measure

the voltage value at a single instant or a single cycle of a waveform” is absolutely reasonable.

MPS incorrectly argues that Mr. Flasck’s declaration proposes that the “voltage signal” need

only exceed the threshold once during the predetermined duration. (MPS Motion at 23.) Mr. Flasck’s

declaration states no such thing. MPS ignores that there is a difference between the claimed “voltage

signal” and a voltage “waveform,” and ignores the fact that the parties’ experts agree that, to a person

of ordinary skill, the claimed “voltage signal” can “continue to exceed” the threshold even though the

waveform’s instantaneous voltage level drops below the signal’s threshold. Therefore, O2 Micro

reasonably asserted infringement based on how a squegged waveform should be evaluated.

MPS also argues that Mr. Flasck did not know where to “draw the line” for infringement, but

MPS ignores much of the question posed to Mr. Flask and selectively quotes out of context. MPS

ignores the part of its own question that asks, “is there a reason this can’t be carried to an

extreme…” and fails to quote Mr. Flasck’s answer that there are in fact “limits” or problems with the

hypothetical, and that posited situation “would defeat the purpose of the whole protection, the whole


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concept of the patent.” (Ex. 49 [Flasck, Tr.] at 1794:4 – 1795:5.)

Moreover, Mr. Flasck did “draw the line” in connection with the accused products. He

explained that the squeg-to-squeg time must be shorter than the time period provided by the

retriggerable multivibrator (e.g., 150 microseconds). (See Ex. 49 [Flasck Tr.] at 1790:8 – 1793:16; Ex.

57 [CDX-36]; Ex. 39 [O2 Micro Pet. for Review] at 40-43, 50-53.) For all of these reasons, Mr.

Flasck’s opinion is entirely consistent with and reasonable in view of how a squegged waveform is

evaluated, the purpose of the retriggerable multivibrator, Dr. Silzars’ testimony about the need to

consider “context,” and the various experts’ admissions that, to a person of ordinary skill, a “voltage

signal” can “continue to exceed” the threshold even though the waveform’s instantaneous voltage level

drops below the signal’s threshold.

2. The Mere Fact That The ITC And Dr. Perreault Disagreed With O2 Micro’s Assertions Does Not Make This An Exceptional Case

The Court twice rejected MPS’s motion for summary judgment, both before and after Judge

Gildea issued his Initial Determination. (See Dkts. 373, 305.) The reasonable basis cited by the Court

when denying those motions did not disappear simply because the ITC and then Dr. Perreault, who

was not subject to the rigors of deposition or cross-examination, reached a different conclusion as to

how the claimed “voltage signal” should be measured than O2 Micro. Both Judge Gildea and Dr.

Perreault employed a more restrictive definition of the term “exceeds a predetermined threshold for

said predetermined duration” than that this Court adopted and more restrictive than required by the

claims or the ‘382 patent specification. Whereas the Court construed the limitation to mean “when the

above-mentioned first voltage signal exceeds and continues to exceed a voltage value determined

beforehand for the above mentioned time period,” both Judge Gildea and Dr. Perreault incorrectly

assumed that the phrase required the waveform to “continually exceed” the threshold. The Court’s

correct construction is broader, as a waveform may continue to exceed a threshold by repeatedly

exceeding it without exceeding it all the time. The actual claim phrase is simply “exceeds … for the

duration” and not “continually exceeds … for the duration,” and repeatedly exceeding the threshold is

also within the scope of the claims as construed.

Even if the claim were limited to a signal “continually” exceeding the threshold, O2 Micro had


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a reasonable basis to allege infringement. First, “squegging,” which causes the voltage waveform to

“periodically and consistently” exceed the threshold, falls squarely within the plain meaning of the

word “continually,” which can mean, “in regular or repeated succession: very often.” (See Ex. 39 [O2

Micro’s Pet. for Review] at 14-19; Ex. 58 [definition of “continually”]; Dkt. 285 at 15 [describing

squegging].) Second, O2 Micro reasonably argued that a “voltage signal” can “continue to exceed” the

threshold even though the waveform’s instantaneous voltage level drops below the signal’s threshold.8

MPS’s “plain English” argument also lacks merit. A squegged signal that “periodically and

consistently” exceeds a value falls squarely within the plain meaning of the word “continually.” (Ex.

58.) The plain meaning of “peak to peak,” which focuses on the “extrema” of the waveform, instructs

that a squegged signal should be evaluated over time, not per cycle. (Exs. 39 & 56.) O2 Micro’s

position is consistent with the Court’s construction.

Finally, MPS is incorrect in asserting the decision in Veteran Med. Prods., Inc. v. Bionix Dev.

Corp., 2009 U.S. Dist. LEXIS 52991, *48-54 (S.D. Mich., Mar. 31, 2009) is “similar” to this case. In

Veteran Med., the patent holder “conceded, without argument, plaintiffs’ motion for summary

judgment.” The “startling differences” between the product and patent were readily apparent, and the

“accusers were aware of these differences from the beginning.” Id. In stark contrast, this Court

repeatedly denied MPS’s attempts to obtain summary judgment, MPS contests only a single element of

the asserted claims, MPS did not reveal its squegging non-infringement theory until late into the case,

and O2 Micro had reasonable arguments why squegging does not preclude infringement. Indeed, none

of MPS’s cited opinions bears any resemblance to this case, and MPS has provided no rational legal

basis for the Court to declare this case exceptional. Its motion should therefore be denied, and the

Court need not even address the unreasonableness of the amount of its fee request.

V. MPS AND ASUSTEK’S FEE PETITION IS DEFICIENT AND UNREASONABLE

Section 285 permits only an award of “reasonable attorney fees” to the prevailing party in an

8 As to the Staff comment that MPS relies upon, it appears to be based on the same testimony from Mr. Flasck discussed above, wherein Mr. Flasck testified that the nonsensical “one peak” hypothetical “would defeat the purpose of the whole protection, the whole concept of the patent.” Harkins Decl., Ex. 49 (Flasck Tr.) at 1794:4 – 1795:5.


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exceptional case, and MPS completely fails to demonstrate that the astounding amount it seeks --

$13,507,643.50 -- is reasonable. The vast bulk of these fees appear not even to come from this case,

but instead relate to an ITC proceeding which cannot be awarded here. MPS also failed to present the

necessary support to demonstrate that its fee request is reasonable. Its request should be rejected.

A. Fees Related to the ITC Investigation Are Not Recoverable

Without any legal authority, Mr. Flagel asserts that MPS can recover fees related to the ITC

proceeding. (Flagel Decl. at ¶ 3.) In fact, it is indisputable that there are no provisions at law for

recovery of fees and costs attendant to ITC proceedings for either complainants or respondents. See,

generally, 19 U.S.C. § 1337, et seq. There is good reason why no such fees are allowed in ITC

investigations. ITC investigations may begin with a complaint from a private party, but the

investigation is a public one, and the ITC Staff serves as a gatekeeper to ensure that only complaints

with proper evidentiary bases become investigations. Thus, the purpose of Section 285 of stopping

frivolous actions is met before the investigation ever begins.

Additionally, as a matter of law, only conduct that occurred during the present litigation can be

considered in determining whether there is a basis for finding that this was an exceptional case. See

Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1329-30 (Fed. Cir. 2003) (reversing district court’s

finding of exceptional case because conduct outside the lawsuit is not a basis for litigation misconduct

under § 285). Thus, the ITC investigation cannot be considered in evaluating whether the present case

is exceptional, and none of that activity can be recompensed under § 285.

ITC investigations are based on allegations of unfair importation, i.e., unfair competition

involving the importation of infringing articles. As a result, while it involves patents, the investigation

is not a patent infringement action that can result in damages under 35 U.S.C. § 284 or the recovery of

fees under § 285. Fees for prosecution of claims of unfair competition are not recoverable under §

285. See Water Techs. v. Calco Ltd., 850 F.2d at 674. See also California Eastern Labs. Inc. v.

Gould, 896 F.2d 400, 403 (9th Cir. 1990) (“Section 285 . . . applies only to infringement actions.”).

MPS and ASUSTeK argue that the discovery in the ITC investigation counts as discovery

conducted in this case. However, that is incorrect. The parties stipulated that evidence produced in

ITC investigation was usable in this case to avoid additional discovery, not to bootstrap ITC costs into


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this case. Regarding discovery permissible in this case, the limits were set by Fed. R. Civ. P. 30(a)(2)

(10 depositions) & 33(a) (25 interrogatories) and no party asked for leave of court to exceed them.

Meanwhile, the ITC permitted nearly unlimited discovery. With the exception of damages-related

discovery taking place after July 2009, all of the depositions were based on notices that issued in the

ITC and not in this action. (See, e.g., Ex. 66 [deposition notices].) Indeed, MPS and ASUSTeK

demanded many depositions beyond the presumptive limits that apply to discovery under the Federal

Rules of Civil Procedure, but which Judge Gildea allowed under ITC rules over O2 Micro’s objection.

(Ex. 67.) MPS and ASUSTeK also employed obstructive methods to unnecessarily increase O2

Micro’s work and costs in the ITC. (Ex. 68.) For example, ASUSTeK asserts that there were only a

couple of issues in the case, but that is false; ASUSTeK witnesses refused to admit they followed MPS

designs and required O2 Micro to take many technical depositions to ascertain which products they

sold and which designs were used as proof of direct infringement. ASUSTeK further drove costs up in

the ITC by hiding its relevant documents within more than 4.5 million pages served in discovery.

(Harkins Decl., ¶ 76.) The Court should reject the request by MPS and ASUSTeK to recover any fees

from the ITC investigation.

B. MPS and ASUSTeK Have Failed to Provide Adequate Documentation to Support Their Request for $13, 507,643.50 in Fees

1. The Failure to Provide More Than Cumulative Totals Precludes The Court From Substantively Analyzing the Reasonableness of the Fee Request

Requests for fees under 35 U.S.C. § 285 must be supported by sufficient documentation to

permit the district court to carefully examine the reasonableness of the hours expended as well as the

billing rate charged. Lam, Inc. v. Johns-Manville Corporation, 718 F.2d 1056, 1068 (Fed. Cir. 1983).

A party seeking attorney’s fees under § 285 must not only provide detailed hourly time records and full

expense statements, those records must be organized in such a fashion as to permit the district court to

review the reasonableness of the hours expended. Id. at 1069. See also Codex Corp. v. Milgo

Electronic Corp., 717 F.2d 622, 632 (1st Cir. 1983) (“The district court found, and we agree, that

Codex’s submissions were inadequate. They submitted time sheets, expense sheets, and bills prepared

by their attorneys, with monthly totals by attorney. The critical element missing was a categorization

of the time spent according to what type of activity was engaged in and by whom.”); Loctite Corp. v.


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Fel-Pro, Inc., 667 F.2d 577, 585 (“The fee schedules submitted to the district court include only the

hours expended by the numerous attorneys and their respective billing rates. There is no way to tell if

the rate charged for the particular work involved or the hours expended on that activity are reasonable.

Whether the award is appropriate can only be determined after a review of a detailed schedule which

includes the services performed, the attorney responsible for carrying out that service, the number of

hours expended and the rates charged, and careful consideration of all other pertinent factors.”).

If the Court grants any attorneys fees at all in this case – and O2 Micro submits that to do so

would clearly be an abuse of discretion – it would need to make detailed findings to support the award.

Water Tech., 850 F.2d at 674. MPS fails to provide even a fraction of the documentation the Court

would need to examine whether all the hours claimed were “reasonably expended on the litigation.”

Instead, the moving parties have asked the Court to take it on faith that they “reasonably” expended

23,931.70 hours by at least 23 billing attorneys and 14,584.80 hours by at least 38 paraprofessionals on

this case.9 Exhibit A to the Flagel Declaration, which purportedly demonstrates the reasonableness of

the fees, has no detailed time entries whatsoever. Exhibit B to the Flagel Declaration also fails to

provide detailed time records, and instead gives a very general description of what the individuals

purportedly did over the course of the litigation, and the entries are suspect. For example, Mr. Scott

Mosko and Mr. Lionel Lavenue, partners with the Finnegan firm, both billed exactly the same number

of hours: 1,714.60. Their descriptions provide no details of the specific work done. Mr. Mosko’s

entry, for example, is that he “was involved in all aspects of MPS, ASUS and ASUSTeK’s defense and

counterclaims in this action, including claim construction, written discovery, witness preparation,

defending depositions motion practice, and trial practice.” (Flagel Decl., Ex. B at 7.) No other

descriptions of what the attorneys did during the 23,931.70 hours they billed are more detailed, many

9 MPS and ASUSTeK recite attorney qualifications in place of the required detailing reasonableness of work performed. They submit only 10 pages summarizing briefly attorney qualifications and the work performed that purportedly entitles them to $13,507,643.50 in fees and costs, but 83 pages to support the reasonableness of the hourly rates. At Exhibit F they provide a copy of Judge Margaret Morrow’s decision awarding attorney’s fees in a case in which O2 Micro’s counsel Howrey represented the party seeking fees, but, notably, Howrey’s fees in that case were less the $1.2 million, not more than $13.5 million. Thus, this proof actually undermines the reasonableness of MPS’s fee request.


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less so. Most of the paraprofessional hours carry no descriptions whatsoever. This is wholly

inadequate for a fee award. See Padco Inc. v. Newell Companies Inc., 13 U.S.P.Q.2d 1607, 1615 (E.D.

Wisc. 1988), aff’d, 878 F.2d 1445 (Fed. Cir. 1989) (unpublished) (no award for attorney time entries

stating simply “in preparation of materials for trial” without a further explanation).

2. Even if MPS and ASUSTeK Were Entitled to a Fee Award, the Amount Sought Is Extraordinary and Should Be Slashed

MPS and ASUSTeK have included “portions of the 2009 AIPLA Report of the Economic

Survey,” but have not provided the portion of the report that shows the average total costs spent on

litigation by location, which shows that for cases in which the amount at stake in the litigation ranged

from $1 million - $25 million (in line with O2 Micro’s damages report), the average cost of litigation

for the San Francisco area through discovery was $2,553,000, and the average total cost of litigation

was $4,116,000. (Ex. 74.) This matter was dismissed about a month before trial, so the average fees

and costs presumably would fall somewhere between the two.

Moreover, the Court should bear in mind that MPS and ASUSTeK are declaratory judgment

plaintiffs in this action and took it upon themselves to seek declaratory judgment as to the ‘519 patent

family that O2 Micro had not planned to litigate, and then sought declaratory judgment of the ‘382

patent when O2 Micro filed its unfair competition complaint with the ITC. See, e.g., Water Tech.

Corp. v. Calco Ltd., 1 U.S.P.Q.2d 1872, 1875 (N.D. Ill. 1987), aff’d in part, rev’d in part, vacated in

part & remanded, 850 F.2d 660 (Fed. Cir. 1988). Also, O2 Micro requested that the present case be

stayed until the ITC investigation was completed, but MPS and ASUSTeK insisted that the district

court litigation proceed on a parallel track, which proved to be unnecessary. (See Dkt Nos. 39, 40-1 –

40-4, 60.)

MPS and ASUSTeK also failed to provide sufficient detail and documentation of the expenses

they seek to recover. Apparently the time to properly identify such costs was too much work: “Due to

the administrative challenges of apportioning the taxable portion of certain costs … the statement of

costs included within the Statement of Services Rendered may include some portions of taxable costs.”

(Flagel Decl., ¶ 3.) Thus, they admit they have not made a proper accounting.

Furthermore, MPS and ASUSTeK have made no attempt to demonstrate a legal basis for the


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recovery of certain expenses. For instance, of the $529,950.54 in “non-taxable costs” sought by the

Latham firm, $381,539.18 are “costs of expert services.” However, such costs are not recoverable

under 35 U.S.C. § 285 as a matter of law. In Amsted Industries Inc. v. Buckeye Steel Castings Co., 23

F.3d 374 (Fed. Cir. 1993), the district court granted the patentee’s motion for attorney fees under § 285

and awarded $510,528.90, which included $146,453.61 for expert witness fees. The Federal Circuit

reversed the witness fee award, holding that § 285 does not provide the explicit statutory authority for

shifting expert witness fees to the prevailing party required by the Supreme Court in West Virginia

Univ. Hosp., Inc. v. Casey, 499 U.S.83 (1991). “[A]n award under section 285 encompasses only

attorney fees; expert witness fees fall under 28 U.S.C. § 1920, subject to the 28 U.S.C. § 1821(b)

limitation.” Amsted Industries Inc., 23 F.3d at 376-77. Thus, MPS and ASUSTeK are not entitled to

recover more than the $40 per day witness attendance limit in 28 U.S.C. § 1821(b).

Other costs are similarly not recoverable. However, because MPS has not provided

documentation of the costs and adequate descriptions of what the costs cover and why they were

necessarily incurred, it is impossible for O2 Micro or this Court to adequately address them. Given

MPS’s failure to provide adequate documentation based on its reluctance to undertake “the

administrative challenges” of properly identifying costs, the request for $1,743,159.68 in

“maybe/maybe-not non-taxable” costs should be rejected. The only way to avoid double recovery is to

reject the request for expenses in its entirety.

VI. CONCLUSION

This is not an exceptional case. O2 Micro brought the case in good faith, and appropriately

dismissed it within four days of receiving a bad report from the Court-appointed expert that O2 Micro

recognized would be, practically speaking, insurmountable at trial, even though it had a proper factual

and legal basis to present its case to the jury. MPS and ASUSTeK have no basis to bring this motion

for attorneys’ fees, and the Court should deny it in its entirety.


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HOWREY LLP

Dated: July 15, 2010

By: /s/Robert Harkins

Henry C. Bunsow California State Bar No. 60707 K. T. Cherian California State Bar No. 133967 Duane H. Mathiowetz California State Bar No. 111831 Robert Harkins California State Bar No. 179525 HOWREY LLP 525 Market Street, Suite 3600 San Francisco, California 94105 Telephone: (415) 848-4900 Facsimile: (415) 848-4999 E-Mail: [email protected] E-Mail: [email protected] E-Mail: [email protected] E-Mail: [email protected] Attorneys for Defendant-Counterclaimant O2 MICRO INTERNATIONAL LIMITED


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