DISTRICT COURT CASES

Northern District of California Orders Plaintiff to Pay $1.19 Million in Attorneys' Fees in "Objectively Baseless" IP Case

On Friday, September 11, 2015, U.S. District Judge Vince Chhabria of the Northern District of California ordered Segan LLC to pay Zynga $1.19 million in attorneys’ fees for filing a patent infringement case that was “objectively baseless from the start.”  The Court also ordered that Segan’s outside law firm was jointly and severally liable with Segan for $100,000 of the award as a Rule 11 sanction.

Segan sued Zynga in Delaware federal court in 2011, claiming that several of Zynga’s games infringe U.S. Patent No. 7,054,928. The case was later transferred to the Northern District of California. The ‘928 patent, entitled, “system for viewing content over a network and method therefor," covers a method of browsing the Internet idea in which users obtain an animated icon and then obtain enhancements such as clothing or hats at other websites. Segan accused Zynga of infringing with its FarmVille game, in which users interact with other "farmers" on Facebook by buying and selling virtual livestock or crops.

At an April, 2015, summary judgment and claim construction hearing, Judge Chhabria stated that, under his interpretation of the patent, Zynga’s games do not infringe the ‘928 patent. The next week, the Court entered judgment in favor of Zynga. Zynga then asked the court to sanction Segan and its counsel and order them to pay Zynga its attorneys’ fees and costs, saying that “no reasonable litigant” could believe it could prevail on Segan’s claim construction positions, which “stretched well beyond reasonable.”

Judge Chhabria awarded all of the fees and costs sought by Zynga, calling them not only reasonable but "on the low side for a case like this, particularly considering the high quality of the representation Zynga received." The Court sanctioned Segan’s outside counsel, finding the pre-filing investigation was inadequate, finding “this was not a case in which attorneys investigated a potential claim on behalf of their client and concluded it had merit based on partial information, only later to learn that their information was wrong.”

Segan LLC v. Zynga, Inc., Case Number 3:14-cv-01315, in the United States District Court for the Northern District of California.

- Authors: David C. Lawrence
               John Wittenzellner