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Home Gambling Network, Inc. v. Piche

United States District Court, District of Nevada

November 4, 2014

HOME GAMBLING NETWORK, INC., et al., Plaintiffs,
v.
CHRIS PICHE, et al., Defendants

For Home Gambling Network, Inc., Mel Molnick, Plaintiffs: Craig A. Marquiz, LEAD ATTORNEY, Marquiz Law Office, Henderson, NV; Sid Leach, LEAD ATTORNEY, Snell & Wilmer, L.L.P., Phoenix, AZ; Patrick Gerard Byrne, Paul Swenson Prior, Snell & Wilmer, Las Vegas, NV.

For Adam Anhang, Jose Vaca-Villalon, Jane Doe (FNU) Piche, Defendants: Thomas R. Ryan, Ryan & Cicilano, LLC, Las Vegas, NV.

For Chris Piche, Inversioners VC DOS MIL S.A., Defendants: Thomas R. Ryan, LEAD ATTORNEY, Ryan & Cicilano, LLC, Las Vegas, NV; Jacob A. Reynolds, Hutchison & Steffen, Las Vegas, NV; Mark A. Hutchison, Hutchison & Steffen, LLC, Las Vegas, NV; Philip A. Kantor, Law Offices of Philip A. Kantor, Professional Corporation, Las Vegas, NV.

For Hilton Group, PLC, Ladbrokes Worldwide, Defendants: Thomas R. Ryan, LEAD ATTORNEY, Ryan & Cicilano, LLC, Las Vegas, NV.

For Eyeball Networks, Inc., Defendant: Thomas R. Ryan, LEAD ATTORNEY, Ryan & Cicilano, LLC, Las Vegas, NV; Jacob A. Reynolds, Hutchison & Steffen, Las Vegas, NV; Philip A. Kantor, Law Offices of Philip A. Kantor, Professional Corporation, Las Vegas, NV.

For Margaret Piche, Internet Opportunity Entertainment, Defendants: Jacob A. Reynolds, Hutchison & Steffen, Las Vegas, NV.

ORDER DENYING PLAINTIFFS' MOTION FOR RECONSIDERATION

David Alan Ezra, Senior United States District Judge.

Before the Court is the Motion for Reconsideration (Dkt. # 375) brought by Plaintiffs Home Gambling Network, Inc. and Mel Molnick (collectively, " Plaintiffs"). Pursuant to Local Rule 78-2, the Court finds this matter suitable for disposition without a hearing. After reviewing the Motion and the supporting and opposing memoranda, the Court DENIES Plaintiffs' Motion for Reconsideration.

BACKGROUND

On September 30, 2013, more than seven years after the filing of the Plaintiffs' First Amended Complaint, this Court granted Defendants' Motion for Summary Judgment in its entirety, dismissing all of Plaintiffs' claims.[1] (Dkt. # 333.) In relevant part, the Court concluded that (1) there was no liability under 35 U.S.C. § 271(a) because at least one of the method steps was performed outside the United States (id. at 16); (2) there was no inducement to infringe the patent because there was no direct infringement of a patent (id.); (3) Defendants did not infringe the Method Patent by operating a website and licensing software that permitted sports betting, lottery, keno, and bingo games because these activities are excluded from the Method Patent pursuant to the prosecution history disclaimer (id. at 23); and (4) there was no contractual liability of Defendants because the HGN Contract did not prevent CWC from licensing the CWC Software to third parties for bingo, keno, lottery or sporting events (id. at 25). Importantly, the Court found that Plaintiffs purposefully attempted to exclude subject matter that was beyond the scope of the Method Patent from the license granted to CWC, so that they could license that subject matter to others for money.[2] (Id. at 26.)

On October 24, 2013, Defendants filed a Motion for Attorney Fees and Costs (Dkt. # 337), arguing they are entitled to a total award of $1, 806, 416.59. (Id. at 1.) Defendants argued that (1) this case is an " exceptional" case, entitling them to attorneys' fees pursuant to 35 U.S.C. § 285; (2) they are entitled to their attorneys' fees, costs and double damages under the patent license agreement; and (3) the attorneys' fees, costs, and damages claimed are reasonable. (Id.)

Plaintiffs responded (Dkt. # 347), arguing (1) this case does not meet the " objectively baseless" standard required for an award of attorney fees under 35 U.S.C. § 285, and (2) Defendants did not meet their burden of establishing an exceptional case by clear and convincing evidence. (Id.)

On April 29, 2014, approximately two weeks before the scheduled hearing on the Motion for Attorneys' Fees, the United States Supreme Court issued Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184, 134 S.Ct. 1749, 188 L.Ed.2d 816 (Apr. 29, 2014) and Highmark Inc. v. Allcare Management System, Inc., No. 12-1163, 134 S.Ct. 1744, 188 L.Ed.2d 829 (Apr. 29, 2014), changing the standard under which a case is found to be " exceptional" under 35 U.S.C. § 285. In light of the Supreme Court's decisions, the Court ordered the parties to submit simultaneous supplemental briefing, which the Court considered in conjunction with the original motions.

On May 22, 2014, the Court issued an Order Granting Defendants' Motion for Attorneys' Fees, concluding that based on the totality of the circumstances, this is an " exceptional case" under 35 U.S.C. § 285. (Dkt. # 367.) Specifically, the Court found that the totality of the circumstances warranted a finding of " exceptionality" in this case because (1) Plaintiffs alleged in their amended complaint that live casinos were located outside the United States in Costa Rica despite controlling Federal Circuit law holding that an infringement of a method patent could not lie unless all steps were performed in the United States; (2) Plaintiffs attempted to sue for infringement of a patent that they did not own and in fact voluntarily relinquished years earlier; and (3) Plaintiffs engaged in patent misuse by purposefully attempting to limit Defendants' usage of subject matter that was beyond the scope of the Method Patent from the license granted to CWC, so that they could license that subject matter to others for money.[3] (Id. at 22.)

Because Plaintiffs did not specifically object to any of Defendants' calculations regarding either the amount of attorneys' fees awarded under § 285 or the amount of damages under the contract, instead remaining steadfast in their opposition to Defendants receiving any fees whatsoever, the Court, in light of its earlier conclusion that Defendants are entitled to attorneys' fees and damages, ordered the parties to submit briefing on the issue of the reasonableness of attorneys' fees and the amount of damages. (Id. at 29.)

On July 8, 2014, Plaintiffs timely filed their supplemental brief. (Dkt. # 374.) However, on July 9, 2014, Plaintiffs also filed a " Supplemental Brief Requesting Reconsideration of the Court's Finding On An 'Exceptional' Case." (Dkt. # 374.) The Court then issued an Order clarifying the supplemental briefing schedule ordered by the Court, stating that to the extent Plaintiffs' motion requesting reconsideration is labeled a " supplemental brief, " that designation was incorrect because the Court very clearly requested supplemental briefing only on Defendants' calculations as set forth in their original Motion for Attorney Fees. (Dkt. # 382.) However, the Court concluded that Plaintiffs' " supplemental brief" requesting ...


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