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Judge Levies $200,000 in Sanctions for Filing of Frivolous Patent Case
The National Law Journal
The law firm of Pearl Cohen Zedek Latzer and two of its partners have been hit with more than $200,000 in sanctions for filing a frivolous patent case, opposing an earlier sanctions ruling and, according to a federal judge in Manhattan, wasting the court's time.
On Feb. 21, Southern District Judge Colleen McMahon (See Profile) ordered the legal team for plaintiff Source Vagabond Systems Ltd. to pay $200,054 in sanctions to defendant Hydrapak Inc.
Pearl Cohen and partners Clyde Shuman and Guy Yonay were sanctioned $187,308 to Hydrapak for attorney fees and costs to defend the case, plus $12,745 to rebut Source's motion for reconsideration of the sanctions.
Source sued Hydrapak in August 2011 over its design for a water storage reservoir used in sports backpacks.
In April 2012, McMahon granted Hydrapak's summary judgment motion for noninfringement and denied Source's cross-motion for summary judgment for infringement.
She also issued a rare ruling granting Hydrapak's motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure.
McMahon then referred the case to Magistrate Judge James Cott (See Profile) for a hearing on the sanctions amount and took the case back to issue the order.
McMahon disagreed with Cott's assessment that the sanction amount should exclude Hydrapak's fees to oppose Source's motion for partial reconsideration of the sanctions. McMahon wrote that "a motion for reconsideration of a court's decision awarding sanctions is part of the motion for sanctions" and falls within the ambit of Rule 11.
"The motion for reconsideration itself was frivolous. The court's statement that Source's counsel's conduct does not approach the egregiousness of the conduct of attorneys in other cases in no way undermines its conclusion that this case was not close on the merits and lacked any arguable basis in fact," McMahon wrote in Source Vagabond Systems v. Hydrapak, 11-cv-5379.
She also said the reconsideration motion "required this court to expend additional time on a case that it had already dismissed as frivolous."
She called "irrelevant" a per curiam judgment by the U.S. Court of Appeals for the Federal Circuit last month to deny Hydrapak's motion for sanctions on appeal: "Source's decision to seek reconsideration of the court's decision on the sanctions motion caused this court to waste even more time, and Hydrapak to waste even more money, than had already been wasted in supervising and defending against this lawsuit."
Hydrapak's lawyer, Eric Walters, a San Francisco partner at Seattle's Davis Wright Tremaine, said, "We're pleased that the sanctions order allowed our client to recover the lion's share of their fees."
He added, "This case never should have been brought and Judge McMahon tried to make that right in her sanctions order."
Shuman, in an emailed response, stated, "We intend to appeal the court's ruling."
@|Sheri Qualters, a reporter at The National Law Journal, an affiliate, can be contacted at email@example.com.