U.S. District Judge Edward Davila. Photo: Jason Doiy/ALM

PersonalWeb Technologies LLC has dodged the first of two attorneys fee bullets fired by cloud computing giants who say the nonpracticing entity's weak arguments and unreasonable conduct made the cases "exceptional" under the Patent Act.

U.S. District Judge Edward Davila of the Northern District of California ruled Monday that though at times PersonalWeb Technologies' tactics may have been "obnoxious," they didn't cross the line into frivolousness or bad faith. Davila seemed to set a high bar for attorneys fees, saying that "something beyond 'unnecessary' motion practice is necessary" for fees; "the motion practice must be demonstrably frivolous or in bad faith," he wrote.

In any event, it's a win for Glaser Weil Fink Howard Avchen & Shapiro team led by Lawrence Hadley and a loss for a Wilmer Cutler Pickering Hale and Dorr lineup that had been looking for "millions" in fees.

EMC, which is now part of Dell Inc., had argued that PersonalWeb's California-based parent, Brilliant Digital Entertainment, created the "phony company" PersonalWeb to masquerade as the developer of a commercial educational tool called StudyPods. "PersonalWeb's actual business was—and still remains—the assertion of what it has dubbed the "True Name" patents against successful cloud-computing companies," EMC argued in its motion for fees.

The 10 "true name" patents relate to reliably identifying and accessing files or data. PersonalWeb describes them as "fundamental to cloud computing, distributed search engine file systems and content addressable storage and social networks."

After getting the case transferred from the U.S. District Court for the Eastern District of Texas to San Jose, EMC brought administrative challenges to the patents at the U.S. Patent and Trademark Office. The Patent Trial and Appeal Board invalidated all of the asserted claims from six of the eight patents. PersonalWeb withdrew a seventh and Davila invalidated the eighth on Section 101 grounds.

EMC had relied in part on a Central District of California decision awarding attorneys fees partly on the basis of a PTAB decision, but Davila observed that the Federal Circuit just reversed that ruling last month, concluding that an invalidity judgment at the PTAB "does not alone translate to finding its defense of the patent unreasonable."

Plus, Davila wrote, PersonalWeb's patents were presumed valid and have been licensed "dozens of time[s] over a15-year period, which demonstrates that others consider the patents to be valid."

As for litigation tactics, there was nothing nefarious about the strategic choice to file in the Eastern District of Texas, Davila wrote. PersonalWeb's refusal to consent to a stay motion after the PTAB actions were instituted doesn't qualify as "egregious" conduct. Nor did its filing of broad evidentiary objections without basis, which had caused the PTAB to threaten its own sanctions. "Simply engaging in obnoxious conduct is not sufficient" to elevate a case to exceptional status, Davila wrote.

"Plaintiff has not engaged in a manner of litigation that was unreasonable, questionable, or overly aggressive," Davila concluded. "The Court finds Plaintiff's litigation tactics to be done in a good-faith effort to advance its position."

Next up for PersonalWeb is motion for $6 million in fees that Amazon.com is bringing before U.S. District Judge Beth Labson Freeman of the Northern District of California. She has scheduled a hearing on the motion for Aug. 6.