March 30, 2016 | By Daniel Nazer

Victory: Court Orders Patent Bully Garfum To Pay Attorneys’ Fees

In a decision that could help other victims of abusive patent litigation, a court today ordered that Garfum.com Corporation must pay an EFF client’s attorneys’ fees. The court found that Garfum’s patent suit lacked merit and was litigated unreasonably.

Back in late 2014, Garfum sued a small photography website called Bytephoto.com for patent infringement. Garfum claimed to own the idea of having a ‘vote for the best’ competition, but on the Internet. Even though its absurd patent was plainly invalid under the Supreme Court’s decision in Alice v. CLS Bank, Garfum demanded that the owners of Bytephoto, Ruth and Steve Taylor, pay it $50,000. Given the substantial cost of defending even a frivolous patent lawsuit, the Taylors faced a difficult situation.

EFF stepped in to represent the Taylors and filed a motion asking the Court to declare Garfum’s patent invalid. The day after the court scheduled a hearing on that motion, Garfum voluntarily dismissed its case, running away before the court invalidated its patent. While we were pleased that our client prevailed, it was a travesty that the case was ever filed. If the Taylors had not found pro bono counsel, they likely would have had to pay to settle Garfum’s frivolous claims.

We filed a motion urging the court to order Garfum to pay the Taylors’ attorneys’ fees. Our brief argued that Garfum’s litigation was “exceptional” for three reasons. First, Garfum’s decision to sue a small hobby website and demand a settlement below the cost of defense indicated its case was a shakedown from the get-go. Second, Garfum made implausible legal arguments and submitted an expert report explicitly contradicting the text of its own patent. Finally, Garfum dismissed its case just before a hearing to avoid a ruling on the validity of the patent.

Today the court issued a ruling ordering Garfum to pay fees. The court accepted most of our arguments. Highlights include:

[T]he parties had the benefit of the Alice decision from the Supreme Court, and many courts had opined on the issue—both district courts and the Federal Circuit—after the Supreme Court issued its Alice decision in June 2014. Thus, although the law on patent eligible subject matter had been in flux, a sufficient number of cases had been decided by the time of briefing that Plaintiff should have realized that its arguments under 35 U.S.C. § 101 were untenable. ...

Plaintiff [argued] for patentability on the grounds that the patent claimed something specialized when that argument goes against the plain text of the patent. The Court additionally finds that Plaintiff’s expert’s declaration was entirely conclusory and unsupported. ...

Further, the fact that the covenant not to sue was tendered almost immediately after the Court set the motion hearing makes it appear as though Plaintiff was running away from any decision on the merits.

The court reduced the fee amount somewhat, allowing fees only from the time Garfum filed its unreasonable response to the motion to dismiss. But, on the whole, the decision is an encouraging victory for our clients.

It is worth noting that the attorneys behind Garfum’s litigation—Austin Hansley P.L.L.C.—have led other similarly abusive campaigns. The same office is behind the outrageous Wetro Lan troll litigation. A judge in the Eastern District of Texas recently issued a fee award in another set of cases filed by this office (with the same expert used in the Garfum case) where the patent owner had sued over 250 companies with a plainly invalid patent.

We hope other patent owners who persist in asserting invalid software patents see these fee decisions and rethink their strategy. Our Stupid Patent of the Month series is packed with cases—like this, and this, and this—where trolls are shaking down defendants with patents that are clearly invalid under the Alice standard.

EFF thanks our co-counsel Joe Gratz of Durie Tangri and Frank Corrado of Barry, Corrado & Grassi P.C. who also represented the Taylors in this case.


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