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Fed Cir: Vexatious Litigation and a Bernanke Dilemma

Normally not a hotbed of dramatic happenings, the Federal Circuit has been on fire lately. Two recent cases are sure to keep the Federal Circuit anything but quiet.

Starr International Company v. U.S.

Maurice "Hank" Greenberg was AIG's leader for four decades, and his company Starr International Co., was AIG's largest shareholder with a 12% stake, reports Reuters. Claiming the government short-changed AIG shareholders in the 2008 government bailout, Starr sought to depose Federal Reserve Chairman Ben Bernanke.

The government opposed the request for deposition by filing a motion for a protective order, with the U.S. Court of Federal Claims, arguing that Starr must show that Bernanke's testimony was "essential to his case, ... [and] not obtainable from another source." The court did not agree.

Despite the fact that normally cabinet officers, department/agency heads, and high-ranking political officers cannot be forced to testify, the court noted this case was an exception. Because Mr. Bernanke himself was so involved in the AIG bailout decision, it was unlikely anyone else would be able to give Starr the answers it was seeking.

Last Friday, the government filed an appeal to the Federal Circuit, asking the court to reverse the Court of Claims decision requiring Bernanke to testify. Reuters reports that the government petition noted: "The demands of civil litigation, if not appropriately limited by the courts, will impair the ability of senior government officials to lead the departments and agencies for which they are responsible." We'll have to wait and see how the Federal Circuit decides this issue.

Monolithic Power Systems, Inc. v. 02 Micro Int'l Ltd.

Two LED competitors Monolithic Power Systems and 02 Micro have been in and out of court for over a decade, reports the Daily Business Review. The pattern went something like this: 02 Micro would assert patent infringement claims against Monolithic (and its customers), after motions and discovery, 02 Micro would withdraw its claims and grant covenants not to sue. In addition to ten years of this, 02 Micro was also very shady about an invention date at the crux of an issue resulting in unnecessary motions and wasted time and resources.

Monolithic sought attorney fees, claiming that this litigation was exceptional, and the court agreed. The Federal Circuit upheld the district court's award of nearly $9 million in attorney fees because the pattern of "overall vexatious litigation strategy and numerous instances of litigation misconduct."

While § 285 is very difficult to prove, the Federal Circuit has shown that there are cases that arise to the level requiring the award of attorney fees. Let this be a lesson to attorneys continuously bringing unnecessary patent infringement claims -- it may cost your client a dear price.

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