Background
Realtime Adaptive Streaming LLC, a patent assertion entity, sued Netflix, Inc. for patent infringement in the District of Delaware. After the Delaware court made various rulings unfavorable to Realtime — including on claim construction issues — Realtime voluntarily dismissed the Delaware case without prejudice. Within a short time, Realtime refiled the same infringement claims against Netflix in the Central District of California, effectively attempting to start fresh in a different venue more favorable to its theory of the case.
Netflix moved for attorneys’ fees, arguing that Realtime’s voluntary dismissal and immediate refiling in a different court was bad-faith forum shopping designed to avoid the adverse rulings in Delaware and gain a litigation advantage by choosing a more favorable forum. The district court agreed and awarded fees under its inherent equitable powers. Realtime appealed.
The Court’s Holding
The Federal Circuit affirmed the award of attorneys’ fees. Courts have inherent equitable powers to sanction bad-faith litigation conduct, including conduct that falls outside the specific grounds for fee awards under 35 U.S.C. § 285 (the patent fee-shifting statute). The court held that Realtime’s pattern of voluntarily dismissing from Delaware and immediately refiling the same case in California, timed to avoid unfavorable rulings, constituted “willful action for an improper purpose, tantamount to bad faith.”
The court found that the deliberate timing and sequence of events — dismissal shortly after adverse rulings in Delaware, followed by refiling in California on identical claims — demonstrated that Realtime was gaming the forum selection process to escape an unfavorable judicial record rather than pursuing its claims in good faith. This kind of forum shopping, the court held, abuses the judicial process and is precisely the type of conduct that courts’ inherent powers are designed to deter and punish. The court also upheld the denial of fees for the initial Delaware filing itself, finding no evidence that the original lawsuit was untenable from the start.
Key Takeaways
- Courts’ inherent equitable powers to sanction bad-faith litigation conduct extend to patent cases and can support attorneys’ fee awards even when the specific grounds of 35 U.S.C. § 285 are not met.
- Forum shopping through strategic voluntary dismissal and refiling — particularly when timed to escape adverse rulings in the first court — can constitute bad faith that warrants sanctions.
- Patent assertion entities and other litigants who voluntarily dismiss and refile in a different venue after receiving unfavorable rulings risk fee awards for abuse of the litigation process.
- Defendants facing repeated forum-shopping by patent plaintiffs should document the timing and circumstances of dismissals and refilings and consider moving for sanctions under the court’s inherent powers, not just under § 285.
Why It Matters
Forum shopping has long been a concern in patent litigation, where the choice of district can significantly affect the outcome — local rules, judicial familiarity with patent law, and the composition of the jury pool all vary across districts. The Federal Circuit’s decision in Realtime v. Netflix sends a clear message that using voluntary dismissal as a tool to escape adverse rulings and seek a more favorable court is a form of bad faith that courts can and will sanction.
For defendants in patent cases brought by entities that file multiple suits across multiple venues, the ruling provides a meaningful tool: if a plaintiff dismisses and refiles in suspicious circumstances, the defendant can seek fees under the court’s inherent powers, even if the case is not “exceptional” under § 285. The decision may help deter abusive litigation tactics by making forum shopping through serial dismissal and refiling economically risky for the plaintiff.