11th Hour strategy shift leaves Netflix lawyers on hook for fees

Defense lawyers at Willkie Farr and Gallagher LLP who represented Netflix in a patent infringement case have been ordered by a federal judge in Los Angeles to pay attorney fees to opposing counsel because the Netflix attorneys abandoned parts of their defense strategy at the Eleventh Hour and shared misleading information with the jury.

David M. Stein, a partner at Olson Stein LLP, represented GoTV Streaming against Netflix on patent claims over mobile media software, argued that Willkie Farr's actions were an "unreasonable" way to litigate.

The three-day trial that began on Oct. 17, 2023 ended with the jury finding Netflix infringed one of the two patent claims and awarding GoTV $2.5 million. GoTV Streaming LLC v. Netflix Inc., 2:22-cv-07556 (C.D. Cal., filed Oct. 17, 2022).

David M. Stein

However, in a motion for attorney fees filed months after the case closed, Stein claimed the defense counsel, led by Willkie Farr partner Barrington E. Dyer, "secretly" abandoned its invalidity defense slideshow presentations they had shared with GoTV's counsel a day before the trial began. Stein claimed that because Dyer briefly discussed to a jury the invalidity issue during opening statements but never shared the slides or brought up the issue throughout the rest of trial, his actions were deceitful and forced the plaintiff's counsel to waste a large amount of trial preparation resources.

In an opposition filing, Dyer argued Stein's claims were nothing more than speculation and innuendo and Netflix "availed itself of the rights available to every part in litigation" to strategically not present its planned invalidity defense during opening statements because they felt it was necessary based on evidence and themes that developed through discovery and how the trial was being presented by GoTV.

U.S. District Judge R. Gary Klausner on Wednesday found Dyer's arguments unpersuasive and ordered his team to pay attorney fees in an amount to be specified by the plaintiff's counsel within 14 days. "Given several instances of suspicious conduct, plaintiff's explanation appears to be the simplest and most likely one. Accordingly, the court concludes, by a preponderance of the evidence, that defendant abandoned its invalidity defense but feigned otherwise intending to force plaintiff to needlessly expend trial resources," Klausner wrote.

Stein did not respond to an email or phone call by press deadline Thursday. Dyer was not available for comment.

Stein's motion stated his legal team was entitled to $500,000 in fees based on the month-long window in which Netflix filed its pretrial memoranda and the last day of trial on Oct. 19, 2023. However, Klausner decided that because GoTV formally withdrew six of its eight patent claims two days before trial, calculating fees from Oct. 15 to Oct. 19 was more appropriate.

"When plaintiff withdrew its claims on that date, defendant presumably spent significant time and resources preparing to defend against those claims. Once those claims were dismissed, all that work was for naught," Klausner wrote. "Whether plaintiff withdrew on that date maliciously or in good faith, it is only fair that both parties shoulder their own fees prior to that date."

In Netflix's opposition filing, Dyer argued Stein couldn't complain about Netflix's decision to withdraw parts of its defense from trial because he, too, waited until the Eleventh Hour to withdraw parts of the claims.

Klausner agreed, in part, but said the plaintiff's conduct was readily distinguishable because "unlike defendant, plaintiff successfully withdrew its claims before trial, and, despite never formally withdrawing its doctrine of equivalents theory, plaintiff never exchanged slides mentioning the theory or discussed the theory during its opening statement."