IP lawyer learns the hard way: Copying Newegg appellate brief is not fair use

September 15, 2016

(Reuters) – Just a few years ago, the New Jersey intellectual property lawyer Ezra Sutton was on the same side as the online retailer Newegg. Newegg and Sutton’s client, the electronics company Sakar International, were among dozens of defendants sued in Texas federal district court by Adjustacam, a patent plaintiff often described as a “troll.” Newegg and Sakar refused to settle with Adjustacam, which ended up dropping its case. Sutton worked with Newegg lawyers on separate motions for attorneys’ fees from Adjustacam. When the trial judge denied the fee requests, Newegg and Sutton’s client both decided to appeal the fee ruling to the Federal U.S. Circuit Court of Appeals.

That is when Sutton discovered that Newegg – which is known as a warrior against what it considers unwarranted patent claims – is just as tough on its erstwhile allies as it is on its sworn enemies.

As Newegg general counsel Lee Cheng recounts the story, he told Sutton early on that Newegg would be willing to file a joint brief with Sakar if Sakar paid a share of the legal fees. Sutton said no thanks, but, as the filing deadline approached, he came back to Newegg. Cheng agreed to show Sutton a draft of the brief Newegg intended to submit to the Federal Circuit to help him write a complementary brief for Sakar.

Instead, the day before Newegg’s brief was due, Sutton filed a brief that was largely copied from Newegg’s draft. When Newegg realized what he’d done and protested the filing, Sutton withdrew the brief and subsequently filed a shorter version focused on Sakar’s argument.

That wasn’t good enough for Newegg. In February 2015, the company sued Sutton for copyright infringement in Los Angeles federal district court. On Tuesday, U.S. District Judge Terry Hatter ruled that Sutton’s copying was not fair use, despite Sutton’s arguments that Newegg wasn’t harmed by the copying. The judge held Sutton liable for copyright infringement. Damages are to be determined at a trial in December.

I’ve never before seen a case in which a lawyer is on the hook for copying a co-defendant’s brief. And after talking Thursday to Sutton and Newegg general counsel Cheng, I have mixed feelings about the outcome.

Sutton’s big point is that his brief didn’t harm Newegg. He told me he wanted the Federal Circuit to know about an expert witness cross-examination that bolstered arguments Adjustacam had litigated frivolously. “I took the brief and amended it to include that,” he said. “I didn’t realize they were going to be offended by that.I thought we were working together.”

He said he pulled the brief as soon as Newegg told him there was a problem. Since then, including in court-ordered settlement talks, he has insisted his filing didn’t damage Newegg, whose appellate brief, in the normal course of litigation, became public within days of his withdrawn filing. Sutton said he has already spent about $50,000 to defend Newegg’s case and still has to return to California for the damages trial.

“I think they’re vindictive,” he said of Newegg. “I’ve been practicing for 40 years. People take excerpts from other people’s briefs and use them all the time. They just want to teach me a lesson.”

That’s exactly what Newegg general counsel Cheng said this case is about: sending a message that even lawyers ostensibly on the same side must respect ethical constraints. “We aren’t out to embarrass or humiliate Mr. Sutton. That doesn’t do anything for us,” Cheng said. “We’re out to make the point that a law license is not a free pass to violate copyright laws and to behave unethically.”

Cheng, who said the company “thought about every possible remedy” before copyrighting its brief and suing Sutton for infringement, was particularly offended that Sutton had agreed by email not to circulate Newegg’s draft brief, yet filed it publicly as his own work – and did so before Newegg had submitted the brief. If Sutton had waited until after Newegg’s brief was on file to submit Sakar’s overtly similar brief, Cheng said, he would have considered him “a giant douche” but would not have sued for copyright infringement.

Cheng said Newegg had to spend money to explain the brief-copying to the Federal Circuit. He also said Sutton’s actions may have hurt Newegg’s case for legal fees. “Who knows what would have happened if it hadn’t been for the sideshow?” he said. (The Federal Circuit remanded the fee motion to the trial judge, who once again denied it; Newegg is now appealing the denial for a second time.)

“I made an affirmative effort to help (Sutton) and help his client, and this is how he repaid that trust,” Cheng said. Newegg faces a lot of multi-defendant suits, Cheng said, so being able to work collaboratively with co-defendants’ lawyers is fundamental. “What Mr. Sutton did crossed every line,” he said.

So: righteous accountability for an alleged litigation plagiarist or an overreaction by an essentially unharmed co-defendant using copyright law for unintended purposes? Even Cheng said he’s heard from lawyers who come out on opposite sides of that question.

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