Pop Top Corp. v. Rakuten Kobo Inc.

N OTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
POP TOP CORP.,
Plaintiff-Appellant
v.
RAKUTEN KOBO INC.,
Defendant-Appellee
______________________
2021-2174
______________________
Appeal from the United States District Court for the
Northern District of California in No. 4:20-cv-04482-DMR,
Magistrate Judge Donna M. Ryu.
______________________
ON MOTION
______________________
Before M OORE, Chief Judge, N EWMAN and STOLL , Circuit
Judges.
Order for the court filed by P ER CURIAM .
Dissent filed by Circuit Judge N EWMAN.
P ER CURIAM .
O R D E R
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POP TOP CORP. v. RAKUTEN KOBO INC. 2
Rakuten Kobo Inc. (Kobo) moves for sanctions against
Pop Top Corp. (Pop Top) under Rule 38 of the Federal Rules
of Appellate Procedure. Kobo argues that Pop Top’s appeal
was frivolous and requests attorneys’ fees plus double its
costs as damages. Kobo further requests we hold Pop Top
and its counsel jointly and severally liable for the sanc-
tions. For the following reasons, we grant the motion in
part and deny it in part.
BACKGROUND
Pop Top owns U.S. Patent No. 7,966,623. The ’623 pa-
tent relates to methods and systems for “content providers
and authors of web-based content to enable highlighter
functionality on their web pages.” ’623 patent at 1:16–19.
The sole claim of the patent requires, among other things,
an “internet document [that] includes code for invoking a
highlighting service to operate with the internet docu-
ment.” Id. at claim 1 (emphasis added).
Pop Top sued Kobo in the Northern District of Califor-
nia, alleging infringement of the ’623 patent. Pop Top con-
tended that the eBooks Kobo serves via its eReader
application are the claimed internet documents because
they are “highlightable” and “include code.” J.A. 304. Pop
Top did not, however, identify any particular code in the
eBooks that allegedly invokes a highlighting service, de-
spite having access to the code in two sample eBooks. See
id. (showing contents of ePub file for A Tale of Two Cities);
J.A. 106 (Kobo’s counsel stating “the e-book file for ‘Win
Bigly’ is presently available for inspection at our New York
City offices”).
In correspondence, Kobo repeatedly explained to Pop
Top that all code related to highlighting is in the Kobo App,
not in individual eBooks. J.A. 92, 574, 580, 583. Kobo also
stated that Pop Top’s contrary position was frivolous and
lacked evidentiary support. J.A. 96. And it advised Pop
Top that “if you decline to dismiss the complaint at this
time, Kobo will seek to recover its attorney’s fees and
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POP TOP CORP. v. RAKUTEN KOBO INC. 3
costs.” Id. Pop Top did not heed that warning and contin-
ued to prosecute the case.
Kobo then moved for summary judgment of nonin-
fringement. It argued that its eBooks do not contain “any
code relating to highlighting” and that “[t]he only code re-
lating to highlighting . . . is found in the Kobo App software
itself.” J.A. 287. For support, Kobo provided a declaration
from its Chief Technology Officer, Trevor Hunter. The dec-
laration states that the highlighting functionality is “lo-
cated in the Kobo App itself.” J.A. 175 ¶ 15; see also
J.A. 175–84 ¶¶ 16–34 (identifying code in Kobo App related
to highlighting functionality). It further states that no code
in the eBooks “relate[s] to any highlighting capabilities of
the Kobo App.” J.A. 184 ¶ 36.
In response, Pop Top accused Kobo of attempting to in-
ject into claim 1 a requirement that the internet document
“include all code necessary to highlight the served internet
document.” J.A. 643 (emphasis added). It also argued that
summary judgment was improper because Mr. Hunter’s
declaration showed that each eBook contains (1) “[c]ode
identifying the eBook as a Reflowable ePub file” and
(2) “code for causing a user interface object for invoking
[sic] a highlighter service.” J.A. 646–47, 674–75. Pop Top
did not explain how this code supposedly satisfies the “code
for invoking” limitation.
The district court granted summary judgment of non-
infringement. Regarding Pop Top’s claim construction ar-
gument, the district court determined that Pop Top
“blatantly misconstrue[d] Kobo’s position.” Pop Top Corp.
v. Rakuten Kobo Inc., No. 20-cv-04482-DMR, 2021 WL
2633479, at *5 (N.D. Cal. June 25, 2021) (Summary Judg-
ment). It explained that Kobo never “contend[ed] that the
internet document must include all code necessary to high-
light the document. Rather, Kobo assert[ed] that the claim
requires the internet document to include code for invoking
a highlighting service, and it present[ed] evidence that the
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POP TOP CORP. v. RAKUTEN KOBO INC. 4
eBooks for the Kobo App do not include any such code.” Id.
(internal quotation marks omitted). As for Pop Top’s in-
fringement theories based on Mr. Hunter’s declaration, the
district court held that Pop Top could not rely on those the-
ories because it failed to disclose them in accordance with
local rules. Id. at *5–6. Regardless, the district court de-
termined that, “[c]ontrary to Pop Top’s assertion, the dec-
laration does not state that the eBook itself contains source
code that invokes the highlighting service.” Id. at *6. The
district court therefore held there was no dispute of fact
that the eBooks do not satisfy the “code for invoking” limi-
tation.
Pop Top appealed. It argued that the district court
erred by (1) not resolving the parties’ alleged claim con-
struction dispute and (2) holding that Pop Top presented
insufficient evidence of infringement to survive summary
judgment. On the first point, Pop Top claimed its position
before the district court was that the “code for invoking”
limitation merely requires “any code that leads to the high-
lighting of the internet document,” whereas Kobo’s position
was that it requires “the code for highlighting the internet
document.” Appellant’s Br. 16. On the second point, Pop
Top cited Mr. Hunter’s declaration and, for the first time
on appeal, its infringement contentions. Id. at 16–17 (cit-
ing J.A. 98–103, 173–79, 300–11). Pop Top further argued,
in its reply brief, that the district court abused its discre-
tion in holding that Pop Top could not rely on Mr. Hunter’s
declaration to prove infringement. Appellant’s Reply Br. 6.
We affirmed without opinion under Federal Circuit
Rule 36. Pop Top Corp. v. Rakuten Kobo Inc., No. 2021–
2174, 2022 WL 1397867 (Fed. Cir. May 4, 2022).
D ISCUSSION
A
Under Federal Rule of Appellate Procedure 38, we may
“award just damages and single or double costs to the
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POP TOP CORP. v. RAKUTEN KOBO INC. 5
appellee” if we determine that an appeal is frivolous. We
have a “longstanding policy of enforcing Rule 38 vigor-
ously.” Walker v. Health Int’l Corp., 845 F.3d 1148, 1157
(Fed. Cir. 2017). An appeal is frivolous as filed when “the
judgment by the tribunal below was so plainly correct and
the legal authority contrary to appellant’s position so clear
that there really is no appealable issue.” State Indus., Inc.
v. Mor-Flo Indus., Inc., 948 F.2d 1573, 1578 (Fed. Cir.
1991). An appeal is frivolous as argued when the appellant
engages in misconduct in arguing the appeal. Id.
Kobo argues Pop Top’s appeal was frivolous as filed.
We agree. The district court determined that Pop Top of-
fered “no evidence whatsoever that the eBooks for the Kobo
App include ‘code for invoking a highlighting service,’ de-
spite being in possession of a complete eBook file.” Sum-
mary Judgment, 2021 WL 2633479, at *5 (emphasis
added). Indeed, Pop Top relied solely on Mr. Hunter’s dec-
laration, but the declaration unequivocally states that the
highlighting functionality is “located in the Kobo App it-
self,” not the eBooks. J.A. 175 ¶ 15; J.A. 184 ¶ 36. Because
it “utterly fail[ed]” to identify any evidence that the eBooks
contain code for invoking a highlighting service, Summary
Judgment, 2021 WL 2633479, at *4, Pop Top had no rea-
sonable basis to appeal the district court’s summary judg-
ment.
Kobo further argues Pop Top’s appeal was frivolous as
argued. Again, we agree. As it did below, Pop Top “bla-
tantly misconstrue[d] Kobo’s position” in arguing that the
parties disputed the scope of the “code for invoking” term.
Summary Judgment, 2021 WL 2633479, at *5. Kobo stated
it “d[id] not dispute” Pop Top’s construction of that term.
J.A. 520. Kobo instead argued that, even under Pop Top’s
construction, it does not infringe because the eBooks “do
not contain any code at all that invokes the highlighting
service.” J.A. 521. Pop Top’s misrepresentation of Kobo’s
position warrants sanctions. See Mor-Flo Indus., 948 F.2d
at 1579 (holding appeal frivolous as argued where
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POP TOP CORP. v. RAKUTEN KOBO INC. 6
appellant “manufactured arguments in support of reversal
by distorting the record”).
Pop Top compounded its misconduct in arguing to us
that it presented sufficient evidence to survive summary
judgment. Pop Top cited its infringement contentions, but
it never mentioned that evidence below in its opposition to
Kobo’s motion for summary judgment. See Appellant’s Br.
16–17 (citing J.A. 98–103, 300–11); J.A. 646–48 (relying
solely on Mr. Hunter’s declaration). Pop Top also cited
Mr. Hunter’s declaration yet failed to address, until its re-
ply, the district court’s holding that Pop Top could not rely
on that evidence under local rules. In any event, Pop Top
did not explain how any of the cited evidence demonstrates
that Kobo’s eBooks contain code related to highlighting.
Accordingly, Pop Top’s appeal was frivolous as argued.
B
Rule 38 authorizes us to award single or double costs
and “just damages,” which may include attorneys’ fees.
Mor-Flo Indus., 948 F.2d at 1581. Kobo requests attorneys’
fees and double its costs. The total amount requested is
$140,964.46, which includes $53,216.19 in attorneys’ fees
relating to this motion. We find the latter amount unrea-
sonable. It took Kobo’s counsel 107.6 hours to fully brief
and argue the merits of this appeal. Mot. Ex. A ¶ 7. The
same counsel then spent about 83 hours briefing Kobo’s
sanctions motion. See id. ¶¶ 8-9. Given that the sanctions
briefing is only 28 pages long and largely parrots the merits
briefing, counsel should have spent considerably less time
preparing the sanctions briefing. We find that $20,000 is a
more reasonable estimate of the actual cost of the sanctions
motion. Accordingly, we award Kobo $107,748.27.
C
Kobo requests that we hold Pop Top’s counsel jointly
and severally liable for the sanctions award. We may hold
an attorney jointly and severally liable for sanctions if an
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POP TOP CORP. v. RAKUTEN KOBO INC. 7
appeal is frivolous due to the “nature of the advocacy in
support of it.” Id. at 1582. As we explained above, Pop
Top’s appeal was frivolous entirely because of the baseless
arguments advanced by counsel. Moreover, Pop Top does
not oppose joint and several liability in its response to
Kobo’s sanctions motion. We therefore hold Pop Top and
its counsel jointly and severally liable for the sanctions.
CONCLUSION
We grant-in-part and deny-in-part Kobo’s motion for
sanctions. We award Kobo $107,748.27, for which Pop Top
and its counsel are jointly and severally liable.
SANCTIONS IMPOSED
July 14, 2022
Date
F OR THE COURT
/s/ Peter R. Marksteiner
Peter R. Marksteiner
Clerk of Court
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N OTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
POP TOP CORP.,
Plaintiff-Appellant
v.
RAKUTEN KOBO INC.,
Defendant-Appellee
______________________
2021-2174
______________________
Appeal from the United States District Court for the
Northern District of California in No. 4:20-cv-04482-DMR,
Magistrate Judge Donna M. Ryu.
______________________
ON MOTION
______________________
N EWMAN, Circuit Judge, dissenting.
I respectfully dissent from the award of attorneys’ fees
for this appeal. The panel majority holds that since Pop
Top presents the same arguments on which it lost in the
trial court, this appeal is frivolous and is sanctioned.
I agree that Pop Top did not have a winning case. How-
ever, due process and the Federal Rules provide the right
of appeal. The United States has continually rejected the
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POP TOP CORP. v. RAKUTEN KOBO INC. 2
“loser pays” philosophy of many countries, for our view of
justice under law includes appellate review. See Beghin-
Say Int’l Inc. v. Ole-Bendt Rasmussen, 733 F.2d 1568, 1573
(Fed. Cir. 1984) (declining to award sanctions despite “a to-
tal absence of merit” in the appellant’s arguments).
An adverse decision on appeal of the merits does not
subject the appellant to sanctions because the case was
weak. Here, Pop Top sued Rakuten Kobo for infringement
of a patent that had been granted with broad claims that
Pop Top was attempting to enforce. The district court
found non-infringement on summary judgment, and
awarded attorneys’ fees to Kobo. Pop Top appealed and
asked this court for de novo review based on claim construc-
tion, a question of law. We affirmed the district court’s
judgment without opinion. Pop Top Corp. v. Rakuten Kobo
Inc., No. 2021-2174, 2022 WL 1397867 (Fed. Cir. May 4,
2022).
Pop Top separately appealed the district court’s award
of attorneys’ fees; that appeal is pending at this court. Pop
Top Corp. v. Rakuten Kobo Inc., No. 22-1688 (appeal cur-
rently in briefing stage). Meanwhile, Kobo filed this mo-
tion for sanctions for Pop Top’s unsuccessful appeal of the
merits case. The panel majority awards appellate sanc-
tions, relying on the district court’s award of sanctions.
However, it is inappropriate to sanction an appeal on the
basis that there were sanctions below. It is also notewor-
thy that the district court’s sanctions are not final, for they
are on separate appeal. See Connell v. Sears, Roebuck &
Co., 722 F.2d 1542, 1554 (Fed. Cir. 1983) (“Whatever the
events in the district court, we are duty-bound to guard our
segment of the judicial process against abuse.”).
An appeal is not frivolous or otherwise egregious
simply because the appellant has a weak case. The right
of appellate review applies even for weak cases. Biodex
Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 863 (Fed.
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POP TOP CORP. v. RAKUTEN KOBO INC. 3
Cir. 1991) (“As we have repeatedly noted, ‘[a]n appeal hav-
ing a small chance for success is not for that reason alone
frivolous’ and thus deserving of sanctions.” (quoting Finch
v. Hughes Aircraft Co., 926 F.2d 1574, 1578 (Fed. Cir.
1991)).
In Refac Int’l Ltd. v. IBM, 798 F.2d 459, 460 (Fed. Cir.
1986), this court reversed a sanctions award where the ap-
pellant’s arguments could “be said to fall just within the
ragged edge of the penumbra surrounding legitimate advo-
cacy.” The court has also explained that “an appeal that
does border the ragged edge of frivolity” is not necessarily
sanctionable. Beghin-Say, 733 F.2d at 1573. “The line be-
tween the tenuously arguable and the frivolous can be an
uncertain one, and sanctions should not be imposed so
freely as to make parties with legitimately appealable is-
sues hesitant to come before an appellate court.” Finch,
926 F.2d at 1578.
The court cautioned that: “In determining whether or
not an appeal is frivolous, . . . an appellate court must be
mindful of the possibility that awarding damages and costs
could have an undue chilling effect on the behavior of later
litigants.” Id. Likewise, our sibling circuits have “been re-
luctant to classify appeals as frivolous, so that novel theo-
ries will not be chilled and litigants advancing any claim or
defense which has colorable support under existing law or
reasonable extensions thereof will not be deterred.”
Hilmon Co. (V.I.) Inc. v. Hyatt Int’l, 899 F.2d 250, 252–53
(3d Cir. 1990) (awarding sanctions for failure to serve de-
fendants for seventeen months without “any evidence of
‘good cause’” for the delay).
Sanctions may be appropriate, as for deliberate mis-
statements or intentional misrepresentation. See, e.g., As-
berry v. U.S. Postal Serv., 692 F.2d 1378, 1381 (Fed. Cir.
1982) (“[Appellant’s] allegation that the settlement is in-
complete because it failed to dispose of a back pay issue is
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POP TOP CORP. v. RAKUTEN KOBO INC. 4
spurious. There was no such issue.”); Romala Corp. v.
United States, 927 F.2d 1219, 1223 (Fed. Cir. 1991) (“[Ap-
pellant]’s statement of the government’s position is grossly
inaccurate.”).
It is not unusual for an appellant to argue that the dis-
trict court erred in claim construction. Pop Top states in
its opening brief at 15: “The parties read claim 1 differ-
ently.” Whether Pop Top’s argument below was sanction-
ably frivolous may be explored in the pending appeal of the
district court’s award of sanctions, but sanctionable
presentations in the trial court do not necessarily render
the appeal sanctionable.
“There are . . . differences between excessive advocacy
and inexperience on the one hand and clear frivolity on the
other.” Beghin-Say, 733 F.2d at 1573. Litigation by its na-
ture reflects the spin of advocacy, and the right of appellate
review is a safeguard to the rule of law. The judicial bur-
den of reviewing a weak appeal or receiving one-sided ar-
gumentation does not warrant the sanction of award of
attorneys’ fees. From my colleagues’ contrary ruling, I re-
spectfully dissent.
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