Raymond P. Niro
A federal judge has ordered Raymond P. Niro and three other lawyers to pay more than $4 million in opposing attorneys fees and expenses stemming from a cellphone patent dispute.
Now, the four lawyers will try to recoup some of that money from a client they said they made $6.5 million richer and who duped them for years.
The judgment on Tuesday from U.S. District Judge William T. Hart was expected given that the judge ruled in January that the four lawyers pursued patent litigation against cellphone manufacturer HTC Corp. despite knowing their client, Daniel Henderson, had lied to obtain the patents being asserted.
Niro is still waiting for another judgment expected to be around $1 million in opposing attorney fees in a case involving similar lawsuits filed against Sharp Corp., Hewlett-Packard Co. and Palm Inc.
The lawyers are Niro, Haller & Niro Ltd. partners Niro, Paul K. Vickrey and David J. Mahalek, and former partner Paul C. Gibbons.
The potential $5 million in fees they face is only a fraction of the $23 million Niro said was collected in a litigation campaign on behalf of Intellect Wireless and Henderson, who resides in Fort Worth, Texas.
Standard contingent fee agreements in patent litigation give attorneys a 40 percent cut of settlements or awards, meaning the Niro firm could have made roughly $9.2 million for work on behalf of Intellect Wireless.
The attorney fee judgments are a result of lies Henderson told the U.S. Patent and Trademark Office leading up to obtaining patents in 2007. Henderson told the patent office he invented a functioning wireless picture phone or wireless identification device in 1993.
After he was issued two related patents, court documents say he told the lawyer who represented him in procuring the patents that, contrary to statements made to the patent office, he had not developed a functioning device in 1993.
Henderson advised his Massachusetts-based lawyer, Robert K. Tendler, that it was unlikely the patents would hold up in litigation.
Tendler testified that he never shared his knowledge of Henderson’s lies with the Niro attorneys.
Niro’s lawyers contended the lie was not disclosed to the firm until 2014.
But in January, Hart ruled the Niro lawyers knew about the lie in 2009, “if not before.” This knowledge was the basis for holding them liable for opposing counsel fees.
HTC had initially sought $4.8 million in fees while Niro contended the fees should be roughly $2.4 million. Hart issued an order for $4,090,030.53.
“We are obviously very pleased with Judge Hart’s decision and his award jointly and severally against Intellect Wireless and its attorneys,” said Stephen S. Korniczky, a Del Mar, Calif.-based partner at Sheppard, Mullin, Richter & Hampton LLP who represents HTC.
“We are currently considering what, if any, action to take against Henderson.”
In an e-mail, Niro said “appellate issues are being considered” regarding the judgment. But he has already taken another action against Henderson.
An amended arbitration complaint dated from April 16 argues Henderson breached his contract with the Niro firm by not producing a 2007 e-mail in which he admitted to Tendler that he lied to obtain the patents.
The complaint asks that Henderson pay 60 percent of the fees owed by the Niro lawyers. That percentage, the complaint says, is an “equitable share” of the money Henderson earned as a result of his contract with Niro, $6.5 million.
The case is Intellect Wireless Inc. v. HTC Corp., et al., No. 09 C 2945.
The second case, which is still awaiting a judgment on attorney fees, is Intellect Wireless Inc. v. Sharp Corp., et al., No. 10 C 6763.