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Wayne Gray Ordered to Pay X/Open $404,820 in attorneys' fees and $5,016.82 in costs - Updated Sept. 2013
Friday, September 14 2012 @ 08:56 AM EDT

Do you remember Wayne Gray, the guy in Florida who tried to to get the trademark INUX, was challenged by X/Open, the owner of the UNIX trademark, and then ended up suing Novell, X/Open and SCO, claiming a conspiracy and adding RICO claims? X/Open won on summary judgment a couple of years ago, he appealed, lost there too, and now the final chapter in this incredible saga is that Gray must pay X/Open's attorneys' fees in the amount of $404,820 plus interest of 6% from June 28, 2010 to September 30, 2011 and an interest rate of 4.75% from October 1, 2011 to the present, and $5,016.82 to cover their costs in dealing with him.

You know how you always hear people say that in the US anybody can sue anyone over a ham sandwich? That's true. You can.

But think about it carefully before you try it if you don't really have a case, because, in the end that ham sandwich might cost you a lot more than any ham sandwich is worth. Call it the SCO First Principle of Litigation.

This saga has been going on since 2001, when X/Open noticed Gray had filed an application for the INUX mark in 1999 and filed its opposition. It's mystifying that it continued this long. Perhaps this order will persuade Gray that things aren't working out and they can only get worse.

Not only were there lengthy battles in the civil case in Florida, where he lost, it was and still is an incredible saga as well as at the USPTO's Trademark Trial and Appeal Board, its court that decides things like whether a trademark being applied for is too much like an extant one. Things there were stayed awaiting finality in the civil case after Gray filed in US District Court in Tampa, Florida.

Later, Gray tried unsuccessfully to file an "amicus brief" in the Novell appeal in SCO v. Novell in 2009, and even showed up for the hearing in the SCO bankruptcy with his then-lawyer wearing a tinfoil hat and demanding that SCO's Chapter 11 trustee, Edward Cahn, investigate Gray's trademark claims and file a report with Gray's then-lawyer.

Not happening on Planet Earth in our lifetime.

The judge there ruled against Gray, saying he was puzzled why Gray would spend so much time and effort on an obviously losing case:

The basic problem with the Motion is that the Chapter 11 Trustee does not wish to participate and Mr. Gray lacks standing to compel his participation. Mr. Gray's effort is confounding to the Court because he invested considerable time and money in an obviously ill-founded, losing effort. The Court is willing to give Mr. Gray the benefit of the doubt that he filed and proceeded with the Motion in the good faith belief that he is entitled to the relief. The Court is nevertheless fully satisfied that Mr. Gray is completely wrong.
You'd think that'd be enough to be received. Confounding is the word. Why do this if you have zero chance? Deeper, why did his lawyer agree to do it? I've never gotten an answer to that question. Either question.

Whatever it was about in his mind, nothing worked out for him, and after losing in US District Court in Tampa, then appealing and losing the appeal, X/Open has now, finally, been named [PDF] the prevailing party in the civil case, meaning it's come to an end. And now the coup de grâce -- the court in Tampa ordered him on September 6th to pay X/Open the sum of $404,820 in attorneys' fees and $5,016.82 in costs:

280 - Filed & Entered: 09/06/2012
Order on motion for attorney fees
Docket Text: ORDER granting [262] Motion for attorney fees to the extent that defendant X/Open is AWARDED attorneys' fees of $404,820, plus interest at 6% from June 28, 2010, until September 30, 2011, and interest at a rate of 4.75% from October 1, 2011, to the present date.. Signed by Magistrate Judge Thomas G. Wilson on 9/6/2012. (CAW)

281 - Filed & Entered: 09/06/2012
Order
Docket Text: ORDER re [167] Bill of costs. Taxation of Bill of Costs by the Clerk is AMENDED to the extent that costs are hereby taxed against the plaintiff in the amount of $5,016.82 pursuant to Rule 54(d)(1), F.R.Civ.P. Signed by Magistrate Judge Thomas G. Wilson on 9/6/2012. (CAW)

So he had his fun, but it has cost him dearly.

You might like to read the X/Open memorandum of law [PDF] in support of its motion for summary judgment back in 2008 on Gray's claim for damages, because it tells the whole, strange story of that litigation, including details about Gray's claims. Gray was asking for $100,000,000 in damages for alleged damage to his business, and X/Open addressed it by quoting Gray's math reasoning and then responding to it:

Gray’s damage claims likewise cannot survive summary judgment as a matter of law. Gray’s $100,000,000.00 damage claim is completely devoid of evidentiary support. Gray claims that X/Open’s challenge to Gray’s INUX trademark rendered his INUX business valueless because Gray needed to drop his business and, instead, defend his alleged rights to use and register his INUX mark (an issue not even at bar in this lawsuit). Yet Gray need only look in the mirror to find the party responsible for his woes, as no genuine issue of material fact exists that Defendants have had no hand in the collapse of Gray’s business. In choosing to defend his alleged rights (which Gray may do), Gray accepted the consequences of abandoning his business to ruin and pursuing his surrogate life as a conspiracy litigator....

It is also undisputed that Gray (even before X/Open’s challenge) had never commercially launched a successful computer product under any name, let alone his proposed INUX mark. It is undisputed that, rather than invest the time and energy to bring his product to market under a non-infringing name or allowing the PTO to decide whether the marks UNUX and INUX were confusingly similar many years ago (which Gray himself prevented by moving the PTO to suspend that case), Gray let his business lie fallow. (See §§ III.E., F., infra.)

These facts are all that is required for this Court to grant X/Open’s motion on Gray’s damage claim since any damage to Gray occurred not as a consequence of X/Open’s actions, but of Gray’s own making in occupationally transitioning to full-time litigant....

Gray further alleges that he has devoted “over 6,500 hours” of his time to his INUX business and “over 8,600 hours” on “the legal defense of his iNUX property” at “$200.00/hour” (a total of $3,020,000.00), that one of his contractors invoiced him for 700 hours of work at “$2,500.00/hour” (a total of $1,750,000.00), and that another contractor billed him for 344 hours of work at “$120.00” (a total of $41,280.00). (Id.) Thus, Gray’s interrogatory responses allege that he spent a minimum of $4,811,280 on his INUX business and defending against X/Open’s opposition in the TTAB (and presumably this lawsuit). Finally, Gray alleges in his responses to Novell’s interrogatories that he “began selling version one of his iNUX software in December 1999 and that, by June 2001, when he suspended his INUX business activities, “iNUX product development cost was hundreds of thousands of dollars and iNUX marketing and promotion . . . totaled over two million dollars. Gray believes that total damages to Gray’s iNUX business and property, including continuing injury and accrued interest now exceeds one hundred million dollars [$100,000,000.00].”...

Gray’s eye-popping assertion that his damages claims total more than $100,000,000.00 as a result of the alleged conspiracy is pure folly. According to documents produced by Gray himself, Gray sold less than $1,500 of INUX product before X/Open opposed Gray’s INUX trademark application in 2001. Bent on proving the fiction that X/Open did not own the UNIX mark, Gray abandoned his business to assume the role of litigant. Any financial despair suffered by Gray is of his own making and cannot be attributed to X/Open. Gray’s outlandish damages claims are neither supported by record evidence nor applicable law. Summary judgment on all of Gray’s damages claims is thus appropriate....

As to the first element, any damage to Gray’s INUX business was caused not by X/Open, but by Gray’s voluntary act of ceasing business after X/Open challenged Gray’s INUX application at the TTAB and asserted infringement of its famous UNIX mark. Gray’s assertion that he “had no choice” but to suspend his INUX business activities is highly disingenuous, at best. Gray could have easily selected another name and proceeded to conduct business under that name rather than dropping his business and assuming the role of full-time litigant. Indeed, X/Open’s trademark opposition in the TTAB (like all trademark oppositions) was directed at the registration of Gray’s INUX mark, not the use of the mark. There is absolutely no evidence that Gray’s business fortunes were inextricably tied to his use of the INUX mark, nor is such an assertion even plausible. ...

Gray operated his INUX business for less than two years, from 1999-2001, and Gray produced no documents from this or any other time period (such as profit-and-loss statements, tax returns, etc.) that would enable a trier of fact to determine the amount of anticipated profits with any degree of certainty, let alone “reasonable certainty.” Gray’s claim of anticipated profits amounts to pure conjecture. Given the scant financial data Gray has produced regarding his INUX business, his anticipated profits could only be based on inappropriate speculation. See Brough v. Imperial Sterling Ltd., 297 F.3d 1172, 1177 (11th Cir. 2002) (reversing jury’s award of expected profits because the award “was based on speculation”).

Given that there is no basis for Gray to recover his legal expenses as an element of his damages and that Gray cannot prove X/Open directly caused damage to his INUX business, let alone prove the amount of any such damage with “reasonable certainty,” summary judgment on Gray’s claims for damages is warranted.

E. Gray’s Damage Claims Are Pure Speculation

Gray’s pipedream claim of $100,000,000.00 in business losses from the alleged conspiracy defies common sense. Gray’s interrogatory responses confirm that Gray sold little, if any, product under his INUX mark before electing to abandon his business and setting off to prove fiction as fact. Just how much success had Gray’s INUX product garnered before X/Open opposed his application? At most, $1,500 over two years, according to Gray’s own documents. Just how much success has Gray’s product garnered since such time? None, there apparently being time only to litigate.

So, then it was X/Open's turn to ask for [PDF] its attorneys' fees and costs to be covered, and in the Introduction, it let the court know how it felt about Gray's tactics and particularly his lawyers' failure to properly counsel Gray as to the likelihood that this was all going to end badly for him:
I. Introduction

Gray’s reckless and vexatious lawsuit against X/Open should not have been filed. Well prior to this lawsuit, Gray had the 1996 Confirmation Agreement between X/Open and its co-defendants. This was all the evidence needed for Gray to fully appreciate this lawsuit’s lack of basis in fact and law. As this Court held in granting summary judgment, the clear and unambiguous language of the Confirmation Agreement establishes that, contrary to Gray’s allegations, X/Open lawfully owns the UNIX trademark and did not engage in any “conspiracy” to conceal the true owner of the mark.

Yet Gray turned a blind eye to the case-dispositive Confirmation Agreement (as well as other corroborating evidence), opting instead to plead that the agreement was fraudulently manufactured by the defendants to deceive him regarding the UNIX mark’s true ownership. Ignoring fact and resting on far-fetched conjecture, Gray forged ahead with this frivolous lawsuit, eventually claiming over $100M in damages in a misguided attempt to raise the stakes of the related U.S. Patent and Trademark Office proceeding or extort a handsome monetary payoff.

Legal safeguards exist to prevent lawsuits like Gray’s from ever coming to bar. As officers of the court, Gray’s counsel had the responsibility to weigh the merits of Gray’s claims in light of the Confirmation Agreement. They also had the responsibility to counsel Gray on the proper use of discovery and the inappropriateness of fishing for evidence of his unsupported theories. These safeguards failed because, while on paper Gray was represented by counsel, Gray essentially served as his own counsel. In pleadings, Gray labelled himself as his own “litigation expert.” Gray’s counsel served as a surrogate sign-off for Gray’s voluminous and needless pleadings, discovery requests, and motions. For all intents and purposes, Gray was practicing law, with loose (or no) oversight from his attorneys.

As a result, not only was Gray’s lawsuit “without substantial fact or legal support” under the Florida RICO Act and the FCRCPA, but an “exceptional” case under the Lanham Act. Further, in allowing or at least sanctioning this lawsuit and Gray’s voluminous filings, Gray’s counsel unreasonably and vexatiously multiplied these proceedings under 28 U.S.C. § 1927.

As a result of Gray’s and his counsel’s misconduct, X/Open has been unnecessarily and unfairly burdened with substantial expenditures in lost management time and hundreds of thousand of dollars in attorneys’ fees and costs. As such, reimbursement of attorneys’ fees and costs is appropriate....

As Gray’s pleadings revealed, Gray was able to implement this vexatious litigation strategy through his counsel’s surrogate signatures for Gray’s filings. As Gray’s counsel represented to this Court, “Gray is an active participant in this proceeding, performing most of the fact research and preparing drafts of almost all of his documents and pleadings.” (Dkt. 38 at 2.) Similarly, as Gray’s counsel represented to this Court, Gray is “acting as [his own] trial preparation expert” and “litigation expert” in this case. (Dkt. 65 at 2, 4, 8.)...

As this Court held in its summary judgment decision, Gray’s claims lacked any merit given the “clear and unambiguous” language of the Confirmation Agreement, which confirmed X/Open’s ownership of the UNIX mark. This clear and unambiguous language aside, Gray opted to argue that the agreement was a sham. However, there was “absolutely no evidence” to support Gray’s “suspicions” and “unsupported theories” on this point, as this Court held. (Dkt. 162: Feb. 20, 2009 Order at 28-29.)

Moreover, Gray’s counsel knew (or should have known) this lawsuit lacked any factual or legal support long before it was initiated. Instead, Gray’s counsel abdicated his professional responsibilities and duties to litigant Gray. Gray’s former counsel David Partlow had access to the case-dispositive Confirmation Agreement in the TTAB opposition long before this lawsuit was filed. He was obviously in a position to counsel Gray that his conspiracy theory lacked any factual or legal merit. Gray’s current counsel Thomas Steele likewise had access to the Confirmation Agreement from the outset of his representation and was similarly in a position to advise Gray of its significance. Nonetheless, both of Gray’s counsel allowed this lawsuit to proceed. And both signed Gray’s complaint, his motions, and/or his discovery requests. In doing so, both either ceded control of this litigation to an overzealous party plaintiff, or failed to undertake the proper legal due diligence required of members of the bar. Further, Gray’s claims were brought for improper purposes. While Gray’s allegations in this lawsuit are more “conspiracy”-based than in the TTAB opposition, his underlying claims concerning SCO’s ownership of the UNIX mark were the same. Thus, the motive behind Gray removing his dispute against X/Open from the TTAB to federal court was obviously to raise the stakes by adding X/Open licensees Novell and SCO as defendant “conspirators.”

Gray’s raise-the-stakes motivation was also evident from his ever-growing damage claims. A reasoned damage claim would have been based on some estimate of Gray’s alleged lost sales. Gray never provided such evidence. The handful of documents Gray produced to substantiate his damage claim showed that Gray never conducted any significant commercial activity under the INUX mark, and never commercially launched any product under the INUX mark. Yet, Gray first claimed $4.5 million in damages, and later when settlement was obviously not forthcoming, upped that amount to a staggering $100+ million. These claims were made without factual substantiation, even though they were either pled or verified by Gray and submitted under Gray’s counsel’s signature. Given the frivolous nature of Gray’s claims, Gray’s counsel’s prior knowledge of (or blindness to) their lack of merit, and the improper motives for filing this lawsuit, X/Open is entitled to reimbursement of its attorneys’ fees under 15 U.S.C. § 1117(a)....

1. The Conduct of Gray’s Counsel Was Unreasonable and Vexatious The Eleventh Circuit has recognized that counsel’s conduct is “unreasonable and vexatious” under Section 1927 when an attorney fails to abandon claims that discovery shows have no merit. Avirgan, 932 F.2d at 1582 (“[F]iling a lawsuit is not a gratuitous license to conduct infinite forays in search of evidence. When it becomes apparent that discoverable evidence will not bear out the claim, the litigant and his attorney have a duty to discontinue their quest.”) (citations omitted). The conduct of Gray’s counsel (both attorneys David Partlow and Thomas Steele) was unreasonable and vexatious because they failed to control their client Gray from filing his complaint and from continuing to prosecute this lawsuit despite the case-dispositive Confirmation Agreement, which was provided long before this litigation was initiated. Instead, they acted as surrogate sign-offs for Gray’s complaint, motions, and other papers. In so doing, X/Open spent significant time and money in defending this litigation.

Additionally, it is clear Gray’s counsel failed to conduct a pre-suit investigation into Gray’s damage claims. Even a cursory investigation would have revealed that Gray’s INUX business never got off the ground. As such, Gray could have suffered no damages. Gray’s attorney was obligated to counsel Gray that “injury” must stem from expected, unrealized sales to support his RICO claims. See Arabian Am. Oil Co. at 1421....

IV . Conclusion

For the reasons detailed above, X/Open respectfully requests that the Court grant X/Open’s motion for attorney’s fees and costs and hold both Gray and his counsel (former counsel David Partlow and current counsel Thomas Steele) jointly and severably responsible for payment of those fees and costs.

Like the judge in the bankruptcy wrote, it's confounding. But I knew you'd want to know how it all ended.

So, is this really the end? Not if Gray doesn't want it to be. He can appeal the orders, if he wants to keep it going, but at least now he knows that keeping it going is going to cost him.

What the Florida lawsuit settled was the issue of X/Open's ownership of the UNIX trademark, and the TTAB will follow the court's decision. However, that doesn't have any bearing on whether there's any likelihood of confusion between the UNIX mark and the INUX mark, or the INUX mark and the UNIXWARE mark, so the oppositions could continue with regard to that.

Updated September 2013:

Mr. Gray chose to apply for bankruptcy after this ruling. And the bankruptcy trustee chose to dismiss Mr. Gray's adventure with prejudice. I guess he avoids having to pay the $404,820 plus interest in X/Open's attorneys' fees and the $5,016.82 in their costs. So that's how this incredibly costly, one could say, wasteful, litigation quest ends. What was it all for? For historians, here are the documents that end this sage, all PDFs, terminating both the INUX application by Gray and his opposition to the mark UNIXWARE belonging to X/Open:

And here, from the USPTO's website, is the history of this case at the USPTO. It began in 1999, and it ends in 2013. Why didn't the USPTO do something to prevent all this? I have no idea. But they didn't. It was up to the courts to take action:


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