Attorney Fee Rates Up to $1,210/Hour Found Reasonable in Patent Case Litigated in Northern District of Texas

On June 12, 2020, Magistrate Judge Rutherford issued an opinion in the Industrial Print Technologies cases (available here) addressing a request for attorney’s fees. The District Court had previously determined that Defendants Cenveo and O’Neil Data Systems were entitled to recover attorney’s fees from Plaintiff Industrial Print Technologies under 35 U.S.C. § 285 for a certain portion of the case. Defendants sought $404,016 in fees for that time period. Defendants were represented by Weil, Gotshal, & Manges and Fish & Richardson.

In terms of rates charged by the firms:

The legal team at Weil comprised one senior partner, two senior associates, one junior associate, and four paralegals who generally bill at hourly rates of $1,165.00-$1,210.00 for senior partners, $600.00-$725.00 for junior associates, and $225.00-$375.00 for paralegals based on experience level. The Fish team included two principals and one of counsel attorney who generally bill their time at hourly rates ranging from $885.00-$990.00 for principals to $525.00-$645.00 for non-principals.

But both firms negotiated “confidential discounted rates” that Defendants paid. Judge Rutherford found that both the “standard” rates and the “discounted rates” were reasonable with respect to attorneys. But the Weil paralegal rates were adjusted downward to $225/hour. Ultimately, Judge Rutherford recommended that the Court enter final judgment awarding a total of $402,867.

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IPR Fees Are Not Available Under Section 285 Of The Patent Act

So holds the Federal Circuit in its June 4, 2020 Amneal v. Almirall decision (available here). In the case, the Federal Circuit denied Almirall’s request for fees incurred for work on an IPR filed against an Almirall patent by Amneal. The Federal Circuit found that Section 285 of the Patent Act does not authorize an award of fees for work done before the PTAB on appeal from an IPR. “[T]he plain meaning of section 285’s reference to ‘[t]he court’ speaks only to awarding fees that were incurred during, in close relation to, or as a direct result of, judicial proceedings.”

The Federal Circuit appeared to leave the door open to an attorney’s fees award where a patent office proceeding was initiated after the filing of a civil action, the proceedings “substituted for the district court litigation on all issues,” and the fees were awarded in the district court proceeding. See PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1569 (Fed. Cir. 1988).

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Trademark Owner Need Not Prove Willfulness To Obtain Defendant’s Profits

On April 23, 2020, the Supreme Court issued its decision in Romag Fasteners v. Fossil, Inc. (decision available here). The Court found that a plaintiff can obtain the defendant’s profits even without showing that defendant willfully infringed the plaintiff’s trademark. Despite this, the Supreme Court noted that a defendant’s state of mind “may have a bearing on what relief a plaintiff should receive.”

In Romig, the jury found that Fossil had acted “in callous disregard” of Romig’s rights, but refused to find that Fossil had acted “willfully.” Controlling Second Circuit authority required the plaintiff to prove willful trademark infringement to recover the profits defendant had earned due to its trademark infringement. The Supreme Court took the case to resolve a conflict among the circuits and reversed.

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Litigation Funding Materials Ruled Irrelevant And Not Discoverable

Here’s an important decision from Chief Judge Stark from the District of Delaware regarding the non-discoverability of communications with litigation funders. Chief Judge Stark found that defendants were not entitled to obtain discovery regarding (i) potential investments by third parties in lawsuits (e.g., solicitations to potential funders, communications with funders who declined to enter into a litigation-funding deal, communications with a funder who entered into a litigation-funding deal) and (ii) communications relating to “quarterly updates” sent about currently pending lawsuits.

CCRG is pleased to have obtained this important decision for firm client United Access Technologies and it’s a good decision for our friends in the litigation funding industry as well, especially given Chief Judge Stark’s prominence and Delaware’s status as one of leading venues for patent infringement cases in the United States.

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Supreme Court Rules Copyright Does Not Extend To Annotations In A State’s Official Annotated Code

On April 27, 2020, the Supreme Court issued its decision in Georgia v. Public.Resource.Org (available here). The Court found that Georgia could not copyright, via a third-party contractor under a work-for-hire agreement, the official version of its annotated code. Under the so-called “government edicts doctrine,” the “officials empowered to speak with the force of law cannot be the authors of—and therefore cannot copyright—the works they create in the course of their official duties.” Accordingly, “[b]ecause Georgia’s annotation are authored by an arm of the legislature in the course of its legislative duties, the government edits doctrine puts them outside the reach of copyright protection.”   

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Supreme Court Rules That PTAB’s Time-Bar Decisions Are Not Appealable

On April 20, 2020, the Supreme Court issued its decision in Thryv, Inc. v. Click-to-Call Technologies, LP (available here). 35 U.S.C. § 314(d) provides that, with respect to inter partes reviews, “[t]he determination by the [Patent & Trademark Office’s] Director whether to institute an inter partes review under this section shall be final and nonappealable.”

In the case, the PTAB instituted an IPR in response to a petition from Thryv that resulted in the cancellation of several patent claims. Patent owner Click-to-Call appealed, arguing that Thryv’s petition was untimely, as it was filed more than a year after Thryv was sued. (35 U.S.C. § 315(b) provides that, “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”)

The question before the Court was whether § 314(d) precluded Call-to-Click’s appeal because the PTAB’s application of § 315(b)’s time limit was closely related to its decision whether to institute the IPR and is therefore rendered nonappealable by § 314(d). The Federal Circuit had held that time-bar determinations under § 315(b) were appealable.

The Supreme Court reversed, vacating the Federal Circuit decision with instructions to dismiss the appeal for lack of appellate jurisdiction. The Supreme Court found that § 315(b)’s time limit was closely related to the decision whether to institute the IPR and thus is nonappealable under § 314(d).

Prediction: this will likely result in a reversal of the Federal Circuit’s recent Facebook decision, in which the Federal Circuit reversed the PTAB when ruling that a petitioner could not join its own IPR after the 1-year bar date, as Thryv stands for the proposition that such a determination is not reviewable in court.

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AAA Teaches Disgruntled Arbitration Claimant How To Litigate Like A Boss

One might think that a non-profit like the American Arbitration Association (AAA), which spends the vast majority of its time administering arbitrations, might not know too much about litigation. But the Fifth Circuit’s April 7, 2020 decision (available here) in Texas Brine Company v. American Arbitration Association, Inc. shows otherwise. There, the AAA gave the plaintiff, a disgruntled claimant in one of AAA’s arbitrations, a quick one-two punch in the form of “snap” removal to federal court followed by a case-dispositive motion to dismiss premised on the Federal Arbitration Act providing the exclusive remedy in cases involving vacaturs of arbitration awards.

In the case, Texas Brine Company was a claimant in an arbitration administered by the AAA. Texas Brine claimed that two of the arbitrators on its panel hid conflicts of interests, and a Louisiana state court vacated the arbitral award. Not satisfied by this victory, and like a true American, Texas Brine then filed suit in Louisiana state court against the AAA (an out-of-state defendant) and the two arbitrators (in-state defendants). The AAA was served with process before the in-state defendants were, and the AAA immediately removed the case to federal court—removal that would not have been possible had either of the in-state defendant been served before the AAA. The federal district court refused to remand the case, and instead entered judgment on the pleadings, dismissing Texas Brine’s claims with prejudice. Texas Brine appealed to the Fifth Circuit Court of Appeals.

In the arbitration, Texas Brine learned that one of the arbitrators was representing a corporation in a dispute in which Texas Brine’s counsel was the opposing counsel. And a second arbitrator began representing the first arbitrator in a related legal-malpractice action. Neither arbitrator disclosed these potential conflicts in the arbitration. Texas Brine moved the AAA to remove both arbitrators, but the AAA’s Administrative Review Council summarily denied the motions. A few weeks later, the AAA removed the second arbitrator due to an offensive comment made to Texas Brine’s counsel. Texas Brine then re-urged removal of the second arbitrator. A day later, both the second and the third arbitrator resigned.

Texas Brine then filed a motion in Louisiana state court to vacate the panel’s awards, and the state court vacated all of the arbitral panel’s rulings on contested issues. Neither party appealed the vacatur. The AAA continued the process of appointing a replacement panel.

In 2018, Texas Brine filed the current suit against the AAA, and the two arbitrators, in Louisiana state court. Texas Brine requested over $12 million in damages and equitable relief, alleging that “the defendants engaged in intentional and wrongful fraudulent conduct in connection with the arbitration proceedings.” Before the Louisiana-resident defendants had been served, the AAA remove the case to federal court. The AAA and the Louisiana-resident arbitrators then moved to dismiss under Rule 12(c) of the Federal Rules. Texas Brine moved to remand given the presence of the in-state defendants. The district court denied the motion to remand in view of “snap removal” and granted the defendants’ Rule 12(c) motion, thus dismissing Texas Brine’s claims with prejudice. Texas Brine appealed from the denial of remand and from the final judgment. The Fifth Circuit affirmed the district court’s decisions.

Snap Removal. In general, a defendant may remove a state court civil case to the federal district court where the case could have been brought. See 28 U.S.C. § 1441(a). This right, in diversity cases, is tempered by the forum-defendant rule. That rule provides that:

A civil action otherwise removable solely on the basis of the jurisdiction under [28 U.S.C. § 1332(a)] may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

The question at issue in the case was thus whether the forum-defendant rule prohibited a non-forum defendant (here, the AAA) from removing the case when a not-yet-served defendant is a citizen of the forum state.

The Fifth Circuit remarked:

By Section 1441(b)(2)’s terms, this case would not have been removable had the forum defendants been “properly joined and served” at the time of removal. [The forum-resident arbitrator defendants] had not been served, though. When the AAA filed its notice of removal, the case was “otherwise removable”—as required by Section 1441(b) — because the district court has original jurisdiction of a case initially filed in Louisiana state court in which the parties are diverse. The forum-defendant rule’s procedural barrier to removal was irrelevant because the only defendant “properly joined and served,” the AAA, was not a citizen of Louisiana, the forum state. . . .

By its text, then, Section 1441(b)(2) is inapplicable until a home-state defendant has been served in accordance with state law; until then, a state court lawsuit is removable under Section 1441(a) so long as a federal district court can assume jurisdiction over the action.

(citations and quotations omitted).

The Fifth Circuit ultimately found that “snap” removal applied: “A non-forum defendant may remove an otherwise removable case even when a named defendant who has yet to be ‘properly joined and served’ is a citizen of the forum state.”

 FAA’s Exclusive Remedy. The Fifth Circuit next turned its attention to whether Texas Brine’s claims were appropriately dismissed in view of the Federal Arbitration Act’s exclusive remedy for complaints of bias or a corrupt arbitrator’s conduct. The Fifth Circuit ultimately found: “Congress identified some potential problems that may arise in arbitration in Section 10 of the FAA and provided a limited remedy. The relief, purported harm, and alleged wrongdoing here show that Texas Brine’s claims, at heart, are in fact an unauthorized collateral attack on the arbitration. The district court was correct to dismiss the challenge.” As such, the Fifth Circuit upheld the district court’s dismissal of Texas Brine’s claims with prejudice.

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Artic Cat (Part I and II): Lots To Know About Patent Marking

In 2017 and 2020, the Federal Circuit issued two Arctic Cat decisions (available here and here) that are important for any patent litigator (and patent owner) to understand. Both decisions deal with patent marking and thus patent damages. By law, a patent holder is entitled to, at most, six years’ worth of pre-suit damages—i.e., damages can at most begin to accrue six years before the plaintiff files its lawsuit. See 35 U.S.C. § 286 (“[N]o recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.”).

An important limitation on damages is the patent-marking statute, 35 U.S.C. § 287. Section 287(a) provides:

Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or by fixing thereon the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

(emphasis added).

In short, a patent holder who practices its patent may mark its embodying product. If the patented product is not marked (by either the patent holder or any licensee of the patent holder), damages do not begin to accrue until the infringer was notified by the patent holder of the infringement.

The Artic Cat decisions discussed many of § 287(a)’s requirements, including that:

  • The patentee bears the burden of pleading and proving he complied with § 287(a)’s marking requirement. Section 287 is a limitation on damages, not an affirmative defense.
  • Compliance with § 287(a) is a question of fact.
  • If a patentee who makes, sells, offers for sale, or imports his patented articles has not “given notice of his right” by marking his articles pursuant to the marking statute, he is not entitled to damages before the date of the defendant’s actual notice of the patent and its alleged infringement.
  • A patentee’s licensees must also comply with § 287, and courts will consider whether the patentee made reasonable efforts to ensure compliance with the marking requirements.
  • If a licensee sold products covered by the patent-at-issue and did not mark, the patentee has failed to satisfy the marking requirements.
  • The burden of proving compliance with marking is and at all times remains on the patentee. Where the defendant identifies unmarked products of the patentee’s licensee, it is the patentee’s burden to establish that the products did not fall within the patent claims.
  • The alleged infringer who challenges the patentee’s compliance with § 287 bears an initial burden of production to articulate the products it believes are unmarked “patented articles” subject to § 287. The Federal Circuit has found that “this is a low bar.” “The alleged infringer need only put the patentee on notice that he or his authorized licensees sold specific unmarked products which the alleged infringer believes practice the patent. The alleged infringer’s burden is a burden of production, not one of persuasion or proof.” “Once the alleged infringer meets its burden of production, however, the patentee bears the burden to prove the products identified do not practice the patented invention.”
  • “The alleged infringer need not produce claim charts to meet its initial burden of identifying products. It is the patentee who bears the burden of proving that it satisfied the marking requirements and thus the patentee who would have to prove that the unmarked products identified by the infringer do not fall within the patent claims.”
  • Section 287 “continues to limit damages after a patentee or licensee ceases sales of unmarked products.” “[O]nce a patentee begins making or selling a patented article, the notice requirement attaches, and the obligation imposed by § 287 is discharged only by providing actual or constructive notice.”
  • Willful infringement—e.g., where an infringer knew of the patent and of its infringement—does not establish actual notice under § 287. Section 287 “is directed to the conduct of the patentee. The marking statute imposes notice obligations on the patentee, and only the patentee is capable of discharging those obligations.”
  • The notice provisions of § 287 do not apply to patents directed to processes or methods. Nor do they apply when a patentee never makes or sells a patented article. “Thus, a patentee who never makes or sells a patented article may recover damages even absent notice to an alleged infringer.”
  • If “a patentee makes or sells a patented article and fails to mark in accordance with § 287, the patentee cannot collect damages until it either begins providing notice or sues the alleged infringer—the ultimate form of notice—and then only for the period after notification or suit has occurred. Thus, a patentee who begins selling unmarked products can cure noncompliance with the notice requirement—and thus begin recovering damages—by beginning to mark its products in accordance with the statute.”
  • “Actual notice requires the affirmative communication of a specific charge of infringement by a specific accused product or device.”
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Should You Communicate With Your Opponent’s Employees Without Your Opposing Counsel’s Permission? Likely Not.

I know it’s technically allowed in some instances but I’ve never seen a situation where contacting your opponent’s employees directly (as opposed to, e.g., seeking their depositions) did any good. So I avoid it.

The district court (S.D.N.Y.) recently issued an opinion (available here) in Dareltech v. Xiaomi Inc. denying a motion to disqualify plaintiff’s counsel. Defendant sought disqualification based on plaintiff’s counsel interviewing and recording defendant’s “company representatives at a promotion exhibition without disclosing affiliation in a pending litigation matter[.]”

The court found that, “in gathering information at the event, [plaintiff’s] counsel acted inconsistently with professional ethics, and that [plaintiff] is precluded from using the collected information in further proceedings.” But plaintiff’s counsel’s “conduct does not require disqualification at this time[.]”

The conduct-at-issue arose in the context of defendant’s counsel advising plaintiff’s counsel that defendant believed the Court lacked personal jurisdiction over it because it did not have any Untied States-based subsidiaries. Thereafter, plaintiff’s counsel and his investigator attended a promotional event held by defendant in New York City. They spoke with defendant’s personnel and recorded the conversations on mobile phones. In one recording, an individual stated that he was “with” defendant at its “N.A. division” based in New York City and that it is “kind of like a secret operation.” A week later, defendant submitted a declaration from its Director of North American Business that defendant “does not maintain any offices in the State of New York” nor does it “have any registered agents, sales agents, or employees located in New York.”

After receiving the declaration, plaintiff’s counsel wrote that “[i]t is now clear that your client likely perjured himself when he submitted a declaration with false statements” and presented an “increased settlement demand,” consistent with plaintiff’s counsel’s earlier e-mail “which promised that his prior settlement demand would expire” on a certain date and that “a higher demand would replace it.”

(Side note: I’ve never seen this type of “higher” demand work. Most of my defense clients get a good chuckle out of this tactic. I’d say that the better rule of thumb is that when a plaintiff makes an offer, that offer generally becomes the new ceiling as to what a defendant would ever pay.)

The court ultimately found as follows:

  • Plaintiff’s argument that “the conversations did not concern the subject matter of the representation” was unpersuasive. Although the conversation did not involve “the patents and products at issue in this case,” inquiries on defendant’s operations were “directly relevant to [defendant’s] anticipated personal jurisdiction motion.”
  • Plaintiff’s counsel was not acting “as a member of the general public attending the event” such that he would be outside of the ethical rules. Here, plaintiff’s counsel “went beyond general attendance or commercial transactions and asked specific, targeted questions related to the scope of [defendant’s] business operations in New York and responsive to proving jurisdiction in this forum.”
  • Plaintiff’s counsel’s lack of disclosure of his affiliation with plaintiff was “problematic” and “inconsistent with Rule 4.3.”
  • The recordings were undisclosed and the “capture of video constitutes misrepresentation inconsistent with Rule 8.4.” As such, the court precluded plaintiff from further use of information obtained at the promotional event in any subsequent proceeding.
  • Because the defendant did not show that plaintiff’s counsel’s conduct “will taint any subsequent trial proceedings”, disqualification was “not warranted at this junction.”
  • Finally, the court ruled that plaintiff “shall not engage in any further ex parte contacts with [defendant’s] personnel without notice to [defendant] or permission from this Court.”
Posted in Non-N.D. Tex. Notable Decisions, Practice Tips, Sanctions | Comments Off on Should You Communicate With Your Opponent’s Employees Without Your Opposing Counsel’s Permission? Likely Not.

E-Mail From Court to Court Coordinator, Instead of Signed Written Order, Is Sufficient to Trigger “Waiver Through Delay”

Things in Texas state court are a bit different from federal court. Take the Fifth District Court of Appeals’ decision In re Yamaha Golf-Car Company (available here). In the case, the trial court e-mailed her court administrator stating that the trial court needed “the following orders” and indicating that a motion to strike a designation of a responsible third party was “Granted.” The court administrator then forwarded the judge’s e-mail to all counsel of record and asked the parties to submit appropriate orders approved as to form pursuant to the judge’s rulings set forth in the judge’s e-mail.

The trial court did not sign a written order granting the motion to strike the responsible third party until eight months later. Three weeks after that, Yamaha sought mandamus relief at the appellate court.

The appellate court rejected the mandamus request, finding that Yamaha waited too long (i.e., it should’ve sought mandamus relief upon receipt of the e-mail from the court coordinator, and not waited until the Court issued the signed written order):

Here, Yamaha waited eight months after the trial court’s July 12, 2018 e-mail ruling to seek mandamus relief, filed the petition only three weeks before trial, and initially offered no explanation for the delay. In its reply brief, Yamaha argues that the e-mail from the court coordinator was not sufficiently clear and specific to be reviewed by mandamus but was, instead, simply an expression of future intent to sign a written order. We disagree. The e-mail states specifically that the judge had granted the motion to strike and, as such, signing an order was merely a ministerial act. . . .

The trial court’s e-mail ruling was sufficiently clear and direct to be reviewed through mandamus. By waiting eight months after that ruling to seek mandamus relief and filing its petition three weeks before trial, Yamaha “waived through delay” its right to pursue mandamus relief of the trial court’s order striking the responsible third party designation.

I can’t agree with this decision (mainly because, until the court entered a signed written order, nothing in the record reflected any ruling), but at least we know where the court of appeals stands. Moral of the story: if you’re going to seek mandamus relief, move quickly, and it’s better to file for mandamus too soon than too late.

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