By David Hricik
First off, happy holidays to everyone. I’ve had some health issues and have been very intermittent in posting. Other than getting old (a good thing), I am happy to report that I am fine.
Second, a lot has been going on in 285. Long ago, I posted here about how prevailing parties were beginning to try to either (a) join lawyers for the losing party to the case to impose fees against them or (b) simply (somehow) have the lawyers held liable without joining them. In addition, more recently, here, I discussed how (c) prevailing parties are seeking to join the principals of asset-less (or near asset-less) patentees and obtain fees from them. In both posts, I discussed the conflicts that can arise between lawyers and clients, and some of the harmful effects of imposing liability on lawyers under 285, given Octane: the zeal of a lawyer, if liable for non-frivolous but “not ordinary” cases, will be chilled. “I can do this under Rule 11, but I might be liable for fees if we lose,” is the conundrum the combination of Octane and using 285 to impose liability on lawyers presents, to put it simply.
A recent case on 285 illustrates another issue, which relates to the obligation of lawyers to create a record that will support an award of fees if they prevail and to seek fees in a way that results in a reasonable award. In one recent case, DataTern v. Microstrategy (Mass. Dec. 2018), the accused infringer prevailed. The court held the case was exception for two reasons: some sort of “Judge shopping” had occurred which caused the accused infringer to consolidate cases, and after claim construction, it became unreasonable to pursue the case.
The accused infringer, rather than seeking fees caused by judge shopping, sought all of its fees incurred early in the case, before consolidation, rather than those that were the extra fees caused by the judge shopping: $590,000. It got nothing, but from the court’s order had it segregated out the fees reasonably, it might have received around $59,000.
It is hard to tell whether the billing records were insufficiently clear to allow for this, or that the strategy was to seeking it all without recognizing the need to show causation of additional fees. Either way, there are good lessons to learn both during litigation (write good work records as they may be used for, or against, you) and in seeking fees, be reasonable.
With respect to the fees after Markman, the accused infringer sought all of the fees from the date of the Markman ruling onward: “every single item” as the court noted. The court again applied a reasonableness standard and looked to causation. It first reasoned that it was absurd to suppose the lawyer instantly could have determined the court’s order rendered further prosecution unreasonable, consulted with its client, and dismiss the case. The court reasoned that about six weeks was enough time for the patentee’s lawyers to have done that work, so immediately lopped off fees for that time period. Then, because work records showed duplicative work, the court lopped off an additional 10% as a rough cut. The first step took the amount sought from $430,000 to $340,000, and then down to $310,000.
The case provides useful guidance in fee petitions moving forward, providing a reasonable cushion for client consultation after a particularly important adverse ruling, such as a Markman ruling.
Finally, the accused infringer sought $157,000 for seeking fees (i.e., for preparing and filing the 285 motion. The accused infringer had made five arguments to support an award, and the court found 2 meritorious (above), and so lopped of 3/5 of the amount sought, taking it to $94,000. Then, exasperated, the court stated it could not understand how it took nearly 300 hours to prepare the motion when the accused infringer had not, as noted above, gone through the billing to show which were actually caused by the misconduct. It awarded $6800.
What are the lessons? It seems that the accused infringer’s attorneys had spent $157,000 to prepare something that could have been done for $7,000, and that it was inadequate to do the job, according to the court at least. Thus, prevailing in an exceptional case is not a free ticket to reimbursement of fees.