Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 22, 2008) (Moran, Sen. J.).*

Judge Moran denied the party's cross motions for attorney's fees. Plaintiff Trading Technologies (“TT”) argued that the case was exceptional. But the Court held that it was not for the following reasons:

• eSpeed's refusal to admit infringement was reasonable. A defendant requiring plaintiff to make its proofs does not alone make a case exceptional.
  
• eSpeed's decision not to agree to an interlocutory appeal of claim construction and noninfringement decision was not grounds to make the case exceptional. Although eSpeed argued against an interlocutory appeal, the Court made the ultimate determination.
  
• eSpeed's pursuit of its inequitable conduct claim, which it lost after a bench trial, did not make the case exceptional. In the Court's opinion regarding inequitable conduct, the Court ruled for TT, but noted that eSpeed's case was not frivolous – click here to read the Blog's post about that opinion.
  
• The jury's willfulness finding did not make the case exceptional. This was especially true because the Court overturned the jury's willfulness decision based upon In re Seagate – click here to read the Blog's post about that case.

The Court noted that neither party in this case acted more outrageously than the other. Counsel for both parties were zealous advocates that pushed, but did not go beyond, the envelope.

eSpeed argued that the Court should award it attorney's fees, pursuant to Fed. R. Civ. P. 37(e)(2), for proving that a particular use of a software package was commercial and not experimental, a fact that TT denied in a request for admission. The Court chose not to rule on TT's and eSpeed's respective procedural arguments regarding whether TT was required to admit the use was commercial. Instead, the Court denied attorney's fees because of the Court's earlier ruling that failure to disclose the commercial use in question to the Patent Office was not inequitable conduct because the use occurred before the critical date. And, as with eSpeed's decision to hold TT to its proofs, the Court would not punish TT for holding eSpeed to its proofs on inequitable conduct.

* Click here to read this opinion and click here to read much more about this case in the Blog’s archives.

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Hickory Farms, Inc. v. SnackmastersSnackmasters, Inc., No. 05 C 4541, Slip Op. (N.D. Ill. Apr. 2, 2008) (Kennelly, J.).

Judge Kennelly awarded defendant approximately $350,000 in attorney's fees, costs and interest, based upon defendant's fee petition. The Court previously held that plaintiff's “Beef Stick” and “Turkey Stick” marks were generic and ordered their cancellation -- click here for more on this case in the Blog's archives. The Court also denied plaintiff's motion for reconsideration of the genericness decision and held that defendant had a right to its reasonable attorney's fees and costs because the case was exceptional. There were several noteworthy rulings in the opinion:

• The Court held that defendant was owned not just its fees from the litigation, but also from the related TTAB because the substantive work and research in the earlier TTAB proceeding formed the core of defendant's successful motion for summary judgment of genericness. It did not matter that defendant initiated the TTAB proceeding.

• The Court awarded defendant its attorney's fees for time spent searching the internet for third party uses of “Beef Stick” and “Turkey Stick.” Internet searching was not clerical work because review of each use of the marks required legal analysis. Furthermore, the Court relied on the fruits of that research in granting summary judgment.

• The Court denied attorney's fees for work related to the Seventh Circuit's mediation program. The Seventh Circuit appeal was a separate proceeding and, therefore, it was not appropriate for the Court to award fees for work done that did not further this case, as the work in the TTAB proceeding did.

• The Court held that an administrative charge of 4% of an attorney's billings was reasonable and awarded it as part of attorney's fees, as opposed to costs. Defendant's counsel used the 4% administrative charge as a standard billing practice, instead of tracking long-distance telephone, copying, faxing and other incidental charges for each client and case. The Court held that 4% was a modest amount and was an “appropriate device” for estimating fees without incurring substantial overhead for monitoring those fees precisely.

 

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Gabbanelli Accordions & Imports, L.L.C. v. Italo-Am. Accordion Mfg. Co. et al., No. 02 C 4048, 2008 WL 351860 (N.D. Ill. Feb. 8, 2008) (Zagel, J.)*

Judge Zagel granted plaintiff summary judgment of trademark and trade dress infringement regarding plaintiff’s “wildly colorful” and “heavily ornamental” accordions. The Court awarded plaintiff approximately $500,000 in damages, attorneys fees and costs. Defendants – Italian entities that sold accordions in the United States – chose not to participate in the case. Instead, they filed an Italian case after this case was filed, but before defendants were served pursuant to the Hague Convention. The Court previously stayed a portion of the case pending the outcome of the Italian case, but noted that the stay may have been a mistake. Years after filing, the Italian case had not been resolved and defendants failed to participate in the U.S. proceeding based upon a belief that the Italian proceeding controlled. For example, defendants admitted personal jurisdiction when they failed to respond to jurisdictional Requests for Admission and instead of filing a motion to dismiss, defendants sent the Court an unsupported letter listing their complaints with the case and the Court’s jurisdiction over them. By failing to participate in discovery and not following the Court’s rules, defendants preempted whatever ability they might have had to make their case.

Practice tip: Participate and play by the rules. Even if you cannot or will not afford counsel, you must answer discovery, respond to motions and appear when required to. Failing to participate will not insulate you from judgment.

* Click here for more on this case in the Blog’s archives.

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Angel Sales Inc. v. Hollywood Gadgets Inc., No. 07 C 1362, Min. Order (N.D. Ill. Nov. 19, 2007) (Denlow, Mag. J.).

Judge Denlow sanctioned defendant in the amount of plaintiff's attorney's fees and costs for preparation and attendance at a settlement conference before the Court.  Defendant's counsel attended the conference, but defendant did not appear.  In a subsequent order, the Court entered a sanctions award of $1,710 based upon plaintiff's fee affidavit.

There is not much to say about this opinion, but I included it as a practice tip and a cautionary tale.  Parties often do not want to personally attend settlement conferences before judges, or they attempt to send a representative without full settlement authority.  But that is a perilous choice.  It can result in sanctions, as here, and, at the least, it usually harms the chances of settlement.  The opposing party that took the time to be at the conference is generally offended that its time was wasted.

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Telewizja Polska USA, Inc. v. Echostar Satellite Corp., No. 04 C 3293, Slip Op. (N.D. Ill. Oct. 30, 2007) (Guzman, J.). 

Judge Guzman adopted Magistrate Judge Keys’s Report and Recommendation in its entirety, awarding plaintiff all of the approximately $800,000 in attorney’s fees and costs plaintiff sought pursuant to the fee-shifting provision in the parties’ agreement and Fed. R. Civ. P. 54(d). At trial, plaintiff sought approximately $2.8M for its breach of contract claim and approximately $5.8M for its unjust enrichment claim – the claims were plead in the alternative. The jury awarded plaintiff approximately $1.4M on the breach of contract claim. The jury also awarded defendant $1 in compensatory damages and approximately $18,000 in punitive damages on defendant’s defamation counterclaim. Defendant argued that plaintiff was not the prevailing party, as required by Rule 54(d) and, therefore, should not be awarded its fees and costs or, at least, should be awarded a reduced amount.

But the Court held that plaintiff prevailed by winning one of its major claims, even though the contract claim was worth less than the unjust enrichment claim, based upon plaintiff’s analysis. Additionally, the $1.4M jury award based upon a $7M demand was sufficient to be considered prevailing. The Court noted that parties have been considered prevailing when a jury awarded even 10% of plaintiff’s demand. The Court also suggested that the outcome might have been different if plaintiff had lost on the claim which created the Court’s federal question jurisdiction. But in this case, jurisdiction was based upon diversity. Finally, the Court denied defendant’s request to reduce counsel’s hours or rates because defendant previously agreed not to challenge the reasonableness of the fees. 

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I have not been able to fulfill my promised additional coverage of the inequitable conduct portion of the Trading Technologies v. eSpeed case, but it is not my fault.*  The Court decided to consider eSpeed's inequitable conduct and patent misuse defenses on the papers.  The Court ordered a briefing schedule that will complete briefing by early December for eSpeed's inequitable conduct and patent misuse defenses , as well as eSpeed's post-trial motions regarding willfulness and damages remittitur and TT's motions for its attorneys' fees and costs.  The Court has scheduled a status conference for December 20th.  Perhaps the parties will have rulings by the end of the year.

Practice tip:  In my experience, one of the dangers of doing inequitable conduct after the conclusion of the jury trial is that both the Court and the parties are exhausted and emotionally drained at the end of the jury trial (particularly after a multi-week trial like this one).  So, when it is time to try inequitable conduct, either the Court no longer wants the trial or the parties and the Court are so exhausted that they have trouble keeping their focus and energy level where it was for the jury trial despite the importance of the issues.  I do not know why the parties or the Court decided that inequitable conduct should be decided on the papers in this case.  But any time that inequitable conduct is to be tried after a jury trial, you run the risk that no live evidence will come in on inequitable conduct.

*  Click here to read much more about this case and Trading Technologies' ("TT") related cases in the Blog's archives

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Top Tobacco, L.P. v. North Atlantic Op. Co., No. 08 C 950, 2007 WL 2688452 (N.D. Ill. Sep. 6, 2007) (Kennelly, J.).

Judge Kennelly previously granted defendant summary judgment on all claims in this trademark infringement case regarding plaintiff’s “TOP and “Fresh-Top Canister” marks and awarded defendant’s attorneys’ fees pursuant to 15 U.S.C. § 1117(a).* The Court reduced the rates charged by defendant’s counsel Kirkland & Ellis’ summer associates from $185 to $125, more in line with paralegal rates. The Court acknowledged that Kirkland & Ellis’s attorneys showed skill “commensurate with its… high rates,”** but reduced Kirkland & Ellis’s rates because that skill did not result in the time savings (as required by the Seventh Circuit). Kirkland & Ellis billed roughly 30% more hours than plaintiff’s counsel. The Court, therefore, reduced Kirkland & Ellis’s rates to those charged by plaintiff’s counsel.

* Click here to read more about this case and related cases in the Blog’s archives.

** Having worked with Kirkland & Ellis’s lead counsel on this matter, Paul Garcia, I can confirm the Court’s praise.

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Canadian Thermal Windows, Inc. v. Magic Window Co., No. 07 C 1784, 2007 WL 2481295 (N.D. Ill. Aug. 27, 2007) (Moran, Sen. J.).

Judge Moran granted defendant’s Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction. Defendant’s business is focused on southeastern Michigan. Defendant’s only connections to Illinois were a passive website, which cannot create jurisdiction, and purchases of certain supplies which were wholly unrelated to defendant’s alleged infringing activities. The Court, therefore, held that it lacked personal jurisdiction. In addition, the Court awarded defendant its attorneys fees and costs for moving to transfer or dismiss the case because plaintiff knew that defendant’s business was localized in southeastern Michigan without any ties to Illinois based on the parties’ ongoing business relationship.

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Ganjavi v. Smith, No. 06 C 4189, 2007 WL 2298375 (N.D. Ill. Jul. 31, 2007) (Gettleman, J.).

Judge Gettleman granted defendant’s Fed. R. Civ. P. 12(b)(1) & (6) motion to dismiss. Plaintiff alleged violation of plaintiff’s attribution and integrity right pursuant to section 106A of the Copyright Act and false presentation in violation of the Anti-Cybersquatting Consumer Protection Act, Lanham Act 15 U.S.C. Section 1125, as well as related state law claims. Plaintiff, a classical guitarist, alleged that defendants attacked plaintiff and his business by posting information on an online forum  and by creating websites “mocking” plaintiff’s website. The Court dismissed plaintiff’s attribution and integrity rights claim because Section 106A only applies to “works of visual art” which expressly excludes electronic publications, including websites. The Court dismissed plaintiff’s anti-cybersquatting claim because plaintiff failed to allege a “bad faith intent to profit” from the alleged cybersquatting as required by the act.

Because the only remaining claims were based in state law, the Court turned to diversity jurisdiction.  There was no question that there was diversity, so the only issue was whether the amount in controversy exceeded $75,000 as plaintiff pled. The Court held that plaintiff had not born its burden of proof to show that the amount in controversy exceeded $75,000. Plaintiff claimed that it would prove actual damages in excess of $75,000 at trial, but provided no evidence supporting his assertion. The Court held that plaintiff’s promise without supporting proof was not sufficient to support jurisdiction.  Plaintiff also argued that he might be awarded punitive damages and attorneys fees in excess of $75,000. The Court held that plaintiff attorneys fees could not be counted toward the amount in controversy. And while punitive damages could be counted, plaintiff provided no evidence of his expected punitive damages. Because plaintiff did not meet his burden of proof, the Court dismissed plaintiff’s remaining state law claims pursuant to Fed. R. Civ. P. 12(b)(1).

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Illinois Tool Works, Inc. v. Chester Bros. Mach. Prods., Inc., No. 05 C 5002, 2007 WL 2278448 (N.D. Ill. Aug. 6, 2007) (Guzman, J.).

Judge Guzman granted in part plaintiff’s Fed. R. Civ. P. 41(a)(2) motion to dismiss, dismissing the case with prejudice but awarding defendant’s costs. The Court also denied defendant’s motion for attorneys fees. After sending several cease and desist letters, plaintiff Illinois Tool Works (“ITW”) filed suit against Chester Brothers Machined Products (“Chester”) alleging that Chester infringed plaintiff’s trademark in the color orange used with pneumatic nailers and staplers. ITW amended its complaint after Chester served ITW with a Fed. R. Civ. P. 11 motion explaining that Chester did not sell pneumatic nailers. Chester answered the amended complaint and the case proceeded. But during discovery one of ITW’s customers began selling orange pneumatic nailers. As a result, ITW amended its trademark registration to exclude pneumatic nailers and filed the instant motion. The Court agreed to dismiss the claims with prejudice, but held that costs were justified because Chester had not engaged in litigation misconduct. The Court, however, denied defendant’s motion for attorneys fees because Chester never explicitly told ITW that it did not manufacture pneumatic nailers and because ITW’s claims survived Chester’s motion to dismiss.

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Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 03 C 4844, Slip Op. (N.D. Ill. Jul. 27, 2007) (Cole, J.).*

Judge Cole recommended granting plaintiff Lorillard Tobacco’s (“Lorillard”) petition for attorneys fees, but reduced the requested fees by about $80,000. Lorillard received a default judgment against defendants in 2006 and, as a result, brought this petition seeking its fees and costs. The Court’s opinion is an excellent guide for anyone preparing a fee petition. The Court refused to consider Lorillard’s costs because although Lorillard submitted a list of costs, it did not total the costs or discuss them in its petition and supporting declaration. Next, the Court accepted most of the costs for the four attorneys whose billing rates were explained in the supporting declaration, but denies any fees for the other nineteen people whose fees were not explained in the declaration. The Court notes that these nineteen people could be partners, associates or paralegals, but the Court cannot assess the reasonableness of their rates or billed activities without knowing their roles. And even for the four, the Court notes that it would have preferred some explanation of each attorney’s experience in past Lanham Act cases, in order to judge whether the attorneys’ billing rates were commensurate with their experience. 

Finally, the court refused a subset of the fees for the four attorneys that were inadequately described, unnecessarily billed by multiple attorneys or clerical in nature. For example, the Court disallowed two eighteen minute bills for attorneys reviewing a one-sentence minute order changing the date of a status hearing.

Practice tip: Generate thorough bills and have someone with perspective on a case do a sanity check to make sure your client is not being billed for unreasonable work or duplicative efforts. Also, when preparing a fee petition, make sure to support the rates and fees billed by all attorneys and paralegals with detailed affidavits.

*  You can read a copy of the opinion here.

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Meyer Intellectual Props. Ltd. V. Bodum, Inc., __ F.Supp.2d __, 2007 WL 2110931 (N.D. Ill. Jul. 24, 2007) (Shadur, J.).

Judge Shadur granted plaintiff’s motion for attorneys’ fees and costs related to a motion discovery dispute won by plaintiff, but modified its original award based upon defendant’s explanations (you can read more about this case in the Blog’s archives). The Court explained that the relevant Federal Rule, Fed. R. Civ. P. 37(a)(4)(A), could be paraphrased as “loser pays,” unless the Court finds the losing parties actions or lack of actions were justified or that other circumstances make a fee award unjust. The Court held that defendant’s explanation warranted reducing the original award by 50%. While the Court did not detail the explanation, this case identifies the broad discretion courts have in determining whether to award attorneys’ fees and costs, as well as the size of those awards.

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Days Inns Worldwide, Inc. v. Lincoln Park Hotels, Inc., No. 06 C 2960, 2007 WL 1455798 (N.D. Ill. May 16, 2007) (Der-Yeghiayan, J.)

Judge Der-Yeghiayan granted in part defendants' motion for reconsideration of the Court's award of plaintiff's attorneys fees' and costs for preparing summary judgment motions.  Plaintiff owns various marks relating to its Days Inn chain (the "Days Inn Marks").  Plaintiff licensed defendants Lincoln Park Hotels, Inc. and Richard Erlich (collectively "LPH") to use the Days Inn Marks in connection with the operation of a hotel in Chicago's Lincoln Park neighborhood.  In 2005, LPH sold the hotel to defendant Gold Coast Investors ("GCI") without informing plaintiff, in violation of the parties' license agreement.  GCI continued operating the hotel using the Days Inn Marks without licensing the rights to the marks from plaintiff.  As a result, plaintiff brought this suit against defendants alleging that, among other things, GCI infringed plaintiff's Days Inn Marks and LPH contributorily infringed plaintiff's Days Inn Marks by selling the hotel to GCI with the knowledge that GCI intended to continue using the Days Inn Marks and without informing plaintiff of the sale or removing the Days Inn Marks from the hotel, as required in the parties' license agreement.  In February, the Court granted plaintiff's summary judgment motion on twelve of fifteen counts and dismissed the remaining three counts as moot (you can find discussion of that opinion in the Blog's archives).  The Court also awarded plaintiff its attorneys' fees, approximately $150,000, for preparing its summary judgment motion.  Defendants moved the Court to reconsider, arguing that the Court should have required the parties to meet to resolve the attorneys fees dispute pursuant to  Local Rule 54.3 before ruling on the fees and that the Court should specifically apportion the fees between defendants.  The Court held that it was not required to follow the Local Rule 54.3 procedure in this case because defendants did not object to plaintiff's requests for fees made in its summary judgment briefing and because additional briefing required by the rule would not have benefited the Court because of its intimate knowledge of the case.  The Court did, however, apportion the fees that it was able to identify as only applicable to one group of defendants.  And the Court awarded an additional $35,000 of fees and costs that had not been presented in the initial motion.

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Judge Darrah, after finding each of the eleven patents-in-suit unenforceable for inequitable conduct, held that the suit was exceptional based upon the inequitable conduct, the filing of several frivolous claims which were previously dismissed and misconduct at trial, providing the Court the discretion to award attorney's fees.  The court also did a detailed analysis of defendants' Bill of Costs and awarded defendants some or all of their requested costs for service of process, court reporters, witnesses and experts, among others.  Of note, the Court held that expert fees, including the expert's hourly rates, were recoverable for time spent on expert reports, deposition and related preparation, and other time spent in responding to discovery, but not for time spent attending other expert depositions in the case.

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Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04 C 7955, 2006 WL 3359349 (N.D. Ill. Nov. 20, 2006) (St. Eve, J.).

In this post-trial opinion, Judge St. Eve denies plaintiff's motion for attorney's fees, enhances the jury's damages award by 50% pursuant to 35 USC Section 284 and awards plaintiff prejudgment interest compounded monthly.  Despite the jury's willfulness finding the Court held that attorney's fees were not warranted because defendant's advocacy was consistently professional and the substantive positions it argued were largely meritorious.

The Court enhanced damages by 50% (an additional $875,000) based upon:  1) evidence that defendant copied plaintiff's design and ideas; 2) defendant's lack of good faith basis for continued infringement (lack of opinion of counsel); 3) defendant's size and financial condition; 4) the fact that the case was not close; and 5) defendant's failure to take remedial action (five of the nine Read factors, Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992)).  But the Court noted that defendant's level of culpability did not evidence "wanton disregard" and, therefore, did not warrant a full trebling of damages.

The Court also awarded plaintiff prejudgment interest.  Defendant did not object to the interest award, but rather sought that the interest be based upon the T-Bill rate instead of the prime rate, as plaintiff requested.  The Court held that the T-Bill rate was more appropriate because it would compensate plaintiff without providing a windfall, but did compound interest monthly because plaintiff would have had access to the profits from any royalties or lost sales at least monthly.

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Jay Kesan  and Gwendolyn Ball  of the University of Illinois  Law School recently published a very interesting article in which they detail their empirical analysis of patent litigations.*  For the study they tracked 3,700 patent litigations beginning as early as 1995.  Among other things, they found that 80% of patent litigations settle and 95% of patent litigations are resolved prior to a full trial on the merits.  These should not be shocking results to patent litigators, but what may be more surprising is the results of their analysis of the cost of patent litigations.

* Thanks to the 271 Patent Blog for identifying the article.

While they could not directly review attorneys fees for the cases, they used the length of the case (which they admit may be a flawed indicator because of delays and stays for various reasons), the number of documents filed in the case (because each filing costs attorney time), and whether a case reached claim construction and summary judgment phases (which are attorney time intensive).

The study found that half of the patent litigations were resolved within ten months of filing.  The also found that expenditures for patent litigations were relatively "modest", although they acknowledged that their cost determination was skewed downward by the large number of cases that settle or are otherwise resolved in the first year of the litigation.  The study also showed that litigations that did not settle quickly and went through summary judgment or trial could become relatively expensive.  Of course, expense is relative.  If the damages potential is large enough, attorneys fees for counsel that get an award for you or prevent one against you will see well worth the return

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