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VARDON GOLF COMPANY, INC. v. KARSTEN MANUFACTURING CORP.

March 31, 2003

VARDON GOLF COMPANY, INC., PLAINTIFF,
v.
KARSTEN MANUFACTURING CORPORATION, DEFENDANT.



The opinion of the court was delivered by: David H. Coar, United States District Judge

MEMORANDUM OPINION AND ORDER

On August 1, 2002, a jury returned a verdict in favor of Defendant Karsten Manufacturing Corporation ("Defendant" or "Karsten"). Shortly thereafter, Defendant Karsten moved for this Court to declare the conduct of Plaintiff Vardon Golf Company ("Plaintiff" or "Vardon") exceptional so that Defendant can recover reasonable attorney's fees in this litigation pursuant to 35 U.S.C. § 285. Defendant Karsten also seeks to tax its costs against Vardon as a prevailing party under Federal Rule of Civil Procedure 54(d)(1) and Local Rule 54.1. To that end, Karsten has submitted a Bill of Costs in support. Defendant's Motion to Declare Plaintiff's Conduct Exceptional and the Bill of Costs have both been fully briefed and are currently before the court.

I. MOTION TO DECLARE VARDON'S CONDUCT EXCEPTIONAL

This was a patent case. By statute, attorney's fees in patent cases can only be awarded in "exceptional cases." 35 U.S.C. § 285. Generally, courts look to the conduct of the non-prevailing party when determining whether a given case is exceptional. "`Among the types of conduct which can form a basis for finding a case exceptional are willful infringement, inequitable conduct before the P.T.O. [Patent and Trademark Office], misconduct during litigation, vexatious or unjustified litigation, and frivolous suit.'" Amsted Indus. Inc. v. Buckeye Steel Castings, Co., 23 F.3d 374, 376 (Fed. Cir. 1994) (quoting Beckman Instruments, Inc. v. LKB Produkter AB,, 892 F.2d 1547, 1551 (Fed. Cir. 1989)).

In this case, the Court does not have to search the record exhaustively for evidence that would support a a declaration that this is an exceptional case. The jury, in its special verdict, found that the Bullet B-52 golf club was prior art and that Vardon, through Dillis Allen, "withheld the Bullet B-52 from the Patent Office to intentionally deceive the Patent Office." (Karsten Mot. Declare Vardon's Conduct Exceptional, Ex. B at 4-5.) "Inequitable conduct resides in the failure to disclose material information with an intent to deceive or mislead the [Patent and Trademark Office]." Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997) (citing J.P. Stevens & Co. v. Lex Tex, Ltd., 747 F.2d 1553, 1559-60 (Fed.Cir. 1984)). As noted above, inequitable conduct before the Patent and Trademark Office supports a declaration of the case as exceptional.

As Vardon points out, "not every case deemed `exceptional' must result in a fee award." Consolidated Aluminum Corp. v. Foseco Intern, Ltd., 910 F.2d 804, 815 (Fed. Cir. 1990). The Court finds that this exceptional case does support an award of reasonable attorney's fees. The jury determined that Defendant Vardon, through Dillis Allen, perpetrated a fraud on the Patent Office. Additionally, Vardon aggressively pursued the fraudulent patents in this litigation, at times resorting to questionable litigation tactics.*fn1 This case presents both inequitable conduct before the Patent Office and vexatious litigation tactics, so the Court finds that recovery of reasonable attorney's fees is appropriate.

What remains is to sort out the proper amount of reasonable attorney's fees. Karsten's motion "claims attorney's fees of $2,019,375.60 and related nontaxable expenses of $259,890.25)" (Joint Statement under LR 54.3, at 1.) In response, Vardon suggests that the Court should cap Karsten's attorneys fees at approximately 1 million dollars. Vardon also provides exhaustive specific objections to the time entries of Karsten's attorneys. The Court will address the proposed fee cap and the specific objections below.

A. Vardon's Proposed cap of $1 million dollars

While it would certainly be easier for the Court to simply declare Karsten's fees to be valued at $1 million dollars without regard to the actual time spent and fees charged, Vardon has offered no principled reason to do so. The primary basis for Vardon's position is that Karsten expended more attorney hours on this litigation than did Vardon.*fn2 (Joint Statement under LR 54.3, at 4) Absent discovery disputes, the Court does not tell any party how to conduct itself during litigation. There is no basis to conclude that the amount of time spent by Vardon was more or less reasonable than the amount of time spent by Karsten in pursuit of their goals during this litigation. Karsten may have been motivated to expend more resources to defend against Vardon's infringement allegations than Vardon was to prove the infringement. The actual reason Karsten expended greater resources is immaterial; provided that the hours spent were spent reasonably, Karsten can recover their reasonable attorney's fees.

In support of its request for fees, Karsten presented to the Court portions of a report prepared by the American Intellectual Property Law Association that contained average costs of intellectual properly litigation in Chicago. (Karsten's Mot. Declare Conduct Exceptional, Ex. D) According to the report, for patent infringement lawsuits with over $25 million at risk, the median cost is $3.5 million, and the middle range (25th percentile to 75th percentile) of these lawsuits cost between $2.5 million and $4.99 million. Vardon does not dispute that there was over $25 million at risk in this case. In light of this range, Karsten's request to receive just over $2 million in attorney's fees seems reasonable. For these reasons, the Court rejects Vardon's proposed cap on attorney's fees.

B. VARDON'S SPECIFIC OBJECTIONS

Vardon also registered specific objections to the attorney's fees Karsten seeks. Its specific objections can be grouped into three basic categories. First, Vardon objects to many of Karsten's requested hours as "excessive billing" on the primary basis that no attorney could reasonably bill more than 10 hours a day pretrial or 14 hours a day during trial. Second, Vardon objects to any attorney recovering fees for time billed in conference with another attorney unless every attorney attending the conference bills time for the conference; Vardon labels these hours "overbilled." Third, Vardon objects to fees for work performed by an attorney when the work meets a similar description as work previously performed by another attorney because it is unnecessarily duplicative.

All three of these objections suffer from a similar problem as Vardon's proposed cap. Vardon wants to arrogate to itself the ability to determine the manner of its opponent's preparation for trial. If accepted, Vardon would be de facto setting the maximum number of hours its opposing attorney should be compensated for each day; the billing practices of its opposing attorneys; and the course of its opponents' litigation practices. Once the plaintiff sets the adversary system in motion with the complaint, it cannot determine the lengths to which the defendant will go to confront and defend against the allegations contained therein. The Court will nevertheless address the specific objections that occur within these categories, as well as all other objections that Vardon makes to Karsten's requested fees.

1. Excessive Billing

Vardon objects to Karsten's attorneys fees on the sole basis of "excessive billing" more than 10 hours a day (or 14 hours a day during trial) many times.*fn3 As with its suggested cap on attorney's fees, Vardon asks this Court to ratify Vardon's own unilateral decision about a reasonable number of hours for an attorney to work in a given day. All of Vardon's objections on this lone basis are overruled. Vardon cannot arbitrarily set for its opponents the maximum number of billable hours in a day.

Vardon made additional objections on the basis of "excessive billing" that were supported by more than its arbitrary choice of a maximum number of reasonable hours. On a few occasions, Vardon objected on the basis of excessive billing when two attorneys' work descriptions were similar, but one spent more time performing the tasks than another. Vardon's recommendation in those cases is that the Court reduce the higher number of hours to correspond to the lower number of hours. Vardon's recommendation has no foundation. The descriptions that are ascribed to more than one attorney are not the type of tasks that could only be performed simultaneously, so there can be no valid inference that the attorneys spent the same amount of time working.*fn4 Moreover, it is unlikely that any two attorneys would perform similar tasks in the exact same amount of time. The objections on the basis of excessive billing for similar work are overruled.*fn5

The final objections that fall under the label "excessive billing" demonstrate again the flaw that runs throughout Vardon's objections to the attorney's fees: its attempt to limit or control the opposing counsel's use of resources. Vardon objects to the presence of two of Karsten's attorneys, Robert G. Lancaster and K. Lee Marshall, in the courtroom during trial who were not sitting at counsel table; Vardon asserts that they should not be paid for their time in the courtroom.*fn6 As much as it would like to, Vardon does not get to determine the litigation resources that its opponents dedicate to lawsuits it brings against them; Karsten's request is limited only by the concept of reasonableness. It might be unreasonable if there were ten attorneys in the courtroom during trial, but the Court believes that the presence of five attorneys in the courtroom during this trial after three years of protracted, complicated and fractious litigation was reasonable. Vardon's objection to the excessive billing for attorneys who were present in the courtroom during trial is overruled.

2. OVERBILLED OBJECTIONS

Vardon objects to many of Karsten's requested attorney's fees on the basis that the hours are "overbilled." When one of Karsten's attorneys' partial description of the time spent on a given day includes a conference with another of Karsten's attorneys, Vardon's position is that time is "overbilled" unless both attorneys list the conference in their description of work for that day. This position is untenable. The premise is an assumption that if all the attorneys involved in the conference did not bill for the time, the conference should not be billed for at all. This practice that Vardon labels "overbilling" supports an equally plausible inference of underbilling on behalf of Karsten's attorneys. The Court will not involve itself in the kind of minute micro-managing of attorney's billing practices that Vardon's position would require. Beyond the principle of reasonableness, parties need not justify their billing practices nor their use of time and resources in litigation. Consequently, Vardon's objections based on overbilling when both attorneys did not list the same description of the use of their time are overruled.*fn7

3. DUPLICATIVE WORK OBJECTIONS

The final group of objections that Vardon makes to Karsten's request for attorney's fees falls under the rubric of "duplicative work." Vardon believes that where one attorney performs work that meets the same description as work earlier performed by another attorney, the work is unnecessarily duplicative. Vardon offers nothing but its bald assertion that the work was duplicative to support its position. If Karsten believed it was necessary for more than one attorney to prepare a witness for a deposition, or for that preparation to require more than one day of work, that is its prerogative. In a case such as this one, where attorney's fees are only awarded in exceptional cases, the Court does not believe that any party would be deliberately wasting resources and duplicating its efforts in order to run up the bill; the risk is too great that the party would be forced to bear its own costs. Karsten was free to prepare for depositions, conduct discovery, and ready itself for trial in whatever manner it and its client believed was appropriate. Once the case has been deemed exceptional, the request for attorney's fees is limited by the principle of reasonableness. Karsten's efforts were not unreasonable. Vardon's objections on the basis of duplicative work are overruled.*fn8

4. OTHER REMAINING OBJECTIONS

Vardon did make a few other objections that cannot be properly characterized as falling into the three categories of objections discussed above. The ...


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