United States District Court, N.D. Illinois, Eastern Division
June 9, 2005.
AERO PRODUCTS INTERNATIONAL, INC., a Florida corporation, and ROBERT B. CHAFFEE, an individual, Plaintiffs,
INTEX RECREATION CORPORATION, a California corporation; QUALITY TRADING, INC., a California corporation; and WAL-MART STORES, INC., a Delaware corporation, Defendants.
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
The Plaintiffs, Aero Products International, Inc. ("Aero") and
Robert B. Chaffee, filed suit against the Defendants, Intex
Recreation Corporation ("Intex"); Quality Trading, Inc.; and
Wal-Mart Stores, Inc. A trial by jury was held; and Defendants
were found to have willfully infringed Plaintiffs' patent, United
States Patent No. 5,367,726 ("the '726 patent"), for a valve used
in an inflatable air mattress and for violating Plaintiffs'
trademark. The jury awarded Plaintiffs $2,950,000.00 in patent
damages and $1,000,000.00 in trademark damages.
In a written opinion, Plaintiffs were also awarded double
patent damages, pursuant to 35 U.S.C. § 284, and attorneys' fees,
pursuant to 35 U.S.C. § 285. Aero Prods. Int'l v. Intex
Recreation Corp., No. 02 C 2590, 2004 WL 1696749 (N.D. Ill. July
15, 2004). The parties were directed, pursuant to Local Rule
54.3, to submit petitions for attorneys' fees. The parties have done so, and presently before the Court is the Joint Statement
Regarding Attorney's Fees and Expenses. Plaintiffs seek
attorneys' fees totaling $2,217,356.93 and expenses totaling
$156,617.43. Intex stipulates that Plaintiffs are entitled to
$1,668,398.70 in attorneys' fees and does not dispute that
Plaintiffs may recover $110,555.18 in expenses.
After conferring, the parties have the following disputes: (1)
the appropriate hourly rate for Plaintiffs' attorneys; (2)
whether Plaintiffs should be compensated for work relating to its
motion to dismiss Intex's Second and Third Counterclaims; (3)
whether Plaintiffs should be compensated for time incurred
relating to Intex's motion for summary judgment concerning
another patent that was not the subject of the jury trial; (4)
whether Plaintiffs should be compensated for time spent on
third-party discovery of Underwriters Laboratories; (5) whether
Plaintiffs should be compensated as to any time incurred after
the jury verdict was returned for motions for judgment as a
matter of law that were later determined to be moot; (6) whether
Plaintiffs appropriately staffed depositions, the pretrial
conference, and trial; (7) the appropriateness of certain
disbursements Plaintiffs are seeking.
In determining the amount of fees to award pursuant to
35 U.S.C. § 285, "there must be some evidence to support the
reasonableness of, inter alia, the billing rate charged and the
number of hours expended." Lam, Inc. v. Johns-Manville Corp.,
718 F.2d 1056, 1068 (Fed. Cir. 1983) (Lam). Expenses may also
be included in awarding fees under § 285. Central Soya Co. v.
Geo. A. Hormel & Co., 723 F.2d 1573, 1578 (Fed. Cir. 1983). The
decision of the proper amount of fees is within the discretion of
the district court. Lam, 718 F.3d at 1069.
Plaintiffs seek the following hourly rates for their four
principal attorneys on the case, William Frankel, Michael Chu,
Mark Remus and David Bluestone: (1) in 2002, $405.00, $320.00, $250.00, and $215.00, respectively; (2) in 2003, after
factoring in a 7.33 percent discount, $403.00, $320.00, $260.00,
and $222.00, respectively; and (3) in 2004, $460.00, $370.00,
$320.00, and $280.00, respectively. Frankel is a partner who
started working in 1980; Chu is an attorney who started working
in 1992; Remus is an attorney who started working in 1997; and
Bluestone is an attorney who started working in 1999.
Intex argues that the hourly billing rate should be reduced
because: (1) the rates charged by Intex are higher than the
median billing rates in the American Intellectual Properly Law
Association's ("AIPLA") 2002-03 hourly billing survey; (2) those
rates are higher than the rates charged by Intex's local counsel;
and (3) of additional factors, as enumerated in Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.
While the rates charged by Plaintiff's counsel in 2002-03 are
higher than the median amount of the AIPLA survey, those rates,
except for Frankel, are all within the seventy-fifth percentile
of the AIPLA survey for attorneys with similar experience;
Frankel's rates only exceed the seventy-fifth percentile amount
for partners with similar experience by $7.00 in 2002 and $5.00
in 2003. Further, an independent survey which examined the hourly
billing rates of thirty large intellectual property law firms in
2004 disclosed Plaintiffs' attorneys' hourly rates were below the
Intex also argues that Plaintiffs' attorneys' rates are higher
than the rates charged by Intex's local counsel. However,
Plaintiffs' attorneys are permitted to set their own rates and
may recover those rates provided that they are reasonable.
Intex further contends that three factors, as enumerated in
Johnson, 488 F.2d 717-19, compel a reduction of the hourly
rates: (1) too much time and labor was expended by Plaintiffs' attorneys; (2) the technology involved was simple and not
complex; and (3) the amount of attorney's fees sought by
Plaintiffs, $2,217,356.93, represents too high of a percentage
32 percent of the actual recovery of $6,900,000.00. However,
the calculation of the time and labor expended by Plaintiffs'
attorneys is not relevant to the determination of the
reasonableness of the hourly rate. While the technology involved
may be relatively simple, the patent issues raised by the parties
were complex. Intex argues that only 25 percent of the recovery
award should be awarded, but Intex raised a number of unnecessary
issues into the case. For example, Intex disclosed it would
assert the defenses of invalidity at trial but abruptly abandoned
this defense during the trial. This type of conduct increased the
time required by Plaintiffs' attorneys in trial preparation and,
therefore, needlessly increased the attorneys' fees.
The presentation of evidence on complicated issues by
Plaintiffs' attorneys was done in a manner that was clear and
understandable for the jury. In particular, in this regard, was
Plaintiffs' attorneys' conduct of the direct examination of
Plaintiffs' expert, Dr. Albert Karvelis. The high level of
Plaintiffs' attorneys' trial practice skills was a significant
factor in achieving a favorable result for the Plaintiffs.
Intex next argues that Plaintiffs should not be compensated for
two specific motions filed by the Plaintiffs' attorneys because
they were unnecessary. These two motions involved United States
Patent No. 5,267,363 ("the '363 patent"). The '363 patent was not
an issue in the jury trial because Intex was granted summary
judgment on claims involving this patent. It was Intex who raised
the issue of the '363 patent; Plaintiffs' attorneys' conduct in
defending these claims was reasonable. Intex also asserts that Plaintiffs should not be entitled to
attorneys' fees for third-party discovery subpoenaed by
Plaintiffs from Underwriters Laboratories because it was
unnecessary, as it sought information regarding the electronics
in the mattress pump, and overly broad, as it related to
waterbeds and bedroom furniture not involved in the litigation.
However, Plaintiffs subpoenaed these documents from Underwriters
Laboratories after Intex claimed it did not have any relevant
documents in this regard. Although Intex claims these documents
were irrelevant, Plaintiffs, in discovery, are entitled to any
information "reasonably calculated to lead to the discovery of
admissible evidence." Fed.R.Civ.P. 26(b)(1). Plaintiffs'
attorneys acted reasonably in this regard.
Intex further contends that Plaintiffs unnecessarily briefed a
number of motions for judgment as a matter of law, as these
motions were rendered moot after the jury entered a verdict in
favor of Plaintiffs on February 25, 2004. Intex contests the time
Plaintiffs' attorneys spent working on briefs which were all
filed after the jury rendered its verdict.
Because the motions were mooted by the jury verdict, Plaintiffs
unnecessarily filed these additional briefs after the verdict and
may not be awarded fees for their preparation. Moreover,
Plaintiffs' time sheets do not disclose the amount of time spent
preparing the briefs; and, therefore, it cannot be determined how
much time Plaintiffs expended. Therefore, Plaintiffs may not
recover their fees for March 2004, valued at $89,645.45. See
Lam, 718 F.2d at 1068-69. The May 2004 brief, though, was only
two pages long. Because of the extremely short nature of this
brief and the large deduction of March 2004 fees, a further
reduction of fees for the May 2004 brief would be inappropriate. Intex also argues that Plaintiffs' attorneys excessively
staffed the case by: (1) having two attorneys present at each
deposition; (2) having all four trial attorneys attend the
pretrial conference; and (3) having four attorneys present at the
trial. Intex also challenges the hours billed by Attorney Chu.
Recovering fees for having multiple attorneys present at a
deposition is permissible under 35 U.S.C. § 285. Vardon Golf Co.
v. Karsten Mfg. Corp., No. 99 C 2785, 2003 WL 172006, at *4
(N.D. Ill. Mar. 31, 2003). Having all trial attorneys attend the
pretrial conference is also reasonable to insure all trial
attorneys understand the Court's trial procedure and the have the
opportunity to raise any specific issues with the Court at that
time. Having four attorneys present at the trial was also
reasonable, based on the number, nature, and complexity of the
issues concerning the validity of the patent, whether Intex's
device infringed the '726 patent, and damages. Intex had four
attorneys present at the trial, as well.
Regarding the participation of Chu, Intex contends that he was
only minimally involved at trial yet billed 1,164.5 hours on this
matter. Chu was the attorney responsible for preparing for
Intex's invalidity defenses. Intex, at the pretrial conference,
stated that it expected the trial to last twelve to fifteen days
and that Intex intended to raise a number of defenses, including
an invalidity defense. During opening statements, Intex also
stated that it would present invalidity defenses. However, as
mentioned above, at trial, Intex abruptly abandoned these
defenses during the first few days of trial. Instead of the
twelve days represented by Intex, the trial, including jury
deliberations, took six days. Chu's preparation regarding the
anticipated invalidity defenses was reasonable based on Intex's
pretrial and early trial assertions that these later-abandoned
issues were going to be litigated. Accordingly, the hours billed
by Chu are reasonable. Lastly, Intex objects to a number of expenses Plaintiffs seek:
(1) $41,021.56 in copying charges; (2) $584.00 in taxi-cab costs;
and (3) $4,356.69 for food and meals obtained throughout the
case. Plaintiffs have not properly documented the necessity for
these copying charges, the number of copies made, or the costs
per copy and may not recover these expenses. See Hensley v.
Eckerhart, 461 U.S. 424, 443 (1983) ("Where documentation is
inadequate, the district court may reduce the award
accordingly."). Plaintiffs have also failed to explain why the
taxi-cab and food expenses are reasonable. Therefore, Plaintiffs'
award of expenses will be reduced by $45,962.25.
For the foregoing reasons, Plaintiffs are awarded $2,127,771.48
in attorneys' fees and $110,555.18 in expenses.
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