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Triune Star, Inc. v. Walt Disney Co.

April 23, 2009

TRIUNE STAR, INC., PLAINTIFF,
v.
THE WALT DISNEY COMPANY, WDIG MOBILE, LLC (D/B/A DISNEY MOBILE), PANTECH & CURITEL COMMUNICATIONS, INC., PANTECH CO., LTD., PANTECH WIRELESS INC. LG ELECTRONICS, INC., AND LG ELECTRONICS MOBILECOMM USA, INC., DEFENDANTS.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

This matter is now before the Court on Motions for Attorneys' Fees by both WDIG Mobile and the LG and Pantech Defendants, as well as a Bill of Costs by the LG and Pantech Defendants. Plaintiffs have filed their objections to these requests, and this Order follows.

DISCUSSION

A. COSTS

Having won summary judgment in their favor, the LG and Pantech Defendants have submitted a Bill of Costs pursuant to Federal Rule of Civil Procedure 54(d), seeking to recover $555.00. WDIG Mobile has filed a separate Bill of Costs that is also in the amount of $555.00. "[C]osts . . . shall be allowed as of course to the prevailing party unless the court otherwise directs . . . ." Fed. R. Civ. P. 54(d)(1). The costs that may be recovered pursuant to Rule 54(d)(1) are specified in 28 U.S.C. § 1920. See Crawford v. Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441 (1987). They include: (1) fees of the clerk and marshal; (2) fees of the court reporter; (3) fees and disbursements for printing and witnesses; (4) fees for exemplification and copies of "papers necessarily obtained for use in the case"; (5) docket fees; and (6) compensation of court appointed experts and interpreters. 28 U.S.C. § 1920.

Rule 54(d) creates a strong presumption favoring the award of costs to the prevailing party. See Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926, 945 (7th Cir. 1997). "The presumption is difficult to overcome, and the district court's discretion is narrowly confined -- the court must award costs unless it states good reasons for denying them." Id. (citation omitted). The losing party must affirmatively demonstrate the prevailing party is not entitled to costs. See M.T. Bonk Co. v. Milton Bradley Co., 945 F.2d 1404, 1409 (7th Cir. 1991). Here, the Plaintiff does not object to the award of costs. An award of costs in hereby awarded in favor of the LG and Pantech Defendants in the amount of $555.00, and $555.00 shall also be taxed as costs in favor of WDIG Mobile.

B. ATTORNEYS FEES

Rule 11 allows the imposition of sanctions if a lawsuit is "not well grounded in fact and is not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law." CUNA Mutual Insurance Society v. Office and Professional Employees International Union, Local 39, 443 F.3d 556, 560 (7th Cir. 2006). The Court previously granted Defendants' Motion for Sanctions pursuant to Fed. R. Civ. P. 11 after finding that any reasonable pre-suit investigation would have revealed that the allegedly infringing devices could not have literally infringed Plaintiff's patent and that the suit was therefore frivolous. The LG and Pantech Defendants have now filed their motion, and a separate motion was filed on behalf of WDIG Mobile. Although Plaintiff's response states that "[f]ees of the magnitude asked for here have ramifications going far beyond the purpose underlying sanctions under Rule 11 and can materially affect the lives of the plaintiff and its counsel," Plaintiffs do not argue or present evidence indicating that they are indigent or financially unable to pay the sanctions that may be awarded.

The reasonableness of a petition for fees is based on consideration of several factors. Hensley v. Eckerhart, 461 U.S.424, 430 (1982). The Court must determine the lodestar amount by multiplying a reasonable number of hours expended by a reasonable hourly rate. Id. This lodestar can be adjusted either upward or downward based on: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal services properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is contingent or fixed; (7) time limitations imposed; (8) the amount involved and results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship between attorney and client; and (12) awards in similar cases. Id.

The party submitting the fee petition has the initial burden of justifying the fees requested and documenting them to the satisfaction of the reviewing court. Id., at 437; Tomazzoli v. Sheedy, 804 F.2d 93, 96 (7th Cir. 1986). Once that burden is met, the fees sought are presumptively appropriate unless challenged by the opposing party. Id. The reviewing court may not reduce the lodestar arbitrarily, but nevertheless has an independent obligation to scrutinize the legitimacy of a fee petition to determine the reasonableness of the hours requested. Spellan v. Board of Education for District 111, 59 F.3d 642, 645-46 (7th Cir. 1995). That being said, a court may reduce the number of hours requested by a lump sum or reasonable percentage "as a practical means of trimming fat from a fee application." Harper v. City of Chicago Heights, 223 F.3d 593, 605 (7th Cir. 2000).

The Seventh Circuit has clarified that in the context of a sanctions award, this involves not only an assessment of the reasonableness of the fee itself, but also consideration of "the reasonableness of the time expended on the litigation by the prevailing party." Kathrein v. Monar, 218 Fed.Appx. 530, 532 (7th Cir. 2006), citing Szopa v. United States, 460 F.3d 884, 886 (7th Cir. 2006); Budget Rent-A-Car Sys., Inc. v. Consol. Equity LLC, 428 F.3d 717, 718 (7th Cir. 2005). A party defending against a frivolous filing has "a duty under Rule 11 to mitigate its legal fees and expenses by resolving frivolous issues quickly and efficiently." Dubisky, 849 F.2d at 1037, citing Brown v. Federation of State Medical Boards, 830 F.2d 1429, 1439 (7th Cir. 1987).

Plaintiff objects to the hourly rates charged by defense counsel, citing Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 555 (7th Cir. 1999), in support of its argument that the rates are excessive in light of community standards where this case was pending. (Response at 29) However, the Seventh Circuit rejected such a mechanical application of the Spegon case in Mathur v. Board of Trustees of Southern Illinois University, 317 F.3d 738, 744 (7th Cir. 2003). In Mathur, the Court of Appeals held that "if an out of town attorney has a higher hourly rate than local practitioners, district courts should defer to the out-of-town attorney's rate when calculating the lodestar amount . . . ." Id. While the rate can be adjusted downward "if local counsel could have provided comparably effective legal services and the rate of the out-of-town practitioner was higher than the local market rate," the Seventh Circuit clarified that the attorney's actual billing rate for comparable work is presumptively appropriate for use as the market rate in computing the lodestar. Id. Finally, "the best evidence of whether attorney's fees are reasonable is whether a party has paid them." Cintas Corp. v. Perry, 517 F.3d 459, 469-70 (7th Cir. 2008).

Here, the defense attorneys' backgrounds clearly indicate that they are highly-qualified, experienced litigators specializing in the area of patent litigation. In support of their hourly rates, the LG and Pantech Defendants offer the Declaration of Patrick J. Kelleher ("Kelleher") as evidence that the hourly rates charged are consistent with the prevailing hourly rates charged by comparable firms in the Chicago, Illinois area. Kelleher further states that "[r]esearch indicates that the hourly rates of [the firms'] attorneys are lower than or comparable to those charged for attorneys at firms of comparable size in Chicago." (Kelleher Declaration at ¶ 11) WDIG Mobile similarly relies on the Declaration of Amy C. Dachtler for her statement that, "Based on information I have reviewed, the fees billed by the Morrison & Foerster LLP attorneys and legal staff are comparable for large Northern California firms with equal expertise in the field of patent litigation." (Dachtler Declaration at ¶ 15) Both groups of Defendants also indicate that the fees sought in the petitions were those actually charged to and paid by their clients in connection with this litigation.

Plaintiff cites a Report of the Economic Survey 2007 by the American Intellectual Property law Association Law Practice Management Committee as evidence of the average fees charged by attorneys specializing in intellectual property law and suggests that this report is somehow conclusive of the rate that should be approved. However, this survey is based on fees that were charged two years prior to the fees incurred in this case. Moreover, this survey actually confirms the reasonableness of the rates charged by the LG and Pantech Defendants' attorneys, as the rates charged in this case are consistent with the rates indicated for ...


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