Federal Circuit Affirms Award of All Litigation Fees and Costs

The nonprecedential opinion in Large Audience Display Systems, LLC v. Tennman Productions, LLC, authored by Judge Linn and joined by Chief Judge O'Malley and Judge Hughes, was handed down on August 20.  The court finds no abuse of discretion in the finding of exceptionality and the award of $755,000 in fees and costs.  The principal bases for the finding of exceptionality were (1) the plaintiff's opposition to a motion to transfer venue from the Eastern District of Texas to the Central District of California; (2) arguments relating to claim construction, made to the USPTO in the context of a reexamination; and (3) the plaintiff's use of a privileged email.  The court concludes that "While we may have reached a different conclusion regarding exceptionality if we were evaluating the  parties’ arguments in the first instance, our review is limited to whether the district court, in considering the totality of circumstances, abused its discretion in reaching the conclusion that LADS’s conduct was exceptional under § 285. See Octane Fitness, 134 S. Ct. at 1756" (p.6).  The court then goes on to find no abuse of discretion in the amount of the award:

LADS next argues that the district court erred in awarding Tennman all of its requested fees, rather than those directly caused by LADS’s exceptional conduct. To support this proposition, LADS relies on Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013), in which we explained that fees should “compensate a defendant for attorneys’ fees it should not have been forced to incur.” Tennman responds that nothing in § 285 requires a direct nexus between the exceptional litigation misconduct and the award, and that full fees are unavailable only where particular litigation misconduct forms the basis of the exceptional case determination and where the moving party only prevails on some of its patent claims, but that neither of these situations applies here. . . . 

The district court applied a Lodestar analysis, which provides a presumptively reasonable fee award. . .  .  In addition to this presumption, we note that the district court has “considerable discretion” to determine the amount of fees under § 285, owing to its “superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.” Bywaters v. UnitedStates, 670 F.3d 1221, 1228 (Fed.Cir.2012) (internal quotations omitted).

The district court did not abuse its considerable discretion in awarding fees for the entire litigation. To begin, nothing in § 285 or our case law precludes such an award. . . .  The district court concluded that the factual bases for the exceptionality finding—from the venue fight, to the unreasonable claim constructoins [sic], to the use of the privileged email—“permeated” the entire litigation. As we have recognized, full fees may be awarded in such circumstances. . . . As discussed above, none of these findings were clearly erroneous (pp. 7-8).

One thing the court notes in passing that I wasn't aware of:  in discussing (and ultimately rejecting) the plaintiff's arguments against the amount of the award, the court writes:

Finally, LADS argues that the district court’s Lodestar analysis was flawed because . . . Tennman failed to prove its hourly rates, because the rates of timekeepers other than Langsam were supported solely by inadmissible hearsay from attorney website bios and the 2013 AIPLA Survey previously found unreliable by the Central District of California in Perfect 10, Inc. v. Giganews, Inc., No. 11-07098, 2015 WL 1746484 (C.D. Cal. March 24, 2015) . . . (p.9).

The AIPLA Report of the Economic Survey, for those of you who aren't aware of it, is an annual publication that provides survey evidence of the mean and median costs of various types of IP proceedings.  I cite it myself all the time as it relates to nationwide medians and means.  I looked at the district court opinion cited above, and while it does express some reluctance to use the survey to determine typical rates in a specific location, it doesn't say that the AIPLA survey is unreliable as it applies to nationwide medians and means:

iii. The AIPLA Economic Survey

Perfect 10's reliance on the AIPLA Economic Survey comes slightly closer to the mark in that it indicates average and median rates for intellectual property lawyers practicing in the Los Angeles area. (See Dkt. No. 650–2, Exh. 7.) However, in Los Angeles, the AIPLA survey only differentiates between partners and associates, without any differentiation based on years of experience. (Id.) And even in those two categories, the survey's results are based on the reported rates of only 13 partners and 13 associates, hardly a representative sample of “prevailing market rates” in the Central District. (Id.)

iv. Other Evidence of Prevailing Market Rates

Because Mr. Mausner's rates, the Laffey Matrix, and the AIPLA survey offer little to no insight on the actual prevailing market rates in the Central district of California for attorneys of equal experience, skill, and reputation, the Court looks to other evidence and concludes Defendants rates are reasonable. . . .