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Fee Request Challenge Sought in IP Suit

June 2, 2017 | Posted in : Expenses / Costs, Fee Award, Fee Entitlement / Recoverability, Fee Jurisprudence, Fee Request, Prevailing Party Issues

A recent Law 360 story by Nicole Narea, “Stanford, ThermoLife Seek To Slash Fee Award in IP Suit” reports that Stanford University and ThermoLife International asked a California federal court to slash attorneys’ fees awarded to two pharmaceutical companies they unsuccessfully sued for patent infringement over their alleged use of certain drug ingredients, proposing they be cut from $1.3 million to less than $10,000 total.
 
Stanford and ThermoLife International LLC argued that Vital Pharmaceuticals Inc. and Hi-Tech Pharmaceuticals Inc. failed to parse the legal fees and costs related only to the infringement of a particular patent for drug ingredients resulting in improved vascular function and that Hi-Tech should not be entitled to a penny in fees given that its counsel allegedly cannot demonstrate that they expended excess time working on the case despite Stanford's conduct.  Furthermore, they asserted that Vital's fees should be limited to its attorneys' work on the vascular function patent or no more than a third of its adjusted fees.

"A number of decisions support the notion that prevailing parties are only entitled to an award of attorneys' fees with respect to amounts they would not have spent but for the exceptional conduct," the motion for reconsideration states.  "Because neither of the defendants has attempted to show what fees stemmed from the allegedly lack of [the vascular function] patent prefiling investigation — instead, taking a kitchen-sink approach of claiming all alleged fees and expenses — the fee award should be zero."

On April 4, U.S. District Judge Janis L. Sammartino granted Vital and Hi-Tech's additional bid for fees under the U.S. Supreme Court’s Octane Fitness ruling, saying ThermoLife and Stanford hadn't done enough research before filing patent infringement litigation over the use of the vascular function patent and pursued a "file-and-settle" strategy.  The litigation began in 2013, when ThermoLife and Stanford filed 81 related patent suits in California's Southern District, but the judge found all the patents-in-suit were invalid.

Vital had sought nearly $370,000 in attorneys’ fees, and Hi-Tech sought $913,370.  Stanford and ThermoLife suggested, however, that Hi-Tech and Vital be awarded no more than $4,673.37 and $4,156.62 respectively of their nontaxable costs.  Stanford and ThermoLife have asked the court to reconsider its determination that the case was exceptional under Octane Fitness, permitting the pharmaceutical companies to recover certain fees.  If the court reverses its decision, the fees requested by the companies would be moot.

But in the event that the court holds its prior decision, Stanford and ThermoLife argued that the companies should only be able to claim costs related to exceptional conduct in the pre-filing investigation of the vascular function patent.  They asserted that Hi-Tech cannot “show its lawyers spent a minute more than they would working on the case,” even if their pre-filing investigation of the vascular function patent was deemed to be sufficient by the court.

Stanford and ThermoLife additionally claimed that Vital’s accounting show that its attorneys spent only 12.2 hours working on the vascular function patent and therefore should only be able to claim that time billed.  Alternatively, they suggested that Vital may be entitled to a third of its requested fees given that the vascular function patent was only one of the three patents it was accused of infringing.