A recent The Recorder story, “In Seminal Case, Chipmaker Asks Judge for $8.1 Million Fee Award,” reports that semiconductor Sidense Corp. may not make new law by recovering its $2.5 million “success fee” as part of an exceptional case attorney fee award.  But U.S. District Judge Susan Illston sounded poised to give the company most or all of the remaining $5.6 million it’s seeking in its long-running patent litigation with Kilopass Technology Inc.

Illston sounded reluctant to parse Sidense’s billing entries line by line—not even after the company and its lawyers admitted making a mathematical error that inflated their fee request by $1.1 million.  “There are only so many hours in the day,” Illston told Kilopass counsel Daralyn Durie, and she doesn’t want to launch “a cottage industry” in exceptional case fee accounting.

Instead Illston referred repeatedly to Kilopass’s unreasonable litigation conduct.  When Durie call Sidense’s fee request “Draconian,” Illston stopped her.  “The Draconian thing that happened here was the lawsuit,” she said.  Acknowledging Durie wasn’t counsel then, she described it as “a very sorry show.”

Backed by attorneys at Kilpatrick Townsend & Stockton, Sidense won summary judgment against Kilopass in 2012, then used the case to persuade the U.S. Court of Appeals for the Federal Circuit to soften its standard for declaring a patent case exceptional.  That decision was superseded by the Supreme Court’s decision in Octane Fitness v. Icon Health & Fitness.  Under the two rulings, Illston declared the Kilopass case exceptional in August of this year.

Sidense revealed that it has been seeking about $9.2 million in fees, representing $5.6 million in hourly billings and an additional $3.6 million success fee.  The firm acknowledges that a hybrid fee in an exceptional case is an issue of first impression. 

Durie and Kiopass had argued in briefing that a mathematical error inflated the success fee by $1.1 milion.  “Upon reflection Sidense agrees,” Kilpatrick partner Roger Cook wrote in a response, reducing the fee request from $9.2 million to $8.1 million.  The error underscores why Sidense should be required to submit detailed billing summaries and time sheets, Durie agrued.  “There may be other errors that we simply can’t uncover,” Durie said, adding that exceptional cases are rare and the burden on courts therefore shouldn’t be severe.

Cook argued that his client actually agreed to pay the $8 million fee under a hybrid fee arrangement in which Kilpatrick agreed to lower billing rates in exchange for bonus for a good result, such as summary judgment and/or attorney fee recovery.  “There’s no reason the court couldn’t look at what the client is actually paying,” Cook said.  "It's readily administrable."