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Category: Fees & Bad Faith

Alleged ‘Patent Troll’ Wants SCOTUS to Hear Fee Award Dispute

November 30, 2023

A recent Law 360 story by Kelly Lienhard, “Traxcell Asks High Court To Review Atty Fee Fight”, reports that Traxcell Technologies LLC has asked the U.S. Supreme Court to take up an appeal concerning attorney fees owed to Sprint and Verizon after the telecommunication companies beat its infringement suit, arguing that the alleged "exceptional" litigation conduct occurred before a final ruling.

A  petition for a writ of certiorari from Traxcell, which filed for bankruptcy earlier this year, claimed that the Federal Circuit erred when it affirmed attorney fee awards to units of Sprint Corp. and Verizon Communications Inc. based on so-called "baseless" litigation conduct from Traxcell's attorney, William Ramey III of the Houston firm Ramey LLP, as the conduct in question occurred before the court adopted a magistrate judge's ruling.

"It is black letter law that a Magistrate's ruling is not final until approved by a district court.  It was [an] error for the Panel to base its fee award entirely upon rulings that were not final and could not have been final until December 11, 2019," Traxcell said.  "None of the conduct that was found to be "exceptional" under [federal law] occurred after the Magistrate Judge's recommendation was made final on December 11, 2019."

Texas-based Traxcell, which has been accused of being a "patent troll" by groups like the Electronic Frontier Foundation, is on the hook for about $784,000 in fees owed to Sprint and $132,000 in fees owed to Verizon, after the companies won rulings that Traxcell's patent lawsuits were legally frivolous.  AT&T Inc., which had also been named in those lawsuits, did not request any fees, as it ended its litigation with Traxcell back in 2019.  A panel of Federal Circuit judges ruled in July without comment that the lower court was right to order Traxcell to pay legal fees incurred by lawyers for the major telecom firms.

Traxcell is now appealing that decision based on arguments that the Federal Circuit departed from typical proceedings and court precedent by issuing fee awards based on conduct that occurred before U.S. Magistrate Judge Roy Payne's ruling in a separate, but related, case was finalized.

Traxcell is asking the high court to either vacate or reverse the attorney fees granted to both Sprint and Verizon and find that the case was not exceptional.  Verizon and Sprint, the latter now owned by T-Mobile, moved to dismiss the bankruptcy attempt, telling the court that it was filed in bad faith.

Deep Attorney Fee Cuts, Judge Citing Billing Deficiencies

November 21, 2023

A recent Law 360 story by Dorothy Atkins, “’Alcon’s $1.2M Sanctions Fee Bid For Its MoFo Attys Slashed”, reports that a New York federal judge slashed Alcon Vision's $1.17 million fee request for its attorneys at Morrison Foerster LLP after securing sanctions against Lens.com over its bad faith counterclaims in a trademark dispute, instead awarding $227,000 after finding "glaring deficiencies" in the fee request.  In a 20-page opinion, U.S. District Judge Nina Gershon rejected Alcon Vision LLC's seven-figure request for attorney fees due to the numerous deficiencies and lack of supporting documentation provided by its legal team at Morrison Foerster.

Instead, the judge reduced the fee request as proposed by Lens.com, and she gave the company and its counsel 60 days to pay the fee award.  The sanctions award and fight over fees is the latest development in hotly contested intellectual property litigation that Texas-based Alcon, which was once owned by Novartis AG, kicked off in January 2018.  Alcon accused Las Vegas-based rival Lens.com of selling its trademarked products without permission and with outdated packaging in New York.

Lens.com hit back with antitrust counterclaims in February 2019, claiming Alcon was attacking it just to "ingratiate itself" with eye care providers that would "reward" Alcon by prescribing their customers its lenses.  But in July 2022, the judge slapped Lens.com Inc. and its attorneys with sanctions for filing bad faith counterclaims.  The judge found that the website's counterclaims served no legitimate purpose and were filed to "harass, and cause delay, expense and vexation to Alcon."  The judge ordered Lens.com and its counsel to pay Alcon's costs and attorney fees "caused by its bad faith and vexatious filing and maintaining" of its counterclaims, as well as fees arising from Lens.com's refusal to produce discovery.

The judge also called Lens.com's counterclaims in the dispute "problematic from the start," and ordered Alcon "to file an affidavit setting forth the costs and attorneys' fees for which I have found Lens.com and its counsel jointly and severally liable."  In response, Alcon's lead counsel of Morrison Foerster filed a seven-page declaration seeking $1.17 million in attorney fees for approximately 1,700 hours of work on behalf of 14 attorneys, including partners and associates, and four paralegals.

But Lens.com fired back, arguing that the fee request is excessive, unsupported and doesn't include time records or invoices.  Lens.com also argued that the declaration improperly seeks a single blended rate for its attorneys and an unidentified "standard hourly rate" for its paralegals, rather than the prevailing rate in the district, among other purported deficiencies.  Lens.com argued that it shouldn't have to pay anything in fees due to the legally deficient fee bid, but at most, Alcon should only be entitled to $227,000 in fees.

Judge Gershon mostly sided with Lens.com on the matter.  Her order noted that Morrison Foerster's declaration had "no supporting documentation and little detail" to support the fee calculation.  She rejected Alcon's assumption in the declaration that it is entitled to recover fees that it already paid to Morrison Foerster in connection with the sanctioned conduct, regardless of whether those fees were reasonable.  The judge concluded that ultimately Alcon's fee bid has "glaring deficiencies," including "vague" billing entries, and hundreds of hours of work invoiced in impermissible block billing, or lumping multiple distinct tasks into a single billing entry.

"Here, Alcon has not even attempted to justify, let alone sufficiently justified, as reasonable the hours or rates sought," the order says.  Although the judge noted that she could deny the fee request in its entirety due to the declaration's lack of support, she declined to do so.  However, she also refused to let Alcon submit additional support for its fee request, because the company didn't request permission to supplement the record, and it would require another round of briefing.

Instead, Judge Gershon agreed to adopt Lens.com's proposal to reduce the billable hours across the board by 62.4% and use a blended hourly rate of $355 for all attorneys and paralegals.  "Lens.com's proposal is well within the range of percentage reductions other courts have applied to requested hours for similar fee application deficiencies," the judge wrote, citing a New York federal judge's decision to slash a fee request by 80% earlier this year in Williamsburg Climbing Gym Co. v. Ronit Realty LLC.

Judge: Bad Faith Needed for Defense Fees in BIPA Class Action

July 31, 2023

A recent Law 360 story by Celeste Bott, “BIPA Defendants Must Show Bad Faith For Fees, Judge Says”, reports that an Illinois federal judge has rejected Christian Dior's argument that it should be the first defendant awarded attorney fees under Illinois' biometric privacy law, finding that a threshold showing of a plaintiff acting in bad faith would be required for such an award and that the luxury retailer couldn't meet that burden.

U.S. District Judge Elaine Bucklo in February dismissed the Illinois Biometric Information Privacy Act suit brought by lead plaintiff Delma Warmack-Stillwell, holding that an exemption under BIPA for data captured "from a patient in a health care setting" freed Christian Dior Inc. from the suit over its online tool for users to virtually try on sunglasses.

In May, Dior argued that Judge Bucklo should award it attorney fees and costs, saying BIPA's plain language makes clear that a "prevailing party" may recover its attorney fees and that the Illinois Supreme Court has held that prevailing parties include defendants.  But Judge Bucklo noted that the only way to enforce compliance with BIPA is through the statute's private right of action, and forcing plaintiffs who don't act in bad faith to foot the bill for a defendant's attorney fees would contradict that intent.

"Exposing plaintiffs bringing BIPA suits in good faith, even if ultimately unsuccessful, to attorneys' fees would unduly chill the sole enforcement mechanism for a law the legislature clearly intended to protect critical privacy interests and would defy BIPA's remedial purpose," the judge said.

Dior failed to establish Warmack-Stillwell had acted in bad faith by bringing her complaint, Judge Bucklo said, despite its arguments that she should have known better given two other similar lawsuits against other companies that were dismissed by Illinois federal judges under the same health care exemption — one before Warmack-Stillwell's case was filed and one tossed about a week after hers was filed.

Those district court rulings were not binding, Judge Bucklo said.  "Neither the Seventh Circuit nor the Illinois Supreme Court has expressed guidance on the matter, so it was not unreasonable for plaintiff to pursue her case," she said.  Judge Bucklo said it was "unnecessary" to decide whether BIPA allowed defendants to win attorney fees at all, because the law would still require a showing of bad faith, which Dior failed to meet.

Insureds Can’t Recover Attorney Fees for Work on Their Own Behalf

April 27, 2023

A recent Business Insurance by Judy Greenwald, “Insureds Can’t Recover Attorney Fees for Work on Their Own Behalf,” reports that, under California law, insureds may not recover attorneys fees for work they performed on their own behalf, a federal appeals court ruled in affirming a lower court decision in Travelers Cos. Inc. units’ favor.

Kathleen March and Patrick Bright, a married couple who are both attorneys and owners of Walking U Ranch LLC  in New Cuyama, California, were involved in an underlying property dispute with a neighbor for which Travelers Cos. units had a duty to defend under the insureds’ primary and excess agribusiness policies, according to court papers in The Travelers Indemnity Co. of Connecticut; Travelers Casualty Insurance Co. of America v. Walking U Ranch LLC, Katheen P. March; Patrick Bright.

The U.S. District Court in Pasadena ruled in Travelers’ favor on the couple’s bad faith breach claim and request for attorneys fees.  A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco affirmed the lower court ruling, saying, “Under California law … attorneys may not recover for work performed on behalf of themselves and another party with identical interests.”

Because Ms. March and Mr. Bright are married and Walking U Ranch’s sole owners, they “therefore all shared the same interest in the outcome of the underlying action.  “There is also no indication that March or Bright spent any extra time in the underlying action representing Walking U Ranch LLC rather than themselves,” the panel said in affirming the lower court’s summary judgment rejecting the bad faith claim.

Judge Recommends Gutting Attorney Fees in IP Case

April 11, 2023

A recent Law 360 story by Rachel Riley, “Ohio Judge Guts Counsel Fees in Archery Row IP,” reports that an Ohio federal magistrate judge has recommended slashing attorneys' request for fees and expenses by more than half when awarding an archery company for a default win in a bow patent and trademark dispute, saying the out-of-town lawyers were pricier than the district where they argued the suit.  U.S. Magistrate Judge Chelsey M. Vascura suggested that the court award Wisconsin-based MCP IP LLC about $109,000 in attorneys fees and some $1,500 in legal costs – a fraction of the nearly $240,000 total the company requested last month.

MCP alleged in a 2021 suit that Ohio outdoor retailer .30-06 Outdoors LLC and archery equipment brand Daibow Inc. ripped off more than a dozen of its bow patents for various designs and utilities and infringed its associated trademarks.  Last August, the federal district court ruled that the two accused archery companies had admitted to those allegations, by default, by failing to respond to the claims over the course of 18 months.  Judge Vascura agreed with MCP that the case met the "exceptional" threshold for awarding attorneys' fees in patent cases; however, the magistrate judge recommended cutting the proposed $168,631.95 attorney fee award by about $60,000 for two reasons.

First, Judge Vascura suggested a downward adjustment to the lodestar because the lead attorneys on the case, Kadie M. Jelenchick and Michelle A. Moran of Foley & Lardner LLP, are based in Milwaukee and thus charge more than average billing rates for intellectual property attorneys in the Southern District of Ohio.  Altogether, the legal team charged the plaintiffs for 314 hours of work on the case, with hourly rates between $330 and $700.

Second, Judge Vascura recommended reducing the lodestar because the lawsuit was only partially successful. MCP was awarded about $80,500 in damages – less than half of the $168,500 it sought — and the court denied the company's request for a preliminary injunction barring the defendants from further patent infringement, the judge said.

In a March 23 motion for attorneys' fees, MCP argued that the defendants' failure to appear in court and other bad-faith legal tactics made for exceptional circumstances.  Since the lawsuit was filed, the plaintiff alleged, .30-06 Outdoors' published a defamatory statement claiming the suit was racially motivated.  According to Judge Vascura's recent report, though, that statement was later deleted at the request of MCP's counsel.

Judge Vascura recommended that the court largely deny MCP's request for another $70,118.77 in litigation expenses, which MCP had only described as "consisting largely of professional services provided by local counsel and MCP IP's damages expert."  "Indeed, beyond a monthly total of fees paid to its damages expert and local counsel (along with modest expenses associated with mailing, parking, travel, and meals), Plaintiff provides no explanation of how these fees were calculated or the services for which these fees were incurred," Judge Vascura said.

If MCP sought reimbursement for fees paid to its local counsel, the company should have included those billing records with its attorneys fee request so the court could determine if they were reasonable, Judge Vascura said.  And though the law authorizes award of attorneys fees to winners of exceptional patent cases, it does not make the same allowance for expert witness fees, the judge said.  The attorneys fees already awarded should be enough to cover any additional costs created by the defendants' uncooperative behavior, Judge Vascura said.  She recommended standard expert witness fees of $40 a day for each day the damage expert spent attending a hearing plus any travel days, totaling $120.