throbber
Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 1 of 10 PageID #: 21530
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`
`
`
`Civil Action No. 4:14-CV-371
`Judge Mazzant
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`
`





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`§§§§§§
`
`IMPERIUM IP HOLDINGS (CAYMAN),
`LTD.
`
`v.
`
`SAMSUNG ELECTRONICS CO., LTD.,
`SAMSUNG ELECTRONICS AMERICA,
`INC., SAMSUNG
`TELECOMMUNICATIONS AMERICA,
`LLC, and SAMSUNG SEMICONDUCTOR,
`INC.
`
`
`MEMORANDUM OPINION AND ORDER
`
`
`
`Pending before the Court is Imperium IP Holdings (Cayman), Ltd.’s (“Imperium”)
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`Motion for § 285 Attorneys’ Fees and Non-Taxable Costs (Dkt. #363). After reviewing the
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`relevant pleadings, the Court grants in part and denies in part Imperium’s motion.
`
`BACKGROUND
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`On June 9, 2014, Imperium filed the instant action against Defendants, alleging
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`infringement of United States Patent Nos. 6,271,884 (the “’884 Patent), 7,092,029 (the “’029
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`Patent”), and 6,836,290 (the “’290 Patent”). On February 8, 2016, the jury returned a verdict
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`finding the following: (1) Defendants infringed Claims 1, 5, 14, and 17 of the ’884 Patent; (2)
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`Defendants infringed Claims 1, 6, and 7 of the ’029 Patent; (3) Defendants willfully infringed the
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`patents-in-suit; and (4) Claim 10 of the ’290 Patent was invalid for obviousness (Dkt. #253).
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`The jury awarded $4,840,772 in damages for infringement of the ’884 Patent and $2,129,608.50
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`in damages for infringement of the ’029 Patent (Dkt. #253). The jury’s award represents an
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`implied royalty rate of four cents per product for the ’884 Patent and two cents per product for
`
`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 2 of 10 PageID #: 21531
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`the ’029 Patent. On August 24, 2016, the Court awarded enhanced damages for willful
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`infringement and entered final judgment (Dkt. #329; Dkt. #330).
`
`
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`On May 11, 2017, Imperium filed the present motion for attorneys’ fees and non-taxable
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`costs (Dkt. #363). On May 26, 2017, Defendants filed a response (Dkt. #372). On June 5, 2017,
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`Imperium filed a reply (Dkt. #381). On June 13, 2017, Defendants filed a sur-reply (Dkt. #387).
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`LEGAL STANDARD
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`
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`Section 285 of Title 35 of the United States Code provides, “The court in exceptional
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`cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. “When
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`deciding whether to award attorney fees under § 285, a district court engages in a two-step
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`inquiry.” MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 915 (Fed. Cir. 2012). The court
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`first determines whether the case is exceptional and, if so, whether an award of attorney fees is
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`justified. Id. at 915–16 (citations omitted). The Supreme Court has defined “an ‘exceptional’
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`case [as] simply one that stands out from others with respect to the substantive strength of a
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`party’s litigating position (considering both the governing law and the facts of the case) or the
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`unreasonable manner in which the case was litigated.” Octane Fitness LLC v. Icon Health &
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`Fitness, Inc., 134 S.Ct. 1749, 1756 (2014).
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`District courts should consider the “totality of the circumstances” and use their discretion
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`to determine on a case-by-case basis whether a case is “exceptional.” Id. A nonexclusive list of
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`factors includes “frivolousness, motivation, objective unreasonableness (both in the factual and
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`legal components of the case) and the need in particular circumstances to advance considerations
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`of compensation and deterrence.” Id. at n.6. Cases that may merit an award of attorney fees
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`include “the rare case in which a party’s unreasonable conduct—while not necessarily
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`independently sanctionable—is nonetheless so ‘exceptional’ as to justify an award of fees” or “a
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`
`
`2
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 3 of 10 PageID #: 21532
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`case presenting either subjective bad faith or exceptionally meritless claims.” Id. at 1757. A
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`party seeking attorney fees under § 285 must prove the merits of their contentions by a
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`preponderance of the evidence. Id. at 1758.
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`ANALYSIS
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`A. Prevailing Party
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`
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`Defendants contend they are a prevailing party as the jury in this case and the U.S. Patent
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`Trial and Appeal Board in a parallel proceeding found two of the three patents-in-suit invalid.
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`Defendants further contend they prevailed because the Patent Office granted ex parte
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`reexamination of the third patent-in-suit. Imperium counters that it is the prevailing party
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`because it obtained an infringement judgment for damages.
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`
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`A plaintiff may be considered a prevailing party for attorney’s fees purposes “if they
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`succeed on any significant issue which achieve some of the benefit the [party] sought in bringing
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`suit.” Farrar v. Hobby, 506 U.S. 103, 109 (1992) (quoting Hensley v. Eckerhart, 461 U.S. 424,
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`433 (1983)). This occurs when a plaintiff “obtain[s] an enforceable judgment against the
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`defendant from whom fees are sought, or comparable relief through a consent decree or
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`settlement.” Id. at 111 (citations omitted). “In short, a plaintiff ‘prevails’ when actual relief on
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`the merits of his claim materially alters the legal relationship between the parties by modifying
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`the defendant’s behavior in a way that directly benefits the plaintiff.” Id. at 111–12. There can
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`be only one prevailing party, but a “party is not required . . . to prevail on all claims in order to
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`qualify.” Shum v. Intel Corp., 629 F.3d 1360, 1367–68 (Fed. Cir. 2010).
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`
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`Because there can be only one prevailing party, the Court finds that Imperium is the
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`“prevailing party” in this case. Imperium was successful in proving Defendants infringed
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`asserted claims in the ’884 and ’029 Patents. The jury awarded Imperium $4,840,772 in
`
`
`
`3
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 4 of 10 PageID #: 21533
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`damages for infringement of the ’884 Patent and $2,129,608.50 in damages for infringement of
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`the ’029 Patent. Following trial, the Court trebled the jury’s damages award for Defendants’
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`willful infringement. Imperium’s damages judgment against Defendants “materially alters the
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`legal relationship” between the parties. This is true because “[a] judgment for damages in any
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`amount . . . modifies [Defendants’] behavior for [Imperium’s] benefit by forcing [Defendants’]
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`to pay an amount of money [they] otherwise would not pay.” Farrar, 506 U.S. at 113. While
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`the jury found the ’290 Patent invalid, the Court recognizes that Imperium is not required to
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`succeed on every claim to be the prevailing party. Shum, 629 F.3d at 1367–68. Further, the
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`Court is unconvinced that the Patent Office’s grant of ex parte reexamination for the ’884 Patent
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`has any significant bearing on the Court’s determination of the prevailing party.
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`
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`Accordingly, Imperium is a prevailing party and thus is eligible for its attorney’s fees.
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`B. Exceptional Case
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`After considering the totality of the circumstances, the Court finds this case is
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`“exceptional” based on the unreasonable conduct of Defendants.
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`First, there was ample evidence at trial of Defendants’ willful infringement that
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`warranted the Court’s enhancement of damages. For instance, Mr. Melfi testified regarding
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`allegations of Defendants’ copying. Mr. Melfi testified that during his time working for ESS,1
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`Defendants sought information on how ESS made its camera and how to duplicate ESS’s camera
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`testing lab. He further testified that Defendants asked specifically about the patented technology
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`and requested source code. The evidence showed that Defendants used obtained information to
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`duplicate ESS’s camera testing lab. In addition, Mr. Bang, who testified for Defendants, stated
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`Defendants did not follow Imperium’s patents after 2011 or monitor Imperium’s previous
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`litigation regarding the patents-in-suit. Mr. Lee testified that in 2011, Defendants dropped
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`1 ESS is short for ESS Technology, Inc., an entity that assigned its rights in the patents-in-suit to Imperium.
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`
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`4
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 5 of 10 PageID #: 21534
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`pursuit of the Imperium’s patents. However, evidence produced at trial indicated the testimony
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`of Mr. Lee and Mr. Bang was untrue. In fact, Defendants knew of Imperium’s patents for years,
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`tracked those patents in other litigation, and tried to obtain those patents through a patent broker
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`before this case began. Despite knowing of Imperium’s patents since at least 2011, Defendants
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`never investigated to form a good faith belief as to non-infringement and invalidity. Instead, the
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`record indicates that Defendants used a patent broker to try to purchase the patents-in-suit
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`without revealing their identity.
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`A finding of willful infringement for purposes of enhanced damages does not require a
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`finding that a case is exceptional under § 285. Brooktree Corp. v. Advanced Micro Devices, Inc.,
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`977 F.2d 1555, 1582 (Fed. Cir. 1992). Nevertheless, “the willfulness of the infringement by the
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`accused infringer may be a sufficient basis in a particular case for finding the case ‘exceptional’
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`for purposes of awarding attorney fees to the prevailing patent owner.” Golight, Inc. v. Wal-
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`Mart Stores, Inc., 355 F.3d 1327, 1340 (Fed. Cir. 2004); see Serio-US Indus., Inc. v. Plastic
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`Recovery Techs. Corp., 459 F.3d 1311, 1321 (Fed. Cir. 2006) (“Exceptional cases usually feature
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`some material, inappropriate conduct related to the matter in litigation, such as willful
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`infringement, fraud or inequitable conduct . . . .”).
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`Second, Defendants made multiple material misrepresentations under oath and in their
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`pleadings. At the beginning of the case, Imperium points out that Defendants represented in its
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`September 2014 answer that it did not know of Imperium’s patents until the June 2014 filing of
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`this lawsuit. Later, in an interrogatory response, Defendants again represented that they did not
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`know of Imperium’s patents until June 2014. Defendants’ responses remained unchanged after
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`deposition and other discovery showed these statements to be incorrect. During trial, Mr. Bang
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`and Mr. Lee gave false testimony regarding Defendants’ knowledge of the patents-in-suit.
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`5
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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 6 of 10 PageID #: 21535
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`Further, Defendants misrepresented key facts bearing on infringement and willfulness, including
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`the fact that Defendants were tracking Imperium’s patents in an earlier litigation, the extent of
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`Defendants’ discussions about obtaining Imperium’s patents, and Defendants’ alleged pre-suit
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`analysis of them.
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`Third, Defendants failed to produce relevant documents timely. During discovery,
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`around July 2015, Imperium specifically requested emails or other documents relating to
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`discussions that Mr. Kaler had with counsel for Imperium in 2011, 2012, 2013, and 2014.
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`Apparently, Defendants never searched for any such documents until the fourth day of trial at
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`2:19 a.m. on February 4, 2016, when Defendants finally produced the requested documents.
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`Defendants, however, produced only documents found on Mr. Kaler’s laptop, omitted any
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`requested documents from Defendants’ own files. Only after Imperium and the Court raised the
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`issue of sanctions did Defendants search their own files for Kaler-related documents. On the
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`fifth day of trial, Defendants then produced a handful of hard-copy documents along with an
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`affidavit from Mr. Bang. This affidavit revealed these communications and documents between
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`Defendants and Mr. Kaler were kept on Mr. Bang’s computer in a separate folder titled,
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`“Imperium.”
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`Last, Defendants have continued to infringe the ’884 and ’029 Patents—after the jury
`
`found infringement, after the Court entered judgment, after the Court enhanced damages. The
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`Court considers Defendants’ continued infringement to be unreasonable, deliberate and willful in
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`nature, especially in light of the Court’s orders and the jury’s verdict. Affinity Labs of Tex., LLC
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`v. BMW N. Am., LLC, 783 F. Supp. 2d 891, 899 (E.D. Tex. 2011) (“Following a jury verdict and
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`entry of judgment of infringement and no invalidity, a defendant’s continued infringement will
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`be willful absent very unusual circumstances.”).
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`
`
`6
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 7 of 10 PageID #: 21536
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`It should be noted that none of Defendants’ conduct in isolation makes this case
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`exceptional. However, when a party does all of these things mentioned above and continues to
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`infringe the patents-in-suit, the Court can only conclude this case is exceptional. Accordingly,
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`the Court awards Imperium its attorney’s fees incurred during this litigation.
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`C. Reasonableness of the Fee Request
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`“[T]he awarding of attorney fees pursuant to 35 U.S.C. § 285 is unique to patent law and
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`therefore subject to Federal Circuit law.” Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340,
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`1343 (Fed. Cir. 2001). The Federal Circuit has “approv[ed] of use of the lodestar method in
`
`calculating an award of § 285 attorneys’ fees.” Innovention Toys, LLC v. MGA Entm’t, Inc., No.
`
`07-6510, 2014 WL 1276346, at *2 (E.D. La. March 27, 2014) (citing Mathis v. Spears, 857 F.2d
`
`749, 755 (Fed. Cir. 1988) (citing Hensley v. Eckerhart, 461 U.S. 424 (1982))). Therefore, the
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`Court will apply the two-step lodestar method.
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`The Court first calculates the “lodestar” by multiplying the number of hours an attorney
`
`reasonably spent on the case by an appropriate hourly rate, which is the market rate in the
`
`community for this work. See Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486,
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`490 (5th Cir. 2012). “A reasonable hourly rate is the prevailing market rate in the relevant legal
`
`community for similar services by lawyers of reasonably comparable skills, experience, and
`
`reputation.” Norman v. Hous. Auth. of City of Montgomery, 836 F.2d 1292, 1299 (11th Cir.
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`1988) (citing Blum v. Stenson, 465 U.S. 886, 895–96 n.11 (1984)). The relevant legal
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`community is the community where the district court sits. See Tollett v. City of Kemah, 285 F.3d
`
`357, 368 (5th Cir. 2002).
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`The party seeking reimbursement of attorney’s fees bears the burden of establishing the
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`number of hours expended through the presentation of adequately recorded time records as
`
`
`
`7
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 8 of 10 PageID #: 21537
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`evidence. See Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993). The Court should use this
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`time as a benchmark and then exclude any time that is excessive, duplicative, unnecessary, or
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`inadequately documented. Id. The hours remaining are those reasonably expended. Id. There is
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`a strong presumption of the reasonableness of the lodestar amount. See Perdue v. Kenny A.,
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`559 U.S. 542, 552 (2010); Saizan v. Delta Concrete Prod. Co., 448 F.3d 795, 800 (5th Cir.
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`2006).
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`After calculating the lodestar, the Court then considers whether the circumstances of the
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`particular case warrant an upward or downward lodestar adjustment. Migis v. Pearle Vision,
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`Inc., 135 F.3d 1041, 1047 (5th Cir. 1998). In making any lodestar adjustment, the Court looks to
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`twelve Johnson factors. Id. (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717–19
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`(5th Cir. 1974) (“(1) the time and labor required for the litigation; (2) the novelty and difficulty
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`of the questions presented; (3) the skill required to perform the legal services properly; (4) the
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`preclusion of other employment by the attorney due to acceptance of the case; (5) the customary
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`fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the
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`circumstances; (8) the amount involved and the result obtained; (9) the experience, reputation
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`and ability of the attorneys; (10) the ‘undesirability’ of the case; (11) the nature and length of the
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`professional relationship with the client; and (12) awards in similar cases.”)).
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`Here, Imperium asks the Court to award it $6,950,000 in attorney’s fees and $738,079.23
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`in non-taxable costs and expenses for litigating this case. In support of its attorney’s fee request,
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`Imperium provides the affidavit of its lead counsel, Mr. Alan Fisch (Dkt. #363, Exhibit 6). Mr.
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`Fisch’s affidavit does not give the Court enough information to determine the reasonableness of
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`Imperium’s fair estimate of attorney’s fees. Particularly, Imperium has not provided the Court
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`with the number of hours Imperium’s attorneys spent on this case. Watkins v. Fordice, 7 F.3d at
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`
`
`8
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 9 of 10 PageID #: 21538
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`457. Without this information, the Court cannot calculate the lodestar. Before granting
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`attorney’s fees for a specific amount, the Court orders Imperium to submit documentation, that
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`indicates the hours and billing rates for all legal assistants, associates, and partners who worked
`
`on this case.2 See Fed. R. Civ. P. 54(d).
`
`The Court finds Imperium is entitled to its non-taxable costs or expenses. The Federal
`
`Circuit interprets § 285 to “include those sums that the prevailing party incurs in the preparation
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`for and performance of legal services related to the suit.” Mathis, 857 F.2d at 757 (quoting
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`Central Soya, Inc. v. Geo. Hormel & Co., 723 F.2d 1573, 1578 (Fed. Cir. 1983)). Nevertheless,
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`the Court further finds Imperium may not recover its expert fees. “Section 285 does not include
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`shifting of expert fees . . . .” Amsted Indus. Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 379
`
`(Fed. Cir. 1994). A district court may, however, “invoke its inherent power to impose sanctions
`
`in the form of reasonable expert fees in excess of what is provided for by statute.” Takeda
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`Chem. Indus., Ltd. v. MylanLabs., Inc., 549 F.3d 1381, 1391 (Fed. Cir. 2008). “The use of this
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`inherent power is reserved for cases with ‘a finding of fraud or abuse of the judicial process.’”
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`Id. (quoting Amsted Indus., 23 F.3d at 378). The Court elects not to impose sanctions in the form
`
`of Imperium’s expert fees. Imperium has made no evidentiary showing that Defendants
`
`committed fraud or abused the judicial process to warrant such a sanction. See MarcTec, LLC,
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`664 F.3d at 921 (“[N]ot every case that qualifies as exceptional under § 285 will also qualify for
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`sanctions under the court's inherent power.”). Section 285 and the Court’s award of attorney’s
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`fees is adequate to compensate Imperium for the circumstances of this case. Therefore, the
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`Court reduces Imperium’s requested non-taxable costs by $156,397.79.
`
`
`2 The Court recognizes that Imperium offered to provide the Court with additional documentation on the particular
`hours and work performed by each Imperium attorney (Dkt. #363 at p. 10).
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`
`
`9
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`

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`Case 4:14-cv-00371-ALM Document 401 Filed 09/13/17 Page 10 of 10 PageID #: 21539
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`CONCLUSION
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`
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`It is therefore ORDERED that Imperium IP Holdings (Cayman), Ltd.’s Motion for § 285
`
`Attorneys’ Fees and Non-Taxable Costs (Dkt. #363) is GRANTED IN PART and DENIED IN
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`PART. The Court awards Imperium $581,681.44 in non-taxable costs or expenses. To
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`determine the amount of attorney’s fees awarded to Imperium, the Court ORDERS Imperium to
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`submit to the Court within seven days of this Order documentation that indicates the hours and
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`billing rates for all legal assistants, associates, and partners who worked on this case.
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`10
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`

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