Case 4:14-cv-00371-ALM Document 404 Filed 09/13/17 Page 1 of 6 PageID #: 21549
`
`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
`
`
`
`
`Civil Action No. 4:14-CV-371
`Judge Mazzant
`
`
`
`§
`§
`§
`§
`§
`
`§§§§§§
`
`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”)
`
`Motion for Taxation of Costs (Dkt. #369). After reviewing the relevant pleadings, the Court
`
`grants Imperium’s motion.
`
`BACKGROUND
`
`On June 9, 2014, Imperium filed the instant action against Defendants, alleging
`
`infringement of United States Patent Nos. 6,271,884 (the “’884 Patent), 7,092,029 (the “’029
`
`Patent”), and 6,836,290 (the “’290 Patent”). On February 8, 2016, the jury returned a verdict
`
`finding the following: (1) Defendants infringed Claims 1, 5, 14, and 17 of the ’884 Patent; (2)
`
`Defendants infringed Claims 1, 6, and 7 of the ’029 Patent; (3) Defendants willfully infringed the
`
`patents-in-suit; and (4) Claim 10 of the ’290 Patent was invalid for obviousness (Dkt. #253).
`
`The jury awarded $4,840,772 in damages for infringement of the ’884 Patent and $2,129,608.50
`
`in damages for infringement of the ’029 Patent (Dkt. #253). On August 24, 2016, the Court
`
`awarded enhanced damages for willful infringement and entered final judgment (Dkt. #329;
`
`Dkt. #330).
`
`

`

`Case 4:14-cv-00371-ALM Document 404 Filed 09/13/17 Page 2 of 6 PageID #: 21550
`
`
`
`On May 19, 2017, Imperium filed the present motion for taxation of costs (Dkt. #369).
`
`On June 2, 2017, Defendants filed a response (Dkt. #377). On June 9, 2017, Imperium filed a
`
`reply (Dkt. #384). On June 13, 2017, Defendants filed a sur-reply (Dkt. #391).
`
`LEGAL STANDARD
`
`Rule 54(d)(1) of the Federal Rules of Civil Procedure states in relevant part that, “costs—
`
`other than attorney's fees—should be allowed to the prevailing party” unless the Court provides
`
`otherwise. Fed. R. Civ. P. 54(d)(1). Rule 54(d) affords courts discretion in awarding costs to
`
`prevailing parties. Kouichi Taniguchi v. Kan Pac. Saipan, Ltd., 132 S. Ct. 1997, 2002 (2012).
`
`This discretion is bridled by 28 U.S.C. § 1920, which limits the types of costs a court can tax
`
`against an unsuccessful party. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441–42
`
`(1987). Section 1920 permits only the following costs:
`
`(1) Fees of the clerk and marshal;
`(2) Fees for printed or electronically recorded transcripts necessarily obtained for
`use in the case;
`(3) Fees and disbursements for printing and witnesses;
`(4) Fees for exemplification and the costs of making copies of any materials
`where the copies are necessarily obtained for use in the case;
`(5) Docket fees under section 1923 of this title;
`(6) Compensation of court appointed experts, compensation of interpreters, and
`salaries, fees, expenses, and costs of special interpretation services under section
`1828 of this title.
`
`28 U.S.C. § 1920.
`
`A district court may decline to award costs listed in the statute but may not award costs
`
`omitted from the statute. Crawford, 482 U.S. at 441–42. “Although the prevailing party is
`
`entitled to its costs, the prevailing party must still demonstrate that its costs are recoverable under
`
`Fifth Circuit precedent, and the prevailing party should not burden the Court with costs that are
`
`clearly not recoverable under the law.” Eolas Techs. Inc. v. Adobe Sys., Inc., 891 F. Supp. 2d
`
`803, 804 (E.D. Tex. 2012).
`
`
`
`2
`
`

`

`Case 4:14-cv-00371-ALM Document 404 Filed 09/13/17 Page 3 of 6 PageID #: 21551
`
`ANALYSIS
`
`
`
`Imperium seeks to recover taxable costs under Rule 54(d) of the Federal Rules of Civil
`
`Procedure. Defendants assert that Imperium is not the prevailing party and thus should not
`
`recover any taxable costs. The Court in a previous motion resolved that Imperium is the
`
`prevailing party in this litigation. Thus, Imperium is entitled to all taxable costs allowable under
`
`Rule 54(d)(1) and 28 U.S.C. § 1920.
`
`
`
`The parties dispute three areas of taxable costs recoverable by Imperium. Specifically,
`
`the parties dispute the following: (1) whether such costs should be reduced in light of the Patent
`
`Trial and Appeal Board’s (“PTAB”) decision to invalidate the ’029 Patent and in light of the
`
`jury’s verdict invalidating the ’290 Patent; (2) whether Imperium can recover per-diem costs for
`
`certain trial witnesses who traveled from out-of-town; and (3) whether Imperium can recover the
`
`costs to convert and Bates-stamp documents for production, as required by the Court’s
`
`E-Discovery order. The Court will consider each of these arguments in separately.
`
`A. Whether Imperium’s Costs Should Be Reduced
`
`Imperium asserts it is entitled to its taxable costs without reduction. Imperium contends
`
`its costs were reasonably necessary for this litigation at the time they were incurred.
`
`Defendants respond by stating Imperium cannot recover costs related to the ’290 and
`
`’029 Patents. Defendants point to two statutes to advance this position. Defendants state that
`
`35 U.S.C. § 288 precludes the recovery of costs—even in the presence of an infringement
`
`verdict—for patents with invalid claims that the patentee did not disclaim before filing suit.
`
`Defendants further state that 28 U.S.C. § 1928 similarly precludes the recovery of costs.
`
`Defendants encourage the Court to exercise its discretion and apportion Imperium’s costs to
`
`reflect only the extent Imperium prevailed in this action.
`
`
`
`3
`
`

`

`Case 4:14-cv-00371-ALM Document 404 Filed 09/13/17 Page 4 of 6 PageID #: 21552
`
`The Court is unpersuaded by Defendants’ citations to 35 U.S.C. § 288 and to 28 U.S.C.
`
`§ 1928. Section 288 expressly states:
`
`Whenever a claim of a patent is invalid, an action may be maintained for the
`infringement of a claim of the patent which may be valid. The patentee shall
`recover no costs unless a disclaimer of the invalid claim has been entered at the
`Patent and Trademark Office before the commencement of the suit.
`
`35 U.S.C. § 288. The Federal Circuit has stated that § 288 does not apply when claims in a
`
`patent are declared invalid during the pendency of the lawsuit. See Bradford Co. v. Jefferson
`
`Smurfit Corp., No. 2000-1511, 2001 WL 35738792, at *7 (Fed. Cir. Oct. 31, 2001) (upholding
`
`the district court’s award of costs and holding that for the patent claim to be considered invalid,
`
`“there must have been a prior determination of invalidity before the patent infringement for
`
`which costs are now sought”). Likewise, none of the facts in this case involves any issue or
`
`conduct contemplated by § 1928. As such, it does not apply. See 28 U.S.C. § 1928 (“Whenever
`
`a judgment is rendered for the plaintiff in any patent infringement action involving a part of a
`
`patent and it appears that the patentee, in his specifications, claimed to be, but was not, the
`
`original and first inventor or discoverer of any material or substantial part of the thing patented,
`
`no costs shall be included in such judgment, unless the proper disclaimer has been filed in the
`
`United States Patent and Trademark Office prior to the commencement of the action.”).
`
`
`
`The Fifth Circuit has held that there is a “strong presumption” that the prevailing party
`
`will be awarded costs, and a denial or reduction, therefore, is “in the nature of a penalty.”
`
`Pacheco v. Mineta, 448 F.3d 783, 793–94 (5th Cir. 2006) (quoting Schwarz v. Folloder, 767
`
`F.2d 125, 131 (5th Cir. 1985)). Defendants have not identified a compelling basis to reduce an
`
`award of taxable costs. Therefore, the Court finds Imperium should receive its taxable costs
`
`under Rule 54(d) without reduction.
`
`
`
`4
`
`

`

`Case 4:14-cv-00371-ALM Document 404 Filed 09/13/17 Page 5 of 6 PageID #: 21553
`
`B. Whether Imperium Can Recover Per-Diem Costs for Certain Trial Witnesses Who
`
`Traveled from Out-of-Town
`
`Defendants have declined to address this category of disputed taxable costs in their
`
`briefing, indicating it is no longer in dispute between the parties. Accordingly, the Court awards
`
`Imperium these costs pursuant to Rule 54(d)(3), which allows fees and disbursement for
`
`witnesses.
`
`C. Whether Imperium Can Recover the Costs to Convert and Bates-Stamp Documents
`
`for Production
`
`Imperium contends it is entitled to costs associated with converting its files to TIFF
`
`format with extracted text (i.e., OCR’d) and labeling each page with a unique production number
`
`(i.e., a Bates number). According to Imperium, such costs are considered “costs of making
`
`copies of any materials where the copies are necessarily obtained for use in the case.” 28 U.S.C.
`
`§ 1920(4). Because the Court’s E-Discovery Order required that documents be in TIFF format
`
`and be Bates-stamped, Imperium argues that these costs are taxable (Dkt. #72 at p. 2).
`
`Defendants maintain that § 1920 forecloses the recovery of such costs.
`
`Despite the Court’s E-Discovery Order requiring produced documents to be in TIFF
`
`format and Bates-stamped, that fact alone would not entitle Imperium to these costs. Instead, the
`
`Court must determine whether converting documents to TIFF format and Bates-stamping them
`
`constitute “making copies” under § 1920(4). The Court first considers file conversion to be a
`
`form of copying and thus may be included under § 1920(4). See DSS Tech. Mgmt. Inc. v.
`
`Taiwan Semiconductor Mfg. Co., No. 2:14-CV-00199, 2016 WL 5942316, at *8 (E.D. Tex. Oct.
`
`13, 2016) (indicating the “costs of making copies” under § 1920(4) “may include the cost of
`
`converting a document to a format (such as TIFF or PDF) required by an E-Discovery Order”);
`
`
`
`5
`
`

`

`Case 4:14-cv-00371-ALM Document 404 Filed 09/13/17 Page 6 of 6 PageID #: 21554
`
`Eolas Techs. Inc. v. Adobe Sys., Inc., 891 F. Supp. 2d 803, 807 (E.D. Tex. 2012) (“Generally, file
`
`conversion is copying a file of one type to a file of another type.”). Accordingly, costs related to
`
`converting documents to TIFF format, as required by an E-Discovery Order, are recoverable
`
`because the documents were “necessarily obtained for use in the case.” 28 U.S.C. § 1920(4).
`
`However, Bates-stamping documents are not recoverable since “stamping documents with
`
`unique numbering cannot be considered ‘making copies,’ regardless of the E-Discovery Order
`
`requirements.” DSS Tech., 2016 WL 5942316, at *8. Imperium’s reliance on Macrosolve, Inc.
`
`v. Antenna Software Inc. to support the recovery of Bates-stamped documents is misplaced. The
`
`Court does not read Macrosolve to allow costs associated with Bates-stamping documents. To
`
`the extent Macrosolve holds otherwise, the Court disagrees that Bates-stamping is allowable
`
`under § 1920(4). Therefore, converting documents to TIFF format is taxable and Bates-stamping
`
`documents are not.
`
`CONCLUSION
`
`
`
`It is therefore ORDERED that Imperium IP Holdings (Cayman), Ltd.’s Motion for
`
`Taxation of Costs (Dkt. #369) is GRANTED IN PART and DENIED IN PART. Imperium
`
`may recover its unopposed taxable costs, but Imperium cannot recover any costs related to
`
`Bates-stamping documents. Imperium is therefore ORDERED to remove the unrecoverable
`
`costs and resubmit to the clerk within seven days of this Order a Bill of Costs reflecting the costs
`
`awarded by this Order.
`
`
`
`
`
`6
`
`