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Buchanan Ingersoll & Rooney PC

Tax Attorney Herman Bouma Publishes Article on Transfer Pricing in Tax Management International Forum
Attorney Herman B. Bouma published an article on U.S. transfer pricing regulations in the September 2006 issue of Tax Management International Forum as part of its issue on the topic "Additional Adjustments to be Made in the Wake of a Transfer Pricing Adjustment — U.S. Perspective."Bouma is counsel with the Washington, D.C., office of Buchanan Ingersoll & Rooney PC and is a member of the firm's Tax Section.

The issue offers the example of a company that must make transfer pricing adjustments, and then poses the question of what additional adjustments must be made, from the point of view of several countries. Bouma's article addresses the situation according to the tax laws and regulations of the United States.

The Tax Management International Forum is a quarterly publication of Tax Management International, a division of BNA International.

11-13-2006

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Buchanan Ingersoll & Rooney PC

BNA Publishes Tax Attorney John McGrady's Article on SSARs
The Bureau of National Affairs (BNA) has published Pittsburgh Tax attorney John E. McGrady III's article "Breathing New Life Into Stock Settled Stock Appreciation Rights" in its Executive Compensation Library. McGrady is a shareholder in the Tax Section of Buchanan Ingersoll & Rooney and is based in the firm's Pittsburgh office.

In the article, McGrady talks about recent developments in tax laws that have led to a renewed interest in Stock Settled Stock Appreciation Rights or SSARs as executive compensation vehicles.

He addresses their key advantages to employers, including their favorable treatment under FAS 123(R) and their disadvantages, which include employee responsibility for tax withholding obligations.

McGrady offers plan design and disclosure considerations, as well as tax and accounting considerations. Lastly, he summarizes corporate and securities laws as they relate to SSARs.

11-13-2006

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Baker & Hostetler, L.L.P.

IP Litigator: Tiffany Inc. v. eBay Inc.: Is eBay Liable for Actions of Counterfeit Tiffany Products?
Cleveland partner Deb Wilcox, co-chair of the firm’s Intellectual Property Litigation practice, co-authored an article for the September/October edition of IP Litigator titled, "Tiffany Inc. v. eBay Inc.: Is eBay Liable for Actions of Counterfeit Tiffany Products?"

The article, co-authored with an attorney from Pitney, Hardin, LLP in New York, focuses on the matter of Tiffany Inc. v. eBay Inc. According to the authors, "The primary issue to be determined is whether or not an online auction Web site company can be held liable for direct and/or contributory trademark infringement when counterfeit products are sold through its Web site. The result of the case will not only significantly affect online auction sites, but will also affect trademark owners, eBay users, and the counterfeiters themselves."

The article goes on to address several issues: 1) Why TIffany sued eBay; 2) Why eBay must defend its actions and policies; 3) Why society should be concerned; and 4) Whether Congress should get involved.

Cleveland associate Brandt Gebhardt assisted Wilcox in preparation of the article.

11-13-2006

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Ruskin, Moscou & Faltischek, PC

Douglas Cooper and the Cooper Family Endow Inaugural Chair in Urban Legal Issues at Fordham Law School
Ruskin Moscou Faltischek, P.C. announced today that Douglas A. Cooper, co-managing partner of the firm and a senior member of the litigation department has, together with family members Jerry Cooper and Dorothy Cooper, endowed The Cooper Family Chair in Urban Legal Issues at Fordham Law School. Douglas Cooper is Fordham Law Class of 1972 and Jerry Cooper is Fordham Law Class of 1953. The Chair is designed to advance scholarship in the area of urban legal issues, an area of particular interest to the Cooper family.

Professor and Associate Dean for Academic Affairs Matthew Diller is the first occupant of the chair. He earned both his A.B. and J.D. at Harvard University. He served as an editor of the Harvard Law Review and clerked for the late Hon. Walter R. Mansfield, U.S. Court of Appeals for the Second Circuit. Before joining the Fordham Law faculty in 1993, he was a staff attorney in the Civil Appeals and Law Reform Unit of the Legal Aid Society. Dean Diller is a leading expert on poverty law, with a focus on pubic benefits and disability law.

“We are delighted to have Dean Diller as chair of the Cooper Chair in Urban Legal Issues. His deep understanding of the complex intersection of legal theory and social science, and the consequences of governmental action in people’s lives, is profound,” noted Douglas Cooper. “My family and I are proud to participate in Fordham Law’s initiative to bring legal academia to the fore in a relevant and dynamic way, and hope the insights gained as a result of Dean Diller’s work will help improve people’s lives.”

Cooper has vast experience in general commercial litigation. He has tried numerous such cases in both the federal and state courts. In addition, he has argued appeals in the New York State Court of Appeals, the Appellate Divisions of the First, Second and Third Departments of the New York State Supreme Court, as well as in the United States Court of Appeals, Second Circuit.

Cooper has been involved in civic and political matters for many years. He is a past President of the Thomas Paine National Historical Association and past Chairman of the New Rochelle Public Library Foundation. He is also one of twelve members of the Board of Advisors of the Center for Crisis Public Relations and Litigation Studies at Lehigh University. In 2005, he was named to the board of trustees of The Nature Conservancy, Long Island Chapter. In 2006, he was named to the national board of The WILD Foundation.

11-13-2006

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Frommer Lawrence & Haug LLP

A Courtroom Standard Full Of Doubt
Though frequently equated with moral certainty, “beyond a reasonable doubt” –the guidance that all juries receive from judges in criminal cases in order to find a defendant guilty – remains one of those venerable legal concepts that too often is more honored in the breach than the observance. Its interpretation by jurors can be fraught with uncertainty. And small wonder! One juror’s “beyond a reasonable doubt” may mean something entirely different to another sitting in the same jury box.

Far short of being a precise marker with an exact meaning for all, the concept of beyond a reasonable doubt has evolved over many centuries since it was promulgated in English common law and adopted by the framers of the nation’s Constitution. In our criminal courts today, it is usually a highly subjective standard interpreted individually through the prism of a given juror’s personal history, beliefs, culture, prejudices, experiences, race and gender. Different backgrounds and different lives create standards.

Although a verdict based on beyond a reasonable doubt has to exceed that which is simply reasonable in a juror’s mind, it has become a concept flexible enough to change from jury to jury. In an ideal world, it would fall just below absolute certainty about a defendant’s guilt. “Beyond” is critical – the operative word. That is why a jury in a criminal case may entertain some reasonable doubt and properly still acquit. As an abstract ideal, such a high standard is wholly admirable, something few would dispute. In the real courtroom world, however, it is too often a notably problematic concept.

Fortunately, this kind of subjectivity is considerably less present in our civil courts where I have been practicing for many decades. There, the level of proof required to prevail in most cases is simply the “preponderance of evidence.” The judge or jury must be persuaded that the facts more likely favor the plaintiff than the defendant or vice versa.

Such a preponderance is meant to reward the more convincing evidence – i.e., its probable truth or accuracy – not the amount of evidence. A single, clearly knowledgeable witness may provide a preponderance of evidence over a dozen opposing witnesses with hazy, uninformed testimonies. In a civil court, a defendant is also required to testify. Also, unlike in a criminal court, if the defendant pleads the fifth, the jurors can assume he or she is hiding some damaging information. Unfortunately, what is sometimes the reality in a civil court is that jurors simply lack the knowledge or experience to make informed assessments of what is, and is not, true or accurate.

That a criminal court should demand a much higher standard for conviction is surely equitable and desirable from a societal perspective. The penalties meted out by our justice system to the convicted in criminal courts can be very severe and extreme up to and including capital punishment. That’s hardly comparable to the monetary judgments that typically stem from civil actions. The flood of wrongfully convicted defendants (many on Death Row) in criminal cases that have come to light in recent years, thanks particularly to DNA testing, underscores both the failure and absolute necessity of the beyond-a-reasonable- doubt standard.

Although juries do make mistakes – convicting the innocent and freeing the guilty – I remain a passionate believer in the jury system: a trial by a jury of one’s peers. In a democratic society, a jury of equals rather than a judge or some legislative body should determine guilt or innocence.

But here, again, a never-ending debate in legal circles concerns just how one defines a “peer.” In the final analysis, beyond a reasonable doubt depends on the composition of any given jury. As most skilled trial attorneys will tell you, selecting the “right” jury is the key to everything that subsequently happens in the courtroom. Every potential juror, being human, comes with baggage of some kind, and the best attorneys try to exploit that to their client’s advantage.

The still-disputed O.J. Simpson double murder trial presented a classic example. Although the accused lived in one of Los Angeles’ most exclusive sections, his lawyers were able to get the trial venue transferred to one of the city’s most depressed areas from which the acquitting, largely African-American jury was drawn. Such a jury’s perceptions of the world, including the concept of beyond a reasonable doubt, might vary considerably from those of Simpson’s affluent neighbors in the posh Brentwood section of Los Angeles.

To them, the glove that didn’t fit fell well beyond reasonable doubt. In the Simpson case, another factor that may have come into play is what legal scholars call jury nullification or willfully ignoring the evidence no matter how overwhelming – which a jury can, if it chooses, arbitrarily do. In the first O.J. trial, quite obviously, some jurors felt that, even if they were wrong, the not-guilty verdict would send a powerful message to the L.A. police, and the D.A.’s office, often viewed in the black community as racially biased.

When the families of the victims later brought a civil action against the acquitted O.J. Simpson in a different venue and where the reasonable doubt standard did not apply, the jury found for the plaintiffs.

A criminal justice system like ours, resting on the doctrine of beyond a reasonable doubt, is designed to produce the best and most equitable of all possible outcomes – freeing the innocent and convicting the guilty. But we live in an imperfect world, peopled with imperfect, fallible human beings who often err. Yet for all its faults, that system, I believe, remains the gold standard in global jurisprudence.

11-13-2006

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Frommer Lawrence & Haug LLP

Attorney's Fees: Compensation For Litigating The Exceptional Patent Infringement Case
Under Section 285 of the Patent statute, courts have discretion to award reasonable attorneys’ fees in patent infringement cases that are deemed “exceptional.” 35 U.S.C. § 285. The Federal Circuit noted that while the threat of enhanced damages for willful infringement under 35 U.S.C. § 284 deters bad faith conduct on the part of the accused infringer, the threat of attorneys’ fees under Section 285 is “the only deterrent to the equally improper bringing of clearly unwarranted suits on invalid or unenforceable patents.” Mathis v. Spears, 857 F.2d 749, 754 (Fed. Cir. 1988). Section 285 provides:

The court in exceptional cases may award reasonable attorneys’ fees to the prevailing party. 35 U.S.C. § 285.

A potential claim for attorneys’ fees can be valuable tool for a party accused of infringing a patent that turns out to have been procured through less than equitable means or where the plaintiff’s conduct exceeds the bounds of zealous advocacy. This article will focus on how such claims are made, what factors courts apply in deciding whether an award is warranted under Section 285, and how courts compute awards in patent cases. Along the way it will touch on other means to recover litigation expenses under Rules 11 and 37 of the Federal Rules of Civil Procedure and through the inherent equitable power of the court.

An award for attorneys’ fees is an exception to the practice adopted in this country that parties bear their own costs in litigation. The rationale behind the so-called “American Rule” is that a party should be able to approach the court for relief without the fear that if he is unsuccessful, he will be left to pay not only his attorney but his adversary’s attorney as well. Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717-718 (1967). Section 285 is an equitable exception to the American Rule intended to address cases where litigation is brought or maintained in bad faith. Mathis, 857 F.2d at 758.

By limiting awards under Section 285 to “exceptional” cases, Congress intended that attorneys’ fees should be applied sparingly and “that recovery of attorneys’ fees will not become an ordinary thing in patent suits.” S. Rep. No. 1503, 79th Cong., 2d Sess. (1946) (discussing the predecessor statute to 35 U.S.C. § 285). The “exceptional case” requirement has been interpreted to limit recovery of attorneys’ fees to those cases where there is clear and convincing evidence of bad faith or at least gross negligence by the losing party in bringing or maintaining the suit. Even in exceptional cases, awarding attorneys’ fees is within the court’s discretion. Mathis, 857 F.2d at 754.

Who is the Prevailing Party?
Attorneys’ fees under Section 285 are available only to the prevailing party. A prevailing party is one that has achieved at least some relief on the merits of the litigation “which alters the legal relationship of the parties.” Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1320 (Fed. Cir. 2004) (internal quotations omitted); Brooks Furniture v. Dutailier Int’l, 393 F.3d 1378, 1381 (Fed. Cir. 2005). A party is considered to have prevailed if it achieves success on a significant issue in the litigation resulting in at least some of the benefits sought in bringing the suit. The party does not have to prevail on all of its claims or defenses. For example, in Brooks the accused infringer was found to have prevailed when it achieved a judgment of non-infringement, despite the fact that the patent was found to be valid.

The prevailing party’s victory does not have to rest entirely on decisions in the litigation itself. In Inland Steel, the accused infringer initiated a reexamination of the patent-in-suit that effectively stayed the litigation. 364 F.3d at 1320. The Patent Office cancelled the patent during the reexamination and the District Court dismissed the case with prejudice. The Federal Circuit found that, by obtaining a dismissal with prejudice the accused infringer was the prevailing party for purposes of Section 285. Inland Steel, 364 F.3d at 1381.

Where a case ends before a judgment on the merits, the issue whether a party has prevailed will depend on whether there is a decision from the court affecting the legal relationship between the parties. For example, an accused infringer may be found to prevail when the patentee voluntarily dismisses a patent infringement complaint. Highway Equipment Co. Inc. v. FECO, Ltd., No. C03-0076, 2005 U.S. Dist. LEXIS 17313, at *14-*15 (N.D.Iowa April 22, 2005); Realtek Semiconductor Corp. v. Marvell Semiconductor, Inc., No. C-04-4265 (MMC), 2005 U.S.Dist. LEXIS 39332 at *11 (N.D.Cal. November 21, 2005). Likewise, entry of a consent decree would “demonstrate the requisite court-ordered change in the legal relationship between the plaintiff and the defendant” require to identify one party as having prevailed. Samsung Elec. Co. Ltd. v. Rambus, Inc., 398 F.Supp.2d 470, 488 (E.D.Va. 2005) (quoting Smyth v. Riviero, 282 F.3d 268, 281 (4th Cir. 2002)).

Settlement agreements, on the other hand, may not be sufficient to result in a party being declared the prevailing party for purposes of Section 285, particularly where there is no admission of liability. Samsung, 398 F.Supp.2d at 486. An accused infringer considering a settlement offer by a patentee where there may be an opportunity to seek attorneys’ fees is well advised to consider insisting on consent to a final judgment.

What Makes a Case Exceptional?
Section 285 provides for attorneys’ fees in patent cases only where the case is “exceptional,” that is, where the totality of the circumstances show that the losing party acted in bad faith or at least with gross negligence in bringing or maintaining the suit. Interspiro USA v. Figgie Int’l Inc., 18 F.3d 927, 933 (Fed. Cir. 1994). The prevailing party must demonstrate “material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions.” Brooks, 393 F.3d at 1381. Whether a case is exceptional under Section 285 is factual finding, subject to appellate review for clear error. S.C. Johnson Son, Inc. v. Carter-Wallace, Inc., 781 F.2d 198, 201 (Fed. Cir. 1986).

Inequitable Conduct
Inequitable conduct on the part of the patentee may give rise to a finding that a case is “exceptional” under Section 285. Indeed, inequitable conduct is a factor that “must be taken into consideration” in determining attorneys’ fees under Section 285. Pharmacia & Upjohn Co. v. Mylan Pharmaceuticals, Inc., 182 F.3d 1356, 1359-1360 (Fed. Cir. 1999) (remanding case for consideration of finding of inequitable conduct by patentee in another litigation). Where the court finds there has been inequitable conduct, it must also make factual findings whether or not the case is exceptional. 182 F.3d at 1360.

The evidentiary burden to prove inequitable conduct is high. There must be clear and convincing evidence that the patentee or its attorneys made a material misstatement or failed to disclose material information to the patent office during prosecution and that the misstatement or omission was done with the intent to deceive. Brasseler, U.S.A. v. Stryker Sales Corp., 267 F.3d 1370, 1379 (Fed. Cir. 2001).

In Brasseler, the Federal Circuit upheld an accused infringer’s award for attorneys’ fees where the patent inventors and the patent attorneys that prosecuted the application knew or should have known about sales of products embodying the patent prior to the “on-sale” bar date. 267 F.3d at 1384-1385. On the basis of inequitable conduct alone, the case was “exceptional” and warranted an award of attorneys’ fees. 267 F.3d at 1386. But success in an inequitable conduct defense does not necessarily make the case exceptional. Lighting World, Inc. v. Birchwood Lighting, Inc., 382 F.3d 1354, 1367 (Fed. Cir. 2004). The court must look at the totality of the circumstances, including the conduct of the parties, the closeness of the issues, and whether there is evidence of bad faith. Eltech Syst. Corp. v. PPG Indust., Inc., 903 F.2d 805, 811 (Fed. Cir. 1990).

Bad Faith Litigation
A case may also be found exceptional if it is (1) brought subjectively in bad faith and (2) is objectively baseless. Brooks, 393 F.3d at 1381. Where a patentee knew or should have known that its asserted claims are not infringed a court may infer that the case was brought or maintained in bad faith. Eltech, 903 F.2d at 810. Realtek, 2005 U.S.Dist. LEXIS 39332 at *12 (bad faith may be implied from “studied ignorance”); Haynes Int’l, Inc. v. Jessop Steel Co., 8 F.3d 1573, 1579 (Fed. Cir. 1993) (“a frivolous patent infringement suit is one which the patentee knew or, on reasonable investigation, should have known, was baseless” and can give rise to an exceptional case under 35 U.S.C. § 285). Subjective bad faith can be inferred where the patentee deliberately failed to investigate whether a claim element was absent from the accused device. Eltech, 903 F.2d at 810. A lawsuit is objectively baseless where “no reasonable litigant could realistically expect success on the merits.” Realtek, 2005 U.S.Dist. LEXIS 39332 at *19 (quoting Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indust., Inc., 508 U.S. 49 (1993)). In Realtek, the Federal Circuit affirmed an attorneys’ fee award where the accused device pre-dated the patent and was itself invalidating prior art.

Conduct that violates an attorney’s duty under Rule 11 of the Federal Rules of Civil Procedure may also give rise to an exceptional case. Brooks, 393 F.3d at 1381. Before bringing suit a patentee must have a good faith basis to believe the patent is valid and infringed. Failure to investigate before filing suit or maintaining a suit in the face of incontrovertible evidence that there is no infringement or that the patent is invalid may make a case exceptional. Realtek, 2005 U.S.Dist. LEXIS 39332 at *18; Eltech, 903 F.2d at 810.

In addition, attorneys’ fees can be recovered in a motion under Rule 11 itself for filing a baseless infringement claim. Refac Int’l. Ltd. v. Hitachi, Ltd, 921 F.2d 1247 (Fed. Cir. 1990) (remanding case to determine proper sanction under Rule 11 for filing baseless infringement claim); Phonometrics, Inc. v. Economy Inns of America, 349 F.3d 1356, 1360 and 1367 (Fed. Cir. 2003) (affirming Rule 11 sanction dismissing case and awarding attorneys’ fees where patentee refused to withdraw claims despite finding of non-infringement in related litigation). Sanctions under Rule 11(c)(2) include “an order directing payment to the movant of some or all of the reasonable attorneys’ fees and other expenses incurred as a direct result of the violation.” Fed. R. Civ. P. 11(c)(2). A motion under Rule 11 must comply with the “safe-harbor” provision that it be served twenty-one days before it is filed with the court, giving the patentee an opportunity to withdraw the complaint. Id. at 1365.

Litigation Misconduct
Even where the patentee asserts a patent in good faith, a case may be found exceptional based on misconduct and unprofessional behavior during litigation. For example, in Rambus Inc. v. Infineon Techs. AG litigation misconduct by the patentee alone was held sufficient to support a finding that the case was exceptional. 318 F.3d 1081, 1106 (Fed. Cir. 2003). This conduct included discovery abuses, obfuscatory discovery responses, false or misleading testimony by a party’s executives, and spoliation of evidence. See also Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1575 (Fed. Cir. 1996) (affirming award of attorneys’ fees where litigation misconduct included accused infringer’s attorney’s attempt to coach a witness by passing him a note with suggested testimony during a deposition).

The court must consider the totality of the circumstances when deciding whether the case is exceptional, including potential misconduct by both parties. The takeaway for any litigant in avoiding a claim for attorneys’ fees, of course, is to act professionally and ethically. And where opposing counsel acts unprofessionally, it is important to make a clear record of abuses that can support the factual findings necessary to sustain an attorneys’ fee award. See, Superior Fireplace Co. v. The Majestic Products Co., 270 F.3d 1358, 1377 (Fed. Cir. 2001)

Willful Infringement
An accused infringer should also be aware that a successful claim of willful infringement can result in an award for attorneys’ fees under Section 285 as well as enhanced damages under 35 U.S.C. § 284. Nexmed Holdings, Inc. v. Block Investment, Inc., No. 2:04-cv-288 (TS), 2006 U.S.Dist. LEXIS 45900, at *12-*13 (D.Utah July 6, 2006). From the perspective of the accused infringer, guarding against a future judgment assessing attorneys’ fees begins with avoiding willful infringement. When a potential infringer has notice of patent rights, he is required to take reasonable precautions to assure that his activities do not result in infringement. Underwater Devices Inc. v. Morrisson-Knudsen Co., Inc., 717 F.2d 1380, 1389 (Fed. Cir. 1983). Very often, the best defense to a charge of willful infringement is to get a legal opinion that the patent is not infringed, is invalid, or is unenforceable. Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004). Exculpatory opinions of counsel are important evidence that the infringer acted reasonably and with due care to avoid infringement. Imonex Services, Inc. v. W.H. Munzprufer Dietmar Trenner GmbH, 408 F.3d 1374, 1378 (Fed. Cir. 2005).

What is a Reasonable Fee?
Once the Court finds a case to be exceptional, it has discretion to determine an appropriate attorneys’ fee. Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1068 (Fed. Cir. 1983). The court must consider the fee award in light of the conduct that makes the case exceptional, including the closeness of the case, and the conduct of counsel and the parties. Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1344 (Fed. Cir. 2001) (“the amount of the attorney fees depends on the extent to which the case is exceptional”). A court may even decide no attorneys’ fees are warranted despite finding a case exceptional.

Attorneys’ fees are awarded to compensate a prevailing party for expenses that resulted from bad faith conduct. Where the case is exceptional because it never should have been brought in the first place, for example, because the patent was procured through fraud or where the infringement claims are baseless, attorneys’ fees are awarded based on work done through the entire litigation. Where the case is exceptional because of litigation misconduct, the court must base the award on litigation expenses that were the result of the misconduct. Rambus, 318 F.3d at 1106 (case remanded to apportion attorneys’ fee award to redress litigation misconduct).

To ascertain reasonable attorneys’ fees, most courts rely on the lodestar calculation, which calculates the total amount of fees by multiplying the reasonable number of hours worked by a reasonable hourly rate. Blanchard v. Bergeron, 489 U.S. 87, 94, 103 L. Ed. 2d 67, 109 S. Ct. 939 (1989). Generally, courts determine the number of hours by relying on evidence of time records, expense statements, and detailed, itemized billing records. Junker v. Eddings, 396 F.3d 1359, 1366 (Fed. Cir. 2005)

The court must determine whether the fees requested are reasonable under the circumstances. The law of the regional circuit is applied to determine a reasonable attorney’s fee award. Courts in the First Circuit analyze the amount of hours reported by “separating out work done in relation to a firm’s hierarchy, from senior partner to junior associate . . . ; eliminating time beyond that consistent with a standard of reasonable efficiency and productivity; and, assigning appropriate rates for the kinds of work done by those at different levels of expertise.” Codex Corp. v. Milgo Electronic Corp., 717 F.2d 622, 631 (1st Cir. 1983). The Fourth, Fifth, Ninth, Tenth, and Eleventh circuits have used twelve factors to determine whether hourly rate and number of hours worked were reasonable. See, e.g., Nikko Materials USA Inc. v. V.R.E. Service Co. Inc., 2006 U.S. Dist. LEXIS 3750 (N.D. Ca. Jan. 13, 2006); Suntiger, Inc. v. Telebrands Adv. Corp., No. 97-432-A, 2004 U.S. Dist. LEXIS 28226, at *19 (Ed. Va. March 29, 2004); Tyler v. Union Oil Co. of Ca., 304 F.3d 379, 390 (5th Cir. 2002); Jean v. Nelson, 863 F.2d 759, 773 (11th Cir. 1988). These factors, first enumerated in Johnson v. Ga. Highway Express, Inc., 88 F.2d 714, 717-19 (5th Cir. 1974), are:

(1) time and labor expended; (2) novelty and difficulty of the questions raised; (3) skill required to properly perform legal services rendered; (4) attorneys’ opportunity costs in pressing the litigation; (5) customary fee for like work; (6) attorneys’ expectation at the outset of litigation; (7) time limitations imposed by client or the circumstances of the case; (8) amount in controversy and the results obtained; (9) experience, reputation and ability of the attorney; (10) undesirability of the case within the legal community; (11) nature and length of professional relationship between the attorney and client; and (12) attorneys’ fees awarded in similar cases.

In assessing a reasonable rate to apply in making the lodestar calculation, courts often look to surveys showing customary billing rates. One survey cited by a number of courts is the American Intellectual Property Law Association Economic Survey, which reports billing rates and typical charges for intellectual property attorneys in different geographic regions. See, e.g., AGFA Corp. v. Creo Products, Inc., No. 00-10836 (GAO). 2004 U.S. Dist. LEXIS 21462, at *9 (D.Mass. October 5, 2004); Golden Voice Technology & Training, LLC v. Rockwell Electronic Commerce Corp., No. 6:01-1036-ORL-19 (JGG), 2004 U.S. Dist. LEXIS 22063, at *5-7 (M.D. Fla. Sep. 30, 2004).

An award under Section 285 is limited to attorneys’ fees. It does not permit recovery of other costs, for instance, expert witness fees. Amsted Indus., Inc., v. Buckeye Steel Castings Co., 23 F.3d 374, 377 (Fed. Cir. 1994). The court, nevertheless, can use its discretion and inherent equity power in appropriate cases to compensate a prevailing party for other expenses that were necessitated by the losing party’s bad faith conduct. Mathis, 857 F.2d at 759. For example, in Mathis, the court awarded the accused infringer its expert witness fees, as well as the cost of lodging out-of-town attorneys where the patentee committed inequitable conduct and conducted the case in clear bad faith. The court found that recovery of expert fees are proper where the expert witnesses were necessary and where the fees charged were reasonable. Likewise, it was reasonable to compensate the defendants for lodging expenses where multiple defendants were sued in an “exceptionally egregious case.” Id. 758-60.

Conclusion
While attorneys’ fees are not routinely awarded in patent infringement cases, they are an important means to recoup at least some of the costs in defending a baseless patent infringement suit. They also represent a deterrent to an opposing attorneys’ bad conduct during litigation. Keeping a potential claim under Section 285 in mind throughout the case, investigating the patentee’s basis for filing the suit in the first place, and pursuing inequitable conduct defenses vigorously will maximize the chance for your client to recover attorneys’ fees.

Stephen J. Lieb is a partner of the firm Frommer Lawrence & Haug LLP. Mr. Lieb’s practice focuses on patent litigation across a range of technologies including electronic data systems, semiconductor processing equipment and fabrication techniques, pharmaceuticals, and biochemical instrumentation. He also provides intellectual property counseling and strategic patent prosecution for clients in the electronics, computer systems, financial services, digital communications, and data encryption fields. Mr. Lieb thanks Ami Doshi for her assistance in preparing this article.

11-13-2006

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White & Case, LLP

Dispositive Motions in International Arbitration
Paul Friedland (New York) will speak about "Dispositive Motions in International Arbitration" at the International Arbitration Institute's conference.

11-12-2006

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