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Imperium Ip Holdings (Cayman), Ltd. v. Samsung Electronics Co., Ltd.

United States District Court, E.D. Texas, Sherman Division

September 13, 2017

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

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Imperium IP Holdings (Cayman), Ltd.'s (“Imperium”) Motion for § 285 Attorneys' Fees and Non-Taxable Costs (Dkt. #363). After reviewing the relevant pleadings, the Court grants in part and denies in part 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). The jury's award represents an implied royalty rate of four cents per product for the '884 Patent and two cents per product for the '029 Patent. On August 24, 2016, the Court awarded enhanced damages for willful infringement and entered final judgment (Dkt. #329; Dkt. #330).

         On May 11, 2017, Imperium filed the present motion for attorneys' fees and non-taxable costs (Dkt. #363). On May 26, 2017, Defendants filed a response (Dkt. #372). On June 5, 2017, Imperium filed a reply (Dkt. #381). On June 13, 2017, Defendants filed a sur-reply (Dkt. #387).

         LEGAL STANDARD

         Section 285 of Title 35 of the United States Code provides, “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. “When deciding whether to award attorney fees under § 285, a district court engages in a two-step inquiry.” MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 915 (Fed. Cir. 2012). The court first determines whether the case is exceptional and, if so, whether an award of attorney fees is justified. Id. at 915-16 (citations omitted). The Supreme Court has defined “an ‘exceptional' case [as] simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014).

         District courts should consider the “totality of the circumstances” and use their discretion to determine on a case-by-case basis whether a case is “exceptional.” Id. A nonexclusive list of factors includes “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at n.6. Cases that may merit an award of attorney fees include “the rare case in which a party's unreasonable conduct-while not necessarily independently sanctionable-is nonetheless so ‘exceptional' as to justify an award of fees” or “a case presenting either subjective bad faith or exceptionally meritless claims.” Id. at 1757. A party seeking attorney fees under § 285 must prove the merits of their contentions by a preponderance of the evidence. Id. at 1758.

         ANALYSIS

         A. Prevailing Party

         Defendants contend they are a prevailing party as the jury in this case and the U.S. Patent Trial and Appeal Board in a parallel proceeding found two of the three patents-in-suit invalid. Defendants further contend they prevailed because the Patent Office granted ex parte reexamination of the third patent-in-suit. Imperium counters that it is the prevailing party because it obtained an infringement judgment for damages.

         A plaintiff may be considered a prevailing party for attorney's fees purposes “if they succeed on any significant issue which achieve some of the benefit the [party] sought in bringing suit.” Farrar v. Hobby, 506 U.S. 103, 109 (1992) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). This occurs when a plaintiff “obtain[s] an enforceable judgment against the defendant from whom fees are sought, or comparable relief through a consent decree or settlement.” Id. at 111 (citations omitted). “In short, a plaintiff ‘prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.” Id. at 111-12. There can be only one prevailing party, but a “party is not required . . . to prevail on all claims in order to qualify.” Shum v. Intel Corp., 629 F.3d 1360, 1367-68 (Fed. Cir. 2010).

         Because there can be only one prevailing party, the Court finds that Imperium is the “prevailing party” in this case. Imperium was successful in proving Defendants infringed asserted claims in the '884 and '029 Patents. The jury awarded Imperium $4, 840, 772 in damages for infringement of the '884 Patent and $2, 129, 608.50 in damages for infringement of the '029 Patent. Following trial, the Court trebled the jury's damages award for Defendants' willful infringement. Imperium's damages judgment against Defendants “materially alters the legal relationship” between the parties. This is true because “[a] judgment for damages in any amount . . . modifies [Defendants'] behavior for [Imperium's] benefit by forcing [Defendants'] to pay an amount of money [they] otherwise would not pay.” Farrar, 506 U.S. at 113. While the jury found the '290 Patent invalid, the Court recognizes that Imperium is not required to succeed on every claim to be the prevailing party. Shum, 629 F.3d at 1367-68. Further, the Court is unconvinced that the Patent Office's grant of ex parte reexamination for the '884 Patent has any significant bearing on the Court's determination of the prevailing party.

         Accordingly, Imperium is a prevailing party and thus is eligible for its ...


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