Opinion
1:97CV01170
April 29, 2002
MEMORANDUM OPINION
I. INTRODUCTION
Currently before the Court is Plaintiff John M. J. Madey's ("Plaintiff") Motion to Defer Consideration of Defendant Duke University's ("Defendant" or "Duke") Motion for Attorney Fees and Bill of Costs [Document #118] [hereinafter "Plaintiff's Motion to Defer"]. For the reasons explained below, Plaintiff's Motion to Defer is DENIED. Also before the Court is Defendant's Petition regarding its Bill of Costs [Document #116]. With respect to the Bill of Costs, Plaintiff has filed an Objection and Motion to Disallow Duke University's Bill of Costs [Document #120] [hereinafter "Plaintiffs Motion to Disallow"]. For the reasons explained below, Defendant's Petition regarding the Bill of Costs is DENIED and, as also explained below, Plaintiff's Motion to Disallow is GRANTED. Finally, before the Court is Defendant's Motion for Attorney Fees [Document #109] pursuant to which Defendant seeks to recover fees and expenses that relate to the patent infringement claims asserted by Plaintiff. For the reasons explained below, Defendant's Motion for Attorney Fees is DENIED.
II. FACTUAL AND PROCEDURAL BACKGROUND
The documents available to the Court indicate that Plaintiff, an internationally renowned scholar in the field of electromagnetic radiation, was hired by Defendant in 1989 as a tenured professor. Plaintiff was expected to assist Defendant in establishing a Free Electron Laser Laboratory ("FEL Lab"). Prior to his employment with Defendant, Plaintiff secured United States Patent Number 4,641,103 for the microwave electron guns used in the FEL Lab ("103 patent"). Plaintiff is also the co-owner and exclusive patent holder for United States Patent Number 5,130,994 ("994 patent"), which covers the Mark III, a Free Electron Laser that is also used in the FEL Lab.
At some point following Plaintiff's arrival at Duke, Defendant and North Carolina Central University ("NCCU") entered into a subcontract involving what was referred to as the "NCCU test stand gun." The gun was assembled and constructed pursuant to a government contract. The subcontract between Defendant and NCCU provided that Defendant was to assist NCCU in researching the test stand gun, which was closely patterned on the Mark III laser, to which Plaintiff held the patent. After the NCCU test stand gun was constructed, NCCU received a federal grant for the commissioning and characterization of a microwave electron gun. Defendant thereafter submitted a research proposal to NCCU, proposing that Duke participate in the commissioning and characterization of the new NCCU microwave electron gun. Plaintiff endorsed this proposal by naming himself as Principal Investigator and signing the proposal on behalf of Defendant. Plaintiff also served as Senior Investigator on a second subcontract entered into between Duke and NCCU based upon the research proposal.
Because of the work conducted by Plaintiff in the field of electromagnetic radiation, Defendant received a federal research grant from the Office of Naval Research. Under the terms of the grant, Plaintiff was to be the Principal Investigator for the research conducted by Defendant's staff. According to Plaintiff, when he objected to the manner in which the research funds were being used, he was removed from his position as Director of the Lab. Also, according to Plaintiff, Defendant petitioned the Office of Naval Research to remove him as Principal Investigator on the grant. Because of Defendant's actions, Plaintiff ultimately submitted his resignation to Duke.
As a result of the aforementioned events, Plaintiff filed suit against Defendant, claiming infringement of both the 103 and the 994 patents (Counts I and II), conversion of property and misappropriation of business opportunities (Count III), violation of 29 U.S.C. § 621-634 (Count IV), violation of civil rights under 42 U.S.C. § 1983 (Count V), constructive fraud (Count VI), and breach of contract (Count VII). Defendant filed a Motion to Dismiss, which was granted with respect to Counts IV and V, but denied with respect to Plaintiff's other claims. This Court, however, eventually granted summary judgment in favor of Defendant with respect to Plaintiff's patent claims (Counts I and II). The Court based its decision regarding summary judgment on its finding that Defendant's use of the 103 and 994 patents was protected by the experimental use doctrine and its finding that Plaintiff had authorized Defendant's manufacture of the NCCU test stand gun through, among other things, his participation in the research proposal. Plaintiff's remaining claims were all state law claims, prompting this Court to decline supplemental jurisdiction and dismiss the remaining claims without prejudice. With respect to the Court's Judgment, Plaintiff filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit on July 13, 2001.
As noted above, Plaintiff asserted two distinct patent claims. First, Plaintiff alleged that Defendant infringed both the 103 patent and the 994 patent by manufacturing and using microwave guns and the Mark III in the FEL Lab. Plaintiff also alleged a separate claim that the manufacture and use of the NCCU test stand gun violated the 103 patent.
Prior to Plaintiff's Notice of Appeal, on June 29, 2001, Defendant filed its Motion for Attorney Fees [Document #109] pursuant to 35 U.S.C. § 285, seeking to recover attorneys' fees and expenses related to the patent claims that were dismissed on summary judgment. On August 1, 2001, Defendant also submitted its Bill of Costs [Document #116] pursuant to Rule 54 of the Federal Rules of Civil Procedure and Middle District of North Carolina Local Rule 54.1 [hereinafter "Local Rule 54.1"]. In response thereto, on August 10, 2001, Plaintiff filed his Motion to Disallow [Document #120]. Furthermore, just prior to filing his Motion to Disallow, Plaintiff, on August 9, 2001, filed his Motion to Defer [Document #118]. Pursuant to his Motion to Defer, Plaintiff seeks to have the Court defer its consideration of the issues of attorneys' fees and costs until the pending Federal Circuit appeal is resolved. The Court will address each of these motions in turn, beginning, for both practical and logistical reasons, with Plaintiff's Motion to Defer.
35 U.S.C. § 285 states that "[t]he [C]ourt in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285.
III. DISCUSSION
A. Plaintiff's Motion to Defer
As previously stated, Plaintiff's Motion to Defer seeks to have the Court defer consideration of Defendant's Motion for Attorney Fees and its Bill of Costs, pursuant to which Defendant seeks to recover $571,815.00 in attorneys' fees, $21,740.00 in expenses, and $16, 983.53 in taxable costs. It is Plaintiff's desire that the Court defer its decision with regard to the aforementioned fees and costs until after the Federal Circuit Court of Appeals has made its decision concerning Plaintiff's appeal. In support of his Motion to Defer, Plaintiff makes several factual arguments. Specifically, Plaintiff claims that Duke is not the prevailing party because it has yet to prevail at the appellate level, that this Court declined to exercise supplemental jurisdiction over Plaintiff's state law claims, that a detailed inquiry will be necessary into the propriety and amount of any fee award that may be granted, and that Defendant allegedly failed to engage in the consultation required under Middle District of North Carolina Local Rule 54.2 [hereinafter "Local Rule 54.2"] prior to filing its Motion for Attorney Fees. (Mem. of Law Supp. Pl.'s Mot. Defer Consideration Duke U.S. Mot. Att'y Fees Bill of Costs, at 6-7.) For these reasons, Plaintiff asserts that this Court should delay its decision with regard to Defendant's Motion for Attorney Fees and its Bill of Costs.
The only legal support provided by Plaintiff for his Motion to Defer comes from the advisory committee notes to Rule 54 of the Federal Rules of Civil Procedure. The language relied upon by Plaintiff states that "[i]f an appeal on the merits of the case is taken, the [C]ourt may rule on the claim for fees, may defer its ruling on the motion, or may deny the motion without prejudice, directing under subdivision (d)(2)(B) a new period for filing after the appeal has been resolved." Fed.R.Civ.P. 54 advisory committee's note (1993 amendments). Taken at face value, the note plainly states that the Court may, after an appeal is taken, defer its decision as to fees, or rule on the issue of fees notwithstanding the pending appeal. Plaintiff's reading of the note, however, is a bit more generous. According to Plaintiff, the note suggests that the Federal Rules of Civil Procedure contemplate instances where the Court should defer its consideration of a motion for fees. See generally Quinones v. City of Evanston, 1995 WL 656690, at *4 (N.D. Ill. Nov. 6, 1995) (noting that the issue of attorney fees had been deferred until the Seventh Circuit resolved the appeal). Plaintiff maintains that the instant case presents such a scenario.
The Court notes, however, that for the most part, the factual arguments raised by Plaintiff in support of his Motion to Defer speak more directly to the propriety of ultimately granting or denying fees and costs and not necessarily to the issue of whether it is appropriate for the Court to currently consider Defendant's requests. The multiple assertions, as previously described, that Plaintiff offers in support of his Motion to Defer should more properly be characterized as arguments in opposition to an ultimate award of fees and costs. Such claims, as asserted by Plaintiff, do not address the issue of whether this Court should defer its decision regarding Defendant's Motion for Attorney Fees and its Bill of Costs. In fact, the only argument proffered by Plaintiff that relates to the aspect of timing — that is, whether the Court should defer its consideration of fees and costs — is Plaintiff's claim that a detailed inquiry will be necessary into the propriety and amount of any fee award that may be granted. This argument, however, does not, as Plaintiff suggests, support deferment of the Court's decision. Rather, assuming that the issues of fees and costs are as detailed and complicated as Plaintiff suggests, it may be more appropriate for the Court to address them presently due to the closeness in time with the disposition of the substantive issues involved as a part of the ruling on summary judgment.
Such a conclusion is supported by the very advisory committee note relied upon by Plaintiff, which plainly states that prompt filing deadlines for motions relating to fees "affords an opportunity for the court to resolve fee disputes shortly after trial, while the services performed are freshly in mind." (Fed.R.Civ.P. 54 advisory committee's note (1993 amendments). The note further states that a prompt ruling on the issue of fees "enables the court . . . to make its ruling on a fee request in time for any appellate review of a dispute over fees to proceed at the same time as review on the merits of the case." Id. Therefore, while the advisory committee notes do provide this Court with the Opportunity to defer consideration of the issue of attorneys' fees, the notes also suggest that a prompt ruling on the issue may be more appropriate. In any event, the decision is clearly within the discretion of the trial judge.
With the information provided by the parties, this Court is prepared to fully consider Defendant's Motion for Attorney Fees and its Bill of Costs. The Court's decision in this regard is supported by the fact that the only argument put forth by Plaintiff addressing the appropriateness of deferment counseled in favor of a prompt resolution of the issue. As noted previously, each of Plaintiff's other arguments for delay were directed not at the issue of deferment, but rather, at the propriety of an ultimate fee award. Accordingly, in light of the interpretation provided in the advisory committee note accompanying Rule 54 of the Federal Rules of Civil Procedure, Defendant's Motion to Defer is hereby DENIED.
The Court notes that the denial of Plaintiff's Motion to Defer may appear to be at odds with the Court's ultimate determination that Defendant's Bill of Costs was filed prematurely. The Court's decision with regard to Defendant's Bill of Costs, however, was not a deferment of the issue of costs. Rather, it was a present determination by the Court that, under the Local Rules, Defendant did not file its Bill of Costs at the proper time, making denial thereof necessary.
B. Defendant's Bill of Costs/Plaintiff's Motion to Disallow
The Court is considering Defendant's Bill of Costs and Plaintiff's Motion to Disallow together because the two matters are obviously intertwined and essentially mutually exclusive. That is to say, if Defendant's Bill of Costs is denied, then Plaintiff's Motion to Disallow will necessarily be granted. The converse scenario is likewise true.
On August 1, 2001, Defendant filed its Bill of Costs, seeking to recover $16,983.53 in taxable costs. Local Rule 54.1 states that a prevailing party may request allowable costs by filing a form, made available at the clerk's office, within thirty days after the expiration of the time allowed for appeal of a final judgment or decree or within thirty days after receipt by the clerk of an order terminating the action on appeal. L.R. 54.1(a)(1). The rule also states that the adverse party, within ten days of the filing of a bill of costs, may file a motion for disallowance setting forth its objections to the proposed bill of costs. Plaintiff filed such an objection, in the form of his Motion to Disallow, on August 10, 2001.
As part of his Motion to Disallow, Plaintiff essentially argues that Defendant's Bill of Costs was filed prematurely and should therefore be dismissed without prejudice. As an alternative argument, Plaintiff attacks certain aspects of the proposed Bill of Costs as excessive. For example, Plaintiff argues that Defendant's Bill of Costs seeks to recover duplicate costs for both stenographic and video transcripts for certain depositions. Plaintiff also claims that Duke seeks to recover the costs of copies of deposition transcripts, which, according to Local Rule 54.1(c)(2)(ii), are not normally recoverable. Plaintiff argues that these costs, among others not specifically enumerated herein, are improper and should be denied. Because of a recent interpretation given by this Court to Local Rule 54.1, however, consideration of Plaintiff's challenges to specific costs is not necessary.
As previously stated, the Local Rules indicate two alternative time-lines under which a bill of costs may be filed. Specifically, the Local Rules state that a bill of costs may be filed within thirty days after the expiration for the time allowed for appeal. L.R. 54.1(a)(1)(i). The Local Rules also provide that a bill of costs may be filed within thirty days after receipt by the clerk of an order terminating the action on appeal. L.R. 54.1(a)(1)(ii). Although the Local Rule is not entirely clear on its face, according to Hoots v. Sara Lee Corp., 2000 U.S. Dist. LEXIS 20336 (M.D.N.C. Mar. 20, 2000), Local Rule 54.1 requires that when a plaintiff appeals an adverse judgment, the defendant may not seek costs until after the plaintiff's appeal is resolved. In reaching this interpretation, this Court reasoned that allowing a bill of costs after the time for appeal has "expired" even when the plaintiff has appealed the adverse judgment would render the second option, that is, to allow a bill of costs after an order terminating the appeal, superfluous. Id., at *3 ("Why include the second alternative if the first can be used even in appealed cases?"). Because the plaintiff had appealed the judgment in Hoots, and the defendant did not wait until after the appeal was resolved before seeking costs, the plaintiff's motion for disallowance of costs was granted. The defendant was left free to resubmit its bill of costs if and when the action was terminated upon appeal. A similar conclusion is warranted herein.
In the instant case, Plaintiff's appeal is pending before the Federal Circuit Court of Appeals. Furthermore, Duke filed its Bill of Costs in reliance on the first alternative of Local Rule 54.1, that is, Local Rule 54.1(a)(1)(i), despite the fact that Plaintiff had appealed the case. Based on the interpretation given by this Court to Local Rule 54.1 inHoots, Duke's Bill of Costs is premature. As a result, Plaintiff's Motion to Disallow is hereby GRANTED. Consistent therewith, Defendant's Petition regarding its Bill of Costs is DENIED. Defendant is, of course, pursuant to Local Rule 54.1(a)(1)(ii), free to file its Bill of Costs anew within thirty days after receipt by the clerk of an order terminating the action on appeal.
C. Defendant's Motion for Attorney Fees
Pursuant to 35 U.S.C. § 285, which allows for the recovery of attorneys' fees in certain patent cases, Defendant filed a Motion for Attorney Fees, seeking to recover $571,815.00 in attorneys' fees and $21,740.00 in related expenses. As a preliminary matter, Plaintiff argues that Defendant's Motion for Attorney Fees, much like its Bill of Costs, is premature and therefore should be denied. While such a result would appear to be justified, according to the advisory committee notes accompanying Rule 54 of the Federal Rules of Civil Procedure, which state that "[a] notice of appeal does not extend the time for filing a fee claim," the filing of an appeal does not necessarily alter the time-line for a motion for attorneys' fees. Fed.R.Civ.P. 54 advisory committee s note (1993 amendments). Rule 54 does, however, allow the district courts to modify the filing deadlines through local rules. In this case, the filing of Defendant's Motion for Attorney Fees is governed by Local Rule 54.2, which states that a motion for attorneys' fees may be filed within sixty days after the entry of final judgment. Local Rule 54.2, however, gives no indication of the meaning to be given the term "final judgment." More specifically, Local Rule 54.2 is unclear as to the effect that a notice of appeal has on the finality of the district court's judgment.
This Court has stated, without explicitly holding, that an appeal should not alter the timeline under which a motion for attorneys' fees must be brought. Lynn v. West, 2000 U.S. Dist. LEXIS 19704, at *5 (M.D.N.C. Aug. 8, 2000) ("When a party prevails at the district court level, the better view appears to be that the clock begins to run with entry of the primary judgment, regardless of whether post-trial motions are filed or appeal is taken."). Moreover, the Fourth Circuit has interpreted the District of Maryland's Local Rules to operate in a similar fashion. Jackson v. Beard, 828 F.2d 1077, 1078-80 (4th Cir. 1987) (affirming the district courts application of a local rule that did not alter the period during which a motion for fees may be filed due to the filing of a post-trial motion); see also Doe v. Terhune, 121 F. Supp.2d 773, 777 (D. N.J. 2000) (stating that an appeal does not alter the filing deadlines for seeking attorneys' fees). of course, such a resolution is somewhat inconsistent with the interpretation given by this Court to Local Rule 54.1 in Hoots, which requires the prevailing party to wait until the appeal is terminated, if an appeal is indeed taken, before filing a bill of costs. Hoots, 2000 U.S. Dist. LEXIS 20336, at *3. This apparent inconsistency, however, need not be resolved at this stage, for Defendant has ultimately failed to meet the requisite standard to recover attorneys' fees under 35 U.S.C. § 285.
Of course, the language used in Local Rule 54.2 regarding attorneys' fees does not provide for filing after the termination of an appeal, as does Local Rule 54.1 with regard to a bill of costs. Therefore, the difference in the wording of the two Local Rules may account for any apparent inconsistency in their interpretation. As the Court's discussion notes, however, the apparent inconsistency need not be resolved at this time.
Plaintiff also argues that Defendant's Motion for Attorney Fees should be denied because Defendant failed to engage in the consultation required under local Rule 54.2. The record suggests, however, that Defendant made a reasonable effort to consult with Plaintiff and was rebuffed. In any event, because the Court ultimately finds that Defendant has failed to meet the requisite standard for the recovery of attorneys' fees under § 285, the Court need not fully consider Plaintiff's claim that the consultation did not occur.
According to 35 U.S.C. § 285, "[t]he [C]ourt in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. The question of whether or not a case is "exceptional" under § 285 is a question of fact. Ruiz v. A.B. Chance Co., 234 F.3d 654, 669 (Fed. Cir. 2000). In making that determination, the Court must apply Federal Circuit precedent, which governs all issues that are unique to patent law. Pharmacia Upjohn Co. v. Mylan Pharms., Inc., 182 F.3d 1356, 1359 (Fed. Cir. 1999) ("Our precedent governs the substantive interpretation of 35 U.S.C. § 285, which is unique to patent law."). According to Federal Circuit law, in order to qualify for the recovery of fees under § 285, Defendant "must prove the exceptional nature of the case by clear and convincing evidence." Ruiz, 234 F.3d at 669. Exceptional circumstances sufficient to invoke § 285 typically involve a finding of unfairness, bad faith, inequitable conduct, vexatious litigation, willful infringement, or some other similar element. Pharmacia, 182 F.3d at 1361; Mahurkarv. C.R. Bard. Inc., 79 F.3d 1572, 1579 (Fed. Cir. 1996), cert. denied, 525 U.S. 1106, 119 S.Ct. 874, 142 L.Ed.2d 775 (1999). Even if Defendant meets its burden to establish that this case is "exceptional," however, this Court retains its discretion over whether or not to award statutory attorneys' fees.Brasseler. U.S.A. I.L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1379 (Fed. Cir. 2001); Pharmacia, 182 F.3d at 1359.
In support of its claim that this case is "exceptional," Defendant argues that Plaintiff's allegations were frivolous in nature. (Duke University's Mem. Supp. Mot. Att'y Fees, at 6 ("This case is exceptional because [Plaintiff's] claims are frivolous.").) It is well established that the assertion of purely frivolous claims can, in certain circumstances, give rise to an "exceptional" case. See. e.g., Haynes Int'l. Inc. v. Jessop Steel Co., 8 F.3d 1573, 1579 (Fed. Cir. 1993). According to Federal Circuit law, a frivolous suit is one which the plaintiff "knew or, on reasonable investigation, should have known, was baseless." Id. After reviewing the parties' arguments, however, this Court finds that Defendant has failed to establish by clear and convincing evidence that Plaintiff's patent claims were baseless. Accordingly, Defendant's Motion for Attorney Fees must fail.
According to Federal Circuit law, "inequitable conduct is a substantive patent issue that must be taken into consideration in determinations under 35 U.S.C. § 285." Pharmacia, 182 F.3d at 1359. Defendant has not, however, alleged that Plaintiff engaged in any level of inequitable conduct. In fact, Defendant's Motion for Attorney Fees rests solely on its argument that Plaintiff's patent claims were frivolous. Therefore, because inequitable conduct was not raised as an issue in this case, the Court need only consider Defendant's position that Plaintiff's patent claims were frivolous.
The Court's conclusion in this regard is supported by its observation that, in resolving Defendant's prior Motion to Dismiss and Defendant's Motion for Summary Judgment as to Plaintiff's patent claims, the Court was required to apply a careful consideration of patent law. Specifically, the Court notes that with respect to Plaintiff's claim that Defendant's construction and use of microwave guns and the Mark III violated the 103 and 994 patents, Plaintiff offered some evidence of commercial intent on the part of Duke in an attempt to invalidate Defendant's reliance on the experimental use exception. Obviously, Plaintiff's evidence was insufficient to withstand Defendant's Motion for Summary Judgment. Nevertheless, Plaintiff's argument regarding commercial intent and the experimental use doctrine was reasonable, leading this Court to conclude that Plaintiff's claim involving the 103 and 994 patents was not frivolous. See id. at 1579-80 (affirming the trial court's grant of summary judgment but finding that the case was not frivolous and reversing the award of attorneys' fees).
Clearly the Court felt that Plaintiff had proffered some evidence of commercial intent, because in granting Defendant's Motion for Summary Judgment as to Plaintiff's patent claims, the Court noted that summary judgment was proper because Plaintiff's evidence was "not of such a character [as to] warrant the jury in finding a verdict in Plaintiff's favor." (Mem. Op. [Document #105], at 15.) The Court's conclusion demonstrates that although Plaintiff's evidence was not sufficient to warrant a verdict in his favor, it was certainly enough to merit the Court's careful consideration so as not to be considered frivolous.
With respect to Plaintiff's claim that Duke's use of the NCCU test stand gun violated the 103 patent, the Court notes that the arguments set forth by Defendant suggest that Plaintiff quickly learned during the discovery process that there was little, if any, support for his suspicion that Duke had used, or even had control over, the test stand gun. Defendant goes on to argue that Plaintiff's failure to marshal support for his position indicates that it was frivolous and an award of attorneys' fees is therefore proper. Defendant makes a solid argument that, to the extent Plaintiff failed to uncover any significant evidence to support his position, Plaintiff's claims involving the test stand gun were fairly weak. Defendant, however, has failed to demonstrate by clear and convincing evidence that Plaintiffs claims were frivolous. The fact that Plaintiff could not uncover any significant support for his claim that Duke used or had control over the NCCU test stand gun in violation of the 103 patent simply suggests that the Court's decision to grant summary judgment as to that claim was correct. It does not, standing alone, necessarily indicate that Plaintiff's claims were frivolous. Accordingly, Defendant has faded to establish by clear and convincing evidence that Plaintiff's claim that it used the NCCU test stand gun in violation of the 103 patent was frivolous.
Because Defendant has failed to prove that Plaintiff's patent claims were frivolous, there is no support for Defendant's assertion that this is an "exceptional" case. Defendant has therefore failed to meet the standard outlined in 35 U.S.C. § 285 for the recovery of attorneys' fees in patent cases. As such, this Court finds that this case is not exceptional" within the meaning of § 285 and Defendant's Motion for Attorney Fees is hereby DENIED.
IV. CONCLUSION
For the reasons stated above, Plaintiff's Motion to Defer [Document #118] is DENIED. Also, for the reasons stated above, Defendant's petition regarding its Bill of Costs [Document #116) is DENIED and Plaintiff's Motion to Disallow [Document #120] is GRANTED. Defendant is, of course, free to file its Bill of Costs anew within thirty days after receipt by the clerk of an order terminating the action on appeal. Finally, for the reasons stated above, Defendant's Motion for Attorney Fees [Document #109] is DENIED.
An Order consistent with this Memorandum Opinion will be filed contemporaneously herewith.