Opinion
4:01CV23
March 18, 2004
ORDER
On August 11, 2003, the Court entered an Order finding the instant case exceptional and awarding Mictrotune its attorneys' fees under 35 U.S.C. § 285. The Court subsequently qualified Gerald Knapton as an expert to assist Broadcom in preparing its Adversary Submission to Microtune's Motion for Attorneys' Fees. Having considered the Motion, Microtune's Supplemental Fee Request, Broadcom's Adversary Submission, Microtune's Response to Broadcom Corporation's Advisory [sic] Submission, and the papers submitted in support of these filings, the Court determines that Microtune should be awarded its reasonable attorneys' fees in the amount of $5,157,658.25 and litigation-related expenses in the amount of $500,168.31.
Discussion
The district court has discretion in determining a reasonable amount for attorneys' fees and litigation expenses, "and, because of its superior understanding of the litigation, frequent appellate review is to be avoided." Lubrizol Corp. v. Exxon Corp., 957 F.2d 1302, 1308 n. 14 (5a Cir. 1992) (citing Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct 1933, 1941 (1983)). In determining an appropriate award of attorneys' fees in a particular case, the court uses the two-step lodestar method in which the court multiplies the reasonable number of hours expended by the reasonable hourly rate for each attorney and then examines the Johnson factors to determine if the lodestar amount should be adjusted either upward or downward. Hensley v. Eckerhart, 461 U.S. 424, 433-34, 103 S.Ct. 1933, 1939 (1983); Rutherford v. Harris County, 197 F.3d 173, 192 (5th Cir. 1999). The Johnson factors are:
(1) the time and labor required for the litigation; (2) the novelty and complication of the issues; (3) the skill required to properly litigate the case; (4) whether the attorney had to refuse other work to litigate the case; (5) the attorney's customary fee; (6) whether the fee is fixed or contingent; (7) whether the client or case circumstances imposed any time constraints; (8) the amount involved and results obtained; (9) the experience, reputation, and ability of the attorneys; (10) whether the case was `undesirable'; (11) the nature and length of the attorney-client relationship; and (12) awards in similar cases.Johnson v. Georgia Highway Express, Inc. 488 F.2d 714, 717-19 (5th Cir. 1974); but see Rutherford, 194 F.3d at 193 (noting that the Supreme Court has prohibited any use of the sixth Johnson factor). The "results obtained" by the prevailing party is an important factor in determining whether to adjust the fee upward or downward. Hensley, 461 U.S. at 434, 103 S.Ct. at 1940. The amount of attorneys' fees incurred by the prevailing party's opponent may also be relevant in determining the reasonableness of a fee award. Lubrizol Corp., 957 F.2d at 1308.
The court should note that while these factors may certainly be considered when adjusting the amount of attorneys' fees award upward or downward, many of these factors are often subsumed within the initial calculation of a reasonable amount of hours at a reasonable rate. Hensley, 461 U.S. at 435 n. 9, 103 S.Ct at 1940 n. 9.
In its Notice of Supplemental Amount of Attorneys' Fees, which included Microtune's attorneys' fees through the end of August 2003, Microtune requested $5, 637, 568.50. In its Adversary Submission to Microtune's Motion for Attorneys' Fees, Broadcom raised several objections to Microtune's fees and proposed various methods for reducing the total amount of fees. Initially, the Court will apply the first step of the lodestar analysis and multiply the reasonable number of hours by the reasonable rate for each attorney. Next, the Court will address the remaining issues raised by Broadcom and other relevant factors in determining whether the amount of attorneys' fees should be adjusted upward or downward.
A Reasonable Rate Multiplied by a Reasonable Number of Hours
A. Reasonable Rate
In his declaration, Alan D. Albright ("Albright") states that he is a partner at the law firm of Gray Gary Ware Freidenrich LLP ("Gray Cary") and is one of the principal trial attorneys in this matter. Albright has been a licensed attorney in Texas since 1984. He served as a law clerk for the Honorable James Nowlin, served as a magistrate judge in the Western District of Texas for seven years and is currently a partner in Gray Cary's IP Litigation Department. Albright states that he is admitted to practice in the Western, Northern and Southern Districts of Texas and has wide exposure to counsel in Texas. His hourly rate was $340 in 2001, $355 in 2002 and $390 in 2003. Based on his knowledge and experience, Albright states that the hourly billing rates for Gray Cary attorneys were reasonable for this type of case. Albright provides the following information on the Gray Cary attorneys doing the primary work on this case:
John Allcock ("Allcock") has been a licensed attorney since 1981 and a partner in the Litigation Department of Gray Cary since 1987. He has tried in excess of 40 jury trials to verdict and, in the last 10 years, has focused on trying patent cases. Allcock's rates for this case during 2001, 2002, and 2003 were discounted to $440/hr. His standard hourly rate was $470 in 2001, $495 in 2002, and $525 in 2003. The amounts billed to Microtune reflected these discounts.
John Giust ("Giust") has a B.S. in electrical engineering and completed his legal education in 1995. Giust was an examiner at the U.S. Patent and Trademark Office and is a registered patent attorney. Giust has been a partner at Gray Cary since 2002 and his practice has been devoted exclusively to intellectual property matters. Giust served as the lead patent attorney in this case and his hourly rates for 2001, 2002 and 2003 were discounted to $230/hr. Giust's standard hourly rate was $280 in 2001, $295 in 2002, and $380 in 2003. The amounts billed to Microtune reflected these discounts.
Matthew Bernstein ("Bernstein") has been an associate in Gray Cary's intellectual property section since 1998. His practice is devoted to intellectual property matters. Bernstein's hourly rate was $225 in 2001, $245 in 2002 and $275 in 2003.
Barry Shelton ("Shelton") is a registered professional engineer. Afer serving as intellectual property counsel for Wireless Knowledge, Inc. for two years, Shelton joined the IP Litigation Department of Gray Cary in 2001 and focuses exclusively on patent litigation. Shelton's hourly rate was $225 in 2001, $245 from 1/1/02 through 6/30/02, $255 from 7/1/02 through 12/31/02, and $275 in 2003,
Cathy Orth ("Orth"), the lead paralegal on this case, had an hourly rate of $125 in 2001, 2002, and 2003.
In her declaration, Nancy Richardson ("Richardson") stated that she is the Chief Financial Officer and General Counsel of Microtune. Richardson has been a licensed attorney for over 8 years and is a member in good standing of the State Bar of Texas. Prior to working for Microtune, Richardson served as Vice President and General Counsel for Concero Inc. and practiced commercial litigation in private practice for three years. Richardson states that she is familiar with the rates charged by law firms for patent litigation.
Richardson states that from January 2001 through November 2001, Microtune was represented by Fulbright Jaworski ("Fulbright") in this case. The Fulbright attorneys primarily responsible for representing Microtune were Dan Davison, David Bahler and Tom Meaney. Fulbright invoiced Microtune for $1,061,360.05, and Microtune paid Fulbright $1,041,360.05 in this case for 3,720 hours of work (for an average rate of $285/hr). Based on her knowledge and experience and on the complexity of the case, Richardson states that the fees Fulbright charged Microtune are reasonable.
In his declaration, Clyde Siebman ("Siebman") states that he is a partner in the law firm of Siebman, Reynolds Burg LLP, counsel for Microtune. Siebman has been a member in good standing of the State Bar of Texas since November of 1984. Siebman has substantial first chair trial experience in state and federal courts for almost twenty years and is certified by the Texas Board of Legal Specialization in Civil Trial Law. Siebman's experience includes a substantial number of complex patent cases. Siebman, Larry Phillips and paralegal Denise Lovelace were the primary attorneys and paralegal from Siebman, Reynolds Burg LLP working on this case. Siebman's hourly billing rate for 2001, 2002 and 2003 was $300. Based on his knowledge and experience and on the complexity of this case, Siebman states that the attorney time expended and the rates charged were necessary and reasonable in this case.
Larry Phillips ("Phillips") has been licensed to practice law in Texas since 1991 and has been associated with Siebman, Reynolds Burg LLP for three years assisting in complex patent cases and other areas of law. Phillips currently serves as a Texas State Representative. Phillips's hourly billing rate for 2001, 2002 and 2003 was $195.
The time and labor required for this litigation was substantial because it involved a fairly complex patent. The patent at issue involved a highly integrated television tuner and necessarily involved the investigation and evaluation of issues such as claim construction, prior art, and a lengthy patent prosecution history. This litigation required counsel skilled in intellectual property litigation and with extensive patent expertise. Counsel for Microtune charged their customary fees, and in some cases, charged a discounted fee for their services. Further, as evidenced by the declarations of Albright, Richardson and Siebman, the law firms representing Microtune are reputable and boast a great deal of trial and intellectual property experience.
Broadcom has not contested the reasonableness of Microtune's hourly rate. See Louisiana Power Light Co. v. Kellstrom, 50 F.3d 319, 328 (5th Cir. 1995) (if an attorney's hourly rate is not contested, "it is prima facie reasonable"). Based on the declarations of Albright, Richardson and Siebman, and on the Court's knowledge and experience in similar cases, the Court concludes that the hourly rates requested by counsel for Microtune are within the prevailing market range and are reasonable.
B. Reasonable Number of Hours
Broadcom does object to the reasonableness of the amount of hours expended by counsel for Microtune in this litigation. The Court will address the objections as to the number of hours expended in turn.
1) Microtune's Refusal to Settle
Broadcom argues that all fees expended by Microtune after the parties attended mediation in December of 2002 should be disallowed because Microtune refused to settle. The Court is not persuaded by this argument. Broadcom offered to pay Microtune $5 million and a $.35 royalty rate on the BCM3415 for three years in exchange for: Microtune granting Broadcom a perpetual license under all of Microtune's patents and patent applications (not just the `035 patent); Microtune severing its relationship with Texas Instruments; and Microtune agreeing to forever immunize from suit, without receiving any compensation whatsoever, all future Broadcom products. Considering Microtune's success at trial, its refusal to settle on these terms was not unreasonable. Microtune obtained a permanent injunction against Broadcom from selling the BCM3415 and a royalty rate of $1.50 per infringing unit. Microtune is able to continue its relationship with Texas Instruments and has reserved the right to assert additional patents against Broadcom in the future. Further, the jury found that Broadcom's infringement was willful, and Microtune was awarded enhanced damages.
2) Withholding Key Documents
Broadcom next argues that the amount of hours expended by Microtune's counsel was unreasonable because Microtune's litigation tactics increased the number of hours. Specifically, Broadcom claims that Microtune withheld key documents until six weeks before trial, and the attorney time stemming from this surprise production should be disallowed. This objection refers to the Rotzoll notebook, which was produced to Broadcom by Microtune only weeks before the initial October trial setting. The Court believes that this objection possesses some merit. The Court is of the opinion that Microtune did not deliberately withhold these documents, but that Microtune should have been more diligent in its search of the materials in the hands of Rotzoll. Accordingly, the Court finds some reduction in fees is appropriate as a result of this late production, but not to the extent urged by Broadcom. Microtune admits that the hours it expended in opposing Broadcom's Motion for Continuance would likely have not been necessary if the Rotzoll notebook has been produced timely, and the Court finds that a reduction of the fees generated by this opposition should be allowed. After carefully examining Microtune's billing records, the Court finds that a reduction in the amount of $54, 091.75 is warranted. The remaining costs incurred in relation to the production of the Rotzoll notebook would have been incurred regardless of when the materials were produced.
The Court arrived at this number by locating all billing entries that contained time expended on Microtune's opposition to continuing the case. Microtune's billing entries often contained long descriptions detailing many tasks, but did not break down the time spent on each task. The Court finds this to be a reasonable billing method under the circumstances of this case. The total amount of fees for all billing entries that contained any reference to Broadcom's Motion for Continuance was $108,183.50. The Court finds that a reduction in Microtune's fees of half that amount, or $54,091.75, is reasonable.
3) Duplicative Hours
a. Firm Transition
Broadcom next argues that Microtune's fees should be reduced because counsel for Microtune billed for duplicative hours. First, Broadcom complains that time was billed for duplicate work when Microtune underwent a legal representation transition from Fulbright to Gray Cary. Broadcom argues that the duplicative work generated when Gray Cary familiarized itself with the case should result in a fee reduction of $112, 996.50. Gray Cary concedes that this is a fair allocation for amounts of duplicative work. The Court is of the opinion that Broadcom should not be responsible for fees for duplicative hours generated by the transition from Fulbright to Gray Cary. Accordingly, Microtune's fees should be reduced by $112, 996.50.
b. Transient Timekeepers
Broadcom also claims that Microtune billed duplicative hours because it used too many transient timekeepers, or timekeepers who were not core attorneys on the case. Broadcom states that Fulbright used 33 transient timekeepers, which resulted in excess fees of $140,448, and that Gray Cary used 52 transient timekeepers, which resulted in excess fees of $284,750. Broadcom fails to point to specific entries that it believes are excessive, but the Court agrees that the number of non-core timekeepers used by Microtune is excessive. While the core attorneys could not perform all the work on a case of this size (and it would not be cost efficient at their rates), some reduction in fees is reasonable due to the inefficiency of using 85 transient timekeepers. The Court is of the opinion that a reduction of Microtune's fees in an amount equal to one half of the amount proposed by Broadcom is appropriate. Accordingly, Microtune's fees should be reduced by $212,599.
4) Vague Billing Entries
Broadcom also urges the Court to reduce Microtune's attorneys' fees based on the use of vague entries such as "trial preparation" in billing descriptions by Microtune's attorneys. Knapton compiled a breakdown of the attorneys using this entry, the amount of hours billed under this entry, and the fees generated under this entry. Broadcom seeks to disallow all amounts billed under this billing entry. The Court is of the opinion that this type of entry is acceptable to an extent for attorneys heavily involved in the strategy and litigation of a case. With the exception of Albright, the Court finds that the amount of hours billed under "trial preparation" were not significant and were reasonable under the circumstances of this case. Albright did bill a significant number of hours using this billing description. The Court recognizes that trial attorneys responsible for handling the bulk of the actual trial spend time in preparation for trial that is otherwise hard to classify. While Albright assisted in the presentation of Microtune's case and argued numerous motions on behalf of Microtune, his use of vague entries is excessive. Albright did use the description "trial preparation" for days he actually spent in trial; therefore, the Court finds those fees should be paid by Broadcom and are not considered in the Court's calculation. Excluding the billing entries during the trial, the description "trial preparation" was used by Albright in 11.23% of his entries with no further description of the work performed. The Court finds this to be an excessive percentage of time for which no further description is offered. However, the Court finds that 5% of Albright's time described as "trial preparation" is reasonable. Accordingly, the Court finds that a fee reduction of 6.23%, or $43,610 (124.6 hours x $350), is warranted.
Broadcom argues that Microtune's fees should be further reduced because counsel for Microtune used block billing in their time records. The Court finds this argument unpersuasive. With the exception of the entries discussed above, Microtune's counsel kept billing records with sufficient description to justify the amount of hours worked, and an adjustment in Microtune's fees for the use of block billing is not necessary.
Broadcom seeks to reduce Microtune's fees because it claims secretarial and clerical tasks were performed by attorneys. But Broadcom fails to point to a single entry depicting tasks performed by an attorney that should have been performed by a clerical worker. Accordingly, a reduction of fees on this basis is not appropriate.
5) Fees Generated by Attorney Tannenbaum
Broadcom also argues that all fees for Attorney Tannenbaum should be disallowed. Tannenbaum is an attorney for Fulbright and was the attorney in charge of prosecuting the `035 patent. Broadcom asserts that because Tannenbaum was involved in the prosecution of the patent and would inevitably be a witness in any litigation, he should never have been involved in litigating the `035 patent. The Court is not persuaded by this argument. In the initial stages of this lawsuit, Tannenbaum had the most familiarity with the patent, and it was reasonable to believe at that time that his handling of the litigation could facilitate a quick resolution. When it became evident that a quick resolution was not likely, Microtune obtained new counsel. The Court has already disallowed fees incurred for the transition of the lawsuit and will not further disallow fees generated by the involvement of Tannenbaum in this litigation.
6) Adjusted Fees
After making the above adjustments based on the number of hours the Court finds to have been reasonably expended by counsel for Microtune in this lawsuit, the adjusted amount of Microtune's attorneys' fees is $5,214,271.25:
— $43.610.00 $5,214,271.25
$5,637,568.50 Fees submitted by Microtune through August, 2003. — $54,091.75 Late production of documents and resulting opposition to Motion for Continuance. — $112,996.50 Duplicative fees as a result of firm transition. — $212,599.00 Inefficient use of an excessive number of transient timekeepers. Excessive use of vague billing description: "trial preparation." Adjusted amount of Microtune's attorneys' fees. The Johnson Factors Used to Determine Whether Lodestar Amount Should be Adjusted.After the Court determines the lodestar amount of fees, it must examine the Johnson factors to determine if the lodestar amount should be adjusted upward or downward. Rutherford v. Harris County, 197 F.3d 173, 192 (5th Cir. 1999). Many of the lodestar factors are usually "subsumed within the initial calculation of reasonably expended hours at a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 435 n. 9,103 S.Ct. 1933, 1940 n. 9 (1983). Of particular importance is the "results obtained" factor when a plaintiff prevails on some, but not all of his claims. Id. at 1940.
See supra at p. 5-6. A majority of the Johnson factors were applied in the Court's determination of reasonably expended hours at a reasonable hourly rate.
While Microtune was the prevailing party in this case, it did not prevail on all of its claims. In such a situation, a two-step inquiry must be answered: "First, did the plaintiff fail to prevail on claims that were unrelated to the claims on which he succeeded? Second, did the plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award?" Id.
In the present case, counsel's work on unsuccessful claims was intimately related to the work done on successful claims. Most of Microtune's counsel's time was devoted to the litigation as a whole, making it impossible to divide the work done on each individual claim. See Chemical Manuf. Assoc. v. E.P.A., 885 F.2d 1276, 1282 (5th Cir. 1989) (finding a lawsuit based on a common core of facts or related legal theories cannot be viewed as a series of discrete claims for the purposes of determining reasonable attorneys' fees). The number of witnesses called at trial was not increased as a result of the unsuccessful claims, and all claims were so closely related that it would have been impossible to allocate the amount of time spent litigating each individual claim. A claim-by-claim reduction cannot be made in this case.
The second step in the inquiry is whether a "reduction in the fee award should be made because the prevailing party's success on the . . . interrelated claims was limited." Id. In making this determination, the Court must keep in mind that the attorneys' fees must be reasonable in light of the level of success obtained. Hensley, 103 S.Ct. at 1942, Knapton states that Microtune's overall fees should be reduced because three of the seven accused product lines were found not to infringe the `035 patent. Knapton further opines that cable modem product lines should not have been included in this lawsuit and argues that a fee reduction of between $600,000 and $1.5 million should be made on that basis. Broadcom also argues that Microtune's fees should be reduced because Microtune abandoned claims 102-108 on the eve of trial.
Microtune points out that it obtained a unanimous jury verdict that Broadcom's BCM3415 tuner, BCM93415 tuner reference design, BCM93350C cable modem reference design, and BCM93352VCM cable modem reference design infringed the valid and enforceable `035 patent. Further, Microtune prevailed on Broadcom's defenses of anticipation, obviousness, written description and new matter. Microtune also obtained a willful infringement verdict, a permanent injunction and was awarded enhanced damages. Further, Microtune prevailed on all eleven of Broadcom's post-trial motions.
The Court has already determined that this is an exceptional case and awarded Microtune attorneys' fees. However, considering both Microtune's successful and unsuccessful claims, the abandonment of claims 102-108 shortly before trial and the total damages award, the Court is of the opinion that some reduction in Microtune's attorneys' fee award is warranted. The Court is unpersuaded by Knapton's opinion that Microtune should not have included any cable modem product line in this lawsuit. Having heard all the evidence presented at trial and considering Microtune's success on the BCM93350C and BCM93352VCM cable modem reference designs, the Court finds Broadcom's argument that Microtune's fees should be reduced a significant amount on the sole basis that cable modem product lines should not have been included in this law suit is unsubstantiated.
The Court is, however, persuaded that the abandonment of claims 102-108 on the eve of trial does warrant some fee reduction, While some reduction for abandonment of these claims is warranted, the Court recognizes that claims 102-108 were claims of the `035 patent and much of the attorney time spent on litigating these claims would have been subsumed in the overall litigation of the `035 patent.
The Court entered its Final Judgment in this case on August 21, 2003 that Microtune shall recover from Broadcom the sum of $1,529,586, which shall be enhanced by a factor of two, and pre-judgment and post-judgment interest. The Court also entered a permanent injunction against Broadcom on August 25, 2003 for the life of the `035 patent. Further, a reasonable royalty rate of $1.50 per unit was set for the `035 patent. While actual damages of just over $3 million exclusive of interest and costs were awarded to Microtune, the royalty rate and permanent injunction obtained serve to increase the level of Microtune's overall success in this case. The Court must consider the overall success of the prevailing party and further determine whether the attorneys' fees sought would be excessive. Hensley, 103 S.Ct. at 1942. Microtune requested $5,637,568.50 in attorneys' fees, and the Court has already adjusted that amount to $5,214,271,25 based on hours unreasonably expended by counsel for Microtune. Considering the abandonment of claims 102-108 shortly before trial and Microtune's overall success, the Court is of the opinion that a further reduction of Microtune's fees of $100,000.00 is appropriate. Therefore, after reduction of an additional $100,000,00, Microtune's attorneys' fees total $5,114,271.25:— $100.000.00 $5,114,271.25
Avondale Indust., Inc. v. Davis, 348 F.3d 487, 491 (5th Cir. 2003), the Fifth Circuit found that the ALJ's award of $15,500 in attorney's fees may be excessive when the plaintiff only recovered $736.50 in penalties and interest, plus future medical costs.
The Court also notes that Broadcom incurred attorneys' fees of over S1 1,170,000, which is almost twice the amount of attorneys' fees incurred by Microtune. While the amount of Broadcom's attorneys' fees is not one of the Johnson factors, the Fifth Circuit has suggested that the amount of the opposing party's attorneys' fees are relevant when determining the reasonableness of the fees claimed by the prevailing party. See Lubrizol Corp. v. Exxon Corp., 957 F.2d 1302, 1308 n. 13 (5th Cir. 1992) (finding district court did not abuse its discretion in determining that Exxon's fees of $2,424,462.04 for entire 6-year litigation were both reasonable and conservative when opposing party Lubrizol's fees of $2,028,000.00 for pre-trial proceedings only were deemed reasonable by Lubrizol).
Microtune requests that it recover additional fees because Broadcom requested extensive briefing on attorneys' fees. Microtune submits that it expended an additional 173.5 hours for a total amount of $43,387 in fees. The Court finds this amount to be reasonable and hereby awards Microtune additional attorneys' fees in the amount of $43,387, which were incurred in litigating its attorneys' fees.
Microtune requests an additional $500,168.31 in litigation-related expenses. Microtune represents to the Court that this amount includes only those related expenses specifically included in the Microtune attorney billing invoices provided to both the Court and Broadcom. The Court is of the opinion that Microtune should recover from Broadcom its litigation-related expenses. The Court further finds that Microtune's claimed expenses of $500,168.31 is reasonable and hereby awards Microtune that amount.
Microtune also seeks to recover $296,284.00 from Broadcom based on Microtune's fee agreement for a retroactive rate adjustment. Microtune's fee agreement provided for discounted billing rates for Allcock and Giust, but provided for a retroactive increase in rates should Microtune prevail. The Court finds that Broadcom should not be charged for the retroactive increase in billing rates of Microtune's counsel. The increase in rates operates as a bonus to Microtune's counsel, and the Court is of the opinion that to require Broadcom to pay a bonus to opposing counsel would be unreasonable and unjust. Accordingly, Microtune's request for the additional $296,284.00 in attorneys' fees is denied.
CONCLUSION
For the foregoing reasons, Microtune is hereby awarded its reasonable attorneys' fees in the amount of $5,157,658.25 (reduced amount plus $43,387.00 incurred by Microtune in litigating attorneys' fees) and $500,168.31 in litigation-related expenses. All other relief requested not expressly granted herein is denied.
It is so ORDERED.