Netlist, Inc v. Smart Modular Technologies, Inc

Filing 511

ORDER RE: PREVAILING PARTY DETERMINATION FOR PURPOSES OF BILL OF COSTS re 481 Bill of Costs, filed by Diablo Technologies Inc, 483 Bill of Costs, filed by Netlist Inc, 471 Bill of Costs,, filed by Diablo Technologies Inc, 484 Objection filed by Netlist Inc. Signed by Judge Yvonne Gonzalez Rogers on 9/1/15. (fs, COURT STAFF) (Filed on 9/1/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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NETLIST, INC.,

Case No.: 13-cv-5962 YGR

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Plaintiff,
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vs.

ORDER RE: PREVAILING PARTY
DETERMINATION FOR PURPOSES OF BILL OF
COSTS

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DIABLO TECHNOLOGIES, INC.,

(DKT. NO. 471, 481, 483, 484)

Northern District of California

United States District Court

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Defendant.
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Plaintiff Netlist, Inc. (“Netlist”) filed its Bill of Costs (and Amended Bill of Costs) on the
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contention that, as a plaintiff that obtained some relief on some of its claims, it is a prevailing party
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entitled to its costs. Relying on the U.S. Supreme Court’s decision in Farrar v. Hobby, 506 U.S.
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103, 113 (1992), Netlist argues that where there is a mixed verdict with only some successes by the
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plaintiff, even if it is only awarded nominal damages, the plaintiff is the prevailing party.
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Defendant Diablo Technologies, Inc. (“Diablo”) objects that Netlist prevailed only on its two
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Lanham Act claims, obtained only nominal damages of one dollar on each of those claims, and lost
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on all significant claims in the litigation. Thus, it is not a prevailing party and is not entitled to costs.
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There can only be one prevailing party in any given case. Shum v. Intel Corp., 629 F.3d
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1360, 1367 (Fed. Cir. 2010). It is true that “a plaintiff who wins nominal damages is a prevailing
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party.” Farrar, 506 U.S. at 112-113. In Farrar, the civil rights plaintiff proved a Constitutional
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violation, but did not establish damages proximately caused by that violation, and so was awarded
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only nominal damages on his claims. Id. at 107-08. However, the Farrar case did not address a
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mixed verdict situation.
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“[A] plaintiff ‘prevails’ when actual relief on the merits of his claim materially alters the
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legal relationship between the parties by modifying the defendant’s behavior in a way that directly

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benefits the plaintiff.” Farrar, 506 U.S. at 111-12. There is no question that nominal damages

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constitute “actual relief on the merits… materially alter[ing] the legal relationship between the

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parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff.” Id.

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“Rule 54(d) has no special rule or exception for mixed judgment cases, where both parties have some

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claims decided in their favor.” Shum, 629 F.3d at 1367. However, in a mixed judgment case, the

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Court must examine the parties’ respective successes to determine which one of the two is the

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prevailing party. Id. If plaintiff’s success is only limited and does not alter the defendant’s behavior

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in any way that significantly benefits the plaintiff, it is not the prevailing party. Id. at 1368-69.

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Here, the Court has considered and denied Diablo’s motion for judgment as a matter of law
on Netlist’s Lanham Act claims. Thus, Netlist succeeded on those claims. However, that success is

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United States District Court
Northern District of California

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only of limited significance, given that the conduct on which it was based was discontinued years

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ago and has no forward-looking effect on the parties. It does not alter Diablo’s behavior in any

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significant way. Further, the significant successes here were in favor of Diablo, which prevailed on

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the breach of contract and misappropriation of trade secret claims, as well as the correction of

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inventorship claim.

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Based on an examination of the parties' respective successes, the Court finds that Diablo is

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the prevailing party in this action for purposes of Rule 54 of the Federal Rules of Civil Procedure.

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The Clerk of the Court is directed to proceed with consideration of Diablo’s Amended Bill of

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Costs (Dkt. No. 481) and any objections thereto.

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IT IS SO ORDERED.
Date: September 1, 2015

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____________________________________
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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