Realtime Data LLC v. Sling TV LLC et al
Filing
326
ORDER granting in part 308 Motion for Attorney Fees by Judge R. Brooke Jackson on 1/20/22.(jdyne, )
Case 1:17-cv-02097-RBJ Document 326 Filed 01/20/22 USDC Colorado Page 1 of 10
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No 17-cv-02097-RBJ
REALTIME ADAPTIVE STREAMING LLC,
Plaintiff,
v.
SLING TV L.L.C.,
SLING MEDIA, L.L.C.,
ECHOSTAR TECHNOLOGIES L.L.C.,
DISH NETWORK L.L.C
Defendants.
ORDER re ATTORNEY’S FEES
The Court granted summary judgment dismissing plaintiff’s remaining claims on July 31,
2021, concluding that the subject patent was invalid because it claimed an abstract idea ineligible
for patenting. ECF Nos. 305 (order) and 306 (final judgment). Defendants then moved for an
award of attorney’s fees. Plaintiff objects. The Court finds that this was an “exceptional case”
warranting an award of attorney’s fees but will need additional information and likely a hearing
to determine the reasonable amount of fees to be awarded.
BACKGROUND
Briefly, by the time summary judgment was granted, the remaining claim was Realtime
Adaptive Streaming LLC’s claim that defendants had infringed Claim 1 (and possibly other
claims) of U.S. Patent No. 8,867,610 (“the ‘610 patent”). Entitled “System and Methods for
Video and Audio Data Distribution,” the ‘610 patent concerns data compression and
decompression algorithms. It purports to optimize compression time for digital files to prevent
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problems such as download delay, data buffering, and reduced system speeds. First it assigns a
data profile based on the frequency that the data is accessed or written. Then it assigns a
compression algorithm to each profile, depending upon whether the read to write ratio is
balanced (symmetrical) or unbalanced (asymmetrical).
The Patent Act does not permit patenting of “laws of nature, natural phenomena, and
abstract ideas.” Alice Corp. Pty. Ltd. v. CLSBank Int’l, 573 U.S. 208, 216 (2014). In addressing
defendants’ argument that the ‘610 patent claimed an ineligible abstract idea, I followed a twostep process: first, was the claim directed to an abstract idea; and second, did the claim
nevertheless contain an “inventive concept” sufficient to transform the abstract idea into a
patent-eligible application. See Mayo Collaborative Services v. Prometheus Laboratories, Inc.,
566 U.S. 66, 77-79 (2012).
At the first step I found that the patent was indeed directed to an ineligible abstract
concept, and that Realtime’s reliance on this Court’s definition of the claim term “throughput of
a communication channel” to distinguish law on which defendants relied was unpersuasive
because that term itself embodied an abstract idea. Id. at 10-11. At the second step I found that
there was no “inventive concept” that rescued the claim, notably because it provided no details as
to how the invention would work to solve the problems the patent claimed to solve, such as an
unconventional encoding or decoding structure or other compression, transmission, or storage
techniques. Id. at 14.
The merits of those findings and conclusions are currently on appeal to the Federal
Circuit. However, the attorney’s fee issue remains before me, and I regret that I have been
unable to turn to it until now.
STANDARD OF REVIEW
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“The court in exceptional cases may award reasonable attorney fees to the prevailing
party.” 35 U.S.C. § 285. “An exceptional case ‘is 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.’”
University of Utah v. Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V., 851
F.3d 1317, 1322 (Fed. Cir. 2017. There is no precise formula for making that determination.
Biax Corp. v. Nvidia Corp., 626 F. App’x 968, 970-71 (Fed. Cir. Feb. 24, 2015) (unpublished).
ANALYSIS AND CONCLUSIONS
A. Defendants’ Entitlement to a Fee Award.
I find that this case was “exceptional” because Realtime disregarded repeated indicators
that the ‘610 patent was likely invalid and pressed on at great expense to the defendants (and
itself). A chronology of key events serves to explain this finding.
This case was filed on August 31, 2017. Initially Realtime claimed that defendants
(collectively “Dish”) had infringed three patents: U.S. Patent Nos. 8,275.897 (“the ‘897 patent”);
8,867,610 (“the ‘610 patent”); and 8,934,535 (“the ‘535 patent”). This was not Realtime’s first
venture into infringement litigation. In its motion for attorney’s fees Dish characterizes Realtime
as a “serial litigant,” having filed some 145 cases, and Dish claims that Realtime was created by
a patent attorney for the purpose of licensing and monetizing patents. ECF No. 308 at 10-11.
That description does not bear on the merits of a particular case. If Dish infringed a valid patent
it deserves a defeat in court, no matter what Dish speculates about Realtime’s underlying
business plan. However, Realtime’s litigation experience does suggest that it should be
particularly alert to the risks of pursuing a potentially invalid claim too long.
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Shortly after the case was filed Dish (and then co-defendant Arris Group, Inc.) filed
motions to dismiss and for judgment on the pleadings. ECF Nos. 47 and 48. The motions were
based on defendants’ contention that the patents were invalid because they were directed to an
abstract idea. See ECF No. 47, passim; ECF No. 48 at 1. The Court denied those motions
during the course of a Scheduling Conference on March 7, 2018, finding that it would proceed to
claim construction first. ECF No. 80 (transcript) at 14. But the Court also expressed its concern
about validity:
[I]f all you’re talking about is algorithms and applying some formula, my
intuition, my gut instinct would be, well, maybe the defendants have a point.
Maybe this is just an abstract concept. This doesn’t sound like something you
would patent. It doesn’t sound like it’s technology. It just sounds like an idea.
Id. at 9.
Later in 2018, two courts found that Claim 15 of Realtime’s similar ‘535 patent was
invalid as directed to an abstract idea without an “inventive concept” that revived its
patentability. Those rulings were highly significant to this Court’s ultimate determination that
the ‘610 patent suffered the same fate. The two patents have nearly the same title. 1 More
importantly, the specifications for the two patents are virtually identical. ECF No. 305 at 2, 6.
Most importantly, Claim 1 of the ‘610 patent and Claim 15 of the ‘535 patent are so similar as to
be essentially the same in substance. See id. at 6-7 (chart comparing the components of the two
claims). Thus, the reasoning in the two cases, Realtime Adaptive Streaming LLC v. Google LLC,
No. CV 18-3629-GW(JCx) (C.D. Cal. Oct. 25, 2018) (slip op. filed at ECF No. 234-6) and
Realtime Adaptive Streaming, LLC v. Netflix, Inc., No 17-1692-CFC-SRF, 2018 WL 6521978
1
The ‘610 patent is titled “System and Methods for Video and Audio Data Distribution.” The ‘535 patent
is titled “System and Methods for Video and Audio Data Storage and Distribution.”
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(D. Del. Dec. 12, 2018), featured prominently in my order granting summary judgment in this
case. ECF No. 305 at 7-9.
In my view, the two cases should have featured prominently in Realtime’s thinking about
the present case. However, Realtime attempted to distinguish Google, largely based on Claim
1’s term “throughput of a communication channel,” which is not found in the ‘535 patent, and on
my interpretation of the term in the Claim Construction Order. 2 The only reference to the term
in the ‘610 Specification states: “In one embodiment, a controller marks and monitors the
throughput (data storage and retrieval) of a data compression system and generates control
signals to enable/disable different compression algorithms when, e.g., a bottleneck occurs as to
increase the throughput and eliminate the bottleneck.” ECF No. 2-2 at 9:53-58. The problem is,
absent any indication of how the system tracks the number of pending requests to determine the
throughput of the communication channel, i.e., a mechanism for determining the number of
requests, the term is itself an abstract idea. See ECF No. 305 at 11.
Realtime attempted to discredit the Netflix case as wrongly decided, in part because it
found Claim 15 of the ‘535 claim to be a representative claim. But the California court also
implicitly found Claim 15 to be representative of at least Claims 16-30. More importantly,
representative or not, Claim 15 is so similar to Claim 1 of the ‘610 patent that the two courts’
rulings should have served as a red flag that Claim 1 faced serious trouble.
This case was stayed on February 26, 2019, pending an Inter Partes Review (“IRP”) of
the ‘610 patent’s validity by the Patent Trial and Appeal Board. See ECF Nos. 157 and 161.
While the stay was in effect certain events bearing somewhat on this case took place.
2
In the Claim Construction Order, issued on January 11, 2019, I defined “throughput of a communication
channel” to mean the “number of pending transmission requests over a communication channel.” See
ECF No. 151 at 8-10.
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First, two administrative patent judges found claims 1-14 of the ‘535 patent (the claims
not addressed in the California court’s invalidity order) unpatentable on obviousness grounds.
See Netflix, Inc. v. Realtime Adaptive Streaming, LLC, 2020 WL 120083, at *14 (P.T.A.B. Jan.
10, 2020); Google LLC v. Realtime Adaptive Streaming, LLC, 2020 WL 959190, at *16
(P.T.A.B. Feb. 27, 2020).
Second, the Federal Circuit issued an unpublished decision in Adaptive Streaming Inc. v.
Netflix, Inc., 836 F. App’x 900 (Dec. 14, 2020). The case involved a patent that claimed systems
for communicating audio and video signals between devices that use different formats. The
court affirmed the dismissal of plaintiff’s case, finding that the claims at issue failed the first
Alice step because they “were directed to the abstract idea of ‘collecting information and
transcoding it into multiple formats.’” Id. at 903. At the second step, the court determined that
the claims “do not incorporate anything that would transform their subject matter into an eligible
application of the abstract idea. . . .In particular, there is no identification in the claims or written
description of specific, unconventional encoding, decoding, compression, or broadcasting
techniques.” Id. at 904. An unpublished opinion does not create a binding precedent, but it was
another red flag for the present case. The case was later highlighted in defendants’ notice of
intent to file a motion for summary judgment based on invalidity. See ECF No. 204 at 2.
The IRP was terminated on jurisdictional grounds (untimeliness) on January 31, 2020,
and rehearing was denied on February 4, 2020. See ECF No. 172. Appeals were filed, and the
Court elected to continue the stay in effect until the conclusion of the IPR proceedings. See ECF
No 173. In a joint status report filed on January 14, 2021, the parties informed the Court that no
IRPs were still pending. ECF No. 178 at 2. Accordingly, the Court lifted the stay on January 15,
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2021. See ECF No. 179 (minute order). That marks the date when defendants began to incur the
attorney’s fees that they are seeking in this case. See ECF No. 308-2 at 1.
On February 11, 2021, in a letter to Realtime’s counsel, defendants reiterated their
position on invalidity, noted that substantial litigation expense would be incurred if the case
continued, and asked plaintiff to dismiss its claims. ECF No. 308-5. Realtime chose not to do
so.
On February 4, 2021 and June 9, 2021 a PTO examiner conducting an ex parte
reexamination of the ‘610 patent issued first and second non-final office actions rejecting Claim
1 and several other claims as unpatentable on obviousness grounds. See ECF No. 305 at 4, n.1. I
did not consider those non-final office actions in my decision on the motion for summary
judgment. Id. However, they could have served as additional red flags regarding the viability of
Realtime’s case.
Finally, on May 28, 2021, as an exhibit to a motion for summary judgment, defendants
filed a declaration of Dr. Alan C. Bovik. ECF No. 223-1. A modified version of the declaration
was filed on June 2, 2021 as an exhibit to defendant’s Motion for Summary Judgment of
Invalidity Based on Lack of Subject Matter Eligibility – the motion that I ultimately granted.
ECF No. 234-1. Realtime promptly filed a Rule 702 motion to exclude certain of his opinions.
ECF No. 237. I understand that parties to litigation typically are not persuaded by the opinions
of the opposing party’s retained expert. In my view, however, Dr. Bovik’s opinions merited
serious consideration, at least as another red flag concerning the potential resolution of the
invalidity issue. I gave them weight in my summary judgment order. ECF No. 305 at 13-14.
The parties completed briefing on summary judgment and, meanwhile, they were
preparing for trial. To be clear, I am not critical of Realtime or counsel for believing it their case
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and wanting the opportunity to present it to a jury. Rather, my point is that by carrying on
despite numerous danger signals or red flags as I have called them, Realtime accepted the risk of
having to reimburse defendants’ reasonable attorney’s fees. In sum, when I consider the totality
of the circumstances leading up to this Court’s grant of summary judgment on July 31, 2021, I
find that Realtime’s dogged pursuit of the case notwithstanding those danger signals renders this
an exceptional case. I conclude that defendants are entitled to an award of reasonable attorney’s
fees.
B. Amount of Fees.
Defendants seek an award of $5,075,519, claiming that those are the attorney’s fees it
reasonably incurred in the six and one-half months after the stay was lifted. Included in that
amount are fees attributed to extensive discovery by both sides; multiple letters of intent to file
and then the filing and briefing of multiple summary judgment motions; the filing and briefing of
Rule 702 motions; motions in limine; and trial preparation. Defendants ask the Court to evaluate
these fees in the context of Realtime’s seeking damages in the range of $42 million.
In support, defendants file the declaration of one of its lawyers, Adam Shartzer,
describing the members of the Fish & Richardson PC team that worked on this case: 13 lawyers
(six at the partner level); three litigation paralegals; four discovery analysts; four library and
search analysts; an IP operations specialist; and a graphic artist. ECF No. 308-1. Their rates
ranged upward to $900 per hour; overall, these individuals had an average billing rate of
approximately $668 per hour. That includes a 15.5% discount that Dish uniquely receives. Id. at
11-12. In addition, the Denver law firm Wheeler Trigg O’Donnell LLP was retained in April
2021 to assist in trial preparation. According to the affidavit of Hugh Gottschalk, their fees
totaled $103,986.50, representing the work of one partner, one associate and one paralegal, at
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rates between $685 and $220 per hour, with an overall average billing rate of approximately
$637 per hour.
The backgrounds of the several lawyers are impressive. But given the number of lawyers
and others working on the case, it is inevitable that there are duplications and other inefficiencies
in the numbers. There is no indication that the time entries have been reviewed and culled to
eliminate inefficiency and assure that the time was necessarily and productively recorded.
In determining the reasonableness of attorney’s fees, the Court starts with the “lodestar”
(reasonable hours times reasonable rates), which is presumptively reasonable. See Robinson v.
City of Edmund, 160 F.3d 1275, 1281 (10th Cir. 1998). However, the lodestar can and
frequently is adjusted after applying factors such as those articulated in Johnson v. Georgia
Highway Express, Inc., 488 F. 2d 714 (5th Cir. 1974]. 3 The Colorado Rules of Professional
Conduct provide a similar list of relevant factors. 4 Defendants have not yet explained or
defended their figures in that context.
In its response Realtime asserts that $5 million is unreasonable on its face. ECF No. 319
at 14. However, plaintiff declines to dig into the “84 pages of raw billing entries” to highlight
those it believes to be unreasonable, and it suggests that the Court should not have to do that
3
Johnson lists 12 factors for courts to consider in determining reasonableness: (1) the time and labor
required; (2) the novelty and difficulty of the questions; (3) the skill required; (4) preclusion of other
employment; (5) the customary fee in the community; (6) whether the fee is fixed or contingent; (7) time
limitations imposed by the client; (8) the amount involved and the results obtained; (9) the experience,
reputation and ability of the attorney’s; (10) the undesirability of the case; (11) the nature and relationship
of the professional relationship with the client; and (12) awards in similar cases. Id. at 717-19.
4
The Colorado Rules of Professional Conduct are found as an Appendix to Chapters 18 to 20,
COLORADO COURT RULES – STATE (2018). These factors identified in Rule 1.5 are (1) time and labor
required, (2) likelihood of preclusion of other employment, (3) fee customarily charged in the locality, (4)
amount involved and results obtained, (5) time limitations imposed by the client or circumstances, (6)
nature and length of the professional relationship, (7) experience, reputation, and ability of the lawyer(s),
and (8) whether the fee is fixed or contingent.
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either. Id. Realtime requests the opportunity for further briefing without indicating what
briefing it desires or how that would advance the ball.
The parties are entitled to a hearing on the reasonableness of the amount. Prior to the
hearing, however, I request that a responsible partner/principal carefully review the defense
teams’ time entries and cull all time that he or she finds to be duplicative, inefficient, or
otherwise unreasonable in view of the Johnson factors. The remaining time entries should then
be carefully reviewed by a responsible member of the plaintiff’s legal team to identify time that
plaintiff still regards as unreasonable or not satisfactorily explained. Counsel should then confer
and attempt to reach agreement. If agreement is not reached, then set an evidentiary hearing. In
that event, if plaintiff is willing to divulge information about the time spent by members of the
plaintiff’s team and their corresponding rates, the Court would consider that information in the
reasonableness determination. However, the Court is not requiring that plaintiff provide that
information.
ORDER
Defendants’ motion for attorney’s fees, ECF No. 308, is granted as to their entitlement to
an award of reasonable attorney’s fees. The Court makes no ruling on the amount of such fees
and has provided directions to counsel concerning that issue.
DATED this 20th day of January, 2022.
BY THE COURT:
___________________________________
R. Brooke Jackson
United States District Judge
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