Chalumeau Power Systems LLC v. Alcatel-Lucent et al

Filing 190

MEMORANDUM ORDER re 180 Supplemental Submission for Attorney Fees and Costs. The Court determines that the appropriate amount of fees is $799,096.02 (see Memorandum Order for further details). Signed by Judge Richard G. Andrews on 11/6/2014. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

CHALUMEAU POWER SYSTEMS LLC,
Plaintiff,

v.

Civil Action No. 11-1175 (RGA)

ALCATEL-LUCENT USA INC., and
ALCATEL-LUCENT HOLDINGS INC.,
Defendants.

MEMORANDUM ORDER

Before the Court is Defendants' Submission for Attorneys' Fees and Costs and Plaintiffs
Response. (D.I. 180, 184). This Court previously granted the Defendants' Motion for
Attorneys' Fees and Costs (D.I. 179), and the Court requested supporting documentation to
determine the appropriate amount of fees. For the reasons stated below, the Court determines
that the appropriate amount of fees is $799,096.02.
Defendants seek $1,182,635.55 of attorneys' fees for defense of the case, $53,367.68 of
attorneys' fees for the fees' litigation, and $97,098.70 for expenses not taxed as costs, for a total
of $1,333,101.93. Plaintiff has three objections. The first is that the hourly rates are
unreasonable; the second is that the "lodestar" should be adjusted downward; and the third is that
no fees should be awarded for work before November 5, 2013.
Defendants argue that the fees charged by its Boston-based attorneys at Goodwin Procter
LLP were reasonable. (D.I. 180 at pp.2-8). Defendants further contend that in this case, the
relevant community for determining reasonable attorneys' fees in this forum is non-Delaware
counsel handling patent infringement cases inside Delaware. (D.I. 180 at p.2). Defendants argue

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that their attorneys' fees reflect the services provided by the attorneys and are consistent with
national data on patent litigation fees. (D.1. 180 at pp.4-8). Accordingly, Defendants requested
attorneys' fees and costs totaling $1,333,101.93.
Plaintiff argues that Defendants have not demonstrated that the general forum rule does
not apply, and that Defendants have not demonstrated that patent litigation in Delaware requires
special expertise that would not be available at a local law firm. (D.I. 184 at pp.2-3). Plaintiff
also argues that Defendants' billing rates are unreasonable, especially when compared to billing
rates for Delaware intellectual property attorneys, as well as national averages. (D.I. 184 at pp.37). Plaintiff proposes that fees should instead be based on median Delaware intellectual property
attorney billing rates, as reported by a recent report of the American Intellectual Property Law
Association. (D.I. 184 at pp.3-5). Using this method, Plaintiff offers that the total for attorneys'
fees and expenses would be $799,096.02. Plaintiff further proposes that all of Defendants'
billable time prior to November 5, 2013 be excluded as unnecessary, which would result in fees
and expenses of $107,117.80. (D.I. 184 at p.7 n.4).
The Patent Act provides that "in exceptional cases [the court] may award reasonable
attorney fees to the prevailing party." 35 U.S.C. § 285. "District courts may determine whether
a case is 'exceptional' in the case-by-case exercise of their discretion, considering the totality of
the circumstances." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756
(2014). The Supreme Court has explained that "[s]ection 285 demands a simple discretionary
inquiry; it imposes no specific evidentiary burden, much less [a high burden such as clear and
convincing evidence]." Id at 1758. To determine reasonable attorneys' fees, courts generally
use the "lodestar" approach, where the number of hours reasonably spent is multiplied by a
reasonable hourly rate. Bywaters v. US., 670 F.3d 1221, 1225-29 (Fed. Cir. 2012). Adjustments

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of the lodestar calculation upward or downward may be made in "rare" and "exceptional"
circumstances, and a court must justify its deviation with specific evidence. Id at 1229-30.
Federal Circuit case law, not Third Circuit case law, governs claims for attorneys' fees under
section 285 of the Patent Act. Id at 1227-28. Reasonable hourly rates for purposes of the
lodestar calculation should generally use the rate of the forum court. See id at 1232-33. There
is a very limited exception to this forum rule "where local counsel is either unwilling or unable
to take the case," but "only where supported by specific evidence that no local attorneys possess
the 'special expertise' necessary to take the case or that no local attorneys were willing to take
the case." Id. at 1233-34 (citations omitted) (internal quotation marks omitted).
The forum rate in this matter must be governed by the rate for Delaware intellectual
property attorneys. This forum court is in Delaware, not Massachusetts. The limited exception
to the forum rule cannot apply because a number of Delaware attorneys can, and do, capably
litigate patent matters. Defendants have not demonstrated, or even tried to demonstrate, that no

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Delaware attorneys possess the expertise to handle a patent case. Indeed, many do. 1 In
exercising discretion in this inquiry, I find that attorneys' fees and expenses should be governed
by the prevailing Delaware market rates for patent litigation. Therefore, this Court finds that
reasonable attorneys' fees and expenses, using Delaware rates, is $799,096.02.
This Court is not convinced that the lodestar calculation should be adjusted up or down,
despite Plaintiff and Defendants' arguments on the matter. The specialized skill that patent
litigators possess, as argued by Defendants, is captured by the hourly rates of Delaware
intellectual property litigators. (See D.I. 180 at p.11). Similarly, this Court is not convinced that

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Off the top of my head, I can think of at least four Delaware firms whose lawyers have
appeared before me as lead counsel in patent litigation.
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Defendants have demonstrated that there is an exceptional circumstance with respect to the result
obtained or the amount involved. (See id. at pp.12-13). Nor do I think the rates should be
adjusted downward simply because Defendants did not win on a dispositive motion or at trial.
Defendants' result was just as good.
Plaintiff argues unconvincingly that expenses and fees prior to November 5, 2013 should
be excluded because they were not reasonably necessary. (D.1. 184 at p.7 n.4). On that date, the
Court granted Defendants' motion to amend to assert a licensing defense. Because the licensing
agreement predates the litigation, and this Court determined the licensing defense was not
untimely, it is not clear why the recovery should exclude fees and expenses from before
November 5, 2013. Defendants had to litigate the case until they learned of the licensing
defense. It makes no sense (and perhaps that is why the argument is limited to a footnote) to say
that defending the case was not reasonably necessary.
In sum, for the above reasons, the Court orders attorneys' fees and costs of $799,096.02
to Defendants.

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Entered this tz_ day of November, 2014.

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