Friday, December 6, 2013

Apple demands $15 million in legal fees from Samsung, spent over $60M on California case

In the U.S. patent reform context, "loser pays"-type fee-shifting is a hot topic (see this Bloomberg article on "Three Issues to Watch as the Senate Targets Patent Trolls", which contains a quote from me on the Goodlatte bill passed by the House yesterday). Presently the hurdle for recovery of legal fees in the U.S. is extraordinarily high: courts do sometimes award attorneys' fees, but only in "exceptional" cases.

In two high-profile patent lawsuits, motions for recovery of litigation expenses were brought this week. On Tuesday, Microsoft filed a motion in the Western District of Washington to recover (only) its taxable costs of $762,914 in connection with the FRAND litigation against Google's Motorola Mobility. The hurdle for recovery of those costs is far lower than for recovery of attorneys' fees -- but the amounts are also much smaller.

Shortly before midnight on Thursday, Apple made a filing in its first litigation with Samsung in the Northern District of California, arguing that Samsung's intentional infringement of Apple's intellectual property makes this litigation an exceptional case in which an award of attorneys' fees is warranted even though it's not the norm in the U.S. under current rules. Apple is seeking to recover from Samsung $15,736,992 ($15.7 million) out of more than $60 million spent in attorneys' fees on the first California case (which involved two trials: the original trial in August 2012 and a retrial in November 2013, resulting in a total damages award of more than $929 million).

The $15.7 million portion represents one third of Apple's attorneys' fees from the outset of this dispute through March 1, 2013 -- the day on which Judge Lucy Koh entered a damages ruling, her last post-trial decision with respect to the first trial. This means Apple does not seek recovery with respect to the costs of the retrial (I guess that's because the retrial was necessitated by the court's disagreement with Apple's choice of notice dates it told to the first jury). Also, Apple only lists fees of timekeepers who billed more than $100,000. And "no fees from Apple’s successful defense against Samsung’s claims are included".

In a footnote, Apple gives examples of other intellectual property infringement cases in which similar or even far greater amounts were awarded:

"For example, a $105.7 million award in a copyright case was upheld on appeal. Mattel, Inc. v. MGA Entm’t, Inc. [...] The Federal Circuit upheld an award of $16.8 million for attorney fees in a patent case. Takeda Chem. Indus. v. Mylan Labs. [...]; see also Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs. [...] (awarding $19 million in fees in patent case)."

The examples provided by Apple involve well-known companies (at least one well-known party per case) but are much smaller disputes in economic terms than Apple v. Samsung. I don't think anyone can reasonably argue that Apple's $15.7 million demand is excessive. The real hurdle here is that any award of attorneys' fees, regardless of the amount, is a steep challenge due to the "American Rule".

These are the pillars of Apple's argument for recovery of attorneys' fees:

  • Apple prevailed on almost all of its infringement allegations and with respect to 26 of the 28 accused products. It defeated all of Samsung's offensive counterclaims.

  • "Samsung's willful, deliberate, and calculated copying of Apple's iPhone makes this an 'exceptional case'"

  • Samsung has had a huge commercial benefit from its intentional infringement.

  • "By seeking only one-third of its fees from timekeepers who billed more than $100,000, Apple ensures that it is not recovering fees for its unsuccessful claims concerning the unregistered combination iPhone trade dress or for tablet design."

[Update] It appears that Google is also seeking roughly $6 million in other expenses (copying of documents etc.). I overlooked that one when I reported on the motion for recovery of legal fees and will address it on this blog when I report on Samsung's opposition brief. The question of legal fees is the more interesting one because of its connection to the patent reform debate. [/Update]

Here's Apple's motion, which again contains some detailed allegations of intentional copying by Samsung:

13-12-05 Apple Motion for Recovery of $15M in Attorneys' Fees From Samsung by Florian Mueller

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