Important Costs Decision Regarding Patent Infringement Litigation

In the United States, unless there’s a statutory or contractual right to attorney’s fees, the prevailing party generally does not receive them. This is the case in patent infringement lawsuits, unless the plaintiff can prove willfulness and that attorney’s fees should be awarded, which is very rare (or if the defendant can prove that the patentee committed misconduct in the litigation or in securing the patent, or if the litigation is brought in subjective bad faith and the litigation is objectively baseless, which is again very rare).

So the prevailing party in a patent infringement case is typically left with an award of costs under Fed. R. Civ. P. 54(d)(1) (“Unless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing party.”).

The provisions of 28 U.S.C. § 1920 limit a court’s discretion in taxing costs against the unsuccessful litigant. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441–42 (1987).

28 U.S.C. § 1920 reads:

A judge or clerk of any court of the United States may tax as costs the following:

(1) Fees of the clerk and marshal;

(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

(5) Docket fees under section 1923 of this title;

(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

In Eolas v. Adobe Systems, Inc. et al., a case from the Eastern District of Texas (but relevant to the Northern District of Texas since both districts (1) are within the Fifth Circuit and (2) routinely handle patent infringement cases), defendants prevailed on their claim that Eolas’ asserted patent claims were invalid. Accordingly, defendants requested that Eolas pay their costs, which totaled, according to Defendants, more than $2 million.

Eolas objected to paying costs associated with the following categories: (1) video depositions; (2) electronic discovery costs including document collection, processing, hosting, scanning, and conversion costs; (3) photocopies; (4) CD and DVD copies; (5) graphics professional support at trial; and (6) demonstratives and exhibits for trial.

Judge Davis, on July 19, 2012, issued in important order (available here) resolving Eolas’ objections as follows:

Video Depositions Costs Were Allowed: Although the Fifth Circuit had previously held that videotaping depositions were not costs that were allowable, § 1920 has been amended to specifically permit recovery for “electronically recorded transcripts.” As such, “[t]he Court finds that § 1920(2) now permits taxing costs for video depositions ‘necessarily obtained for use in the case.’”

Certain Electronic Discovery Costs Were Allowed: First, document scanning costs were allowed. Second, document collection, processing and hosting costs were not allowed. “Though the statute has been broadened to allow for copying materials as opposed to just papers, it is not so broad as to cover general electronic discovery costs that precede copying or scanning of materials.” Third, costs associated with converting files in native format to TIFF format were not recoverable in the instant case, because the parties had an agreement to produce their documents in native format or to convert native files to TIFF images and then produce such images. Accordingly, costs associated with the TIFF conversion process were not “necessarily obtained for use in the case.” (Judge Davis noted that, had the parties’ agreement been different, the result may have been different as well.)

Costs for Photocopies Were Allowed: Judge Davis found that Defendants may tax costs for “for 50% of the general copying charges and 100% of the detailed copying charges.” General copying charges were those charges that did not adequately describe the photocopies that were being made, and detailed copying charges specifically indicated the material being copied.

CD and DVD Copies Were Allowed: These were allowable in the same manner as the costs for photocopies.

Graphics Professional Support Were Allowed: Judge Davis allowed recovery for audio-visual support, but found that only $32,000 of defendants’ requested $95,000 was reasonable and necessary for trial.

Demonstratives and Exhibits for Trial Were Allowed: These were allowable in the same manner as the costs for photocopies.

Defendants were ordered to resubmit an agreed Bill of Costs to the Clerk.

Eolas is represented by Mike McKool, Jr., Ada Brown, Christopher Mierzejewski, Daniel Pearson, Douglas Cawley, Gayle Klein, Gretchen Curran, Holly Engelmann, Ivan Wang, James Quigley, Joel Thollander, John Campbell, Jr., John Garvish, II, John Johnson, II, Joshua Budwin, Kevin Burgess, Lindsay Martin, Matthew Rappaport, Phillip Aurentz, Rosemary Snider, Samuel Baxter, and Thomas Fasone, III, all of McKool Smith, P.C.; and Andrew Gorham, Robert Bunt, and Robert Parker, all of Parker Bunt & Ainsworth.