United States District Court, D. Minnesota
M-I DRILLING FLUIDS UK LTD. and MI LLC, Plaintiffs,
DYNAMIC AIR INC., Defendant.
J. Pivnick, ALSTON & BIRD LLP, for plaintiffs.
G. Carlson, CARLSON CASPERS VANDENBURGH LINDQUIST &
SCHUMAN PA, for defendant.
MEMORANDUM OPINION AND ORDER ON REPORT AND
R. TUNHEIM CHIEF JUDGE
patent case, the prevailing party, Defendant Dynamic Air Inc.
(“DAI”), filed a motion for reasonable attorney
fees, expert-witness fees, and costs incurred by DAI in
defending this action brought by Plaintiffs M-I Drilling
Fluids UK Ltd. and M-I LLC (collectively “M-I”).
(Def.'s First Mot. for Attorney Fees, June 3, 2016,
Docket No. 228.) The Court granted DAI's motion in part,
finding this case “exceptional” under 35 U.S.C.
§ 285. (Mem. Op. & Order at 20-21, Mar. 30, 2017,
Docket No. 281.) Pursuant to the Court's order, DAI filed
a second motion and supporting documents, arguing that it
should be awarded approximately $2.07 million. (Def.'s
Second Mot. for Attorney Fees, Apr. 20, 2017, Docket No.
285.) United States Magistrate Judge Hildy Bowbeer issued a
Report and Recommendation (“R&R”),
recommending that DAI be awarded approximately $1.36 million
of the $2.07 million that it requested. (R&R at 47-49,
Jan. 26, 2018, Docket No. 367.) Both DAI and M-I filed
objections to the R&R. (Def.'s Objs., Feb. 23, 2018,
Docket No. 375; Pls.' Objs., Feb. 23, 2018, Docket No.
376.) Because the $1.36 million that the Magistrate Judge
recommended be awarded is reasonable, and because the amounts
that the Magistrate Judge recommended be excluded are not
reasonable (with one exception), the Court will generally
overrule the parties' objections, adopt the R&R in
part, and grant DAI's motion in part.
STANDARD OF REVIEW
the filing of a report and recommendation by a magistrate
judge, a party may “serve and file specific written
objections to the proposed findings and
recommendations.” Fed.R.Civ.P. 72(b)(2);
accord D. Minn. LR 72.2(b). “The district
judge must determine de novo any part of the magistrate
judge's disposition that has been properly objected
to.” Fed.R.Civ.P. 72(b)(3). Thus, the Court will review
the parties' objections de novo.
DAI'S PROPOSED AWARD
Magistrate Judge recommended that DAI be awarded
approximately $1.36 million of the $2.07 million that it
requested. (R&R at 47-49.) DAI objects to several
portions of its request that the Magistrate Judge recommended
be excluded from the award, and M-I objects to the entire
award as being unreasonable. The Court will generally
overrule the parties' objections. But the Court will
sustain DAI's objection to the Magistrate Judge's
denial of data-hosting and management costs, as those costs
are documented in invoices submitted to DAI.
Inter Partes Review
Magistrate Judge recommended denying DAI approximately $460,
000 in fees and costs associated with inter partes review
(“IPR”). DAI argues that denial of its
IPR-related fees and expenses punishes it for pursuing
resolution via a more cost-conscious route. But that argument
assumes that the Court would award DAI the same (or more)
fees and expenses for pursuing a similar validity challenge
in district court to the same extent that DAI pursued it
before the U.S. Patent and Trademark Office. Similar to
DAI's fees related to its unasserted antitrust
counterclaims - which the Magistrate Judge recommend be
denied and to which DAI does not object - DAI's
IPR-related fees and expenses were not “expended in
furtherance of successful claims, or of claims closely
related to successful claims.” Whitworth v.
Nat'l Enter. Sys., Inc., No. 08-968, 2010 WL
1924505, at *6 (D. Or. Apr. 21, 2010), R&R
adopted, 2010 WL 1923673 (D. Or. May 11, 2010). DAI
prevailed in this action because M-I's infringement
theories were meritless, not because M-I's patents were
invalid. (Mem. Op. & Order at 16-17.)
true that IPRs have become quite common in modern patent
disputes. See Brian J. Love & Shawn Ambwani,
Inter Partes Review: An Early Look at the Numbers,
81 U. Chi. L. Rev. Dialogue 93, 103 (2014). But the IPRs
pursued legal theories that had no bearing on the (1)
ultimate resolution of this case or (2) when this case
resolved. Awarding DAI almost half a million dollars for IPRs
that proved irrelevant would go too far. The Court will
therefore overrule DAI's objection in this respect, adopt
this portion of the R&R, and deny DAI its fees and
expenses related to the IPRs.
Data-Hosting and Management Costs
argues that it should be awarded $15, 032.06 for data-hosting
and management costs. The Magistrate Judge recommended
denying DAI these costs, finding that DAI's counsel, the
Carlson Caspers law firm, did not bill DAI for these costs.
But Carlson Caspers's invoices to DAI clearly show each
of these costs on the “Disbursements” section,
i.e., a disbursement to a third party paid by Carlson
Caspers, for which Carlson Caspers billed DAI, and for which
DAI paid Carlson Caspers. Each of the line-items on the
spreadsheet of data-hosting and management costs that
DAI seeks appears on various invoices. The Court will
therefore sustain DAI's objection in this respect, reject
this portion of the R&R, and award DAI $15, 032.06 for
data-hosting and management under § 285.