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M-I Drilling Fluids UK Ltd. v. Dynamic Air Inc.

United States District Court, D. Minnesota

March 20, 2018

M-I DRILLING FLUIDS UK LTD. and MI LLC, Plaintiffs,
v.
DYNAMIC AIR INC., Defendant.

          Scott J. Pivnick, ALSTON & BIRD LLP, for plaintiffs.

          Alan G. Carlson, CARLSON CASPERS VANDENBURGH LINDQUIST & SCHUMAN PA, for defendant.

          MEMORANDUM OPINION AND ORDER ON REPORT AND RECOMMENDATION

          JOHN R. TUNHEIM CHIEF JUDGE

         In this 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.

         I. STANDARD OF REVIEW

         Upon 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.

         II. DAI'S PROPOSED AWARD

         The 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.

         A. DAI's Objections

         1. Inter Partes Review

         The 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.)

         It is 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.

         2. Data-Hosting and Management Costs

         DAI 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[1] of data-hosting and management costs that DAI seeks appears on various invoices.[2] 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.

         3. ...


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