Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-00528/USCOURTS-cand-4_04-cv-00528-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 Patent Infringement

---

United States District Court

For the Northern District of California

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E-PASS TECHNOLOGIES, INC., )

)

 Plaintiff, )

)

 v. )

) No. C-00-2255-DLJ

3COM CORP. AND PALM, INC., ) No. C-03-4747 DLJ

) No. C-04-0528 DLJ

 Defendant. ) Related Cases

______________________________)

)

E-PASS TECHNOLOGIES, INC. ) 

) ORDER

 Plaintiff, )

)

 v. )

)

VISA INTERNATIONAL SERVICE )

ASSOCIATION, and VISA U.S.A., )

INC. )

 Defendant. )

______________________________)

)

E-PASS TECHNOLOGIES, INC. )

)

 Plaintiff, )

)

 v. )

)

PALMONE, INC., PALMSOURCE, )

INC. AND HANDSPRING, INC. )

)

 Defendants. )

)

______________________________)

In April 2006, the defendants filed motions for attorneys’

fees. On November 21, 2006, the Court granted the Motions for

Attorneys’ Fees in the following cases: E-Pass v. PalmOne, cases

C-00-2255 and C04-0528; E-Pass v. Visa USA and Visa International

Service Association, case C-03-4747; and E-Pass v. PalmSource, case

C-04-0528;. The Court held that each party was entitled to an award

of attorney fees and was to submit to the Court an accounting

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detailing their expenses. E-Pass would then have an opportunity to

respond. The parties submitted their statements. Subsequently, the

Federal Circuit entered an Order upholding this Court’s granting of

summary judgment against E-Pass and denying E-Pass’s appeal. This

action led plaintiffs to file additional briefing with the Court on

the issue of the scope of their entitlement to fees. The Court now

resolves all outstanding fee related issues. 

I. Background

The background of the underlying action is set out in detail in

this Court’s Order of November 21, 2006. On April 3, 2006 all

defendants filed motions to recover reasonable attorneys fees and

costs under 35 U.S.C. § 285. The Visa entities also sought

sanctions under 28 U.S.C. § 1927, arguing that E-Pass had

unreasonably and vexatiously multiplied the proceedings. The Visa

entities sought these sanctions both against E-Pass and also against

its counsel. In its Order of November 21, 2006 the Court found that

each of the following cases was exceptional under 35 USC § 285: EPass v. Visa USA (Case 03-4747); E-Pass v. Visa International (Case

03-4747); E-Pass v. PalmSource (Case 04-0528); and E-Pass v.

PalmOne, (Cases 00-2255 and 04-0528).

In the same Order, the Court decided, in the exercise of its

discretion under 35 USC § 285 to award Visa USA all of its fees and

costs incurred in Case 03-47447. See Order of November 21, 2006 at

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45:11-19. In E-Pass v. Visa International, Case 03-4747, the Court

granted the motion for attorney fees under 35 USC § 285, but only as

to expenses solely incurred for defense of infringement claims based

on the Palm VII, the Zire, the Tungsten and the Treo products. In

the Visa International case the Court deferred a decision on

attorney fees for all other purposes until the conclusion of the

Federal Circuit appeal.

Similarly, the Court granted the motion for attorney fees under

35 USC § 285 in E-Pass v. PalmOne, but only as to expenses incurred

after remand of case 00-2255 from the Federal Circuit, and only as

to expenses solely incurred for defense of infringement claims based

on the Palm VII, the Zire, the Tungsten and the Treo products. At

that point the Court deferred decision on attorney fees for all

other purposes until the conclusion of the Federal Circuit appeal.

Finally, the Court granted the Motion for Attorney Fees in E-Pass v.

PalmSource (Case 04-0528). 

The Federal Circuit heard oral argument on E-Pass’ appeal on

December 4, 2006 and rendered a decision on January 12, 2007. The

Federal Circuit affirmed this Court’s granting of summary judgment

in all respects. See E-Pass Technologies, Inc. V. 3Com Corp, et.

al., 473 F.3d 1213 (Fed. Cir. 2007). On January 26, 2007 E-Pass

petitioned for a rehearing and a rehearing en banc. The Federal

Circuit denied both requests on February 21, 2007 and issued its

mandate on February 26, 2007. Subsequent to the Federal Circuit’s

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orders, the parties filed renewed motions for attorney’s fees

seeking fees on those issues which this Court had deferred ruling

upon pending the Federal Circuit appeal. E-Pass filed responsive

pleadings to the renewed motions. Therefore the issues which this

Court had deferred until resolution of the appeal are also now

before the Court.

II. Legal Standard

 Defendants have brought their request for attorney fees

pursuant to Federal Rule of Civil Procedure 54(d)(2)(B); Civil Local

Rule 54-6, and 35 U.S.C. § 285. 35 U.S.C. § 285 provides: "[t]he

court in exceptional cases may award reasonable attorney fees to the

prevailing party." The purpose of the statute is to "compensate the

prevailing party for its monetary outlays in the prosecution or

defense of the suit." Automated Business Cos. v. NEC Am., Inc., 202

F.3d 1353, 1355 (Fed. Cir. 2000) quoting Central Soya Co. v. Geo. A.

Hormel & Co., 723 F.2d 1573, 1578 (Fed. Cir. 1983). The party

seeking attorney fees must prove by clear and convincing evidence

that the case is "exceptional." Monster Cable Prods. v. Quest

Group, 2005 U.S. Dist. Lexis 23466, *10 (N.D. Cal. 2005). 

The Court must engage in a two part test to determine whether

to award a party attorney fees under § 285. The court must first

make a factual determination as to whether the case is

"exceptional." If the Court decides that it is an "exceptional"

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case, then it may use its discretion to determine whether or not an

award of attorney fees is appropriate. See Interspiro v. Figgie

Int'l, 18 F.3d 927, 933 (Fed. Cir. 1994). 

III. Discussion

A. The Visa Defendants

1. Visa USA

As noted above, the Court is required first to determine as a

matter of fact whether the case was "exceptional." Interspiro v.

Figgie Int'l, 18 F.3d 927, 933. This Court has concluded that the

case against Visa USA is “exceptional” within the meaning of 35

U.S.C. § 285. 

This Court had awarded Visa USA all of its fees and costs. The

Visa entities combined seek a total of $1,112,935.50 in attorney

fees and $28,714.90 in costs. According to the declaration of Julie

Han in support of the fee request, the Townsend law firm represented

both Visa USA and Visa International in the suit. Both Visa USA and

Visa International share equally in the fees and expenses incurred

on the action. “Each party pays 50% of the fees and costs billed by

Townsend.” Han Decl. of January 8, 2007 at ¶ 2.

While the Court awarded all of its fees to Visa USA, E-Pass

still requests that the Court scrutinize Visa USA’s fee request

arguing that “Visa U.S.A.’s defense focused on establishing that it

did not attend the Palm V presentations at issue.” See E-Pass

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Response of February 27, 2007 at 3:1-2. Since E-Pass steadfastly

refused throughout the litigation to clarify its contentions, the

Court will not limit Visa USA’s fee request. There is no question

that Visa USA was required to address much more throughout the

litigation than merely its presence at the demonstrations. The

Court, therefore, awards Visa USA $556,467.75 in attorney fees and

$14,357.45 in costs, subject to the reductions discussed below.

2. Visa International

As to Visa International, the Court ultimately concluded

that E-Pass had engaged in vexatious or unjustified litigation and

that the suit against Visa International was frivolous, warranting a

determination that the litigation was "exceptional" under § 285. 

See Amsted Indus., Inc. v. Buckeye Steel Castings Co., 23 F.3d 374,

376 (Fed.Cir.1994). This Court had left open the total scope of the

award of fees and costs to Visa International pending the Federal

Circuit’s determination. As noted above, the original fee award

covered only fees related “solely incurred for defense of

infringement claims based on the Palm VII, the Zire, the Tungsten

and the Treo products.” The Court deferred deciding at that point

any award of fees relating to the Palm V. 

On appeal, the Federal Circuit concurred with this Court’s

analysis that E-Pass had failed entirely to present evidence of

infringement. The Federal Circuit referred to E-Pass’s position as

“fatally flawed,” and noted that “[e]ven when all of the evidence

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that E-Pass cites to is accounted for, its claim cannot survive

summary judgment.” Similarly, the Federal Circuit rejected E-Pass’s

argument under the doctrine of equivalents finding E-Pass’s efforts

to demonstrate infringement under that doctrine to be “totally

defective.”

 As the basis for their renewed request for fees, Visa

International argues that as E-Pass never clearly defined the scope

of its infringement contentions, that the Visa entities were forced

to litigate throughout this case “not only the infringement charges

with respect to the two demonstrations, but also those with respect

to other unspecified activities.” See Visa Accounting at 2:13-22.

Visa asserts it should therefore be entitled to recoup all of its

fees, not just those for the CES and in-house demonstration. 

For ease of Court review, the Visa entities have broken the

fees and costs down into time periods. Again, as noted above, each

of the fee and costs figures below represents the total amount

incurred by Visa USA and Visa International, which the Visa entities

argue should be split in half for each. 

The first time period is October 2003 until April 12, 2005. 

This period covers the period from the filing of the Complaint

against Visa until the ruling on the original motion to dismiss. As

noted above. In its order on Visa’s motion to dismiss, the Court

found the E-Pass’s allegations “minimalist” and “conclusory” but

sufficient to survive a motion to dismiss. Visa seeks a total of

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$122,631 in fees and costs of $5,111.20 for this time period.

The second time frame for which the Visa entities seek fees is

from the April 12, 2004 Order on the Motion to Dismiss until the

June 8, 2004 Order on Status Conference. During this April to June

time period, the Visa entities were preparing answers, counterclaims

and preparing for the Joint Case Management Conference. The total

of fees for this time period were $51,703 and costs equaling

$284.43.

The third time period is from June 8, 2004 until the October

29, 2004 Summary Judgment motion hearing. During this time period,

Visa argues that it was responding to discovery requests and

preparing and filing a motion for summary judgment. The fees

associated with this time period are $180,211 and costs equaling

$6,733.66. 

The fourth time period is from the October 29, 2004 Summary

Judgment hearing until the February 25, 2005 Claim Construction

Order. During this time period, Visa conducted claim construction

proceedings including making disclosures, and filing their claim

construction brief as well as preparing for and attending the claim

construction hearing. The total of fees for these activities was

$130,175 and costs of $5,123.94.

The fifth time period is February through May 2005. During

this time period the Visa entities were responding to further

discovery requests and also filing supplemental summary judgment

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motions. As E-Pass argued at the summary judgment hearing that the

Court should not rule on the motions as E-Pass had not had

sufficient opportunity to take discovery. The Court granted E-Pass’

request. The total of fees incurred by the Visa entities during

this time frame was $213,065.50 and an additional $2,809.29 in

costs.

The sixth time period, was from May 2005 until August 31, 2006. 

During these months the Visa entities were gathering responsive

discovery materials and filing for a protective order regarding

access by its counsel, Stephen Weiss, to the materials. The

Magistrate Judge ordered a hearing on the issues encompassed in the

protective order. Ultimately, the Magistrate Judge denied Visa’s

request for a protective order. In August 2005 the Visa entities

filed additional motions for summary judgment. In March of 2006, the

Court granted these motions for summary judgment. Total fees

requested for this time period are $213,065.50 and $2,809.29 in

fees. 

 E-Pass raises numerous objections to the Court granting the

Visa entities fees request. E-Pass first argues that the Visa

entities have requested “all” fees” and not “reasonable” attorney

fees as authorized under 35 U.S.C. § 285. E-Pass argues that the

fees requested are not reasonable because: (1) they request fees for

work done in conjunction with the Palm V, which the Court excluded

from recovery; (2) they request fees for unrelated proceedings such

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as motions to disqualify plaintiff’s counsel, seeking protective

orders, reviewing briefs from an ancillary law suit, searching for

expert witnesses, and preparing for appeal; (3) that the amount

requested must be reduced as it contains requests for hours which

are excessive and/or redundant; (4) that the request impermissibly

seeks Expert-Related Fees; and (5) that Visa has asked for

impermissible overhead costs. E-Pass also asserts that since the

hours requested cover topics beyond those permitted to be recovered

by Visa International under this Court’s November 11, 2006 Order,

that the fee request is really in the nature of an impermissible

motion for reconsideration. Finally, E-Pass takes issue with the

fact that the Visa entities have simply split the fees down the

middle for the separate legal entities: Visa USA and Visa

International. Visa seeks to have the Court enter a fees Order

against both E-Pass and its counsel jointly. The Court will now

review each of these contentions.

(A) Fees for the Palm V?

As noted above, E-Pass asserts that the Visa fee request covers

work performed regarding the Palm V, which was outside the scope of

the Court’s November 21, 2006 Order. While this argument had merit

prior to the issuance of the Federal Court Order on the appeal, the

November 21, 2006 Order made it clear that the issue of whether Visa

could seek fees for the Palm V could be revisited upon issuance of

the Federal Circuit Order. 

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In its Order, the Federal Circuit not only affirmed this

Court’s finding of summary judgment, but it concluded that E-Pass’s

arguments were “fatally flawed” and, more specifically, that E-Pass

had presented no evidence to support its claims. E-Pass’s choice of

litigation strategy forms the basis for the Court’s sanction award. 

The Federal Circuit’s Order serves only to affirm this Court’s

finding that sanctions are warranted, and are warranted on all

aspects of the litigation, including claims based on the Palm V. 

(B) Fees for “Collateral” Proceedings

E-Pass argues the Visa defendants’ billing records reveal that

Visa spent time on matters which were collateral to the case, such

as seeking to disqualify E-Pass’ counsel, reviewing briefs in

related litigation, and seeking protective orders regarding

documents. The Court concurs that these matters are peripheral to

the core of the case and grants E-Pass’ request to strike

$150,416.09 in fees as outlined in the Weiss Declaration of February

21, 2007. (Half of this amount is to be subtracted from the award

to Visa International and half from Visa USA.)

Similarly, the fee request includes entries for work related to

the appeal. As fees for work on the appeal are outside the

jurisdiction of this Court, this amount, $114,988.64 should also be

stricken.

While the case was on appeal, Visa filed with the Federal

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Circuit a motion for sanctions under Rule 38 based on the argument

that the appeal was frivolous. The Federal Circuit denied the

motion. E-Pass now asserts because the Federal Circuit did not

award Visa sanctions for the appeal, this Court cannot award further

sanctions. This argument has no basis in fact or law. This Court

still has authority under 28 U.S.C. § 1927 to determine whether

sanctions are appropriate. 

E-Pass also argues that Visa’s Renewed Request for sanctions is

an impermissible request for reconsideration. In so arguing, E-Pass

ignores the language of the November 2006 Order. In its Order of

November 2006, this Court specifically reserved the issue of whether

additional sanctions might be imposed upon completion of the appeal,

so E-Pass has been on notice of the Court’s position on additional

sanctions and Visa’s renewed request was contemplated by that Order. 

(C) Reasonable Fees

E-pass argues to the Court that Visa’s fees are excessive and

redundant and should be reduced. As support for the proposition

they cite to Hensley v. Eckerhart, 461 U.S. 424 (1983) Hensley does

stand for the proposition that the district court should exclude

from this initial fee calculation hours that were not “reasonably

expended . . .Cases may be overstaffed, and the skill and experience

of lawyers vary widely. Counsel for the prevailing party should make

a good faith effort to exclude from a fee request hours that are

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excessive, redundant, or otherwise unnecessary, just as a lawyer in

private practice ethically is obligated to exclude such hours from

his fee submission. Id. At 434. In Hensley, however, the Supreme

Court looked at the issue of the reasonableness of the hours

requested as part of its analysis about the level of victory

achieved by the prevailing party. Here, as defendants prevailed in

their entirety, the proscriptions of Henley do not apply. 

The Weiss Declaration identifies fees it contends to be

excessive. The Court disagrees and finds that the identified items

are not shown to be excessive. Based on that finding, any further

consideration by the Court as to the requested deductions would

require the Court to engage in an unwarranted level of secondguessing. 

 (D) Expert-Related Fees

E-Pass requests reductions based on its argument that Visa

impermissibly seeks fees related to expert witnesses. E-Pass cites

to Amsted Industries Inc. v. Buckeye Steel Castings Co., 23 F.3d

374, 379 (Fed. Cir. 1994) as support. In Amsted, a patent case, the

district court granted Amsted's motion for enhanced damages and

attorney fees under 35 U.S.C. §§284, 285. The fee request, which

was granted in full, included expert witness fees of $46,453.61. On

appeal, the Federal Circuit held that recovery of expert witness

fees was outside the purview of the statute. Visa is not seeking

reimbursement for expert witness fees. As E-Pass recognizes, the

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fees requested are for attorney efforts related to the potential

need for experts. While E-Pass claims that these efforts were

premature, again the Court will not second-guess reasonable attorney

conduct of a litigation strategy for the case. 

(E) Overhead Costs

E-Pass seeks to have the Court strike $616.35 in fees

attributable to librarians and other overhead-related time. Howes

v. Medical Components, Inc., 761 F.Supp. 1193 (E.D.PA. 1990), cited

by E-Pass, does in fact stand for the proposition that in a patent

case, charges for overhead, such as expenses for secretarial time,

word processing equipment, and library services should not be

allowed. See also PPG Industries, Inc. v. Celanese Polymer

Specialties Co., 658 F.Supp. 555, 559 (W.D.Ky.1987; Trend Products

Co. v. Metro Industries Inc., 10 U.S.P.Q.2d 1539 (C.D.Cal.1989).

Thus, the Court disallows the overhead charges requested by Visa in

the amount of $616.35 as set out in the Weiss Declaration. 

 (F) Award Against Counsel

Visa urges the Court to make both E-Pass and its counsel

jointly and severally liable for any fee award. This fee request is

based on Visa’s assertion that as of March 2007 E-Pass had not paid

the Visa entities the costs taxed by the Clerk of Court in the fall

of 2006. Neither had E-Pass paid the costs awarded to Visa by the

Federal Circuit. As support for its argument that sanctions are

appropriate against both E-Pass and its counsel, Visa cites 28

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U.S.C. § 1927 (2207), which provides in pertinent part that “[a]ny

attorney . . .who so multiplies the proceedings in any case

unreasonably and vexatiously .. .” may have sanctions imposed

against him. Visa looks to Phonometrics, Inc. v. Westin Hotel Co,

350 F.3d 1242 (Fed. Cir. 2003) as the basis for this Court being

able to award sanctions jointly against E-Pass and its counsel.

In Phonometrics, after the District court entered judgment in

favor of Westin, Westin requested attorney fees and costs pursuant

to both 35 U.S.C. § 285 and 28 U.S.C. § 1927. The District court

found that Phonometrics' continued maintenance of their action after

the Federal Circuit had issued an opinion in a related matter

clearly invalidating their position, was “vexatious, supported an

‘inference of bad faith’ and ‘resulted in unjustified multiplication

of proceedings.” The District court imposed liability in

Phonometrics for all attorney fees and costs incurred by Westin

pursuant to 35 U.S.C. § 285 and on Phonometrics' counsel pursuant to

28 U.S.C. §1927. The District Court also held that Phonometrics

never articulated a viable infringement theory. This finding was

upheld on appeal. The court further found that Phonometrics

“continued to litigate this case knowing that its claim could not

meet the standard for infringement” therefore violating section

1927. See Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir.1991)

(affirming an award of fees and costs pursuant to 28 U.S.C. § 1927,

noting “[w]hen it becomes apparent that discoverable evidence will

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not bear out the claim, the litigant and his attorney have a duty to

discontinue their quest”). The award of fees against counsel was

also based in part on the long history of the case and of related

cases all in front of the same judge. The District Court held that

each case which had been resolved in a way which undercut

Phonometrics case “presented Phonometrics and its counsel not merely

the opportunity, but the obligation, to reconsider the viability of

Phonometrics' claims in light of the evidence, and to refrain from

further prosecution. Phonometrics never chose the latter course,

even when that opportunity was specifically presented.” Id. 

In many ways the Phonometrics case is similar to the case at

bar, but it is not exactly on point. Both this Court and the Federal

Circuit have found that despite ample opportunity, E-Pass presented

no evidence of infringement. See also Byrnes v. Lockheed-Martin,

Inc., where the fact that plaintiff had lack of evidence to file a 

defamation claim becomes clear at plaintiff’s deposition, but

plaintiff’s counsel specifically refused to dismiss the claim after

receiving defendants' warning letter regarding sanctions.

Additionally, like Phonometrics, E-Pass has throughout the

litigation morphed its contentions to fit whatever argument it

thought would allow it to survive to the next proceeding. 

Despite these similarities, the E-Pass cases still does not

rise to the level of egregious conduct found in Phonometrics. Absent

the blatant and sustained abuse of the court process which occurred

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in that case, this Court does not see the joint award of fees

requested here as sound policy. Moreover, other cases on the issue

of joint sanctions suggest that the Court proceed very cautiously in

this regard. Toth v. Trans World Airlines, Inc., 862 F.2d 1381,

1386 (9th Cir. 1988). In Toth, appellants did not fully comply with

the magistrate's discovery orders. By the date of the hearing on the

motion to dismiss appellants had yet to comply with the magistrate's

discovery orders. The court granted appellants two extensions of

time within which to comply with the outstanding orders. By the time

of the third hearing appellants still had not fully complied with

the district court's orders and therefore the Court dismissed the

case and imposed sanctions jointly against Thornally and Toth. On

appeal the Ninth Circuit found the joint award to be an abuse of

discretion to the extent that such expenses were not “incurred as a

result of plaintiff's and plaintiff's counsel's disobedience of ...

Court[] orders.” In contrast, counsel for E-Pass did not disobey

any specific order of the Court. Inability to reach agreement with

opposing counsel did give rise to numerous motions both before the

Magistrate Judge and before this Court, but none of those motions

resulted in sanctions for non-compliance. Given the record as a

whole, the Court finds that while counsel for E-Pass made tactical

decisions which had the effect of prolonging the proceedings, those

actions were not so egregious as to warrant a joint award of

attorney fees. 

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B. The Palm Defendants’ Motion for Attorney Fees

1. PalmSource

In its Order of November 21, 2006 the Court found that the

cases involving palmOne and PalmSource had “a litigation history of

questionable pre-filing investigation and a discovery strategy of

unwarranted delay and obstruction, which supported a finding that

they are ‘exceptional’."

In its Order of November 21, 2006, this Court found that EPass’s allegations of inducing infringement against PalmSource had

changed over time. After undergoing many permutations, E-Pass’s

ultimate infringement contentions reverted back to the overly spare

format which the Court had found unacceptable in two prior rounds of

motions for inadequate disclosure under the Court’s local rules for

patent cases. 

As the Court noted in its March 17, 2006 Order, “there is no

evidence that the patented method has ever been practiced on any one

the [accused] devices." All of the above, left PalmSource arguing

that it should never have been a party to this case, and that as a

party, Palmsource was “unnecessarily abused” by E-Pass. See August

11, 2006 Hearing Transcript at 28:14-18. 

On January 5, 2007 PalmSource submitted an accounting of

expenses incurred. This accounting requested fees and expenses in

the amount of $1,026,333.50 in fees and $32,432.57 in costs related

to the resolution of the case including expenses for bringing the

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motion for attorney fees but did not include costs related the

appeal of the case. See PalmSource Accounting dated January 5, 2007

at p.2. 

E-Pass makes many of the same arguments against PalmSource that

it made against Visa and which are discussed in greater detail

above.

(A) Fees for “Collateral” Proceedings

E-Pass argues that the PalmSource defendants’ billing records

reveal that PalmSource spent time on matters which were collateral

to the case, such as seeking to disqualify E-Pass’ counsel and

reviewing briefs in related litigation. Unlike the Court’s Order in

regard to Visa and to the other Palm defendants which was limited on

the topics about which those defendants could seek fees, the Order

did not contain similar limitations for PalmSource. Nonetheless, the

Court finds that these matters where peripheral to the core of the

litigation and excludes from recovery fees in the amount of

$86,521.50 for these ancillary matters. 

(B) Reasonable Fees

E-pass argues to the Court that PalmSource’s fees are excessive

and redundant and should be reduced. As support for the proposition

they cite to Hensley v. Eckerhart, 461 U.S. 424 (1983) As discussed

above, Hensley is not directly on point. Again, while the Weiss

Declaration identifies fees it terms as excessive, the Court finds

that the identified items are not so excessive as to require

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reduction, and for the Court to make the requested deductions would

require the Court to engage in a level of second-guessing which is

not warranted. 

(C) Expert-Related Fees

E-Pass requests reductions based on its argument that

PalmSource impermissibly seeks fees related to expert witnesses. 

Amsted Industries Inc. v. Buckeye Steel Castings Co., 23 F.3d 374,

379 (Fed. Cir. 1994). Similar to Visa, PalmSource is not seeking

reimbursement for expert witness fees. As E-Pass notes, the fees

requested are for attorney efforts related to the potential need for

experts. While E-Pass claims that these efforts were premature,

again the Court will not second guess attorney efforts to conduct

the litigation strategy for the case. 

(D) Fees for Overhead

E-Pass seeks to have the Court strike $234.18 in fees

attributable to librarians and other overhead-related time. Howes

v. Medical Components, Inc., 761 F.Supp. 1193 (E.D.PA. 1990), cited

by E-Pass, does in fact stand for the proposition that in a patent

case, charges for overhead, such as expenses for secretarial time,

word processing equipment, and library services should not be

allowed. See also PPG Industries, Inc. v. Celanese Polymer

Specialties Co., 658 F.Supp. 555, 559 (W.D.Ky.1987; Trend Products

Co. v. Metro Industries Inc., 10 U.S.P.Q.2d 1539 (C.D.Cal.1989).

Thus, the Court disallows the overhead charges requested by

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PalmSource in the amount of $ 234.18 as set out in the Weiss

Declaration at Exhibit G. 

2. The Other Palm Defendants

The Palm defendants (3Com, Palm and palmOne) argued that EPass’s allegations against them were frivolous from the outset and

also that E-Pass vexatiously prolonged the litigation, together

rising to the level of abusive conduct. 

The Court found that E-Pass’s litigation tactics were similarly

abusive to the other Palm defendants as they had been to PalmSource.

Throughout the litigation, defendants were forced to expend

resources merely to attempt to have E-Pass clearly define its

claims. In addition to changing theories of liability, E-Pass

altered the scope of allegedly infringing devices as the case

progressed, despite representations by plaintiff counsel that it

would not do so.

Accordingly on November 21, 2006 the Court granted the Palm

defendants Motion for Attorney Fees and ordered the Palm defendants

to submit an accounting detailing the expenses they incurred in

defendant the suit. As per the Order, the submission only included

expenses incurred after the remand of Case C00-2255.

On January 5, 2007, the Palm defendants submitted a filing

requesting a total of $592,737.50 in attorney fees. This amount was

broken down into four separate requests. First, the Palm defendants

state that they incurred $425,016.50 in legal fees in their defense

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of E-Pass’s infringement claims based upon the Palm VII, Zire,

Tungsten and Treo products. Second, the Palm defendants seek

$17,351.50 in legal fees in their defense of E-Pass’s infringement

claims based upon the LifeDrive, which product E-Pass belatedly and

improperly attempted to inject into the litigation. Third, the Palm

defendants state that as a “proximate result of E-Pass’ infringement

claims, the Palm defendants developed both invalidity and

enforceability defenses regarding the ‘311 patent. The Palm

defendants seek an additional $118,819.50 in legal fees regarding

these defenses. The Palm defendants concede that the Court did not

grant these fees in its prior Order, but argue that these fees were

a “natural result” of E-Pass’ infringement claims. 

Finally, the Palm defendants request $31,550.00 in legal fees

relating to their motion for attorneys’ fees and for the work

preparing the Bill of Costs. The Palm defendants again assert that

they should be awarded these fees, since “but for E-Pass’

infringement claims” they would not have been incurred. 

On January 22, 2007, the Palm defendants submitted a

supplemental submission. In this pleading, the Palm defendants

request and additional $147,312. This amount represents the legal

fees expended responding to E-Pass’ appeal to the Federal Circuit of

the Order granting summary judgment in favor of defendants. 

E-Pass responds to the Palm defendants’ submission as follows: 

first, E-Pass alleges that the fees sought by the Palm defendants

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exceed those authorized by the November 21, 2006 Order. As noted

above, the Court’s Order held that fees were awarded to the Palm

defendants only as to expenses incurred after remand of case 00-2255

from the Federal Circuit and a to expenses solely incurred for

defense of infringement claims based on the Palm VII, the Zire, the

Tungsten and the Treo products. E-Pass contends that a “close

analysis of the Palm Defendants’ Accounting reveals that they seek

fees that are inconsistent with the Court’s Order and settled case

law.” 

(A) Reasonable Fees

Like its argument against Visa, E-Pass renews its argument that

Palm’s requested hours are unreasonable. In this instance, E-Pass

points to no specific instances as unreasonable and the Court has no

evidence in front of it to suggest that this is the case. 

(B) Fees for the Palm V

E-Pass specifically argues that the Palm defendants seek fees

which include both permissible products which were the subject of

the fee award (the Palm VII, the Zire, Tungsten and Treo products)

but also for the Palm V. E-Pass asserts that some portion of these

fees attributable to the Palm V must be reduced. However, as more

fully discussed above, based on the Federal Circuit’s findings, this

Court finds that inclusion of fees related to the Palm V is

appropriate. 

(C) Fees for the LifeDrive

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While this Court did not previously state that fees should be

recoverable based on the LifeDrive product, Palm reminds the Court

that it found that E-Pass’s attempts to belatedly inject this

product into the case to be completely inappropriate. E-Pass had

never listed the LifeDrive in its complaint or its infringement

contentions. Nor did it seek leave of Court to amend these

contentions. As the Court held in its November 21, 2006 Order, EPass’ Motion for Summary Judgment on the LifeDrive was totally

without merit. The Court’s failure to include the LifeDrive as a

permissible product for reimbursement of legal fees was an

oversight. The same findings of extraordinariness which apply to

the Tungsten, and Treo apply with greater force to the LifeDrive

which was added to the litigation by E-Pass in violation of all

procedural requirements. Therefore, the Court grants in whole,

Palm’s request for $17,351.50 in legal fees related to defense of

infringement claims based on the LifeDrive.

(D) Fees Related to Invalidity and Unenforceability

The Palm defendants seek reimbursement of $118,819.50 for

preparation of submissions on the issues of invalidity and

unenforceability. While these arguments are not explicitly

authorized by the Court’s Order, Palm argues that the were a

proximate result of E-Pass’ infringement claims. 

E-Pass counters that both the amount of these fees is

extraordinary and that it should be denied as outside the scope of

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the Court’s November 2006 Order. The Court never reached the merits

of the invalidity and enforceability arguments. Nevertheless, these

defenses are part and parcel of the defenses which must be assessed

by defense counsel in every claim of patent infringement. The Court

sees no reason to exclude the fees simply because the claim was

resolved on another ground. 

(E) Fees for “Collateral” Matters 

E-Pass argues the Palm defendants’ billing records also reveal

that Palm spent time on matters which were collateral to the case,

such as seeking to disqualify E-Pass’ counsel, and reviewing briefs

in related litigation. The Court concurs that these matters are

peripheral to the core of the case and grants E-Pass’ request to

strike $26,241.50 in fees as outlined in the Weiss Declaration of

February 21, 2007. 

(F) Expert-Related Fees

E-Pass requests reductions based on its argument that Palm also 

impermissibly seeks fees related to expert witnesses. As discussed

above, Palm is not seeking reimbursement for expert witness fees,

rather for fees related to attorney efforts to find and set

parameters for potential experts. While E-Pass claims that these

efforts were premature, again the Court will not second guess

attorney efforts to plan out the litigation strategy for the case. 

 

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ACCORDINGLY:

The Court, therefore, awards:

(1) Visa USA $423,457.21 in attorney fees and $14,357.45 in

costs; 

(2) Visa International $423,457.21 in attorney fees and

$14,357.45 in costs; 

(3) PalmSource $907,145.32 in fees and $32,432.57 in costs; 

(4) the Palm Defendants (3Com, Palm and palmOne)$566,496.00 in

fees.

 IT IS SO ORDERED

Dated: November 14 , 2007 ____________________________ 

 D. Lowell Jensen

 United States District Judge

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