Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_12-cv-00450/USCOURTS-cand-4_12-cv-00450-22/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:504 Copyright Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PQ LABS, INC., and SHANGHAI PINQI 

DIGITAL TECHNOLOGY CO., LTD.,

Plaintiffs,

v.

YANG QI; ZAAGTECH, INC.; JINPENG 

LI; and HAIPENG LI,

Defendants.

________________________________/

No. 12-0450 CW

ORDER GRANTING

MOTION FOR

ATTORNEYS' FEES

(Docket No. 195)

Plaintiffs PQ Labs, Inc. and Shanghai PinQi Digital 

Technology Co., Ltd. move for an award of attorneys' fees incurred 

in prosecuting this action. Defendants Yang Qi, Jinpeng Li and 

Zaagtech, Inc. oppose Plaintiffs' motion. The matter was taken on 

under submission on the papers. Having considered all the 

parties' briefs and supporting documentation, the Court now grants 

Plaintiffs' motion. Plaintiffs' motion also requests costs; this 

order will not address the request because the Clerk of Court 

already taxed costs.

BACKGROUND

Plaintiffs brought this action against Defendants1 for 

misappropriation of trade secrets, copyright infringement, 

trademark infringement, breach of contract and various other 

 

1 The operative complaint in this case also names Haipeng Li 

as a Defendant. Following trial, the Court dismissed Plaintiffs' 

claims against Haipeng Li for lack of prosecution. As used in the 

remainder of this Order, the term "Defendants" refers to the

remaining Defendants Yang Qi, Zaagtech and Jinpeng Li unless 

otherwise specified.

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business-related torts. The Court held a bench trial on these 

claims between March 10, 2014 and March 13, 2014. After 

considering all of the testimony, documentary evidence and 

arguments of counsel presented during and after trial, the Court 

entered findings of fact and conclusions of law. In its Order,

the Court directed the clerk to enter judgment for Defendants on 

Plaintiffs' claim of copyright infringement, California Penal Code 

section 502, trespass to chattels, the Computer Fraud and Abuse 

Act and unfair competition related to the same. The Court also

directed the clerk to enter judgment for Plaintiffs on their 

claims for misappropriation of trade secrets, trademark 

infringement, false advertising, tortious interference with 

prospective economic advantage, breach of contract, breach of 

fiduciary duty, conversion and unfair competition related to the 

same. The Court issued a permanent injunction against Defendants 

and awarded Plaintiffs actual and exemplary damages for their 

claim of misappropriation of trade secrets. The Court also 

determined that Plaintiffs are entitled to recover reasonable 

attorneys' fees and costs for the causes of action on which they 

prevailed and ordered further briefing to determine the amount of 

fees. 

LEGAL STANDARD

Plaintiffs brought and prevailed in both federal and 

California state law claims; the Court applies California state 

law in calculating the appropriate fees. Mangold v. Cal. Pub. 

Util. Comm'n, 67 F.3d 1470, 1478-79 (9th Cir. 1995) (holding that 

Erie principles require a federal court to apply state law in 

calculating attorneys' fees when the prevailing party succeeded in 

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both state and federal claims). In California, as in the Ninth 

Circuit, reasonable attorneys' fees are determined by first 

calculating the "lodestar." Ketchum v. Moses, 24 Cal. 4th 1122, 

1131 (2001) (citing Serrano v. Priest (Serrano III), 20 Cal. 3d 25 

(1977)). The "lodestar" is calculated by compiling the number of 

hours spent on litigating the case and multiplying it by a 

reasonable hourly rate of compensation for each attorney. Id. at 

1131-32. A court may adjust the lodestar to address several 

factors of the lawsuit, including the difficulty of the case and 

the contingent nature of the fee award. Maria P. v. Riles, 43 

Cal. 3d 1281, 1294 n.8 (citing Serrano III, 20 Cal. 3d at 49).

DISCUSSION

Plaintiffs move for an award of attorneys' fees in the amount 

of $1,110,254.06. This figure represents $887,460.58 for the 

Intellectual Property Law Group (IPLG); $159,167.80 for Ellenberg 

& Hull; $36,300.68 for additional attorney expenses, such as 

research and translation fees; and $27,325.00 for IPLG's fees in 

preparing the instant motion for fees. 

Preliminarily, the Court notes that because Plaintiffs did 

not prevail on all issues presented at trial, Plaintiffs first

determine a reasonable method for calculating the portion of their 

time attributable to the claims for which they are entitled to 

fees. To that end, Plaintiffs determine that, of their total 

hours worked on the case, their counsel spent 82% of their time 

proving claims on which they prevailed at trial. Counsel arrives 

at this figure by calculating the percentage of time spent 

addressing the successful causes of action at trial. The IPLG 

simply calculates its total lodestar and then discounts it to 

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account for the 82% figure. For Ellenberg & Hull, counsel first 

count those tasks solely related to the claims on which Plaintiffs 

prevailed and then adjust fees for the remainder of their tasks to 

seek fees for 82% of that time. Defendants do not object to the 

hourly rates charged by the attorneys. Instead, Defendants raise 

four specific objections to Plaintiffs' requested award and offer 

two more general arguments about the award; the Court now 

addresses each in turn.

First, Defendants argue that the Court should reduce 

Plaintiffs' award by 10% because Plaintiffs overstaffed the case

and by an additional 5% because Plaintiffs' counsel duplicated 

their efforts. Plaintiffs respond that Defendants do not meet 

their burden to contest fees on this basis because Defendants make 

only a general argument without providing any authority regarding 

reasonable staffing levels and without specifying duplicated 

efforts. As the party challenging Plaintiffs' fee request, 

Defendants bear a burden to "point to the specific items 

challenged, with sufficient argument and citations to the 

evidence." Premier Med. Mgmt. Sys., Inc. v. Cal. Ins. Guarantee 

Ass'n, 163 Cal. App. 4th 550, 564 (2008). The Court agrees that 

Defendants did not meet their burden of showing a duplication of 

efforts. In support of their motion, Plaintiffs submitted billing 

reports from all attorneys working on the case; Defendants could 

have tried to identify any specific duplications, but they did 

not. Instead they offer a general and unsubstantiated allegation 

of duplication of efforts. The Court will not reduce Plaintiffs' 

award on that basis. Defendants also argue that Plaintiffs 

overstaffed the case. The only evidence they offer in support of 

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this argument is a declaration from Defendants' counsel, in which 

he compares Defendants' level of staffing to Plaintiffs' staffing. 

But, as Plaintiffs argue, this information is not very useful to 

the reasonableness inquiry because Plaintiffs bore the burden at 

trial, so it is expected that they would have to expend more 

resources to fulfil their role in the litigation of their case. 

For the foregoing reasons, the Court will not reduce Plaintiffs' 

award on the grounds that Plaintiffs' counsel duplicated efforts 

or overstaffed their case.

Second, Defendants argue that the Court should reduce 

Plaintiffs' award by: (1) $10,000.00 for the time Plaintiffs 

billed for their unsuccessful application for a Temporary 

Restraining Order and (2) $15,000.00 for time Plaintiffs billed 

for their unsuccessful opposition to Defendants' motion to dismiss

in part Plaintiffs' first amended complaint. The Court is not 

persuaded that these reductions are appropriate. Defendants do 

not cite any authority for excising unsuccessful moments from an 

otherwise-successful litigation campaign. This is likely because 

California courts have not issued a clear pronouncement on the 

issue. In the Ninth Circuit, however, it is established that a 

party may recoup fees even for "losing stages" of a case they 

eventually win. See, e.g., Cabrales v. County of Los Angeles, 935 

F.2d 1050, 1052-53 (9th Cir. 1991) ("If a plaintiff ultimately 

wins on a particular claim, she is entitled to all attorney's fees 

reasonably expended in pursuing that claim--even though she may 

have suffered some adverse rulings.") Other federal courts in 

this district have applied this rule when awarding fees pursuant 

to California law. E.g. Bonner v. Fuji Film, 2008 WL 410260, at 

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*2 (N.D. Cal.) (citing Cabrales) (holding that parties prevailing 

on a Cal. Civ. Code § 3344 claim are entitled to fees incurred in 

filing an unsuccessful motion to dismiss because they ultimately 

prevailed in the litigation). Because Defendants' argument is 

unsupported by authority, the Court opts to apply the rule as 

articulated in Cabrales and will not reduce Plaintiffs' fee award 

on the basis of Defendants' argument.

Third, Defendants ask the Court to reduce Plaintiffs' award 

by 10 to 30% because Plaintiffs block-billed2 their invoices. 

Defendants provide the Court with three illustrative block-billed 

time entries, but they do not object to specific portions of the 

entries. Instead, they ask that the Court exercise its general 

discretion and reduce the award by a percentage of its choosing. 

The Court declines to do so. First, as Plaintiffs show, block 

billing has been accepted in this district. See, e.g., Stonebrae, 

L.P. v. Toll Bros., Inc., 2011 WL 1334444 at *8 (N.D. Cal.) 

("Block-billing is a typical practice in this district, and 

blocked-bills have been found to provide a sufficient basis for 

calculating a fee award."). Second, as explained above, 

Plaintiffs reduced their award request to 82% of the total fees 

they charged for this case to account for the time spent on the 

claims on which they did not prevail. This reduction was designed 

to address the portions of time entries for which Plaintiffs are 

 

2 Block billing is a time-keeping method where an attorney 

enters the total daily time spent working on a case, rather than 

itemizing the time spent on a specific task. See Mendez v. Cnty. 

of San Bernardino, 540 F.3d 1109, 1129 n.2 (9th Cir. 2008); see

also Christian Research Inst. v. Alnor, 165 Cal. App. 4th 1315, 

1325 (2008).

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not entitled to recoup their fees, whether block-billed or not. 

Finally, the Court's review of the time entries reveals that 

Plaintiffs' time entries, though block-billed, contain sufficient 

detail to identify precisely the task accomplished. If, for 

example, there were large blocks of time billed for tasks 

unrelated to the claims on which Plaintiffs prevailed, Defendants 

had ample opportunity and information on which to challenge those 

specific entries. Defendants declined to do so. For these 

reasons, the Court will not reduce Plaintiffs' fee award due to 

Plaintiffs' block billing. 

Fourth, Defendants ask the Court to reduce Plaintiffs' award 

by an amount determined by the Court because Plaintiffs did not 

succeed in proving all their requested damages. The Court's Order 

following the bench trial explained that Plaintiffs were only able 

to establish an actual loss of $650.00, but that they also 

demonstrated that Defendants were unjustly enriched by $214,800.00 

by their misappropriation of trade secrets; the Court thus awarded 

Plaintiffs $215,450.00 in damages. Defendants argue that 

Plaintiffs' fee award should be reduced because Plaintiffs sought 

over seven million dollars in damages on their trade secret claims

but were awarded less than 3% of their claim. Plaintiffs respond 

that they obtained significant relief on their misappropriation 

claim in that they obtained permanent injunctive relief, so any 

argument that their award should be reduced for failure to obtain 

the relief they sought fails. The Court agrees. "A reduced fee 

award is appropriate if the relief, however significant, is 

limited in comparison to the scope of the litigation as a whole." 

Hensley v. Eckerhart, 461 U.S. 424, 440 (1983). In this case, 

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Plaintiffs proved their entitlement to significant injunctive 

relief, commensurate with the scope of the case. As Defendants 

themselves argue, the legal issues presented in the case were 

straightforward and the documents were not voluminous. There is 

not so wide a deviation from the scope of the case to the results 

obtained to warrant a reduction of attorneys' fees on that basis. 

The Court now turns to Defendants' more general arguments. 

Defendants ask that the Court apply a 10% across-the-board 

"haircut" to the award, based on the exercise of the Court's 

discretion, and due to the "massive" size of the requested award.

The Court does not agree that "massive" is an accurate descriptor 

of the award requested in this case, considering the scope of the 

case and the relief Plaintiffs received. The Court is not 

persuaded that imposing a 10% reduction to the award request is 

warranted. 

There remains one final matter to address. Defendants ask 

that the Court only hold Defendants Qi and Li liable for the fee 

award. Defendants argue that Zaagtech cannot be held liable for 

fees because California law only permits an award of fees where 

there has been "willful and malicious misappropriation," and this 

Court's previous Order stated that a corporation cannot commit 

willful and malicious conduct. However, as Plaintiffs show, the 

imposition of fees against Zaagtech in this instance is proper 

because Qi and Li were officers of Zaagtech and because the Court 

found that Qi and Li committed the requisite conduct with the 

requisite mental state to warrant attorneys' fees. California law 

permits the award of attorneys' fees against a corporation upon 

the showing that the corporation's "officer, director, or managing 

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agent" committed the wrongful act warranting fees. Cal. Civ. 

Code § 3294(b). Accordingly, the Court will award attorneys' fees 

against Defendants Qi, Li and Zaagtech.

For all of the above-articulated reasons, the Court finds 

that Defendants' objections to Plaintiffs' motion are unavailing. 

The Court thus finds that Plaintiffs are entitled to attorneys' 

fees in the requested amount of $1,110,254.06. 

CONCLUSION

For the foregoing reasons, Plaintiffs' motion for attorneys' 

fees (Docket No. 195) is GRANTED. Defendants Qi, Li and Zaagtech

are ordered jointly and severally to pay Plaintiffs' attorneys' 

fees forthwith in the amount of $1,110,254.06.

IT IS SO ORDERED. 

Dated: January 16, 2015 CLAUDIA WILKEN

United States District Judge

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