Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00124/USCOURTS-azd-2_12-cv-00124-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

James Jeffrey Caron, Spellbinders Paper 

Arts Company, LLC, 

Plaintiffs, 

vs. 

Lifestyle Crafts, LLC, 

Defendant.

No. CV-12-00124-PHX-NVW

ORDER 

Before the Court is Lifestyle Crafts’ Motion for Exceptional Case Finding and 

Award of Attorney Fees and Expenses (Doc. 65). Lifestyle Crafts seeks an award of 

attorney fees and non-taxable costs in the amount of $62,239.85. 

I. BACKGROUND 

On December 3, 2012, this action was dismissed because U.S. Patent No. 

7,469,634 (“the ’634 Patent”) was held to be unenforceable due to the inequitable 

conduct of Plaintiffs James Jeffrey Caron and Spellbinders Paper Arts Company, LLC, 

before the United States Patent & Trademark Office (“PTO”) and this action was barred 

by collateral estoppel. (Doc. 59.) The Court declined to dismiss this action as a sanction 

for discovery misconduct. (Id.) On the same day, judgment was entered in favor of 

Defendant Lifestyle Crafts, LLC, and against Plaintiffs, on Plaintiffs’ complaint and 

Lifestyle Crafts’ counterclaim. (Doc. 60.) 

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The determination that Plaintiffs had engaged in inequitable conduct before the 

PTO to obtain the ’634 Patent was made in Caron et al. v. QuicKutz Inc., No. CV-09-

02600-PHX-NVW, based on finding clear and convincing evidence that: 

1. Plaintiffs misrepresented to the PTO Michael Dywan’s status as a joint 

inventor, inventorship is material, and Plaintiffs intended to deceive the 

PTO by submitting inventorship information that suited their current 

interests without regard for its truthfulness. 

2. Plaintiffs submitted to the PTO declarations without disclosing three of the 

declarants had financial relationships with Spellbinders, misled the PTO 

regarding the qualifications of two other declarants, the qualifications and 

financial relationships were material, the PTO relied on the declarations, 

and Plaintiffs intended to deceive the PTO. 

3. Caron misrepresented his knowledge of chemical etching either to the PTO 

or during deposition and misrepresented to the PTO his knowledge of the 

teachings of an earlier patent, Caron’s 2011 declaration is an affirmative act 

of egregious misconduct, and Plaintiffs intended to deceive the PTO by 

submitting the declaration. 

(Id.) 

Lifestyle Crafts seeks an award of attorney fees under 35 U.S.C. § 285 and, 

alternatively, under the Court’s inherent powers. Because the Court will award fees 

under 35 U.S.C. § 285, it is not necessary to consider awarding fees under the Court’s 

inherent powers. 

II. ANALYSIS 

In patent infringement actions, “[t]he court in exceptional cases may award 

reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. Deciding whether to 

award attorney fees under § 285 requires a two-step inquiry: (1) whether the prevailing 

party has proved by clear and convincing evidence that the case is exceptional, and, if so, 

(2) whether an award of attorney fees is justified. MarcTec, LLC v. Johnson & Johnson, 

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664 F.3d 907, 915-16 (Fed. Cir. 2012). It is undisputed that Lifestyle Crafts is the 

prevailing party in this action. 

A. This Is an Exceptional Case. 

Whether a case is exceptional under § 285 is decided under Federal Circuit law. 

Power Mosfet Techs., LLC v. Siemens AG, 378 F.3d 1396, 1407 (Fed. Cir. 2004). “A 

case may be deemed exceptional when there has been some material inappropriate 

conduct related to the matter in litigation, such as . . . fraud or inequitable conduct in 

procuring the patent, misconduct during litigation . . . .” Brooks Furniture Mfg., Inc. v. 

Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). “Although a finding of 

inequitable conduct or ‘fraud in the Patent and Trademark Office’ is often a basis for a 

district court to find that a case is ‘exceptional,’ it is not a prerequisite to an award of 

attorney fees under § 285.” Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 

455 (Fed. Cir. 1985). “[T]here is no per se rule of exceptionality in cases involving 

inequitable conduct,” but the lack of such a rule “does not mean that inequitable conduct 

is insufficient for a finding of an exceptional case.” Nilssen v. Osram Sylvania, Inc., 528 

F.3d 1352, 1358 (Fed. Cir. 2008). 

The Court has found by clear and convincing evidence that Plaintiffs made 

multiple, material misrepresentations with the intent to deceive the PTO and declared the 

’634 Patent unenforceable under the inequitable conduct doctrine. Based on these 

findings, the Court finds this case to be “exceptional” under § 285. 

B. An Award of Attorney Fees Is Justified. 

Federal Circuit case law “provides wide discretion to district courts; courts may 

award attorney fees in inequitable conduct cases, but are not required to do so.” Nilssen, 

528 F.3d at 1358. “In determining whether to award attorney fees, courts must weigh 

factors such as degree of culpability, closeness of the questions, and litigation behavior.” 

Id. at 1359 (district court was within its discretion to award attorney fees where it 

weighed the evidence before it and determined that litigation misconduct and inequitable 

conduct were sufficient grounds to award fees to prevent a gross injustice). In an 

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inequitable conduct case, the district court may award all of the fees reasonably incurred 

defending against an infringement lawsuit because the accused infringer would not have 

incurred any of the fees if the patentee had not committed inequitable conduct in pursuit 

of its patent and had not filed a claim for infringement of the improperly obtained patent. 

Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1386 (Fed. Cir. 2001). 

Here, the Court held Plaintiffs’ patent unenforceable upon finding by clear and 

convincing evidence that they made multiple, material misrepresentations with the intent 

to deceive the PTO. The ruling was not a close question. But for Plaintiffs’ inequitable 

conduct before the PTO and filing of this lawsuit, Lifestyle Crafts would not have 

incurred defense fees. Thus, the Court finds an award of attorney fees under § 285 is 

necessary to prevent a gross injustice and is justified. 

C. The Amount of the Attorney Fees Award Is Reasonable. 

Federal procedural rules govern applications for attorney fees (including nontaxable costs) and taxable costs in this Court. LRCiv 54.2 requires a party seeking 

attorney fees and related non-taxable expenses to show eligibility, entitlement, and the 

reasonableness of the requested award. LRCiv 54.2(c)(3) provides a non-exclusive list of 

factors bearing on the reasonableness of the requested fee award, which the Court has 

considered. Based on the Court’s lengthy commercial litigation experience and 

familiarity with fees charged in cases similar to this, the Court finds that the hourly rates 

charged in this case are at or below reasonable and market rates, and the fees awarded are 

reasonable in light of all the circumstances of the litigation. 

As found above, Lifestyle Crafts has shown eligibility and entitlement under 

§ 285. “The methodology of assessing a reasonable award under 35 U.S.C. § 285 is 

within the discretion of the district court.” Automated Business Co. v. NEC America, 

Inc., 202 F.3d 1353, 1355 (Fed. Cir. 2000). The purpose of § 285 is to compensate the 

prevailing party for its expenses in the prosecution or defense of the suit, and it serves as 

a deterrent to improperly bringing clearly unwarranted patent infringement lawsuits. Id. 

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Plaintiffs object to the majority of the items for which Lifestyle Crafts seeks 

reimbursement. They have identified twelve types of objections. 

Under Objection No. 1, Plaintiffs object to fees requested for preparation of 

Lifestyle Craft’s fee motion and memorandum because Lifestyle Crafts has not cited 

legal authority showing its entitlement to reimbursement for fees incurred preparing a fee 

application. Preparation of the fee application is part of legal services rendered in 

defense of Plaintiff’s patent infringement litigation. Lifestyle Crafts is entitled to 

reimbursement for those services under § 285 for the reasons stated above. 

Under Objection No. 5, Plaintiffs object to more than 70 time entries on the 

ground the entry “[u]nreasonably splits time for tasks that are undifferentiated between 

the instant action and the Lifestyle Crafts [sic] action, which tasks also are not properly 

itemized.” On June 25, 2010, substantially all of the assets of QuicKutz were sold to 

Lifestyle Crafts. In December 2011, Lifestyle Crafts began paying QuicKutz’s legal 

expenses associated with Caron et al. v. QuicKutz Inc., No. CV-09-2600-PHX-NVW, 

and those payments by Lifestyle Crafts were offset against the payments QuicKutz was 

entitled to receive for its assets. One firm that represented both Lifestyle Crafts and 

QuicKutz invoiced Lifestyle Crafts for services it provided on behalf of Lifestyle Crafts 

in this case and for services provided on behalf of QuicKutz in Caron et al. v. QuicKutz 

Inc. in a combined invoice. Counsel for the firm has submitted a declaration stating that 

he reviewed each time entry and allocated each entry as appropriate between QuicKutz 

and Lifestyle Crafts; he also provided a spreadsheet showing how each time entry has 

been allocated. There is no reason to believe the allocation was not made in good faith. 

Further, because Plaintiffs have had opportunity to review QuicKutz’s fee application 

concurrently with Lifestyle Crafts’ fee application, there is little risk that both QuicKutz 

and Lifestyle Crafts will be reimbursed for the same expense. The task descriptions are 

sufficient for the Court to conclude that these time entries are reasonably allocated. 

Moreover, as a practical matter, whether a portion of an item is included in the fee award 

against Plaintiffs in favor of QuicKutz or in the fee award against Plaintiffs in favor of 

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Lifestyle Crafts should make little difference to Plaintiffs. QuicKutz’s fee request will 

not be reduced on the basis of Objection No. 5. 

Under Objection No. 8, Plaintiffs object to the vast majority of time entries, 

contending that the entry does not comply with LRCiv 54.2(e)(1) and (2) because it fails 

to show the time devoted to each individual unrelated task per day and does not 

adequately describe the services rendered. Many of the entries to which Plaintiffs object 

adequately describe a service rendered that is combined with a conference, email, or 

telephone call described as “re same.” Other entries objected to describe a series of 

plainly related tasks. QuicKutz’s fee request will not be reduced on the basis of 

Objection No. 8. 

The Court has considered Plaintiffs’ other objections and finds them to be 

unpersuasive. Therefore, objections numbered 2, 3, 4, 6, 7, 9, 10, 11, and 12 are rejected. 

LRCiv 54.1(e) identifies taxable items1

 that may be recovered by filing a bill of 

costs within fourteen days after the entry of final judgment, which Lifestyle Crafts did 

not do. But Lifestyle Crafts has not requested reimbursement of taxable items in its fee 

application. Except for pro hac vice applications ($100.00) and certificates of good 

standing ($72.00), which are not reimbursable costs and will be excluded from the fee 

award, the expenses included in the fee application are non-taxable items. 

IT IS THEREFORE ORDERED that Lifestyle Crafts’ Motion for Exceptional 

Case Finding and Award of Attorney Fees and Expenses (Doc. 65) is granted in the 

amount of $62,067.85. 

// 

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 Taxable items include Clerk’s fees and service fees, the cost of original 

transcripts for trial, deposition costs, witness fees and expenses, the cost of certain paper 

copies and photographs, interpreter fees, docket fees, and fees paid to the state court clerk 

in removed cases. 

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IT IS FURTHER ORDERED that the Clerk enter judgment in favor of Lifestyle 

Crafts, LLC, in the amount of $62,067.85, plus interest thereon at the rate of 0.17% per 

annum from the date of judgment until paid. 

Dated this 4th day of March, 2013. 

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