Initially, Tracy reargues the merits of the summary judgment and attorney’s fees
motions granted against her. Such arguments are improper and are not reconsidered with
respect to the current motion before us.

As to the current disputed fee motion, Tracy objects on several grounds, each of
which were considered and rejected with one exception as set forth below:

1, “Arquest’s Counsel Created Few Documents”

Tracy argues that Arquest’s counsel only created 70 pages of work product in this
litigation, and should only receive $100 per page for a total reasonable fee award of
$7000. Irrespective of the fact that Arquest surely generated more than 70 pages of work
product in this litigation, we reject Tracy’s novel fee calculation as contrary to the
method stated in Hensley, 461 U.S. at 433 (“The most useful starting point for
determining the amount of a reasonable fee is the number of hours reasonably expended
on the litigation multiplied by a reasonable hourly rate.”).

2. “The Court Rejected Several of Arquest’s Contentions”

While apportionment of fees between winning and losing claims may be
appropriate, apportionment is not appropriate between winning and losing arguments as
to the same claim. Hensley, 461 U.S. at 435, Under Hensley, Arquest is entitled to fees
pertaining even to its losing arguments:

Where a plaintiffhas obtained excellent results, his attorney should recover a fully
compensatory fee. ... In these circumstances the fee award should not be reduced

-4-



Lastly, Tracy objects to paying photocopying charges because they are not
itemized. Arquest has supplied monthly invoices from Pennie & Edmonds that each
include a single entry for photocopying. (See, e.g., FEE 00108A.) Thus, photocopying
charges are only itemized by month and not by job, This is entirely reasonable.
Keeping track of what document has been copied rather than just recording what client
and matter the photocopying involved would demand more time than its worth. Tracy’s
reliance on Staszak v. Kimberly-Clark Corp., 2002 WL 31557610, *1 (N.D. Ill. Nov.
18, 2002) is misplaced. That case involves photocopying charges for “copies of papers
necessarily obtained for use in the case” under 28 U.S.C. § 1920.

CONCLUSION
Based on the foregoing analysis, we grant the motion for disputed attorney’s fees

as modified above. Tracy is ordered to pay Arquest $240,793.38 in attorney’s fees.

Che aa? bree ret

Charles P. Kocoras
Chief Judge
United States District Court

i 0
Dated: (AUG 2 5 2003



we have discretion to limit billable rates to those prevailing in the local market, see
Mathur v. Board of Trustees of Southern Illinois University, 317 F.3d 738, 744 (7th Cir.
2003), we decline to do so here, Arquest’s retention of Pennie & Edmonds, its long time
patent counsel, was logical and reasonable.

5. “The Case Was Overstaffed and Unreasonable Hours Were Spent”

Tracy asserts that Pennie & Edmonds overstaffed the case and billed hours that
were used to educate young associates. We do not agree. Pennie & Edmonds usually
had only three attorneys (for which Arquest seeks recovery) working on the case at any
given time. To the extent that Tracy objects to two attorneys’ involvement in the case
(attorneys Sharlacken and Jain), the objection is unjustified as Arquest’s motion does not
seek reimbursement for fees associated with their work. While we agree that Tracy
should not have to pay for young Pennie & Edmonds associates to educate themselves
on general aspects of patent law, her objection lacks any detail whatsoever as to the
identification of these alleged educating hours.

6. “There Was Excessive Turnover at the Pennie Firm”

Tracy generally states that excessive turnover at Pennie & Edmonds created
inefficiencies resulting in more hours being billed than are reasonable. The only
changes to the attorney staffing of the case by Pennie & Edmonds was the replacement

of one junior associate with another and the removal of one partner whose duties were

-6-



simply because the plaintiff failed to prevail on every contention raised in the

lawsuit. Litigants in good faith may raise alternative legal grounds for a desired

outcome, and the court's rejection of or failure to reach certain grounds is not a

sufficient reason for reducing a (ee. The result is what matters.
461 U.S. at 435 (citation omitted).

3. “The Work Was Neither Complex Nor Extensive”

We reject this argument as too vague and generalized. Additionally, Tracy cites
no case law for its position, and we find the amount of work spent on this patent
litigation to be reasonable.

4. “The Billing Rates Used by Arquest Are Excessive”

Tracy objects to the rates charged by Arquest’s counsel, Pennie & Edmonds, a
patent law firm based in New York City. Tracy argues that Arquest should only be able
to recover fees at hourly rates cqual to or less than those charged by Tracy’s counsel’,
which is based in Illinois. Tracy cites no authority for the proposition that a party’s
recovery of atiorney’s fees is limited by its adversary’s counsel’s billable rate.

Pennie & Edmonds has been Arquest’s patent counsel for several years. Thus, it was
entirely reasonable for Arquest to continue its retention of Pennie & Edmonds for

purposes of the present case filed here in Chicago. Furthermore, Tracy cites no authority

holding that more expensive out-of-town billable rates are not recoverable in full. While

' In the present litigation, counsel for Tracy did not actually charge Tracy by
the hour but rather through a contingency fee arrangement.

-5-


9, “Arquest’s Additional Arquest Lawyer (Ryan) Was Unnecessary”

Tracy objects to Arquest’s retention of attorney William Ryan. William Ryan
is a former employee of Arquest now practicing law as a solo practitioner. Arquest
states that he was retained because of his prior experience in the diaper industry, which
allowed him to provide useful insight to Arquest’s litigation strategy. We find
Arquest’s stated reasons reasonable and will allow Arquest to recover his fees.

10, “The Requested ‘Costs’ Are Excessive, Undocumented, and Were Not
Awarded”

First, Tracy states that related non-taxable costs are not encompassed by an
award of attorney’s fees. She is mistaken. See Central Soya Co., 723 F.2d at 1578.

Second, Tracy states that such expenditures as transportation, lodging, and meals
are not recoverable because the invoices do not include the actual bills for them. She
does not cite any supporting authority for this proposition, We have reviewed Pennie
& Edmonds’s monthly invoices and find them to be adequate documentation of the
expenses they incurred. Additionally, we only find charges for transportation. We do
not even find charges for meals or travel. In any event, Tracy has failed to direct us to
specific charges she objects to paying.

Third, Tracy states that fees and expenses must be apportioned to cover the
specific activity being sanctioned. Nothing and no one have been sanctioned.
Accordingly, this objection is irrelevant,

-8-



Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Oth
ve Maglatrate Judge Charles P. Kocoras than Arsigned Sudye
CASE NUMBER 02 C 1649 DATE 8/25/2003
CASE Arquest, Inc. vs. Rhonda Tracy
TITLE

{Ln the following box (a) indicate the purty filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nalure
of the motion being presented.]

MOTION:

DOCKET ENTRY:

qd) o Filed motion of [ usc listing in “Motion” box above.]

(2) im] Brief in support of motion due ____.

(3) Oo Answer brief to motionduc__. Reply to answer briefdue___.

(4) i Ruling/Hearing on___sset for_____at

(5) O Status hearing{held/continucd to] [sct for/re-set for]on__—s_sset for at.
(6) a Pretrial conference[held/continucd to] [sct for/re-sct for]on___—sset for at.
(7) o Trial{set for/re-set for] on at

(8) oO [Beneh/Jury trial] [Hearing] held/continued to att _

(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) O Local Rule 41.1 O KRCP43({a)(1) OO FRCP41(a)(2).

ao) [Other docket entry) ENTER MEMORANDUM OPINION: We grand Arquest, Inc.’s motion
for disputed attomcy’s fees as modified. Tracy is ordered to pay Arquest $240,793.38 in attorncy’s fees.
Edward D. Manzo’s motion (Doc 62-1) for leave to withdraw as counsel for plaintiff is granted. So
ordered.

(11) @ {For further detail see order attached to the original minute order.]

No notices required, advised in open court

No nati Wired. i
notices require tices

Notices mailed by judge’s staff. AUG 2 6 72003

Notified counsel by telephone.

dine dockey
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VY | Mail AO 450 torm. 4yn09 AaMaisig’S'A
Copy to jufPy/magisicate judge. yu)

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AO. 450Rev. 5/85)Iudgment in a Civil Case

United States District Court
Northern District of Mlinois

Eastern Division

Arquest, Inc. JUDGMENT IN A CIVIL CASE
Vv. Case Number: 02 C 1649
Rhonda Tracy

Oo Jury Verdict. This action came before the Court for a trial by jury. The issues have been
tried and the jury rendcred its verdict.

a Decision by Court. This action came to hearing before the Court. The issues have
been heard and a decision has been rendered.

IT IS HEREBY ORDERED AND ADJUDGED that attorney’s fees are awarded in favor of
plaintiff Arquest, Inc. and against Rhonda Tracy. ‘Tracy is ordered to pay Arquest, Inc.
$240,793.38 in attorney’s fees. All matters in controversy having been resolved, final judgment
is hereby entered.

. Dobbins, C of Court

Date: 8/25/2003



absorbed by another partner already on the case who actually had a lower billing rate
anyway. These staffing changes are entirely reasonable.
7. “Arquest is Not Entitled to Time Spent on Clerical Tasks”

As to clerical tasks Tracy states only the following:

“Clerical tasks performed by lawyers are not properly included in an attomey fee

award. See Kelley v. City of Chicago, 205 F. Supp. 930, 934 (N.D. Ill. 2002).

Arquest has included time of attomeys spent on clerical tasks, and Tracy objects

to them.”

(Tracy Opp. at 12.) We will not scour Pennie & Edmonds’s invoices for evidence of
clerical tasks because Tracy has lodged a general objection to paying such costs.
8. “Local Counsel Charges Were Astronomical”

Tracy objects to paying $32,060 in fees for local counsel because the number of
hours and the billing rate were unreasonably high. We disagree as to the number of
hours spent by local counsel. Total attorney time spent by local counsel since the
complaint was filed over a year ago was 84.25 hours. Local counsel paralegal time was
just 4.5 hours during the same period. This is a reasonable amount of time. We do,
however, question the reasonableness of having a high billing rate partner so involved
as local counsel. Accordingly, we will reduce attorney fees for that partner’s time to

reflect the same billing rate as the associate who also worked on the case as local

counsel. Local counsel’s attorney’s fees are reduced by $5,030.



DISCUSSION

Arquest moves for an award of $245,823.38 in attorney’s fees. Tracy objects to
the entire amount, stating that “it should be no more than $43,466, or lower, or zero”.
(Tracy Opp. at 6.)

The “starting point for determining the amount of a reasonable fee is the number
of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.”
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). After this initial calculation, “[t]here
remain other considerations that may lead the district court to adjust the fee upward or
downward.” Jd at 434. Such other considerations may include proper documentation
of hours worked, overstaffing, redundant work, excessive hours, and the ultimate result
of the litigation. Jd at 433-34. Additionally, the Court of Appeals for the Federal
Circuit has held that attorney’s fees under 35 U.S.C. § 285 “include those sums that the
prevailing party incurs in the preparation for and performance of legal services related
to the suit.” Central Soya Co. v. Geo, A. Hormel & Co., 723 F.2d 1573, 1578 (Fed. Cir.
1983) (affirming district court’s award of $100,000 in attorney’s fees and $29,000 in
related expenses under 35 U.S.C. § 285). Thus, section 285 is not limited to attorney’s

fees in the strictest sense of the term, but also includes related expenses or costs not

taxable under 28 U.S.C, § 1920.



infringe the ‘824 patent and that the ‘824 patent is invalid. Tracy filed a counterclaim
in the action alleging infringement. Previously, we granted summary judgment that the
Arquest Diapers and the Arquest Pants do not infringe the ‘824 patent. Argquest, Inc.
v. Tracy, 2002 WL 31744658 (N.D. Ll. Dec. 5, 2002); (Dkt. No. 38.) Subsequent to the
summary judgment, Arquest moved for attorney’s fees under the patent statute, 35
U.S.C, § 285, based on Tracy’s filing and maintenance of her counterclaim as well as
certain arguments made in support of the counterclaim and against summary judgment
of non-infringement. We granted the motion and now adjudicate the amount of
attorney’s fees,
LEGAL STANDARD

The requirements for awarding attorney’s fees under 35 U.S.C. § 285 are: “(1)
the case must be exceptional; (2) the district court may exercise its discretion; (3) the
fees must be reasonable; and (4) the fees may be awarded only to the prevailing party.”
Machinery Corp. of America v. Gullfiber AB, 774 F.2d 467, 470 (Fed. Cir. 1985), We
have already found this case to be exceptional under section 285 due to ‘Tracy’s

unjustified claims and arguments. (Dkt. No. 55.) Arquest is clearly the prevailing

party. Thus, we now exercise our discretion to award a reasonable amount of fees.



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION es RS
Vr
NS
ARQUEST, INC., )
)
Plaintiff, 5
)
v8. ) 02 € 1649

)
RHONDA TRACY, )
)
Defendant. )

MEMORANDUM OPINION

CHARLES P. KOCORAS, Chief District Judge:

This matter comes before the court on Plaintiff Arquest, Inc.’s (“Arquest”)
motion for disputed attorney’s fees pursuant to 35 U.S.C. § 285. We have already
granted Arquest its attorney’s fees in principle. (Dkt. No, 55.) The present motion only
pertains to the amount of fees. For the reasons set forth below, we grant the motion as
modified below.

BACKGROUND

This lawsuit arises from a patent, U.S. Pat. No. 5,797,824 (the “824 patent”),
held by Defendant/Counter-Claimant Rhonda Tracy. The ‘824 patent covers an
improvement for disposable diapers. Arquest sued Tracy for declaratory judgment that

its diapers (the “Arquest Diapers”) and training pants (the “Arquest Pants”) do not