Court Opinion

ID: 4305313
Source: CourtListenerOpinion
Date Created: 2018-08-20 15:00:41.322177+00
Date Added: 2024-06-11T14:08:47.490397
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

   LARGE AUDIENCE DISPLAY SYSTEMS, LLC,
              Plaintiff-Appellant

                           v.

   TENNMAN PRODUCTIONS, LLC, JUSTIN
TIMBERLAKE, BRITNEY SPEARS, SPEARS KING
                POLE INC.,
            Defendants-Appellees

  STEVE DIXON, MUSIC TOUR MANAGEMENT,
                    INC.,
                  Defendants
            ______________________

                      2017-2266
                ______________________

   Appeal from the United States District Court for the
Central District of California in No. 2:11-cv-03398-R-RZ,
Judge Manuel L. Real.
                 ______________________

               Decided: August 20, 2018
                ______________________

    DWAYNE K. GOETZEL, Meyertons, Hood, Kivlin,
Kowert & Goetzel, P.C., Austin, TX, argued for plaintiff-
appellant. Also represented by RYAN T. BEARD; MICHAEL
G. BURK, The Burk Law Firm, P.C., Austin, TX.
2               LARGE AUDIENCE DISPLAY SYSTEM v. TENNMAN
                                         PRODUCTIONS, LLC

   ANDREW SOL LANGSAM, Pryor Cashman LLP, New
York, NY, argued for defendants-appellees.
                ______________________

    Before O’MALLEY, LINN, and HUGHES, Circuit Judges.
LINN, Circuit Judge.
     Large Audience Display Systems, LLC (“LADS”) ap-
peals the award of fees under 35 U.S.C. § 285 after re-
mand. The district court awarded all attorney fees and
costs incurred from the beginning of the case in the
amount of $737,012.34 in fees and $22,511.52 in costs.
This amount included fees relating to the district court
litigation in Texas and California, and those associated
with the reexamination proceeding at the U.S. Patent and
Trademark Office (“PTO”).
     On appeal, LADS challenges both the district court’s
exceptionality determination and the amount of the fee
award. Because the district court, considering the totality
of the circumstances, did not abuse its discretion in find-
ing the case exceptional or in awarding fees for the entire
litigation, we affirm.
                   I. EXCEPTIONALITY
    The district court concluded that the case was excep-
tional primarily on three grounds: (1) LADS’s opposition
to the defendants’ motion to transfer from the Eastern
District of Texas; (2) LADS’s assertion of “objectively
weak” arguments to the PTO during reexamination,; and
(3) LADS’s use of a “clear[ly]” privileged email between
defendant Tennman and its attorneys in its opposition to
LADS’s motion for attorney fees. LADS challenges the
exceptionality of each of these bases, and also argues that
Tennman’s own conduct precludes a finding of exception-
ality here. We address each of these arguments in turn.
LARGE AUDIENCE DISPLAY SYSTEM     v. TENNMAN                3
PRODUCTIONS, LLC

                              A
     We begin with LADS’s opposition to the motion to
transfer. The district court found that LADS was formed
as a corporation only two days prior to the filing of this
lawsuit in Texas. The court also found that LADS had
never conducted any business in Texas—indeed, had
never even picked up the keys to the office—and had
failed to pay its corporate taxes for three years, which
lead to a suspension of its corporate form. The court
further found that LADS’s corporate status was not
reinstated until shortly after Tennman brought LADS’s
corporate status to the court’s attention. 1 Based on these
findings, in which we see no error, the district court
concluded that “[p]laintiff was formed in order to defeat a
change of venue and keep the case in the Eastern District
of Texas.” The district court acted within its discretion in
reaching that conclusion in the context of the totality of
circumstances surrounding this case. See Octane Fitness
LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756
(2014).
    LADS argues that the law of the case precluded the
district court from considering LADS’s corporate for-
mation at all in rendering the exceptionality determina-
tion on remand. We disagree. In Large Audience Display
Systems, LLC v. Tennman Prods., LLC., 660 F.App’x 966
(Fed. Cir. 2016) (per curiam) (“LADS I”), we cautioned
that LADS’s formation in Texas could not be considered
as an attempt to create jurisdiction in Texas. The district
court was free, however, to consider “the totality of the
circumstances . . . including . . . [LADS’s] opposition to the

    1   We see no error either in the district court’s cate-
gorization of LADS’s inactive corporate status as “ceasing
to exist,” or in the district court’s reliance on LADS’s
three-year forfeiture as evidence that LADS’s opposition
to transfer was exceptional.
4               LARGE AUDIENCE DISPLAY SYSTEM v. TENNMAN
                                         PRODUCTIONS, LLC

motion to transfer venue.” Id. at 972. The district court
did what we expressly permitted when this case was last
before us. We have carefully considered LADS’s other
arguments relating to its opposition to transfer and find
them to have no merit.
                            B
    Next, LADS challenges the district court’s finding
that LADS’s claim construction arguments pressed in
reexamination were objectively unreasonable. LADS also
argues that the district court erred by considering only
the unreasonableness of two of the seven constructions,
rather than all of them, and that its positions were not
unreasonable.
    In LADS I, we noted the differences in the adjudicato-
ry processes and claim construction standards followed by
the PTO and the district courts. Id. at 971. We also
instructed the district court to consider “the objective
reasonableness of LADS's claims given the standards and
burdens that apply in district court, including the reason-
ableness of LADS's proposed claim constructions.” Id. at
972. The district court followed these instructions here.
In a response filed at the PTO, LADS argued that “posi-
tioning means” excludes a static base because that con-
tent was disclaimed during prosecution. Based on that
disclaimer, LADS argued that a prior art reference show-
ing a screen fixed to a building—a static base—does not
anticipate. In that same response, however, LADS ex-
plained to the examiner that “the building itself serves as
a primary positioning means of the screen-display(s).”
The district court concluded that this explanation wholly
undermined LADS’s prosecution history argument. The
district court also concluded that LADS’s argument to the
PTO that “large audience” necessarily includes hundreds
of people, despite an example in the patent showing
fourteen people, was objectively unreasonable. We see no
clear error in those conclusions. Moreover, that the
LARGE AUDIENCE DISPLAY SYSTEM    v. TENNMAN               5
PRODUCTIONS, LLC

district court only analyzed two of LADS’s seven claim
construction arguments does not undermine its finding
that LADS’s conduct was exceptional.
                             C
    Next, LADS argues that the district court erred by
considering LADS’s use of a privileged email after the
case was dismissed to support its exceptionality finding.
LADS argues that its use of the email was reasonable and
unexceptional because it did not know the email was
privileged, did not receive notification that the email was
privileged before its use, and did not know that the recipi-
ents of the email were Tennman’s attorneys. LADS also
argues that: (1) the email was used after the dismissal of
the case, and only to rebut assertions that the case was
frivolous; (2) the timing of the email led LADS reasonably
to conclude that the email was given over in an attempt to
promote settlements; and (3) that Tennman did not
satisfy its burden to show that the email was privileged.
    The district court found that “[i]t was clear from the
face of the email that it was intended only for the Defend-
ants and their counsel.” The email was sent between
Tennman’s attorneys—Andrew Langsam (with a pryor-
cashman.com domain), Gary Stiffelman (with a zif-
frenlaw.com domain), and Brad Rose (with a
pryorcashman.com domain), and contained no salutation
to LADS’s counsel, Michael Burk. Moreover, the top-level
email is sent in response to nested emails, which could
not reasonably be interpreted to have been intended for
LADS’s counsel. There is little doubt that any reasonable
attorney would have recognized this email as privileged, if
not immediately during document review, then certainly
when LADS submitted the email as part of its briefing on
the issue of attorneys fees. We see no clear error in the
district court’s consideration of LADS’s use of this email
as a basis for its exceptionality finding. LADS’s argu-
ment that the email was not privileged, or that Tennman
6               LARGE AUDIENCE DISPLAY SYSTEM v. TENNMAN
                                         PRODUCTIONS, LLC

improperly failed to follow the proper procedure for claw-
ing back the document are baseless.
                             D
    LADS additionally contends that Tennman’s own bad
acts undermine the exceptionality finding. These alleged
bad acts are: (1) changing how Tennman calculates its
15% fee discount (either applied to hours or to billing
rates); (2) including a single fee entry by an associate for
“Preparation of Litigation Hold Letter” after Tennman
had already issued a document preservation hold; (3)
making improper arguments about the Olympic prior art
and the attempts to bring this reference to the attention
of the PTO; and (4) misrepresenting the location of de-
fendants and witnesses as all within California. We see
no merit in any of LADS’s arguments. First, the discount
calculation presumably would have resulted in the same
fee, and LADS has failed to explain why this was error.
Second, Tennman reasonably explained that the litigation
hold letter entry referred only to defendants added after
the litigation hold was placed. Third, although Tenn-
man’s arguments with respect to the submission of the
Olympic prior art were rejected, LADS has not shown that
those arguments were unreasonable. Finally, even as-
suming that Tennman’s assertion that all the Defendants,
witnesses, and evidence were “primarily located and
resided in the Los Angeles area” was an overstatement,
this would not indicate that the district court abused its
discretion in finding LADS’s conduct here to be exception-
al.
    While we may have reached a different conclusion
regarding exceptionality if we were evaluating the parties’
arguments in the first instance, our review is limited to
whether the district court, in considering the totality of
circumstances, abused its discretion in reaching the
conclusion that LADS’s conduct was exceptional under
§ 285. See Octane Fitness, 134 S. Ct. at 1756. On that
LARGE AUDIENCE DISPLAY SYSTEM   v. TENNMAN               7
PRODUCTIONS, LLC

standard, we see no reason to disturb the district court’s
decision.
                II. AMOUNT OF THE AWARD
     LADS next argues that the district court erred in
awarding Tennman all of its requested fees, rather than
those directly caused by LADS’s exceptional conduct. To
support this proposition, LADS relies on Kilopass Tech.,
Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir.
2013), in which we explained that fees should “compen-
sate a defendant for attorneys’ fees it should not have
been forced to incur.” Tennman responds that nothing in
§ 285 requires a direct nexus between the exceptional
litigation misconduct and the award, and that full fees are
unavailable only where particular litigation misconduct
forms the basis of the exceptional case determination and
where the moving party only prevails on some of its
patent claims, but that neither of these situations applies
here. See Beckman Instr., Inc. v. LKB Produkter AB, 892
F.2d 1547, 1553–54 (Fed. Cir. 1989) (“[T]he amount of fees
awarded to the ‘prevailing party’ should bear some rela-
tion to the extent to which that party actually pre-
vailed.”); Read Corp. v. Portec, Inc., 970 F.2d 816, 831
(Fed. Cir. 1992) (“[W]hen attorney fees under 35 U.S.C.
§ 285 are awarded solely on the basis of litigation miscon-
duct, the amount of the award must bear some relation to
the extent of the misconduct.”).
    The district court applied a Lodestar analysis, which
provides a presumptively reasonable fee award. See
Lumen View Tech. LLC v. Findthebest.com, Inc., 811 F.3d
479, 483 (Fed. Cir. 2016). In addition to this presump-
tion, we note that the district court has “considerable
discretion” to determine the amount of fees under § 285,
owing to its “superior understanding of the litigation and
the desirability of avoiding frequent appellate review of
what essentially are factual matters.” Bywaters v. United
8               LARGE AUDIENCE DISPLAY SYSTEM v. TENNMAN
                                         PRODUCTIONS, LLC

States, 670 F.3d 1221, 1228 (Fed.Cir.2012) (internal
quotations omitted).
    The district court did not abuse its considerable dis-
cretion in awarding fees for the entire litigation. To
begin, nothing in § 285 or our case law precludes such an
award. See Homeland Housewares, LLC v. Sorensen Res.,
581 F. App’x 877, 881 (Fed. Cir. 2014) (non-precedential)
(not requiring the “granularity” of limiting “the award to
the costs that Homeland incurred in responding to specific
acts of litigation misconduct”). The district court conclud-
ed that the factual bases for the exceptionality finding—
from the venue fight, to the unreasonable claim construc-
toins, to the use of the privileged email—“permeated” the
entire litigation. As we have recognized, full fees may be
awarded in such circumstances. See Monolithic Power
Sys., Inc. v. O2 Micro Int’l Ltd., 726 F.3d 1359, 1369 (Fed.
Cir. 2013) (affirming full fee award based on conduct “that
was ‘pervasive’ enough to infect the entire litigation”
(internal citation omitted)); see also In re Rembrandt
Techs. LP Patent Litig., No. 17-1784, 2018 WL 3862644
(Fed. Cir. Aug. 15, 2018) at *18–19 (rejecting a full fee
award because the district court made no finding that the
exceptional misconduct “so severely affected every stage of
the litigation that a full award of attorney fees was prop-
er” (quoting and distinguishing O2 Micro, 726 F.3d at
1369)). As discussed above, none of these findings were
clearly erroneous.
     LADS’s cited authorities are inapposite. Unlike the
prevailing party in Beckman Instruments, Inc. v. LKB
Produkter AB, 892 F.2d 1547 (Fed. Cir. 1989), Tennman
prevailed on every one of its key arguments. See Beck-
man, 892 F.2d at 1554 (when one party prevails on some
claims and the other party prevails on other claims, “this
fact should be taken into account when determining the
amount of fees under § 285”). Moreover, the exceptionali-
ty determination here was not limited to particular acts of
litigation misconduct. See Read Corp. v. Portec, Inc., 970
LARGE AUDIENCE DISPLAY SYSTEM   v. TENNMAN               9
PRODUCTIONS, LLC

F.2d 816, 831 (Fed. Cir. 1992) (noting as a remand in-
struction that an attorney fee award based on a single act
of litigation misconduct would only allow fees to be
awarded that “bear some relation to the extent of the
misconduct”). In any event, we find no clear error in the
district court’s determination that LADS’s exceptional
conduct here “permeated throughout the entirety of this
matter,” such that the fee award, in fact, related to the
extent of the misconduct. We discern no abuse of discre-
tion in the district court awarding full fees.
     Finally, LADS argues that the district court’s Lode-
star analysis was flawed because: (1) there is a discrepan-
cy between the $733,414.34 in fees sought by Tennman’s
Fee Motion and the $755,925.86 in fees awarded by the
district court; (2) Tennman failed to prove its hourly
rates, because the rates of timekeepers other than Lang-
sam were supported solely by inadmissible hearsay from
attorney website bios and the 2013 AIPLA Survey previ-
ously found unreliable by the Central District of Califor-
nia in Perfect 10, Inc. v. Giganews, Inc., No. 11-07098,
2015 WL 1746484 (C.D. Cal. March 24, 2015); and (3) the
district court did not consider the reasonableness of hours
billed, did not take into account hours jointly billed by
defendant The Lakers, did not sufficiently discount the
disproportionate partner billings, and made various
errors with respect to particular entries and allowing
block billings. Finally, LADS argues that the district
court clearly erred in the amount of costs awarded.
    Tennman admits that it inadvertently added the costs
to its fee request on remand twice, resulting in
$755,925.86 plus costs of $22,511.52, instead of
$733,414.34 plus costs for a total award of $755,925.86.
In light of this admission, the proper award should be a
total of $737,012.34, broken down as follows: $733,414.34
(fees incurred by Tennman) less $18,913.52 (the district
court’s discount for associate-level work performed by
partners) plus $22,511.52 (costs). We therefore modify
10              LARGE AUDIENCE DISPLAY SYSTEM v. TENNMAN
                                         PRODUCTIONS, LLC

the district court’s award to reflect a total award of
$737,012.34, which includes both fees and costs.
    The district court did not otherwise abuse its discre-
tion or clearly err in any fact-finding relating to its Lode-
star analysis. In LADS I, we instructed the district court
to engage in a proper Lodestar analysis to determine
reasonable attorney’s fees, rather than merely conclude
that the fees Tennman requested were reasonable be-
cause they were “below average” for a typical patent
infringement suit of this size. 660 F. App’x at 972-73.
The district court followed these instructions by calculat-
ing the reasonable number of hours and reasonable rates
of Tennman’s attorneys. Moreover, Langsam’s declara-
tion set forth the qualifications of each of Appellee’s
attorneys. LADS has failed to show any clear error in the
district court’s hourly rate determination.
    LADS has also failed to show any clear error in the
district court’s calculation of the number of hours for
which fees were awarded. LADS does not explain why the
joint defense with respect to the Lakers resulted in a
higher than reasonable fee. Also, the district court dis-
counted certain entries to take into account partner hours
for associate work. Further, the district court adequately
analyzed and only then accepted Tennman’s billing prac-
tices. The district court did not clearly err in its calcula-
tion of costs.
    The district court performed a proper Lodestar analy-
sis. The award is modified to $737,012.34, inclusive of
fees and costs.
              III. FEES FOR REEXAMINATION
    At oral argument and by court order, we requested a
separate accounting of fees spent on the reexamination
proceedings at the Board and those spent on the district
court litigation. The parties filed a joint response, with
conflicting accountings.
LARGE AUDIENCE DISPLAY SYSTEM    v. TENNMAN                 11
PRODUCTIONS, LLC

     Tennman also notes, in response to this court’s sua
sponte questioning, that fees incurred at the PTO were
“ordinarily necessary” to the district court litigation, and
therefore are recoverable under § 285. See Webb v. Dyer
Cty. Bd. of Election, 471 U.S. 234, 105 S.Ct. 1923 (1985)
(explaining that “ordinarily necessary” ancillary fees are
recoverable); PPG Indus., v. Celanese Polymer Specialties
Co., 840 F.2d 1565, 1568 (Fed. Cir. 1988) (reversing the
district court’s denial of attorneys’ fees for certain inter
partes PTO proceedings, as those proceedings were “use-
ful and of a type ordinarily necessary” and “substituted
for the District Court litigation on all issues considered by
the PTO and the Board”). We need not decide whether
the fees here are recoverable under § 285, because LADS
waived any challenge to the inclusion of those fees on the
basis of Webb and PPG by failing to make such an argu-
ment either to the district court or in its initial briefing to
this court.
    For the reasons set forth above, the judgment of the
district court is affirmed-as-modified.
            AFFIRMED-AS-MODIFIED
                            COSTS
    No costs.