International Rectifier v. Samsung Electronics

• Decision Date: 23 September 2005
• Docket Number: No. 04-1429.,No. 04-1608.,04-1429.,04-1608.
• Parties: INTERNATIONAL RECTIFIER CORPORATION, Plaintiff-Appellee, v. SAMSUNG ELECTRONICS CO., LTD. and Samsung Semiconductor, Inc., Defendants-Appellants, and Ixys Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1235

424 F.3d 1235

INTERNATIONAL RECTIFIER CORPORATION, Plaintiff-Appellee, v. SAMSUNG ELECTRONICS CO., LTD. and Samsung Semiconductor, Inc., Defendants-Appellants, and Ixys Corporation, Defendant-Appellant.

No. 04-1429.

No. 04-1608.

United States Court of Appeals, Federal Circuit.

September 23, 2005.

Glenn W. Trost, Coudert Brothers LLP, of Los Angeles, California, argued for plaintiff-appellee. Of counsel on the brief was David E. Killough, Vinson & Elkins LLP., of Austin, Texas.

Stanley J. Panikowski, DLA Piper Rudnick Gray Cary U.S. LLP, of San Diego, California, argued for defendants-appellants Samsung Electronics Co., Ltd., et al. With him on the brief were Mark D. Fowler and Michael G. Schwartz, of East Palo Alto, California.

Roger L. Cook, Townsend and Townsend and Crew LLP, of San Francisco, California, argued for defendant-appellant Ixys Corporation. With him on the brief were Eric P. Jacobs and Nancy L. Tompkins.

Before LOURIE, LINN, and PROST, Circuit Judges.

LINN, Circuit Judge.

Samsung Electronics Co., Ltd. and Samsung Semiconductor, Inc. (collectively, "Samsung") and Ixys Corp. ("Ixys") separately appeal from the United States District Court for the Central District of California's orders granting Samsung a reduced attorney fee award and denying Ixys attorney fees. Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV98-433-R (C.D.Cal. Aug. 4, 2004); Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV98-433-R (C.D.Cal. May 26, 2004). Because the district court abused its discretion in reducing Samsung's fee request, we vacate the district court's award of fees to Samsung and remand for additional proceedings consistent with this opinion. Because the district court abused its discretion in denying Ixys's fee request, we reverse the district court's denial of fees to Ixys and remand for additional proceedings consistent with this opinion.

I. BACKGROUND

The present appeal stems from a contempt proceeding initiated by International Rectifier Corp. ("IR") brought in the United States District Court for the Central District of California ("district court"). The contempt proceeding was based on alleged violations of a permanent injunction entered pursuant to a consent judgment between IR and Samsung as a result of a separate litigation. The contempt proceeding was previously before this court in an appeal by Samsung of the district court's order holding Samsung in contempt and in an appeal by Ixys of the district court's denial of Ixys's motion to clarify, vacate, or modify the permanent injunction. Both appeals were heard on the same day and addressed in a single opinion of this court. Int'l Rectifier Corp. v. Samsung Elecs. Co., 361 F.3d 1355 (Fed.Cir.2004). In those appeals, we reversed the district court's judgment holding Samsung in contempt and held that there was no evidence to support the conclusion that Ixys was aiding, abetting, or otherwise acting in active concert or participation with Samsung. Id. This court's opinion in those appeals recite in detail the underlying facts, which will not be repeated here.

The present appeals involve both Samsung's and Ixys's separate motions for attorney fees following our remand in the prior appeals. Following that remand, Samsung filed a motion in the district court seeking, after amendments to include attorney fees incurred in preparing the motion, $1,276,450 in attorney fees and $96,257.10 in costs. IR opposed Samsung's motion, arguing that the district court was free to deny the motion based on Samsung's alleged misconduct in conspiring to violate the injunction. IR also argued that Samsung's fee request was excessive and unreasonable. The district court awarded Samsung $650,000 in attorney fees and $45,000 in costs, noting that the case "has been terribly over-lawyered" and that "SAMSUNG took no risk in defending this matter." Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV98-433-R (C.D.Cal. Aug. 4, 2004) ("Samsung Order").

Ixys also moved for attorney fees and costs following this court's remand in the prior appeal. The district court denied Ixys's motion in its entirety. Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV98-433-R (C.D.Cal. May 26, 2004) ("Ixys Order"). The district court first held that Ixys's motion was untimely. Next, the district court held that Ixys did not contribute substantially to the resolution of the issues such that it could not recover attorney fees as an intervenor. Third, the district court held that Ixys could not recover under 35 U.S.C. § 285 because IR acted in good faith in bringing suit. Fourth, the district court found that Ixys's conduct was wrongful and thus would preclude an award of attorney fees in any event. Finally, the district court held that the consent judgment providing for attorney fees to the prevailing party in any litigation could not benefit Ixys who was not a party to the agreement.

Samsung and Ixys separately appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

II. DISCUSSION

A. Standard of Review

Initially, the parties dispute whether Federal Circuit law or regional circuit law applies to the issue of an attorney fee award pursuant to a provision of the consent judgment. Samsung argues that the law of the regional circuit applies because interpretation of an attorney fee provision in a consent judgment is not unique to patent law, citing Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1349 (Fed.Cir.2002). IR argues that Deprenyl Animal Health is not relevant to this case because Deprenyl Animal Health involved interpretation of an arbitration clause rather than an attorney fee provision. IR cites Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1299 (Fed.Cir.2004), for the proposition that this court applies its own law to awards of attorney fees. Although Deprenyl Animal Health was concerned with whether Federal Circuit law or regional circuit law applied to the scope of an arbitration clause in a patent license agreement, in Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1365-66 (Fed.Cir.2001), this court held that regional circuit law and state law applied to a challenge to an award of arbitration fees pursuant to a settlement agreement providing for arbitration of infringement disputes. IR's argument that Q-Pharma broadly holds that all attorney fee awards are reviewed under Federal Circuit law is without merit because Q-Pharma was only concerned with an award under 35 U.S.C. § 285. 360 F.3d at 1299. Thus, we conclude that, like the arbitration fee award in Flex-Foot, the award of attorney fees pursuant to a consent judgment provision is subject to regional circuit law and state law, if relevant. In this case, both Ninth Circuit and California law are applicable.

The Ninth Circuit reviews an award of attorney fees for an abuse of discretion. Roy Allan Slurry Seal v. Laborers Int'l Union of N. Am. Highway & St. Stripers/Road & St. Slurry Local Union 1184, AFL-CIO, 241 F.3d 1142, 1145 (9th Cir.2001). Underlying facts are reviewed for clear error, and underlying legal conclusions are reviewed de novo. Id. An award of attorney fees under 35 U.S.C. § 285 is governed by Federal Circuit precedent. Q-Pharma, 360 F.3d at 1299. We review a denial of attorney fees under section 285 for an abuse of discretion and any findings of fact underlying that determination for clear error. Id.

B. Analysis

1. Samsung's Appeal

Samsung argues that the district court's reduced fee award was an abuse of discretion for several reasons. First, Samsung contends that it met its burden of proving that the full amount of its request was reasonable but that IR failed to present any evidence to rebut its proof. Second, Samsung argues that IR's comparison, before the district court, of its fees in the contempt proceeding to Samsung's fee request was inappropriate because IR was able to use a substantial amount of material from its separate infringement litigation against Ixys in the contempt proceeding. Finally, Samsung contends both that the district court's stated factual basis for reducing the award is legally insufficient and that the findings that the district court articulated for reducing the award are clearly erroneous.

IR argues that the narrow scope of the contempt proceeding before the district court and the fact that it spent less than $500,000 on the contempt proceeding both indicate the reasonableness of the district court's reduction. IR additionally argues that it pointed to specific entries that were unreasonable and that the district court has the inherent power to scrutinize fee requests even if no contrary evidence is presented. IR also argues that the facts cited by the district court for the reduction are legally sufficient and that those findings are not clearly erroneous.

Samsung's fee request was pursuant to an attorney fee provision in the consent judgment. The consent judgment expressly states that it is governed by federal law and California state law. Therefore, we will apply Ninth Circuit law and California state law to this question. Because we conclude that the district court did not adequately explain its reduction of Samsung's fee request, we need not reach Samsung's additional arguments. However, because the district court's fact findings are very likely to be the basis for a decision on remand, we address Samsung's arguments that the district court's fact findings are clearly erroneous.

The Supreme Court has made clear that although district courts have discretion in determining the amount of a fee award, "[i]t remains important, however, for the district court to provide a concise but clear explanation of its reasons for the fee award." Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). The Ninth Circuit has explained that "decisions of district courts employing percentages in cases involving large fee requests are subject to heightened...