Amazon.com, Inc. v. Personalweb Techs., LLC (In re Personalweb Techs., LLC)
| Decision Date | 02 March 2021 |
| Docket Number | Case No. 18-md-02834-BLF,Case No.: 5:18-cv-00767-BLF,Case No.: 5:18-cv-05619-BLF |
| Parties | IN RE: PERSONALWEB TECHNOLOGIES, LLC ET AL., PATENT LITIGATION AMAZON.COM, INC., and AMAZON WEB SERVICES, INC., Plaintiffs v. PERSONALWEB TECHNOLOGIES, LLC and LEVEL 3 COMMUNICATIONS, LLC, Defendants, PERSONALWEB TECHNOLOGIES, LLC, and LEVEL 3 COMMUNICATIONS, LLC, Plaintiffs, v. TWITCH INTERACTIVE, INC., Defendant. |
| Court | U.S. District Court — Northern District of California |
[Re: ECF 636]
[Re: ECF 184]
[Re: ECF 88]
Having found this case exceptional under 35 U.S.C. § 285, the Court must now determine the amount of reasonable attorneys' fees and costs owed at the end of this multidistrict litigation ("MDL") for alleged patent infringement that ensnared Amazon and over 80 of its customers. In February 2020, Defendants Amazon.com, Inc., Amazon Web Services, Inc., and Twitch Interactive, Inc. (collectively "Amazon") prevailed against Plaintiff PersonalWeb Technologies, LLC ("PersonalWeb") at summary judgment and judgment was entered in favor of all Defendants. ECF 381; ECF 578; ECF 643. After an August 6, 2020 motion hearing, the Court found the case exceptional and awarded Amazon attorney fees and costs but, upon request of PersonalWeb, reserved the question of the reasonableness of Amazon's requested fees. H'rg, ECF 625; Order Awarding Fees, ECF 636 at 34. In its prior motion, Amazon requested attorney fees totaling $6,100,000.00 and non-taxable expenses of $323,668.06. Mot. for Attorney Fees and Costs ("Mot."), ECF 593 at 15. Amazon also reserved its right to submit a supplemental fee request for future fees related to preparing the fees motion. Gregorian Declaration ("Gregorian Decl.") ¶ 21, ECF 592-1. Now, PersonalWeb challenges the reasonableness of Amazon's request. Suppl. Br., ECF 644. For the reasons that follow, the Motion is GRANTED IN PART and DENIED IN PART.1
Separate from this MDL, in December 2011, PersonalWeb commenced a patent infringement suit in Texas federal court against Amazon and its customer Dropbox, Inc. See PersonalWeb Techs., LLC v. Amazon.com Inc., No. 6:11-cv-00658 (E.D. Tex. Filed Dec. 8, 2011) (the "Texas Action"). PersonalWeb eventually stipulated to dismissing its claims with prejudice, ending the action. ECF 315-7; ECF 315-8. Four years later in January 2018, PersonalWeb resurrected its claims, filing over 85 lawsuits across the country against various Amazon customers for their use of Amazon's Simple Storage Service ("S3") and alleging infringement of the same patents implicated in the Texas Action. See ECF 295; ECF 1, Schedule A. Amazon quickly intervened to defend its customers, and counterclaims from both parties ensued. Amazon.com, Inc. et al v. Personal Web Technologies, LLC et al, 18-5:18-cv-00767-BLF (N.D. Cal. Filed February 5, 2018) (the "DJ Action"), ECF 62, 71.
In June 2018, the cases were consolidated into the current MDL proceeding and assigned to this Court. Compl., ECF 1. With Plaintiff's approval, the Court selected the Twitch case as the representative customer action to proceed and stayed all other customer cases pending resolution. ECF 313. In two phases, the Court granted Amazon's motions for summary judgment as to all claims. ECF 381; ECF 578.
Order Awarding Fees at 33. Because PersonalWeb failed to object to the reasonableness of Amazon's requested fees in its opposition brief, the Court ordered supplemental briefing. Id. PersonalWeb filed its Supplemental Brief on October 30, 2020. Suppl. Br., ECF 644. Amazon filed its Response on November 16, 2020. Response, ECF 646.
The first issue to resolve is the proper methodology of calculating the amount of attorneys' fees to which Amazon is entitled. In patent infringement actions, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285; see Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 553 (2014). Supreme Court precedent determining the reasonableness of fees applies uniformly to all federal fee-shifting statutes permitting the award of reasonable fees, such as § 285. See City of Burlington v. Dague, 505 U.S. 557, 562 (1992). Furthermore, courts "apply Federal Circuit law to the issue of attorney fees in patent infringement cases." Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1299 (Fed. Cir. 2004). District courts have "'considerable discretion' in determining the amount of reasonable attorney fees under § 285" because of "the district court's superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters." Homeland Housewares, LLC v. Sorensen Research, 581 Fed. Appx. 887, 881 (Fed. Cir. 2014) (quoting Bywaters v. U.S., 670 F.3d 1221, 1228 (Fed. Cir. 2012)) (internal quotation marks omitted); see also Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
The Court has already determined that this case is exceptional, meriting an award ofattorneys' fees. See Order Awarding Fees; see also Octane, 572 U.S. at 555 (). The parties now dispute the implication of this finding. PersonalWeb urges this Court to apply a "but for" standard that awards fees accrued litigating frivolous conduct and excludes fees accrued litigating non-frivolous conduct. See Suppl. Br. at 1-2. Amazon counters that awarding fees related to discrete acts of litigation misconduct is the incorrect standard to apply. Response at 1. This Court agrees with PersonalWeb that it should apply the "but for" standard as described in Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017), but is mindful that there are limits to the degree of parsing required. Homeland Housewares, LLC v. Sorensen Research, 581 F. App'x 877, 881 (Fed. Cir. 2014) ("We decline, however, to require such granularity from the district court, particularly because it is the 'totality of the circumstances,' and not just discrete acts of litigation conduct, that justify the court's award of fees." (quoting Octane, 572 U.S. at 554).
PersonalWeb's proposed methodology originates in Fox v. Vice, 563 U.S. 826 (2011). There, the Supreme Court held that when a plaintiff asserts both frivolous and non-frivolous claims, the defendant may recover only the amount incurred because of the frivolous claims. Id. at 826. In such cases, fees are determined according to "whether the fees requested would not have accrued but for the" misconduct. Id. at 839-40; see also Goodyear, 137 S. Ct. at 1187.
Several years later, the Supreme Court applied the "but for" standard to a court's inherent authority to sanction a litigant for bad faith conduct by ordering it to pay the other side's legal fees. Goodyear, 137 S. Ct. at 1183-84. It explained that fee-shifting in the sanction context must be compensatory rather than punitive. Id. at 1186. As such, "the court can shift only those attorney's fees incurred because of the misconduct at issue." Id. An award that Id. at 1186-87 (quoting Fox, 563 U.S. at 836)). The Federal Circuit has since appliedthis reasoning in the patent context, explaining that fees awarded under § 285 are "compensatory, not punitive" and "[i]n such a statutory sanction regime, a fee award may go no further than to redress the wronged party for losses sustained." In re Rembrandt Techs. LP Patent Litig., 899 F.3d 1254, 1279 (Fed. Cir. 2018) (quoting Goodyear, 137 S. Ct. at 1186) (internal marks omitted). "Critically, the amount of the award must bear some relation to the extent of the misconduct." Id.
Amazon emphasizes that Goodyear applied the "but for" fee-shifting methodology in a different context, where the court was concerned with its inherent power to sanction. Response 1. But Fox concerned a § 1983 claim where the court dismissed the plaintiff's federal claims with prejudice after the plaintiff admitted they were invalid. 563 U.S. at 830. In that case, the Supreme Court was considering § 1988, which allowed an award of reasonable fees to a prevailing party in certain civil rights cases. Fox, 563 U.S. at 829-30. It reversed the district court's grant of fees for defending the entire suit in federal court, holding that the "but for" test applied. Id. at 839-40; see also Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1106 (Fed. Cir. 2003) (). And numerous courts have since applied the Fox-Goodyear standard to § 285 assessment...
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