Niazi Licensing Corp. v. St. Jude Med. S.C.

• Decision Date: 26 August 2022
• Docket Number: 17-cv-5096 (WMW/BRT)
• Parties: Niazi Licensing Corporation, Plaintiff, v. St. Jude Medical S.C., Inc., Defendant.
• Court: U.S. District Court — District of Minnesota

Niazi Licensing Corporation, Plaintiff,
v.
St. Jude Medical S.C., Inc., Defendant.

No. 17-cv-5096 (WMW/BRT)

United States District Court, D. Minnesota

August 26, 2022

ORDER

Wilhelmina M. Wright, United States District Judge.

In this patent-infringement matter, the Court previously granted Defendant St. Jude Medical S.C., Inc.'s (St. Jude) motion for attorneys' fees and costs as to reasonable amounts incurred after October 2019, pursuant to 35 U.S.C. § 285 and 28 U.S.C. § 1927. The Court ordered St. Jude to file a supplemental memorandum of law and supporting documentation in support of its requested amount. St. Jude now seeks an award of $753,110.12 in attorneys' fees and costs. Plaintiff Niazi Licensing Corporation (NLC) opposes St. Jude's requested amount and moves to vacate the Court's October 25, 2021 Order regarding attorneys' fees and costs. For the reasons addressed below, the parties' motions are granted in part and denied in part.

BACKGROUND

NLC owns United States Patent No. 6,638,268 (the '268 Patent), which pertains to a catheter system that can be inserted into the coronary sinus of the heart. The '268 Patent also claims methods of using the catheter system.

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NLC commenced this patent-infringement action against St. Jude in November 2017, alleging that St. Jude indirectly infringed the '268 Patent by inducing its customers-namely, medical professionals-to infringe the '268 Patent. After this Court issued its October 21, 2019 claim construction order, a single method claim remained in dispute: claim 11 of the '268 Patent, which claims a series of steps for “using a double catheter.” The parties subsequently cross-moved for summary judgment. The Court concluded that NLC failed to present evidence to prove two essential elements of its patent-infringement claim-namely, that at least one person directly infringed the patented method and that St. Jude knowingly induced infringement and possessed specific intent to encourage another's infringement. Accordingly, the Court denied NLC's motion for summary judgment of infringement and granted St. Jude's motion for summary judgment of non-infringement. NLC appealed.

While NLC's appeal was pending, St. Jude moved for attorneys' fees and costs, arguing that NLC knew or should have known that its patent-infringement claims lacked merit. In an October 25, 2021 Order (Fees Order), this Court granted St. Jude's motion in part. Although the Court rejected St. Jude's argument that sanctions were warranted under Rule 11, Fed. R. Civ. P., the Court found that “NLC engaged in bad-faith efforts to prolong this litigation” after October 2019 and “chose repeatedly to engage in improper tactics in an attempt to bolster the strength of its litigation position.” Based on these findings, the Court concluded that NLC's conduct was “exceptional” under 35 U.S.C. § 285 and, consequently, that St. Jude is entitled to the reasonable attorneys' fees and

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costs it incurred after October 2019. The Court also found that, because NLC's attorneys intentionally and recklessly disregarded their duties to the Court, NLC's attorneys will be jointly and severally liable to personally satisfy an award of reasonable attorneys' fees and costs, pursuant to 28 U.S.C. § 1927. The Court ordered the parties to file supplemental briefing as to the reasonable amount of attorneys' fees and costs that should be awarded. Neither party appealed the Fees Order.

St. Jude now seeks an award of $753,110.12 in attorneys' fees and costs.^[1] NLC opposes St. Jude's requested amount, arguing that St. Jude seeks amounts that are not recoverable and that the fees sought are unreasonably redundant and excessive.^[2] After the parties had fully briefed the attorneys' fees issue, the United States Court of Appeals for the Federal Circuit issued a decision affirming in part, reversing in part, and

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remanding this case for further proceedings. Niazi Licensing Corp. v. St. Jude Med. S.C., Inc., 30 F.4th 1339 (Fed. Cir. 2022). In particular, the Federal Circuit reversed this Court's construction of several claim terms in the '268 Patent and this Court's determination that several claims in the '268 Patent are invalid as indefinite. Id. at 134952. But the Federal Circuit affirmed this Court's determination that St. Jude was entitled to summary judgment of no infringement as to claim 11 of the '268 Patent. Id. at 135253. The Federal Circuit also affirmed this Court's exclusion of expert testimony and imposition of sanctions against NLC for discovery violations. Id. at 1358. In light of the Federal Circuit's decision, NLC now moves to vacate this Court's Fees Order.

ANALYSIS

I. NLC's Motion to Vacate

NLC moves to vacate this Court's Fees Order pursuant to Rule 60(b), Fed. R. Civ. P., in light of the Federal Circuit's decision on appeal.

A district court “may relieve a party or its legal representative from a final judgment, order, or proceeding . . . based on an earlier judgment that has been reversed or vacated.” Fed.R.Civ.P. 60(b)(5). Relief under Rule 60(b) “is an extraordinary remedy” that is within the discretion of the district court. Hunter v. Underwood, 362 F.3d 468, 475 (8th Cir. 2004). Here, St. Jude opposes NLC's Rule 60(b) motion on both procedural and substantive grounds.

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A. Timeliness and Waiver

St. Jude first argues that NLC's Rule 60(b) motion is untimely and that NLC waived this argument by failing to appeal the Fees Order.

“A motion under Rule 60(b) must be made within a reasonable time” after entry of the relevant order or judgment. Fed.R.Civ.P. 60(c)(1). When determining the timeliness of a motion under Rule 60(b), courts may consider the time during which an appeal is pending, because Rule 60(b) motions “can be made even though an appeal has been taken.” Fed. Land Bank of St. Louis v. Cupples Bros., 889 F.2d 764, 766-67 (8th Cir. 1989) (internal quotation marks omitted). “What constitutes a reasonable time under Rule 60(b) depends on the particular facts of the case in question.” Id. at 767.

St. Jude argues that NLC's Rule 60(b) motion is untimely and improper because NLC did not appeal the Fees Order. A Rule 60(b) motion cannot “be used as a substitute for a timely appeal.” Hunter, 362 F.3d at 475. If the reason asserted for the Rule 60(b) motion could have been addressed on appeal from the judgment, the motion must be denied “as merely an inappropriate substitute for an appeal.” Aikens v. Ingram, 652 F.3d 496, 501 (4th Cir. 2011); accord Hunter, 362 F.3d at 475. An order on a motion for attorneys' fees must be appealed within 30 days after entry of the order. See Fed. R. App. P. 4(a)(1)(A), (a)(7)(A)(i). But “a determination of entitlement to fees is not a reviewable final decision until quantification of the fee award.” Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys., LLC, 927 F.3d 1292, 1303-04 (Fed. Cir. 2019). Here, the Fees Order was not appealable because it did not quantify the fee award. See id.

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Moreover, several courts “have recognized that a party must file a separate appeal only when [that party] challenges some aspect of the [attorneys' fees] award itself.” Flowers v. S. Reg'l Physician Servs., Inc., 286 F.3d 798, 801 (5th Cir. 2002) (collecting cases). NLC's Rule 60(b) motion does not challenge the merits of the Fees Order but instead “seeks relief solely on the ground that the underlying merits judgment [has been] reversed.” Id. (quoting Cal. Med. Ass'n v. Shalala, 207 F.3d 575, 577 (9th Cir. 2000)). In such circumstances, a Rule 60(b) motion challenging an attorneys' fees order that was not appealed is procedurally proper. See id. Here, the proffered basis for NLC's Rule 60(b) motion did not arise until the Federal Circuit issued its decision in April 2022. Thereafter, NLC promptly filed its Rule 60(b) motion in May 2022. As such, NLC's motion is procedurally proper.

Because NLC's Rule 60(b) motion is both timely and procedurally proper, denial of the motion on this basis is not warranted.

B. Grounds for Relief

To establish that relief from the Fees Order is warranted, NLC must demonstrate that the Fees Order “is based on an earlier judgment that has been reversed or vacated.” Fed.R.Civ.P. 60(b)(5). According to NLC, the Fees Order was “based on” St. Jude's status as a prevailing party, which has been reversed by the Federal Circuit's decision on appeal. The Fees Order awarded attorneys' fees and costs to St. Jude on two bases: first, the Court's determination that this is an “exceptional case” under 35 U.S.C. § 285, and second, the Court's determination that NLC's attorneys “multiplie[d] the proceedings

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. . . unreasonably and vexatiously” in violation of 28 U.S.C. § 1927. The Court addresses, in turn, whether the Federal Circuit's decision on appeal effectively reversed either of the two bases for this Court's Fees Order.

1. Attorneys' Fees and Costs Under 35 U.S.C. § 285

In its Fees Order, this Court granted St. Jude's motion for “exceptional case” attorneys' fees and costs pursuant to 35 U.S.C. § 285.

Under Section 285, a district court “in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285 (emphasis added). “In a patent case, Federal Circuit law governs the determination of which party has prevailed.” SSL Servs., LLC v. Citrix Sys., Inc., 769 F.3d 1073, 1086 (Fed. Cir. 2014). “[T]he touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties,” and “[t]his change must be marked by judicial imprimatur.” O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, 955 F.3d 990, 992 (Fed. Cir. 2020) (affirming district court's denial of exceptional-case attorneys' fees award under Section 285) (quoting CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419, 422 (2016)). A defendant “need not prevail on the merits to be classified as a prevailing party,” but the defendant must obtain a result that ...