Silicon Knights, Inc. v. Epic Games, Inc., 5:07-CV-275-D

• Court: United States District Courts. 4th Circuit. Eastern District of North Carolina
• Writing for the Court: JAMES C. DEVER III
• Docket Number: No. 5:07-CV-275-D,5:07-CV-275-D
• Parties: SILICON KNIGHTS, INC., Plaintiff, v. EPIC GAMES, INC., Defendant.
• Decision Date: 07 November 2012

SILICON KNIGHTS, INC., Plaintiff,
v.
EPIC GAMES, INC., Defendant.

No. 5:07-CV-275-D

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

Filed: November 7, 2012

ORDER

On May 30, 2012, after an eleven-day trial and one day of deliberations, a jury returned a verdict against Silicon Knights, Inc. ("Silicon Knights" or "plaintiff") [D.E. 802]. The jury found that Silicon Knights failed to prove its breach of contract claim, and that Epic Games, Inc. ("Epic Games" or "defendant") had proven its breach of contract, copyright infringement, and trade secret misappropriation counterclaims. Id. 1-3. The jury awarded Epic Games $2,650,000.00 for its breach of contract counterclaim, and $1,800,000.00 for its copyright infringement and trade secret misappropriation counterclaims. Id. 2-3. On May 30, 2012, the court entered a judgment reflecting the jury's verdict [D.E. 804]. Thereafter, in accordance with a schedule that this court set, Silicon Knights and Epic Games filed numerous post-trial motions.

On June 13, 2012, Silicon Knights moved to stay execution and enforcement of the judgment. See Pl.'s Mot. Stay [D.E. 808]. On June 20, 2012, Epic Games responded in opposition. See Def.'s Mem. Opp'n Mot. Stay [D.E. 811]. On July 6, 2012, Silicon Knights replied. See Pl.'s Reply Mot. Stay [D.E. 827].

On July 2, 2012, Epic Games moved for costs. See Def.'s Mot. Costs [D.E. 813]. On August 1, 2012, Silicon Knights moved to disallow Epic Games's costs, see Pl.'s Mot. Disallow Costs [D.E.

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838], and filed a supporting memorandum. See Pl.'s Mem. Supp. Mot. Disallow Costs [D.E. 839]. On August 16, 2012, Epic Games replied. See Def.'s Reply Mot. Costs [D.E. 842].

On July 2, 2012, Epic Games moved for an award of attorney's fees, see Def.'s Mot. Attorney's Fees [D.E. 814], and filed a supporting memorandum. See Def.'s Mem. Supp. Mot. Attorney's Fees [D.E. 815]. On August 1, 2012, Silicon Knights responded in opposition. See Pl.'s Mem. Opp'n Mot. Attorney's Fees [D.E. 837]. On August 16, 2012, Epic Games replied. See Def.'s Reply Mot. Attorney's Fees [D.E. 843].

On July 2, 2012, Epic Games moved to amend the judgment, see Def. 's Mot. Amend J. [D.E. 816], and filed a supporting memorandum. See Def.'s Mem. Supp. Mot. Amend J. [D.E. 817]. On August 1, 2012, Silicon Knights responded in opposition. See Pl.'s Mem. Opp'n Mot. Amend J. [D.E. 835]. On August 16, 2012, Epic Games replied. See Def.'s Reply Mot. Amend J. [D.E. 841].

On July 2, 2012, Silicon Knights moved to alter the judgment by remittitur, see Pl.'s Mot. Remittitur [D.E. 818], and filed a supporting memorandum. See Pl.'s Mem. Supp. Mot. Remittitur [D.E. 819]. On August 1, 2012, Epic Games responded in opposition. See Def.'s Mem. Opp'n Mot. Remittitur [D.E. 830]. On August 16, 2012, Silicon Knights replied. See Pl.'s Reply Mot. Remittitur [D.E. 845].

On July 2, 2012, Epic Games moved for a permanent injunction, see Def.'s Mot. Inj. [D.E. 820], filed a supporting memorandum, see Def.'s Mem. Supp. Mot. Inj. [D.E. 821], filed a proposed sealed exhibit in support of its motion for a permanent injunction [D.E. 822], and moved to seal the proposed sealed exhibit [D.E. 823]. On August 1, 2012, Silicon Knights responded in opposition. See Pl.'s Mem. Opp'n Mot. Inj. [D.E. 836]. On August 16, 2012, Epic Games replied. See Def.'s Reply Mot. Inj. [D.E. 844].

On July 2, 2012, Silicon Knights moved for judgment as a matter of law, see Pl.'s Mot. J.

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as Matter of Law [D.E. 824], and filed a supporting memorandum. See Pl.'s Mem. Supp. Mot. J. as Matter of Law [D.E. 825]. On August 1, 2012, Epic Games responded in opposition, see Def.'s Mem. Opp'n Mot. J. as Matter of Law [D.E. 831], and moved to seal the response and first two attached exhibits [D.E. 833]. On August 16, 2012, Silicon Knights replied. See Pl.'s Reply Mot. J. as Matter of Law [D.E. 846].

On July 25, 2012, Epic Games moved to compel complete responses to its post-judgment interrogatories and requests for production, see Def.'s Mot. Compel [D.E. 828], and filed a supporting memorandum. See Def.'s Mem. Supp. Mot. Compel [D.E. 829]. On August 8, 2012, Silicon Knights responded in opposition. See Pl.'s Mem. Opp'n Mot. Compel [D.E. 840].

As explained below, the court denies as moot Silicon Knights's motion to stay, grants in part and denies in part Epic Games's motion for costs, grants in part and denies in part Silicon Knights's motion to disallow costs, grants in part and denies in part Epic Games's motion for attorney's fees and expert witness fees, grants in part and denies in part Epic Games's motion to amend the judgment, denies Silicon Knights's motion to alter the judgment by remittitur, grants in part and denies in part Epic Games's motion for a permanent injunction, grants Epic Games's motion to seal the exhibit filed in support of its motion for a permanent injunction, denies Silicon Knights's motion for judgment as a matter of law, grants Epic Games's motion to seal its response to Silicon Knights's motion for judgment as a matter of law and the first two exhibits attached to that response, and grants Epic Games's motion to compel.

I.

Silicon Knights asks the court to stay the execution and enforcement of the judgment until the parties have submitted, and the court has considered, all post-trial motions. See Pl.'s Mot. Stay 2-3. The deadline for submitting post-trial motions, responses, and replies has passed. See [D.E.

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806, 810]. All post-trial motions and the parties' arguments supporting and opposing those motions are ripe, and this order resolves the pending motions. Thus, the court denies as moot Silicon Knights's motion to stay.

II.

As for Epic Games's motion for costs, Epic Games seeks an award of $280,910.24. See Def.'s Mot. Costs 1. Federal Rule of Civil Procedure 54(d)(1) governs a post-judgment motion for an award of costs. See Fed. R. Civ. P. 54(d)(1). Rule 54(d)(1) provides that "costs—other than attorney's fees—should be allowed to the prevailing party." Id. A "prevailing party" is "a party in whose favor a judgment is rendered" or "one who has been awarded some relief by the court." Buckhannon Bd. & Care Home. Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 603 (2001) (quotation and alteration omitted). "[T]he rule gives a presumption in favor of an award of costs to the prevailing party." Teague v. Bakker, 35 F.3d 978, 996 (4th Cir. 1994); see Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981). However, a district court has discretion to award or deny costs to the prevailing party. See Crawford Fitting Co. v. J.T. Gibbons. Inc., 482 U.S. 437, 441-42 (1987), superseded on other grounds by statute, 42 U.S.C. § 1988; Couram v. S.C. Dep't of Motor Vehicles, Civil Action No. 3:10-00001-MBS, 2011WL 6115509, at *2 (D.S.C. Dec. 8, 2011) (unpublished). A court "must justify its decision to deny costs by articulating some good reason for doing so." Cherry v. Champion Int'l Corp., 186 F.3d 442, 446 (4th Cir. 1996) (quotation and citations omitted); see Teague, 35 F.3d at 996. A losing party's good faith is insufficient, standing alone, to justify denying costs to a prevailing party. Cherry, 186 F.3d at 446. Instead, a losing party's good faith is a "virtual prerequisite" to a denial of costs in favor of the prevailing party. Id. Upon a finding of the losing party's good faith, the court may deny an award of costs when "there would be an element of injustice in a presumptive cost award." Id.; see Delta Air Lines, 450 U.S.

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at 355 n.14. The factors that a court should consider to determine whether such an element of injustice would arise from an award of costs are: "(1) misconduct by the prevailing party; (2) the unsuccessful party's inability to pay the costs; (3) the excessiveness of the costs in a particular case; (4) the limited value of the prevailing party's victory; or (5) the closeness and difficulty of the issues decided." Ellis v. Grant Thornton LLP, 434 F. App'x 232, 235 (4th Cir. 2011) (per curiam) (unpublished); see Cherry, 186 F.3d at 446-47.

When an award of costs to the prevailing party is appropriate, the court looks to federal law to determine the scope of the award. See Crawford Fitting, 482 U.S. at 441-43. Section 1920 of Title 28 of the United States Code lists taxable costs. 28 U.S.C. § 1920; see Crawford Fitting, 482 U.S. at 441 ("[Section] 1920 defines the term 'costs' as used in Rule 54(d).").¹ Section 1920's list of recoverable costs is exhaustive as to "expenses that a federal court may tax under the discretionary authority found in Rule 54(d)." Crawford Fitting, 482 U.S. at 441-42. Accordingly, "Rule 54(d) does not provide authority to tax as costs those expenses not enumerated in [section]

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1920." Herold v. Haioca Corp., 864 F.2d 317,323 (4th Cir. 1988); see Crawford Fitting, 482 U.S. at 441-2.

A court's local rules also may impact a party's ability to recover costs. Pursuant to Federal Rule of Civil Procedure 83, "a district court . . . may adopt and amend rules governing its practice." See Fed. R. Civ. P. 83(a)(1). Local rules promulgated pursuant to Rule 83 "have the force and effect of law, and are binding upon the parties and the court which promulgated them." Jackson v. Beard, 828 F.2d 1077, 1078 (4th Cir. 1987) (quotation omitted). District courts have "broad discretion to interpret their local rules [and] [o]nly in rare cases will [appellate courts]...