Trading Technologies Int'l Inc. v. Espeed Inc.

• Decision Date: 29 October 2010
• Docket Number: No. 04 C 5312.,04 C 5312.
• Citation: 750 F.Supp.2d 962
• Parties: TRADING TECHNOLOGIES INTERNATIONAL, INC., Plaintiff,v.ESPEED, INC., Espeed International, Ltd., Ecco LLC, and EccoWare, Ltd., Defendants.
• Court: U.S. District Court — Northern District of Illinois

750 F.Supp.2d 962

TRADING TECHNOLOGIES INTERNATIONAL, INC., Plaintiff,

v.ESPEED, INC., Espeed International, Ltd., Ecco LLC, and EccoWare, Ltd., Defendants.

No. 04 C 5312.

United States District Court, N.D. Illinois, Eastern Division.

Oct. 29, 2010.

Paul A. Kafadar, McDonnell Boehnen Hulbert & Berghoff, Paul H. Berghoff, Christopher Michael Cavan, George I. Lee, Jennifer M. Kurcz, Jeremy E. Noe, Marcus Jay Thymian, Matthew J. Sampson, Paul S. Tully, McDonnell, Boehnen, Hulbert & Berghoff, Ltd., Alan Wayne Krantz, Kirsten L. Thomson, Leif R. Sigmond, Jr., Michael D. Clifford, Michael David Gannon, Michelle Lynn McMullen–Tack, Rebecca L. Brown, S. Richard Carden, McDonnell Boehnen Hulbert & Berghoff LLP, Steven F. Borsand, Trading Technologies International, Inc., Chicago, IL, for Plaintiff.Elizabeth Hartford Erickson, Imron T. Aly, Ivan Michael Poullaos, James M. Hilmert, James Ethan McComb, Kevin Anthony Banasik, Tracy J. Allen, Winston & Strawn LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

SIDNEY I. SCHENKIER, United States Magistrate Judge

eSpeed, Inc., eSpeed International, Ltd., Ecco LLC, and EccoWare Ltd. (collectively “eSpeed”) seek to strike a bill of costs filed by Trading Technologies, Inc. (“TT”) or, in the alternative, to stay consideration of costs pending eSpeed's appeal. After a jury awarded TT damages for eSpeed's patent infringement, and the trial judge (then Judge Moran) entered a permanent injunction against eSpeed, TT submitted a bill of costs (doc. # 1272, 1283) seeking $3,321,775.58. eSpeed objects to TT's bill of costs (doc. # 1288), contending that TT cannot recover costs because TT is not the prevailing party and, even if TT were the prevailing party, this Court should exercise its discretion to deny costs or, in the alternative, to stay costs pending appeal (Def.'s Obj. at 1). In response (doc. # 1297), TT removed certain challenged costs and reduced its request to $2,887,117.56 (Pl.'s Resp. at 1). Thereafter, eSpeed filed a reply (doc. # 1304), arguing that TT should be awarded no more than $147,190.45 in costs, assuming TT is a prevailing party entitled to costs at all (Def.'s Reply at 1). At the Court's invitation, and with eSpeed's agreement, TT later supplemented its submission with invoices and witness depositions that were previously made available to Judge Moran.

After careful consideration of the arguments presented and the documentation submitted, this Court rules as follows: (1) we deny eSpeed's motion to strike, (2) we deny eSpeed's motion to stay, and (3) we grant in part and deny in part TT's bill of costs, and award $381,831.04 in costs to TT.

I.

We begin by summarizing the issues and decisions in this case, before addressing eSpeed's threshold argument that TT is not a “prevailing party” entitled to costs under Federal Rule of Civil Procedure 54(d).

A.

On August 12, 2004, TT filed a complaint against eSpeed (doc. # 1) alleging direct, indirect, and contributory infringement of TT's patents, U.S. Patent No. 6,766,304 ('304) and U.S. Patent No. 6,772,132 ('132). TT requested relief in the form of a judgment of infringement, a preliminary and permanent injunction, damages, treble damages for willful infringement, and an assessment of costs and reasonable attorney's fees (Pl.'s Compl. at 4). The accused products included several versions of eSpeed's “Dual Dynamic,” “eSpeedometer,” “Modified eSpeedometer,” “eSpeed Futures View,” “Ecco Price Ladder,” and “eSpeed AutoSpeed Basis.” All of those products relate to electronic trading in futures. eSpeed filed an answer (doc. # 133) denying infringement and asserting the invalidity and unenforceability of the '304 and '132 patents (Def.'s Ans. at 10). eSpeed also filed a counterclaim seeking declarations of non-infringement, invalidity, and unenforceability of TT's patents, as well as an award of costs and reasonable attorney's fees (Def.'s Ans. 12–18).

After various proceedings, some—but not all—of eSpeed's accused product types were found to infringe TT's patents. On February 9, 2005, the Court denied TT's motion for a preliminary injunction (doc. # 83). On October 31, 2007, after a three-day Markman hearing, the Court construed the claims in dispute (doc. # 425) and then substantially reaffirmed its construction in a clarification order dated February 21, 2007 (doc. # 475). On June 20, 2007, the Court found that various versions of eSpeed's “Dual Dynamic,” “eSpeedometer,” and “Modified eSpeedometer” did not literally infringe TT's patents, and in addition, precluded TT from asserting infringement under the doctrine of equivalents (doc. # 708). On October 10, 2007, after a four-week trial, a jury ruled in favor of TT (doc. # 1061), finding that TT's '304 and ' 132 patents were valid and infringed by eSpeed using “eSpeed Futures View,” “Ecco Price Ladder,” and “eSpeed AutoSpeed Basis” (collectively, the “infringing products”). The jury also determined that the priority date for the patents was March 2, 2000, the date on which TT's provisional application was filed, and found eSpeed's infringement to be willful. The jury awarded TT $3.5 million in compensatory damages. The Court subsequently vacated the jury's finding of willfulness (doc. # 1144), and reduced the damage award by remittitur to $2,539,468.00 (doc. # 1153)—a number that plaintiff accepted (doc. # 1325). The Court withheld the issue of inequitable conduct from the jury (doc. # 840) and, after a two-day hearing, the Court rejected eSpeed's argument that the patents-in-suit were unenforceable for inequitable conduct (doc. # 1215). On May 22, 2008, the Court granted TT's motion for a permanent injunction against eSpeed's infringing products (doc. # 1232).

The case then proceeded to appeal. After first rejecting eSpeed's contention that there was no final judgment to appeal, the Federal Circuit considered the merits of the parties' cross appeals. On February 25, 2010, the Federal Circuit affirmed. Trading Tech. Int'l, Inc. v. eSpeed, Inc., 595 F.3d 1340 (Fed.Cir.2010).

B.

eSpeed argues that TT should not be considered the prevailing party because the Court granted eSpeed's motion for partial summary judgment with respect to the non-infringing products (Def.'s Obj. at 2). eSpeed contends that, because granting this motion “essentially disallowed the bulk of damages that TT would have sought at trial,” TT's case is analogous to others where courts have required both parties to bear their own costs because the litigation resulted in a “tie” ( Id. at 2–3). In response, TT argues that it is clearly the prevailing party because the jury awarded TT damages for infringement and the Court entered a permanent injunction against eSpeed (Pl.'s Resp. at 2–3). TT also argues that the Court's finding of non-infringement for some products and reversal of the jury's finding of willfulness does not preclude TT from being the prevailing party ( Id. at 3).

Rule 54(d)(1) provides that, “[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party.” In patent cases, Federal Circuit law governs whether a party may be considered the prevailing party. See Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1181–1182 (Fed.Cir.1996). In the context of patent litigation, a plaintiff “prevails” when “the actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.” Id. (quoting Farrar v. Hobby, 506 U.S. 103, 111–113, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992)). Whether or not a party prevailed, however, is only a threshold inquiry. Id. at 1182. Once a court finds a prevailing party, the court retains broad discretion as to what costs to award, if any. Farrar, 506 U.S. at 115–116, 113 S.Ct. 566; Barber v. Ruth, 7 F.3d 636, 644 (7th Cir.1993). Because the decision of whether to award costs to a prevailing party “implicates considerations not unique to patent law,” it is governed by the law of regional circuits. Manildra, 76 F.3d at 1183. In the Seventh Circuit, there is a presumption in favor of awarding costs to the prevailing party which is “difficult to overcome.” Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 945 (7th Cir.1997). Generally, only two reasons warrant the denial of costs: (1) misconduct by the prevailing party worthy of a penalty, or (2) the losing party's inability to pay. Id.

The Supreme Court has held that a judgment for damages in any amount modifies the defendant's behavior for the plaintiff's benefit, thus signifying the plaintiff as the prevailing party. Farrar, 506 U.S. at 113, 113 S.Ct. 566 (holding that even a plaintiff who wins nominal damages is considered the prevailing party). Here, TT achieved a damage award (after remittitur) of more than $2.5 million. As TT points out, the jury answered each subpart of every special verdict question in TT's favor ( See Pl.'s Resp. at 1; Jury Verdict (doc. # 1061)). The Court then issued a permanent injunction against eSpeed's infringing products. Under Farrar's holding, TT is the prevailing party based on its damage award alone. See 506 U.S. at 113, 113 S.Ct. 566. However, there can also be no serious dispute that TT's injunctive relief modified eSpeed's behavior in a way that benefitted TT. The fact that eSpeed had previously discontinued some of the infringing products is immaterial. As a result of TT's injunction, eSpeed is now restricted from choosing to produce or sell any of the infringing products in the future, which bestows a considerable benefit on competitor TT. Thus, TT's injunctive relief forms a second, independent basis upon which to conclude that TT is the prevailing party. See Young v. City of Chicago, 202 F.3d 1000 (7th Cir.2000) (holding that demonstrators who obtained an injunction against the City's exclusion of protestors during the Democratic national...