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DataTern, Inc. v. MicroStrategy, Inc.

United States District Court, D. Massachusetts

December 3, 2018

DATATERN, INC., Plaintiff,



         I. Background

         On June 5, 2018, the Court granted in part and denied in part defendants' motions to recover attorneys' fees pursuant to 35 U.S.C. § 285. The Court instructed “[e]ach party seeking an award of fees” to file “an application for fees, with affidavits and a detailed breakdown of time and costs, within 21 days” of the order. (June 5, 2018 order at 39).

         On June 26, 2018, each of the six defendants filed an application for fees. DataTern filed a consolidated objection to defendants' applications. Each defendant's application and DataTern's relevant objections to that application will be considered in turn.

         II. Attorneys' Fees

         A. MicroStrategy, Inc.

         The Court's June 5 order provided that defendant MicroStrategy, Inc. was to be awarded two categories of fees: (1) “fees reasonably related to plaintiff's judge-shopping activities - generally, fees incurred prior to these cases being consolidated and stayed against the customers, ” which occurred on July 17, 2012; and (2) “fees reasonably incurred after the Court's claim-construction decision, ” which occurred on February 7, 2017. (Id. at 37).

         MicroStrategy's application requests fees and costs of $591, 032.71 for the first category and $431, 212.92 for the second. MicroStrategy also requests $157, 505 for the work its attorneys performed in seeking attorneys' fees. In total, MicroStrategy requests $1, 179, 750.63.

         DataTern contends that MicroStrategy's fee application should be rejected in its entirety for two principal reasons: (1) because it fails to establish a nexus between the fees listed in its application and the limits described in the Court's June 5 order, and (2) because its request is excessive.

         1. Fees Reasonably Related to Judge-Shopping Activities

         As to its first contention, DataTern is correct that MicroStrategy must establish a reasonable “nexus” between the requested fees and the limits described by the Court's June 5 order. A fee award must “‘bear some relation to the extent of the misconduct.'” Integrated Technology Corp. v. Rudolph Technologies, Inc., 629 Fed.Appx. 972, 977 (Fed. Cir. 2015) (quoting Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1344 (Fed. Cir. 2001)). As the Court noted in its June 5 order, as a general matter, only fees incurred prior to July 17, 2012, could be considered reasonably related to DataTern's judge-shopping activities.

         It is true that MicroStrategy has only requested fees from the appropriate time period. Nonetheless, the fees incurred must be reasonably related to the judge-shopping activities that the order identified. MicroStrategy and its customers undoubtedly would have incurred substantial fees due to the filing of the litigation regardless of the efforts to consolidate the cases in front of a single judge that DataTern apparently believed would be desirable. A fee award is only appropriate to compensate defendants for the “extra legal effort to counteract the[] misconduct”; it is not intended to give them a windfall. Highmark, Inc. v. Allcare Health Mgmt. Sys., 687 F.3d 1300, 1316 (Fed. Cir. 2012), vacated on other grounds, 572 U.S. 559 (2014).

         MicroStrategy has submitted an application that appears to exclude only a single category of attorneys' fees-fees incurred in investigating potential counterclaims against DataTern. Otherwise it has simply requested all fees it incurred prior to July 17, 2012, without attempting to show any connection, of any kind, between the fees incurred and the misconduct.

         The Court has reviewed the time entries submitted by MicroStrategy and is unable to ascertain whether any specific entries relate to or arise out of the judge-shopping activities. It is certainly likely that MicroStrategy incurred some additional fees related to those activities, although the order of magnitude is probably closer to $5, 900, or perhaps $59, 000, than $590, 000. In any event, it is not the role of the Court to cull through the time entries, ascertain which relate to the improper conduct, and determine a reasonable amount. Because it cannot make a reasonable fee determination based on the evidence provided, no fees will be awarded to MicroStrategy arising out of the judge-shopping activities of DataTern.

         2. Fees Reasonably Incurred after Claim-Construction Opinion

         In substance, the Court's June 5 order concluded that DataTern's claims became unreasonable at some point after the Court's claim construction order on February 7, 2017. The boundary line between reasonable and unreasonable persistence in a litigating position is hazy under the best of circumstances; nevertheless, such a line exists, and DataTern crossed it here, for the reasons outlined in the June 5 order.

         MicroStrategy has claimed attorneys' fees for every single time entry on or after February 7, 2017. For the Court to find that DataTern's litigating position became unreasonable immediately on February 7 would require, in effect, that the company dismiss its claims the moment the decision is rendered-presumably, without even consultation between the attorneys and the client, and without any consideration of possible alternatives. That is, of course, an extreme and unrealistic scenario.

         Again, however, MicroStrategy has made no effort to distinguish between fees incurred because of an unreasonable prolongation of the litigation and fees that would have been incurred even if DataTern acted entirely reasonably. Under the circumstances, and without assistance from MicroStrategy, the Court concludes (perhaps generously) that DataTern's position became unreasonable no later than six weeks after the February 7 claim-construction decision-that is, by March 21, 2017. By that point, DataTern had ample time to review the ...

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