United States District Court, D. Arizona
A. Teilborg Senior United States District Judge
before the Court are Plaintiff GoDaddy.com LLC
(“GoDaddy”)'s Motion for Attorneys' Fees
and Related Non-Taxable Expenses, (Doc. 353), Motion to Seal
and Notice of Lodging Certain Exhibits to GoDaddy's
Motion for Attorneys' Fees and Related Non-Taxable
Expenses, (Doc. 354), and Motion for the Court to Review the
Clerk's Taxation of Costs, (Doc. 375). Also pending
before the Court are Defendants'Motion for Attorneys'
Fees and Related Non-Taxable Expenses, (Doc. 356), and two
motions to seal, (Docs. 360, 372). The Court now rules on the
filed this declaratory judgment action against RPost seeking,
among other things, damages for fraudulent misrepresentation
and judicial declarations of invalidity, non-infringement,
and unenforceability for patent misuse of various patents
(the “Asserted Patents”) after RPost attempted to
enforce those patents against GoDaddy. (Doc. 46 at 38).
GoDaddy claimed that RPost engaged in fraudulent
misrepresentation because RPost “represented unclouded
ownership in and rights to enforce” the Asserted
Patents. (Id. at 16-17). RPost counterclaimed,
asserting that GoDaddy was liable for direct infringement of
the Asserted Patents. (Doc. 108 at 20-27).
first round of dispositive motions was a success for RPost as
the Court dismissed Count II of GoDaddy's First Amended
Complaint (“FAC”) for patent misuse. (Doc. 105).
The second round also proved fruitful for RPost, as the Court
dismissed GoDaddy's remaining declaratory judgment counts
against RMail Ltd. and RPost International Ltd. (Doc. 106).
The third round was mildly rewarding for RPost, as the Court
dismissed two of GoDaddy's declaratory judgment counts in
their entirety. See (Doc. 107) (dismissing Counts
XIV and XVI of GoDaddy's FAC).
summary judgment, the Court held that the asserted claims of
the Asserted Patents were invalid under 35 U.S.C. § 101.
(Doc. 344 at 59). The Court also held that RPost was entitled
to summary judgment on Count I of GoDaddy's FAC for
fraudulent misrepresentation. (Id.) As the remaining
counts had been adjudicated or were mooted by the invalidity
declarations, judgment was entered accordingly. (Docs. 344 at
to the “American Rule, ” a litigant's
“attorney's fees are not ordinarily recoverable in
the absence of a statute or enforceable contract providing
therefor.” Fleischmann Distilling Corp. v. Maier
Brewing Co., 386 U.S. 714, 717 (1967). The reasons for
the rule are that,
since litigation is at best uncertain one should not be
penalized for merely defending or prosecuting a lawsuit, and
that the poor might be unjustly discouraged from instituting
actions to vindicate their rights if the penalty for losing
included the fees of their opponents' counsel. Also, the
time, expense, and difficulties of proof inherent in
litigating the question of what constitutes reasonable
attorneys' fees would pose substantial burdens for
Id. at 718. The parties invoke several exceptions to
the American Rule.
The Patent Act of 1952
statute governing attorneys' fees in patent litigation is
straightforward: “[t]he court in exceptional cases may
award reasonable attorney fees to the prevailing
party.” 35 U.S.C. § 285. Thus, the statute
“imposes one and only one constraint on district
courts' discretion to award attorney's fees in patent
litigation: The power is reserved for ‘exceptional'
cases.” Octane Fitness, LLC v. ICON Health &
Fitness, 134 S.Ct. 1749, 1755-56 (2014). An
“exceptional” case is “simply one that
stands out from others with respect to (1) the substantive
strength of a party's litigating position (considering
both the governing law and the facts of the case) or (2) the
unreasonable manner in which the case was litigated.”
Id. at 1758.
movant must show exceptionality by preponderant evidence,
” Site Update Sols., LLC v. CBS Corp., 639
F.App'x 634, 636 (Fed. Cir. 2016), and the Court enjoys
considerable discretion in determining whether to
“award fees in the rare case in which a party's
unreasonable conduct-while not necessarily independently
sanctionable-is nonetheless so ‘exceptional' as to
justify an award of fees, ” Octane Fitness,
134 S.Ct. at 1757; see, e.g., Highmark Inc. v.
Allcare Health Mgmt. Sys., Inc., 134 S.Ct. 1744, 1748
(2014); Lumen View Tech. LLC v. Findthebest.com,
Inc., 811 F.3d 479, 482 (Fed. Cir. 2016). When reviewing
a case for “exceptionality, ” the Court should
consider “the totality of the circumstances, ”
such as the following non-exclusive list of factors:
“‘frivolousness, motivation, objective
unreasonableness (both in the factual and legal components of
the case) and the need in particular circumstances to advance
considerations of compensation and deterrence.'”
Octane Fitness, 134 S.Ct. at 1756 n.6 (quoting
Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19
(1994)). Further, “the conduct of the parties is a
relevant factor under Octane's
totality-of-the-circumstances inquiry[.]” Gaymar
Indus., Inc. v. Cincinnati Sub-Zero Prods., Inc., 790
F.3d 1369, 1373 (Fed. Cir. 2015) (citing Octane
Fitness, 134 S.Ct. at 1756); see also Power Mosfet
Techs., L.L.C. v. Siemens AG, 378 F.3d 1396, 1415 (Fed.
Cir. 2004) (finding that a district court did not abuse its
discretion in denying fees under § 285 “because
all of the parties had conducted themselves without the
decorum required when practicing before a federal
“it is the ‘substantive strength of the
party's litigating position' that is relevant to an
exceptional case determination, not the correctness or
eventual success of that position.” SFA Sys., LLC
v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015)
(quoting Octane Fitness, 134 S.Ct. at 1756)
(emphasis in original). In other words, “[a]
party's position on issues of law ultimately need not be
correct for them to not ‘stand out, ' or be found
reasonable.'” Id.; see also Raylon,
LLC v. Complus Data Innovations, Inc., 700 F.3d 1361,
1368 (Fed. Cir. 2012) (“Reasonable minds can differ as
to claim construction positions and losing constructions can
nevertheless be nonfrivolous.”).
Arizona Revised Statute § 12-349
Arizona state law,
Except as otherwise provided by and not inconsistent with
another statute, in any civil action commenced or appealed in
a court of record in this state, the court shall assess
reasonable attorney fees, expenses and, at the court's
discretion, double damages of not to exceed five thousand
dollars against an attorney or party, including this state
and political subdivisions of this state, if the attorney or
party does any of the following:
1. Brings or defends a claim without substantial
2. Brings or defends a claim solely or primarily for delay or
3. Unreasonably expands or delays the proceeding.
4. Engages in abuse of discovery.
Ariz. Rev. Stat. § 12-349(A). Furthermore, “[f]or
the purposes of this section, ‘without substantial
justification' means that the claim or defense is
groundless and is not made in good faith.” Id.
The Court's Inherent Power
“inherent” in the power of the Court is the
authority to award attorneys' fees against a party or its
counsel in three “narrowly defined
circumstances.” Chambers v. NASCO, Inc., 501
U.S. 32, 45 (1991). First, under the “common fund
exception, ” the Court may award attorneys' fees
“to a party whose litigation efforts directly benefit
others.” Id. (citing Alyeska Pipeline
Serv. Co. v. Wilderness Society, 421 U.S. 240, 258- 59
(1975)). Second, the Court may impose attorneys' fees as
a sanction for “‘willful disobedience of a court
order.'” Id. (quoting Alyeska Pipeline
Serv., 421 U.S. at 258).
and of most relevance here, the Court may assess
attorneys' fees as a sanction “when the losing
party has ‘acted in bad faith, vexatiously, wantonly,
or for oppressive reasons . . . .'” Octane
Fitness, 134 S.Ct. at 1758 (quoting Alyeska Pipeline
Serv., 421 U.S. at 258-59). “In this regard, if a
court finds that fraud has been practiced upon it, or that
the very temple of justice has been defiled, it may assess
attorney's fees against the responsible party, as it may
when a party shows bad faith by delaying or disrupting the
litigation or by hampering enforcement of a court
order[.]” Chambers, 501 U.S. at 46 (internal
citations and quotations omitted). Moreover, in addition to
attorneys' fees, the Court may invoke its inherent power
“to impose sanctions in the form of reasonable expert
fees in excess of what is provided for by statute”
provided that the non-prevailing party acted in bad faith or
fraudulently. Takeda Chem. Indus. Ltd. v. Mylan Labs.,
Inc., 549 F.3d 1381, 1391 (Fed. Cir. 2008); see
iLOR, LLC v. Google, Inc., 631 F.3d 1372, 1380 (Fed.
Cir. 2011) (noting that although district courts cannot
impose expert fees under § 285, “a court can
invoke its inherent power to award such fees in exceptional
cases based upon a finding of bad faith” (citations
long been recognized that the public has a general right of
access “to inspect and copy . . . judicial records and
documents.” Nixon v. Warner Commc'ns,
Inc., 435 U.S. 589, 597 (1978). This right of access
extends to all judicial records except those that have
“traditionally been kept secret for important policy
reasons, ” namely grand jury transcripts and certain
warrant materials. Kamakana v. City & Cty. of
Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006).
Nevertheless, “the common-law right of inspection has
bowed before the power of a court to insure that its
records” do not “serve as . . . sources of
business information that might harm the litigant's
competitive standing.” Nixon, 435 U.S. at 598.
a particular court record is one traditionally kept secret, a
strong presumption in favor of access is the starting
point.” Kamakana, 447 F.3d at 1178 (quotation
omitted). A party seeking to seal a judicial record bears the
burden of overcoming this presumption by either meeting the
“compelling reasons” standard if the record is a
dispositive pleading, or the “good cause”
standard if the record is a non-dispositive pleading.
Id. at 1180. In this case, the attached documents all
relate to the parties' motions for attorneys' fees
which are non-dispositive.
less-stringent “good cause” standard requires a
“particularized showing” that “specific
prejudice or harm will result” if the information is
disclosed. Foltz v. State Farm Mut. Auto. Ins. Co.,
331 F.3d 1122, 1130 (9th Cir. 2003) (quotation omitted);
see Fed. R. Civ. P. 26(c). Thus, “[b]road
allegations of harm, unsubstantiated by specific examples of
articulated reasoning” does not overcome the strong
presumption in favor of public access. Beckman Indus.,
Inc. v. Int'l Ins. Co., 966 F.2d 470, 476 (9th Cir.
business context, a “trade secret may consist of any
formula, pattern, device or compilation of information which
is used in one's business, and which gives him an
opportunity to obtain an advantage over competitors who do
not know or use it.” In re Elec. Arts, Inc.,
298 F.App'x 568, 569-70 (9th Cir. 2008) (quoting
Restatement (First) of Torts § 757, cmt. B (1939)). As
this Court has observed, “because confidentiality alone
does not transform business information into a trade secret,
a party alleging trade secret protection as a basis for
sealing court records must show that the business information
is in fact a trade secret.” PCT Int'l Inc. v.
Holland Elecs. LLC, 2014 WL 4722326, at *2 (D. Ariz.
Sept. 23, 2014) (quotation omitted). In other words,
“[s]imply mentioning a general category of privilege,
without any further elaboration or any specific linkage with
the documents, does not satisfy the burden.”
Kamakana, 447 F.3d at 1184.
GoDaddy's Motion for Attorneys' Fees
to 35 U.S.C. § 285, GoDaddy moves for an award of its
attorneys' fees in the amount of $1, 038, 590.00. (Doc.
353 at 5). GoDaddy also requests that the Court invoke its
inherent authority to award GoDaddy its expert fees in the
amount of $144, 480.00 in addition to $9, 835.68 for other
non-taxable costs. (Id.) GoDaddy contends that it is
“the prevailing party” and that this case is
“exceptional” under § 285 for three reasons.
First, GoDaddy maintains that RPost “advanced
litigation positions and patents in this case that were
completely without merit.” (Id. at 7). Second,
GoDaddy asserts that RPost and its damages expert, Gregory
Smith, “advanced completely unreliable and unreasonable
damages positions in both the first and second expert damages
reports, despite the Court providing RPost and Smith an
opportunity to cure the deficiencies.” (Id. at
7-8). Finally, GoDaddy believes that RPost “enforced
its patents here and in serial fashion elsewhere such that
its enforcement campaign was advanced in a highly
unreasonable manner.” (Id. at 8).
response, RPost does not dispute that GoDaddy is “the
prevailing party” as required by § 285.
See (Doc. 370). However, RPost disagrees that this
is an “exceptional” case warranting an award of
over $1, 000, 000.00 in attorneys' fees. (Id. at
6-20). RPost insists that its litigation positions and Mr.
Smith's expert reports were reasonable and advanced in
good faith. (Id.) RPost also rebuffs GoDaddy's
contention that it is simply a “patent enforcement
entity” because it operates a successful business that
does not rely solely on licensing agreements. (Id.
Court now reviews the “totality of the
circumstances” to decide whether the “substantive
strength” of RPost's litigating position or the
reasonableness of its litigation conduct “stands
out” from other cases, thereby making this case
“exceptional.” Octane Fitness, 134 S.Ct.