Free Response to Motion - District Court of Arizona - Arizona

1 MICHAEL O. SUTTON Texas State Bar No. 19535300 2 Federal Bar No. 416565441 3 STEVEN S. BOYD Texas State Bar No. 24001775 4 Federal Bar No. 22772 NATHAN C. DUNN 5 Texas State Bar No. 24036509 6 LOCKE LIDDELL & SAPP LLP 600 Travis St., Suite 3400 7 Houston, Texas 77002 Telephone: (713) 226-1200 8 Facsimile: (713) 223-3717 9 Attorneys for Plaintiff, LEXCEL SOLUTIONS, INC 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 MasterCard International, Inc. and MasterCard International, L.L.C. (collectively MASTERCARD INTERNATIONAL, INC. and MASTERCARD INTERNATIONAL, LLC. both Delaware Corporations Defendants. v. LEXCEL SOLUTIONS, INC., an Arizona Corporation Plaintiffs, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION NO. CV 03-1454 PHX JAT UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA PHOENIX DIVISION

LEXCEL'S RESPONSE TO MASTERCARD'S MOTION FOR AN AWARD OF REASONABLE ATTORNEYS' FEES

JURY DEMANDED

27 "MasterCard" or "Defendant") have filed a Motion for an Award of Reasonable Attorneys' 28 Fees and Memorandum in Support requesting an award of reasonable attorneys' fees in the -1Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 1 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 amount of $530,219.56. Lexcel Solutions, Inc. ("Lexcel"), pursuant to Federal Rule of Civil 2 Procedure 54 and United States District Court of Arizona Local Rule 54.2(f), files this 3 4 5 6 Introduction. MasterCard argues that it is entitled to the full amount of attorney, paralegal, and legal Response to MasterCard's Motion for An Award of Reasonable Attorneys' Fees.

7 research fees expended in defense of this suit on grounds that the Nonexclusive Software 8 License Agreement and 17 U.S.C. § 505 authorizes such an award. MasterCard has submitted 9 10 Motion for an Award of Reasonable Attorneys' Fees. 11 12 13 Summary of the Argument. MasterCard is not entitled to an award of reasonable attorneys' fees and costs under an itemized statement of the attorney, paralegal, and legal research fees in support of its

14 the attorney's fees provision in the Confidentiality Agreement. This provision limits recovery 15 of reasonable attorneys' fees and costs by the prevailing party to suits or actions brought to 16 17 18 brought by Lexcel in the present case do not involve any provisions of the Confidentiality construe or enforce provisions of the Confidentiality Agreement alone. Because the claims

19 Agreement, MasterCard is not entitled to an award of attorneys' fees and costs under the 20 Nonexclusive Software License Agreement. Furthermore, MasterCard is not entitled to an 21 award of reasonable attorneys' fees and costs under Arizona Revised Statutes section 1222 23 award of attorneys' fees. 24 25 In addition, MasterCard is not entitled to an award of reasonable attorneys' fees and 341.01 because the Confidentiality Agreement between Lexcel and MasterCard governs the

26 costs under 17 U.S.C. § 505, which gives the court discretion to award to reasonable 27 attorney's fees and costs to the prevailing party in an action brought under a provision of the 28 Copyright Act. In determining whether to award reasonable attorney's fees and costs under 17 -2Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 2 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 U.S.C. § 505, courts consider several factors including the objective reasonable of the 2 claimant's factual and legal arguments, the claimant's motivation, frivolousness of the claim 3 4 5 copying of protected works. Because the record shows that Lexcel's copyright claim was and whether the copyright claim was in accord with the Copyright Act's policy to deter the

6 brought in good faith and was not frivolous and that Lexcel's factual and legal arguments 7 objectively reasonable and that filing this action prevented any further copying by MasterCard, 8 which furthers the purpose of the Copyright Act, MasterCard should not be awarded 9 10 Contrary to MasterCard's arguments, the trade secret misappropriation claim is not 11 12 related to Lexcel's copyright claim. Through its objections and statements during the attorneys' fees and costs under 17 U.S.C. § 505.

13 deposition of Robert Young, MasterCard concedes that the claims are unrelated. Moreover, 14 MasterCard is not entitled to an award of reasonable attorneys' fees for prevailing on the trade 15 secret misappropriation claim because the claim was not based on a provision in the 16 17 18 19 Agreement. Finally, the itemized statement of attorney, paralegal, and legal research expenses Confidentiality Agreement, which limits recovery only for claims involving the Confidentiality

20 submitted by MasterCard in support of its request for $530,219.56 in attorneys' fees and 21 expenses include 857.3 hours of attorney and paralegal time entries containing task 22 23 performed in connection to a separate patent infringement case filed in New York. Lexcel 24 25 objects to the $301,954.80 in fees associated with this 857.3 hours of attorney and paralegal descriptions that do not comply with the requirements of Local Rule 54.2(e)(2) and tasks

26 time. Lexcel also specifically objects to the $3,625.71 in legal research fees requested by 27 MasterCard. The legal research expense statement fails to adequately identify the research 28 performed as required by Local Rule 54.2(e)(2)(B). -3Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 3 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 2 I. 3 4

Argument. MasterCard is Not Entitled to an Award of Reasonable Attorneys' Fees Pursuant to the Attorney's Fees Provision Contained in the Confidentiality Agreement. In its Motion for an Award of Reasonable Attorneys' Fees, MasterCard argues that it is

5 entitled to attorneys' fees as the prevailing party to all of the claims in this suit brought to 6 7 8 9 10 11 12 License Agreement). Specifically, MasterCard argues that it is entitled to an award of enforce various provisions of the Nonexclusive Software License Agreement (Agreement or

reasonable attorney's fees pursuant to following provision of the Confidentiality Agreement: 10. ATTORNEY'S FEES. In the event any suit or other action is commenced to construe or enforce any provision of this Agreement, the prevailing party, in addition to all other amounts such party shall be entitled to receive from other party, shall be paid by said party [sic] reasonable attorney's fees and court costs.

13 See Confidentiality Agreement, Exhibit 1, at Page 2, ¶ 10. The attorneys' fees provision applies 14 to suits commenced to construe or enforce the Confidentiality Agreement portion of the 15 License Agreement alone and does not apply to the suits or actions brought to construe or 16 17 18 only place in which the issue of awarding the prevailing party attorney's fees is addressed. enforce other parts of the License Agreement. Notably, the Confidentiality Agreement is the

19 None of the other portions of the Agreement, including Amendment 1 and all the Addendums 20 to the Agreement, even mention the issue of attorney's fees. Moreover, if Lexcel and

21 MasterCard intended to have a provision entitling the prevailing party to an award of 22 23 parties would have included a stand-alone provision addressing this matter in the initial portion 24 25 of the Agreement or added such provision to any of the detailed Addendums to the attorney's fees in a suit relating to or arising out of any of the terms of the Agreement, both

26 Agreement. Furthermore, Addendum No. 5 to the Agreement explicitly states that the terms 27 and conditions of this Addendum No. 5 shall become a part of the Agreement as amended by 28 Amendment No. 1 and that any use of the word "AGREEMENT" in Addendum No. 5 shall be -4Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 4 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 a reference to the entire Agreement as amended by Amendment No. 1 and including the terms 2 and conditions of Addendum No. 5. See Addendum No. 5, Exhibit 2, at Page 1. Unlike 3 4 5 its applicability to the Agreement or any other kind of reference to the Agreement or Therefore, the absence of similar language in the Confidentiality Addendum No. 5, the Confidentiality Agreement does not a contain an express clarification of

6 Amendment No. 1.

7 Agreement and the inclination of the parties to include such language in other parts of the 8 Agreement indicates that Lexcel and MasterCard did not intend for the provisions of the 9 10 Fees provision of the Confidentiality Agreement cited above includes the modifier "this" in 11 12 front of the word "Agreement" instead of using a more general article such as "the" further Confidentiality Agreement to apply to the entire License Agreement. Finally, the Attorney's

13 evidencing that the Attorney's Fee provision of the Confidentiality Agreement was intended 14 only to apply to suits commenced to construe or enforce the provisions of the Confidentiality 15 Agreement alone and not provisions contained in other parts of the License Agreement. 16 17 18 Agreement, requires that "contractual provisions to pay attorney's fees be strictly construed." In addition, New York law, which governs interpretation and construction of the

19 Kleinberg v. Radian Group, Inc., No. 01 Civ. 9295 RMB GWG, 2003 WL 22723014, *2 20 (S.D.N.Y. November 18, 2003) (applying New York law and citing Hooper Associates, Ltd. 21 V. AGS Computers, Inc., 74 N.Y.2d. 487 (1989) and Tokyo Tanker Co. v. Etra Shipping 22 23 show that the courts have declined to award attorneys' fees to the prevailing party under the 24 25 provision of the contract in circumstances where the court found that none of the breach of Corp., 536 N.Y.S.2d 75, 77-78 (N.Y. App. Div. 1st Dept. 1989)). Other New York decisions

26 contract claims were covered by the relevant attorney's fee provision. The decisions suggest 27 that New York courts only allow recovery for claims strictly falling under the language of the 28 applicable attorney's fee provision of the contract. See Hirschfeld v. IC Securities, Inc., 521 -5Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 5 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 N.Y.S.2d. 436, 441 (N.Y. App. Div. 1st Dept. 1987); see also American Honda Motor Co., 2 Inc. v. Two Wheel Corporation, 918 F.2d 1060 (2d Cir. 1990) (applying New York law). 3 4 5 that the provision was meant to apply only to actions commenced to construe or enforce any The language of the Attorney's Fee provision of the Confidentiality Agreement clarifies

6 provision of the Confidentiality Agreement and that the recovery of attorneys' fees by the 7 prevailing party is limited to those fees incurred in defense of claims based on a breach of the 8 Confidentiality Agreement. In the present case, neither of the causes of action required the 9 10 asserted a claim that MasterCard has breached any portion of the Confidentiality Agreement. 11 12 MasterCard's Motion for an Award of Reasonable Attorneys' Fees, the Second Amended Court to construe or enforce any provision of the Confidentiality Agreement nor has Lexcel

13 Complaint, and the Order granting MasterCard summary judgment on all counts show that all 14 of Lexcel's claims relied exclusively upon provisions in Addendum No. 5, Addendum No. 8, 15 and Section II of the initial Agreement. Accordingly, MasterCard is not entitled to an award 16 17 18 Finally, MasterCard argues that it is entitled to an award of reasonable attorneys' fees of reasonable attorneys' fees pursuant to the Attorney's Fee provision cited above.

19 for claims that are related to the breach of contract claims Lexcel has asserted. MasterCard 20 relies upon three Arizona decisions in support of its argument. See Ramsey Air Reds, L.L.C. v. 21 Cutter Aviation, Inc., 198 Ariz. 10, 13, 6 P.3d 315, 318 (Ct. App. 2000); Campbell v. 22 23 Case Power & Equipment Co., 179 Ariz. 155, 164, 876 P.2d 1190, 1199 (Ct. App. 1994). In 24 25 the cases relied upon by MasterCard, the parties were seeking attorneys' fees pursuant to Westdahl, 148 Ariz. 432, 441, 715 P.2d 288, 297 (Ct. App. 1985); Duetsche Credit Corp. v.

26 Arizona Revised Statute section 12-341.01. Id. Under A.R.S. § 12-341.01, "in any contested 27 action arising out of a contract, express or implied, the court may award the successful party 28 reasonable attorneys' fees." Ariz. Rev. Stat. Ann. § 12-341.01 (2005). Arizona courts have -6Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 6 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 held that the "arising out of" language in the statute allows the recovery of reasonable 2 attorneys' fees for tort actions interwoven with the contract claims and actions relating to the 3 4 5 Duetsche Credit, 179 Ariz. 155. While these decisions do hold that a successful party on a matters in the contract. See Ramsey Air Reds, 198 Ariz. 10; Campbell, 148 Ariz. 432;

6 contract claim may recover attorneys' fees expended in litigating any related or interwoven 7 claims, these cases are inapplicable to the instant case. Under Arizona law, if a contract 8 provides for an award of reasonable attorney's fees, A.R.S. § 12-341.01 does not apply. 9 10 1362 (Ct. App. 1992) ("the statute applies in contract actions when the contract has not 11 12 provided for the payment of fees; it does not govern when the contract expressly provides for Sullivan v. State Land Department of the State of Arizona, 172 Ariz. 599, 601, 838 P.2d 1360,

13 them."); Gametech International, Inc. v. Trend Gaming Systems, L.L.C., 380 F. Supp.2d 14 1084, 1089 (D. Ariz. 2005) ("an attorneys' fees provision in a contained in a contract controls 15 to the exclusion of the Arizona Revised Statutes governing attorneys' fees."). Because the 16 17 18 award of reasonable attorneys' fees, which limits the recovery to prevailing party for expenses Confidentiality Agreement between Lexcel and MasterCard contains a provision governing the

19 incurred in defending claims brought to construe or enforce the Confidentiality Agreement, 20 MasterCard is not entitled to receive an award of reasonable attorneys' fees for claims that are 21 interwoven or related to the Confidentiality Agreement or any other portions of the License 22 23 24 25 Under the Copyright Act of 1976, the district court has the discretion to award "a 26 27 reasonable attorney's fee to the prevailing party." 17 U.S.C. § 505 (2005). MasterCard relies Agreement between MasterCard and Lexcel. II. MasterCard is Not Entitled to an Award of Reasonable Attorneys' Fees under Copyright Act § 505 in Connection with Lexcel's Copyright and Trade Secret Misappropriation Claims.

28 upon a decision by United States District Court for the Southern District of New York to -7Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 7 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 support the proposition that awarding attorneys' fees under the Copyright Act to prevailing 2 party to a copyright claim is the rule rather than the exception and that attorneys' fees should 3 4 5 99 Civ. 4899 (SAS), 2000 U.S. Dist. LEXIS 4549, *3 (S.D.N.Y. 2000) (quoting However, be awarded routinely. The Kroll-O'Gara Company v. First Defense International, Inc., No.

6 Micromanipulator Co., Inc. v. Bough, 779 F.2d 255, 259 (5th Cir. 1985)).

7 MasterCard's reliance on Kroll-O'Gara and Micromanipulator to support their argument for 8 an award of reasonable attorneys' fees under the Copyright Act is misplaced. In both of those 9 10 the prevailing party on the copyright claim. Moreover, in awarding attorneys' fees to the 11 12 plaintiff, the district court in Kroll-O'Gara was guided by the policy of the Copyright Act to cases, the court awarded attorneys' fees in the context of situations in which the plaintiff was

13 "encourage suits to redress copyright infringement." The Kroll-O'Gara Company, 2000 U.S. 14 Dist. LEXIS 4549, at *3 (citing Roth v. Pritkin, 787 F.2d 54, 57 (2d. Cir. 1986) ("Because the 15 Copyright Act is intended to encourage suits to redress copyright infringement, fees are 16 17 18 The United States Supreme Court has held that "prevailing plaintiffs and prevailing generally awarded to a prevailing plaintiff.")).

19 defendants are to be treated alike" when the court is exercising its discretion to award 20 attorney's fees under § 505 of the Copyright Act. Fogerty v. Fantasy, 510 U.S. 517, 534 21 (1994). The United States Court of Appeals, Ninth Circuit ("Ninth Circuit") has followed this 22 23 in which the defendant is found to be the prevailing party on the copyright claim. See Maljack 24 25 Productions v. GoodTimes Home Video, 81 F.3d 881, 889 (9th Cir. 1996). The Ninth Circuit, principle when deciding whether to award attorneys' fees under the Copyright Act in situations

26 in determining whether to award attorneys' fees to a prevailing party under the Copyright Act 27 § 505, has held that the district court "should consider, among other things: the degree of 28 success obtained on the claim; frivolousness; motivation; objective reasonableness of factual -8Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 8 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 and legal arguments; and need for compensation and deterrence." Maljack Productions, 81 2 F.3d at 889 (9th Cir. 1996); Columbia Pictures Television, Inc. v. Krypton Broadcasting of 3 4 5 facts of the present case actually discourages the award of attorneys' fees to MasterCard under Birmingham, Inc., 259 F.3d 1186, 1197 (9th Cir. 2000). The application of these factors to

6 section 505 of the Copyright Act. 7 Throughout this case, the Plaintiff has presented factually and legally reasonable

8 arguments in support of its claim that the Defendants' committed copyright infringement by 9 10 Plaintiff's software is protected, copyrighted work. See Decl. of Carl Kubitz, attached as 11 12 Exhibit 15 to Plaintiff's Response to Defendant's Motion for Summary Judgment, ¶ 7, attached copying protectable elements of Plaintiff's copyrighted software and code. First, the body of

13 here as Exhibit 3. Plaintiff's software includes tables, RXN files, TXN files, TRC files, source 14 code, and object code. Id. at ¶ 8. Furthermore, the database and table definition portions of 15 Plaintiff's software have been registered with the United States Copyright Office. Id. at ¶ 11. 16 17 18 files and TRC files. Id. at ¶ 15. MasterCard has admitted that it had reviewed the tables, RXN The record shows that MasterCard has copied all or a portion of the tables, RXN files, TXN

19 files, TXN files, TRC files and the object code of Lexcel's software. Id. at ¶ 13. In addition, 20 there are substantial similarities between the protectable elements of Lexcel's software and 21 MasterCard's replacement software. 22 23 MasterCard had access to its copyrighted software and that MasterCard's replacement 24 25 software, which was developed in an unusually short time frame, was substantially similar to These findings show that Lexcel has supported its

argument that MasterCard has infringed the copyrights in its software by showing that

26 Lexcel's. The Ninth Circuit has long held that copyright infringement can be shown by a 27 defendant's access to the copyrighted work and that two works being compared are 28 substantially similar. Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435 (9th Cir. 1994). -9Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 9 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1

Lexcel's copyright claim was not frivolous and Lexcel commenced its copyright claim

2 on a good faith belief that MasterCard had copied its copyrighted software when it developed 3 4 5 instituted this suit. This is evidence that Lexcel's copyright claims were meritorious and that a replacement. Finally, MasterCard deposited Lexcel's source code with the court after Lexcel

6 MasterCard recognized the merit of these claims. 7 In addition to the evidence showing that MasterCard is not entitled to attorneys' fees

8 pursuant to the law of Copyright Act § 505, MasterCard should not be awarded attorneys' fees 9 10 Lexcel's trade secret misappropriation claim is not related to its copyright claim. MasterCard 11 12 instructed its technical expert, Robert Young, not to answer questions regarding his opinion on for the trade secret misappropriation claim pursuant to section 505 of the Copyright Act.

13 the copyright infringement claim and the general issue of assessing substantial similarity 14 between two pieces of software. 15 16 17 18 19 20 See Deposition of Robert D. Young, Exhibit 4, at p. 38, l. 15 - l. 25 and p. 1, l. 1 ­ p. 4, l. 18. 21 22 Therefore, even MasterCard recognizes that the trade secret and copyright infringement claims Q. Okay, all right. And in looking in those cases in which you have worked, whether or not you have offered an opinion, but in which you've worked where you're looking at copyright infringement, what do you look for in the sense of whether there is substantial similarity? Mr. Leach: I'm going to object to these questions, because he hasn't offered any opinions in this case on copyright infringement, nor has your expert. So it exceeds the scope of any opinions that he's been asked to offer in this case.

23 are distinct. 24 III. 25 26 27 28 -10Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 10 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169 Lexcel Objects to Specific Time Entries for Fees and Expenses. Lexcel also objects to $301,954.80 in fees associated with a total of 857.3 hours of attorney and paralegal time entries submitted by MasterCard in support of its Motion for an

1 Award of Reasonable Attorneys' Fees. Lexcel also specifically objects to the $3,625.71 in 2 legal research fees requested by MasterCard. 3 4 5 Lexcel objects to $297,498.80 charged by MasterCard for 809.8 hours of attorney time A. Attorney Time

6 entries on the grounds that the these time entries contain task descriptions that do not comply 7 with various requirements of LRCiv 54.2(e)(2). In addition, some of these time entries include 8 tasks that were performed for a separate patent infringement suit filed in the Southern District 9 10 Under LRCiv 54.2(e)(2) a party moving for an award of attorneys' fees must 11 12 "adequately describe the services rendered so that the reasonableness of the charge can be of New York related to MasterCard's use of Lexcel's software.

13 evaluated." LRCiv 54.2(e)(2) (2005). The rule states that if the descriptions are incomplete or 14 fail to adequately describe the service rendered, the "court may reduce the award accordingly." 15 Id. More specifically, LRCiv 54.2(e)(2) has set forth specific requirements for descriptions of 16 17 18 19 pleadings, motions, and responses. See LRCiv 54.2(e)(2)(A), (e)(2)(B), (e)(2)(C) (2005). For entries containing attorney time spent in participating in phone conferences, "the attorney work with regards to telephone conferences, legal research and the preparation of

20 time entry must identify all participants and the reason for the telephone call." LRCiv 21 54.2(e)(2)(A) (2005). Lexcel objects to the time entries in which MasterCard has failed to 22 23 54.2(e)(2)(A). MasterCard has submitted numerous time entries in which the participants to 24 25 the phone conference have been identified but the reason for the conference has been omitted. comply with the description requirements for phone conferences pursuant to LRCiv

26 There are also a few entries that fail to identify the participants to the phone conference. 27 With regard to descriptions of attorney time spent for legal research, the rule states that

28 the "time entry must identify the specific legal issue researched" and that "time entries simply -11Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 11 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 stating `research' or `legal research' are inadequate and the court may reduce the award 2 accordingly." LRCiv 54.2(e)(2)(B) (2005). MasterCard's attorney time statement reflects 3 4 5 legal research task descriptions do not provide information as to the specific legal issue many time entries that include task descriptions for legal research. However, some of these

6 researched and a couple of time entries just state "Legal Research." Lexcel objects to all of 7 attorney time entries failing to comply with LRCiv 54.2(e)(2)(B). 8 9 10 defense of Lexcel's claims. 11 12 pleading, paper or other document prepared and the activities associated with its preparation." Under LRCiv 54.2(e)(2)(C), a "time entry must identify the MasterCard has also submitted time entries that fail to describe with adequate specificity MasterCard's preparation of various pleadings, motions, and responses filed in

13 LRCiv 54.2(e)(2)(C) (2005). In the example provided in the local rule, 54.2(e)(2)(C) requires 14 that the time entry state what pleading, motion or other document was prepared and that it 15 state any factual investigation or legal research related associated with its preparation. Id. 16 17 18 preparation of a motion, response, or pleading was performed by an attorney without any Lexcel objects to numerous attorney time entries in which MasterCard has simply stated that

19 description of supporting legal research or factual investigation. 20 Finally, Lexcel objects to a number of time entries containing descriptions of tasks

21 performed in connection with the patent infringement suit between Lexcel and MasterCard in 22 23 counsel representing MasterCard in the patent infringement suit, patent searches, 24 25 correspondence with counsel with regards to matters in the patent infringement suit and review New York. These tasks include, but are not limited to, numerous phone conferences with

26 of documents relating to the patent infringement suit in New York. MasterCard is not entitled 27 to the legal fees associated with these tasks since they were not performed in defense of claims 28 in the instant case. Lexcel is not required to pay MasterCard for any time spent on an entirely -12Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 12 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 separate case. 2 3 4 5 Memorandum in Support of Defendants' Motion for an Award of Attorneys' Fees and Related For the Court's convenience, Exhibit 5 has been marked up to Attached as Exhibit 5 is a marked up copy of MasterCard's itemized statement of attorneys' fees, which were included as Exhibits C1, C2 and C3 to MasterCard's

6 Non-Taxable Expenses.

7 identify the time entries containing task descriptions to which Lexcel objects in the following 8 manner: 9 10 legal research descriptions, according LRCiv 54.2(e)(2)(B), have been highlighted in green; all 11 12 time descriptions identifying time spent on motions, pleadings or responses do not meet the all phone conference task description that fail to comply with the specificity

requirements of LRCiv 54.2(e)(2)(A) have been highlighted in the color blue; all inadequate

13 specificity requirements of LRCiv 54.2(e)(2)(C) are highlighted in yellow; and any task 14 performed in connection with the patent infringement suit in New York has been highlighted in 15 pink. In addition, attached as Exhibit 6 is an Excel Spreadsheet that specifically identifies the 16 17 18 time entry that has been highlighted. Exhibit 6 also specifically states the basis or grounds for pages and line numbers associated with each disputed task description within each disputed

19 its objection or dispute with each time entry containing tasks that either violate a provision of 20 LRCiv 54.2(e)(2) or tasks that were performed in defense of the separate patent infringement 21 suit. 22 23 each time entry leaving Lexcel unable to determine how much time was spent on the tasks it is 24 25 specifically disputing. As such, Lexcel has objected to the entire time associated with any time MasterCard did not provide a breakdown of the time devoted to each individual task in

26 entry that includes at least one task that either violates the local rule cited above or that is 27 associated with the patent infringement suit in New York. The Court should adjust the amount 28 of fees disputed to reflect the time spent on the disputed tasks. -13Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 13 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 2 3 4 5

B.

Paralegal Time

Lexcel also objects to $4,456.00 spent by MasterCard for work performed by its paralegals. Many of the paralegal time entries to which Lexcel has specifically objected include time spent by the paralegals on tasks performed for the patent infringement suit in New York.

6 Additionally, there are time entries in which MasterCard provided an inadequate description of 7 the preparation of certain motions, pleadings, and response by its paralegals in violation of 8 LRCiv 54.2(e)(2)(C). There is also a time entry in which a paralegal did some legal research, 9 10 54.2(e)(2)(B). 11 12 Lexcel would like to note that there are a number of time entries beginning in October but the nature of the legal research was not specified and thus, failed to comply with LRCiv

13 2004 in which a paralegal by the initials "PBM" spent time organizing and filing newly received 14 documents. Lexcel has objected to this time because the parties did not exchange documents 15 after the close of discovery, which was August 6, 2004. Thus, any documents received by 16 17 18 19 supplemental discovery or relate to documents for the patent infringement suit. Attached is a marked-up copy of the itemized list of paralegal time entries provided by MasterCard during October 2004 and afterward either should have been sent to Lexcel as

20 MasterCard in support of its Memorandum to its Motion for an Award of Reasonable 21 Attorneys' Fees. See Exhibit 7. Additionally, Exhibit 8 is an Excel spreadsheet identifying the 22 23 for Lexcel's objection. On this spreadsheet, the entries in which time was spent organizing and 24 25 filing newly received documents by the paralegal in October 2004 through the end of August page and line numbers of the disputed paralegal time entries and specifying the basis or ground

26 2005 have been shaded in gray. 27 28 C. Legal Research Expenses

Finally, Lexcel objects to the $3,625.71 in legal research expenses for which

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1 MasterCard seeks reimbursement. The requirements of LRCiv 54.2(e)(2) apply to requests for 2 legal expenses in addition to applying to itemized submission of attorney and paralegal time. 3 4 5 expended and expenses incurred shall be in the format described in this Local Rule." LRCiv Local Rule 54.2(e) states that "unless otherwise ordered, the itemized account of the time

6 54.2(e) (2005). As such, the rule that time entries for legal research should identify the 7 specific legal issue researched does apply to MasterCard's itemized statement of its legal 8 research fees. In the "Description" column of the itemized list of Legal Research Expenses 9 10 Motion for an Award of Reasonable Attorneys' Fees, all of the time entries just state "Legal 11 12 Research" and do not provide any further description of the matter researched or for what case provided by MasterCard as part of Exhibit C3 to its Memorandum in Support of MasterCard's

13 the research was conducted. Because the legal research expense time entries fail to comply 14 with the LRCiv 54.2(e)(2)(B), Lexcel objects to MasterCard's request for the legal research 15 expenses it has submitted. A marked up copy of MasterCard's statement of legal research 16 17 18 19 Conclusion. MasterCard is not entitled to an award of reasonable attorneys' fees and expenses expenses has been attached as Exhibit 9.

20 under the Confidentiality Agreement or under 17 U.S.C. § 505. Furthermore, MasterCard's 21 itemized statement of attorney, paralegal, and legal research fees shows that $305,580.51 of 22 23 the requirements of LRCiv 54.2(e)(2) or include tasks performed for an entirely different suit. 24 25 Accordingly, Lexcel requests that this Court deny MasterCard's Motion for an Award of MasterCard's fees and expenses are associated with time entries that either fail to comply with

26 Reasonable Attorneys' Fees or, in the alternative, reduce any award of reasonable attorneys' 27 fees and expenses to MasterCard by $305,580.81. 28 -15Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 15 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169

1 2 Dated: November 23, 2005 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Of Counsel: STEVEN S. BOYD Texas State Bar No. 24001775 Federal Bar No. 22772 [email protected] NATHAN C. DUNN Texas State Bar No. 24036509 [email protected] LOCKE LIDDELL & SAPP LLP 600 Travis St., Suite 3400 Houston, Texas 77002 Telephone: (713) 226-1200 Facsimile: (713) 223-3717

Respectfully submitted, LOCKE LIDDELL & SAPP LLP By: s/ Michael O. Sutton w/p Nathan C. Dunn MICHAEL O. SUTTON Texas State Bar No. 19535300 Federal Bar No. 416565441 [email protected] LOCKE LIDDELL & SAPP LLP 600 Travis St., Suite 3400 Houston, Texas 77002 Telephone: (713) 226-1200 Facsimile: (713) 223-3717 Attorney for Plaintiff Lexcel Solutions, Inc.

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CERTIFICATE OF SERVICE

Copy of the foregoing was sent via FedEx, return receipt requested, this 23 day of 3 November, 2005 to: 4 VIA FEDEX Sid Leach 5 SNELL & WILMER 6 One Arizona Center 400 E. Van Buren 7 Phoenix, AZ 85004-2202 8 VIA FEDEX Thomas Cummings 9 ARMSTRONG TEASDALE LLP 10 One Metropolitan Square, Suite 2600 St Louis, MO 63102-2740 11 ATTORNEYS FOR DEFENDANTS 12 MASTERCARD INTERNATIONAL, INC. AND 13 MASTERCARD INTERNATIONAL, LLC 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -17Case 2:03-cv-01454-JAT MASTERCARD'S MOTION FOR ATTORNEY'S FEES 17 of 17 Filed 11/23/2005 Page LEXCEL'S OPPOSITION TO Document 169 s/ Nathan C. Dunn Nathan C. Dunn