Free Response in Support of Motion - District Court of Arizona - Arizona

1 Martin W. Schiffmiller KIRSCHSTEIN, OTTINGER, 2 ISRAEL & SCHIFFMILLER, P.C. 489 Fifth Avenue, 17th Floor 3 New York, New York 10017 Telephone: 212) 697-3750 4 James W. Armstrong (No. 009599) 5 SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor 6 Scottsdale, Arizona 85251-3693 Telephone: (480) 425-2600 7 [email protected] 8 Attorneys for Defendant Liz Claiborne, Inc. 9 10 11
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

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12 Lemelson Medical, Education & Research Foundation, Limited Partnership, 13 Plaintiff, 14 v. 15 CompUSA, Inc., et al., 16 Defendants. 17 18 Liz Claiborne, Inc., 19 20 v. 21 Lemelson Medical, Education & Research Foundation, Limited Partnership, 22 Counterdefendant. 23 24 Counterclaimant,

No. CIV'00-0663-PHX-HRH MEMORANDUM IN SUPPORT OF DEFENDANT LIZ CLAIBORNE, INC.'S MOTION FOR AWARD OF ATTORNEYS' FEES

In accordance with Rule 54.2(c)-(d) of the Local Rules of Civil Practice of the

25 United States District Court for the District of Arizona, Defendant Liz Claiborne, Inc. 26 ("Claiborne") hereby submits the following Memorandum and attached documentation in 27 support of its February 17, 2006 Motion for Award of Attorneys' Fees and related non28 taxable expenses which Claiborne was forced to incur in its successful defense of this
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1 longstanding patent infringement case brought by Plaintiff Lemelson Medical, Education & 2 Research Foundation, Limited Partnership ("Lemelson"). As discussed below, this case 3 clearly qualifies as "exceptional" within the meaning of the statute providing for attorneys' 4 fees in patent disputes, 28 U.S.C. § 285, and Claiborne consequently respectfully requests 5 that it be awarded the reasonable total sum of $39,067.53 as a prevailing party. 6 I. 7 8 ELIGIBILITY A. The Judgment

Claiborne seeks an award of attorneys' fees and related non-taxable expenses in

9 connection with the Judgment entered February 6, 2006, granting Lemelson's Motion To 10 Dismiss and dismissing this action in its entirety as to all Defendants. The Court's Order of 11 Dismissal (also entered February 6, 2006) expressly provided that the terminated
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 Defendants, including Claiborne, could proceed with motions for attorneys' fees in 13 accordance with Local Rule 54.2. 14 15 B. The Applicable Statutory Authority

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Section 285 of Title 35, United States Code, provides that, with respect to patent

16 infringement actions: "The court in exceptional cases may award reasonable attorney fees 17 to the prevailing party." The Court having dismissed all of Lemelson's patent infringement 18 claims with prejudice, Claiborne and the other Defendants are clearly the prevailing parties 19 in this action. See Interstate Forging Indus. v. Federal Forge, Inc., 1998 U.S. Dist. LEXIS 20 8760, at *7-*8 (W. Dist. Mich. June 8, 1999). 21 22 C. The Nature of the Case

This lawsuit is one of five simultaneously filed in the District of Arizona by

23 Lemelson six years ago, on April 4, 2000. As amended, Lemelson's Complaints accused 24 hundreds of companies of infringing various patents issued to the late Jerome H. Lemelson 25 in the early 1990s, for which Lemelson claimed the benefit of the filing dates of two patent 26 applications submitted by Mr. Lemelson to the U.S. Patent and Trademark office in 1954 27 and 1956. According to Lemelson, those patents purportedly encompassed bar code

28 scanners and similar "machine vision" equipment like that developed and sold by
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1 manufacturers such as Symbol Technologies, Inc. ("Symbol") and Cognex Corporation 2 ("Cognex"). Rather than sue Symbol, Cognex or any other manufacturers, however,

3 Lemelson's lawsuits in Arizona targeted those manufacturers' customers, like Claiborne, 4 which had no role in either making or designing the scanning technology at issue. 5 Accordingly, Lemelson's claims of infringement in the instant lawsuit were based merely 6 upon the Defendants' use of bar code scanners and/or similar systems in the routine course 7 of operating their unrelated businesses. 8 Fortunately, however, prior to the commencement of the Arizona lawsuits, and in

9 response to letters sent by Lemelson to their customers alleging infringement, Symbol and 10 Cognex filed their own actions against Lemelson in the District of Nevada, seeking a 11 declaratory judgment that, inter alia, Lemelson's patents were invalid or unenforceable
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 under the equitable doctrine of prosecution laches. See Symbol Technologies, Inc. v. 13 Lemelson Med., Educ. & Research Found., Ltd. P'ship, No. CV-N-99-00397 (D. Nev. filed 14 July 21 1999); Cognex Corp. v. Lemelson Med., Educ. & Research Found., Ltd. P'ship, No. 15 CV-N-99-00533 (D. Nev. filed Sept. 27, 1999). In light of the long prior pendency of these 16 manufacturer declaratory judgment actions, which were later consolidated before the
1 17 Nevada District Court on March 21, 2000, Claiborne and numerous other Defendants

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18 moved to stay the instant lawsuit in October 2000, pending a final determination of the 19 validity of the same "bar code" and "machine vision" patents at issue here in the Nevada
2 20 litigation.

21 22 23 24 See Symbol Technologies, Inc. v. Lemelson Med., Educ. & Research Found., Ltd. P'ship, 301 F. Supp.2d 1147, 1150 (D. Nev. 2004).
2 1

Prior to submitting its stay motion Joinder on October 27, 2000, Claiborne filed an 25 Answer on October 2, 2005, denying any liability on the infringement claims asserted in Lemelson's First Amended Complaint, together with a Counterclaim seeking declaratory 26 and injunctive relief based upon the invalidity and unenforceability of Lemelson's patents. The Court later permitted Lemelson to amend its Complaint two more times, without 27 requiring the Defendants to submit additional answers. Lemelson's Third Amended Complaint was filed on August 30, 2002. Both Claiborne's and Lemelson's pleadings also 28 alleged that attorneys' fees were awardable under 35 U.S.C. § 285.
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1

In its November 6, 2000 Response to the Defendants' stay motions, Lemelson

2 conceded that it made "little sense, as a matter of judicial administration or cost to the 3 parties, to litigate parties, to litigate this case in parallel with the other actions." 4 Accordingly, on January 5, 2001, the Court ordered that "this action is stayed pending the 5 entry of a final non-appealable judgment in the Symbol/Cognex litigation currently pending 6 in the United States District Court for the District of Nevada." The Court further ordered 7 that the parties should notify it when such a judgment was entered, at which time further 8 orders would be made. 9 Meanwhile, following extensive pretrial proceedings and an interlocutory appeal to

10 the Federal Circuit, the consolidated Symbol/Cognex litigation was tried before the Nevada 11 District Court from November 18, 2002 through January 17, 2003. 301 F.Supp. 2d at 1150.
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 After five and one-half months of additional post-trial briefing, the Nevada court entered its 13 final judgment on January 23, 2004, concluding (among other holdings) that Lemelson's 14 alleged patent rights had been forfeited under the equitable doctrine of prosecution laches. 15 301 F.Supp. 2d at 1154-57. Thus, as explained by the district court: 16 17 18 19 20 21 22 23 24 Symbol/Cognex, 301 F.Supp.2d at 1154. 25 In applying these standards to the evidence introduced at trial, the Symbol/Cognex 26 court found that: 27 28 Lemelson's 18 to 39 year delay in filing and prosecuting the asserted claims under the fourteen patents-in-suit after they were first purportedly disclosed in the 1954 and 1956 applications was unreasonable and unjustified and that
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The defense of prosecution laches was first recognized in the patent context nearly 150 years ago in Kendall v. Winsor, 62 U.S. 322, 21 How. 322, 16 L.Ed. 165 (1858). In Kendall, the Supreme Court held that a person "may forfeit his rights as an inventor by a willful or negligent postponement of his claims, or by an attempt to withhold the benefits of his improvement from the public until a similar or the same improvement should have been made and introduced to others." Id., 62 U.S. at 329. Sixty-five years later, in Woodbridge v. United States, 263 U.S. 50, 44 S.Ct. 45, 68 L.Ed. 159 (1923), and Webster Electric Co. v. Splitdorf Electrical Co., 264 U.S. 463, 44 S.Ct. 342, 68 L.Ed. 792 (1922), the Supreme Court applied the defense of prosecution laches to prevent the applicant from deliberately delaying the issuance of a patent solely to increase its commercial value, and to prevent a patent applicant from unreasonably postponing the time when the public could enjoy the free use of an invention.

1 2 3 4

the doctrine of prosecution laches renders the asserted claims unenforceable against Symbol and Cognex. The first patent based on Lemelson's 1954 application issued in 1962, and the first patent based on Lemelson's 1956 application issued in 1963. From that point forward, the public was entitled to assume that what was not claimed was dedicated to the public.

5 301 F.Supp.2d at 1155-56 (citations omitted) (emphasis added). 6 The Nevada District Court further found that the evidence "strongly supported" the

7 following combination of factors asserted by the plaintiffs in support of their prosecution 8 laches claim: 9 10 11
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

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(1) Mr. Lemelson's original disclosures were made public in the 1960's and those patents expired by the 1980's; (2) before the asserted claims were filed numerous articles and patents describing machine vision and bar code scanning were published, and commercial products were developed and marketed; (3) Mr. Lemelson was aware of the developments in the machine vision and bar code fields, and yet he still waited; (4) Mr. Lemelson systematically extended the pendency of his applications by sitting on his rights, and sequentially filing one application at a time so that he could maintain co-pendency while waiting for viable commercial systems to be designed and marketed; and (5) Mr. Lemelson (and his new counsel [including those who filed the Arizona lawsuits]) then drafted and prosecuted hundreds of new claims in the late 1980's and 1990's specifically worded to cover those commercial systems.

17 301 F.Supp.2d at 1156 (emphasis added). The Nevada court also noted that of the five 18 million patents issued in the United States between 1914 and 2001, Lemelson patents held 19 the top thirteen positions for the longest prosecutions, and that "[s]ome of the claims 20 asserted by Lemelson in this case will not expire until 2011, fifty-five years after the 1956 21 application was filed and forty-eight years after the application issued as a patent." Id. 22 Moreover, Lemelson's "culpable neglect" in ignoring "the duty to claim his invention 23 promptly" resulted in a "prejudicial effect ... suffered by the public, and privately by 24 Symbol and Cognex and others, which were denied the ability to distinguish that which is 25 claimed by Lemelson from that which is not." Id. Accordingly, the court aptly concluded 26 that "[i]f the defense of prosecution laches does not apply under the totality of 27 circumstances presented here, the Court can envision very few circumstances under which 28 it would." Id.
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Prosecution laches acts to protect the public by forcing patentees to file patent claims in a timely manner. Beyond the extraordinary delay presented here, the record also shows that Lemelson effectively extended his patent monopoly by maintaining co-pendency for nearly forty years through continuation practice, and added new claims to cover commercial inventions in the marketplace years after his original patents had expired. This is precisely the type of prejudice to the public which the equitable doctrine of prosecution laches is designed to guard against.

6 Symbol/Cognex, 301 F.Supp.2d at 1157 (citations omitted). 7 Lemelson subsequently appealed the district court's decision to the Federal Circuit,

8 which in an opinion issued on September 5, 2005 affirmed the holding that Lemelson's 9 asserted patents were unenforceable under the prosecution laches doctrine. Symbol

10 Technologies, Inc. v. Lemelson Med., Educ. & Research Found., Ltd. P'ship, 422 F.3d 1378 11 (Fed. Cir. 2005).3 Specifically, after first explaining that because there may be several
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12 "legitimate" reasons for refiling a patent application, the doctrine should be used 13 "sparingly" and "only in egregious cases of misuse of the statutory patent system," the 14 Federal Circuit found that Lemelson's conduct met this strict standard: 15 16 17 18 19 20 21 22 23 24 25 The district court also held in the alternative that the plaintiffs' machine vision and 26 bar code scanning products did not infringe Lemelson's patent claims, and that those claims were otherwise invalid for lack of a "written description" and enablement under 35 U.S.C. 27 § 112. These additional holdings were not addressed by the Federal Circuit in Lemelson's appeal, given the appellate court's finding that the district judge did not abuse his discretion 28 in applying the prosecution laches defense. Symbol/Cognex, 422 F.3d at 1386.
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[R]efiling an application solely containing previously-allowed claims for the business purpose of delaying their issuance can be considered an abuse of the patent system. * * * In particular, multiple examples of repetitive refilings that demonstrate a pattern of unjustifiably delayed prosecution may be held to constitute laches. Taken singly, the delay in the prosecution on any one particular application will surely not appear to merit relief by the courts in equity. On the other hand, an examination of the totality of the circumstances, including the prosecution history of all of a series of related patents and overall delay in issuing claims, may trigger laches. The district court here heard considerable evidence that that was what occurred in this case. * * * The court also found that Lemelson had engaged in "culpable neglect" during the prosecution of these applications and it recognized the adverse effect on businesses that were unable to determine what was patented from what was not patented. * * * Under those circumstances, we can hardly conclude that the court abused its discretion in holding the involved patents unenforceable ... . The court thoroughly examined the facts and the equities, and it exercised its discretion reasonably.

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P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

422 F.3d at 1385-86 (citations omitted) (emphasis added).4 D. Legal Authority Governing Standard of Eligibility for Attorneys' Fees

The Court of Appeals for the Federal Circuit, which has exclusive jurisdiction over all appeals from patent infringement cases under 28 U.S.C. § 1295, has consistently held that fees may be awarded to prevailing accused infringers in patent cases, like Claiborne, when the case may be deemed "exceptional" under § 285. Such "exceptional cases" include those involving bad faith. Mathis v. Spears, 857 F.2d 749 (Fed. Cir. 1988). In Eltech Systems Corp. v. PPG Industries, Inc., 903 F.2d 805, 811 (Fed. Cir. 1990), the Federal Circuit held that "there is and should be no difference in the standards applicable to patentees and infringers who engage in bad faith litigation" for purposes of establishing the prevailing party's entitlement to an award of attorneys' fees. Thus, an award of fees against a patentee who prosecutes a bad faith or poorly grounded infringement action is as appropriate as an award against an infringer who acted willfully and raises non-meritorious defenses to an infringement claim. II. ENTITLEMENT The courts have recognized that circumstances other than inequitable conduct (e.g., fraudulent misrepresentation) in the procurement of a patent may support a finding that a case is "exceptional" for purposes of a fee award to a prevailing patent defendant. Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 455 (Fed. Cir. 1985) ("Other exceptional circumstances include ... misconduct during litigation, vexatious or unjustified litigation, or a frivolous suit."); Hughes v. Novi American, Inc., 724 F.2d 122 (Fed. Cir. 1984); see generally DONALD S. CHISUM, CHISUM ON PATENTS § 20.03[c][iii][B] (1997). A patent owner who is "manifestly unreasonable in assessing infringement, while

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Later, on panel rehearing, the Federal Circuit amended its opinion to extend the district court's laches holding of enforceability of the 76 patent claims asserted by 27 Lemelson to all of the claims contained in the 14 patents at issue. Symbol Technologies, Inc. v. Lemelson Med., Educ. & Research Found., Ltd. P'ship, 429 F.3d 1051 (Fed. Cir. 28 2005).
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1 continuing to assert infringement in court, ... whether grounded in or denominated wrongful 2 intent, recklessness or gross negligence," may be deemed to have brought a baseless suit or 3 engaged in bad faith litigation, justifying a fee award under § 285. Eltech Systems, 903 4 F.2d at 811. Indeed, as observed by the Federal Circuit in View Engineering Inc. v. Robotic 5 Vision Systems Inc., 208 F.3d 981, 986 (Fed. Cir. 2000), "[a] patent suit can be an 6 expensive proposition. Defending against baseless claims of infringement subjects the 7 alleged infringer to undue costs ... ." 8 Here, as discussed above, this action was one of five simultaneously filed by

9 Lemelson against no less than several hundred defendants, including many of the largest 10 industrial companies and retail firms in the United States. These suits alleged that activities 11 which these companies had engaged in routinely for years and even decades, such as the
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 universal use of bar code scanners and other "machine vision" equipment infringed 13 between 8 and 16 of Lemelson's still-active United States patents. Obviously, because the 14 activities, processes and equipment uses accused by Lemelson of infringement are 15 prevalent throughout the production, quality control, warehousing, shipping, selling, and 16 other routine operations of Claiborne and the other defendants, the potential damages if the 17 defendants were found liable for infringing Lemelson's patents were enormous. 18 The only reason that Lemelson was able to assert that the practice of technology

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19 which had been in the marketplace for decades prior to the filing of this action in April 20 2000 could still infringe Lemelson's unexpired patents was because of the deliberate, 21 systematic delaying by Lemelson or its predecessors of the issuance of its patents for as 22 long as 18 to 39 years from the filing thereof. Moreover, during these deliberately

23 extended patent prosecutions, Lemelson amended the claims of the original 1954 and 1956 24 patent applications to capture within their scope newly developed technologies such as 25 laser bar code scanning. 26 It was precisely Lemelson's policy of stretching out patent prosecutions so that the

27 ultimately issued patents would extend much farther into the future and capture more 28 valuable technology within their scope that led to the invalidation of all the suit patents by
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1 the trial court in the Symbol/Cognex case, affirmed by the Federal Circuit. Thus, the 2 Lemelson patent portfolio that enabled it to launch a wide-ranging assault on a good 3 portion of American industry, seeking to reap fantastic financial rewards in royalties for the 4 practice of inventions never actually made by Jerome Lemelson (the named inventor) was 5 grounded in inequitable conduct and unfair dealing from the outset. This is why the courts 6 did not hesitate to apply the equitable prosecution laches doctrine to invalidate every claim 7 of all 16 Lemelson patents in suit. 8 Not only were Lemelson's actions against Claiborne and the hundreds of other

9 defendants based substantively on patents that should either never have issued or should 10 have expired decades earlier, but the manner in which Lemelson proceeded to seek 11 enforcement is also a proximate cause of the legal expenses incurred by Claiborne for
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 which it now seeks reimbursement. Lemelson was already engaged in litigation in Nevada 13 on the same patents at issue in this action with two of the largest manufacturers of bar code 14 scanning equipment, and those accused infringers had already raised the issue of 15 prosecution laches, before Lemelson brought its "mass tort" actions in this Court. Rather 16 than litigating the validity and infringement issues against the parties responsible for 17 producing much of the allegedly infringing devices until a resolution of those issues was 18 reached, Lemelson proceeded to sue hundreds of "innocent bystanders" like Claiborne and 19 claim that their longstanding use of "machine vision" equipment and methods infringed 20 still-active patents. The defendants in this Court were faced with the potential of

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21 astronomical damages or royalties if Lemelson prevailed, and many of them settled out by 22 taking royalty-bearing licenses rather than risking being held infringers. Claiborne and the 23 remaining defendants refused to do so, however, and incurred substantial expenses in 24 resisting Lemelson's poorly grounded and unfair lawsuits. 25 All of these circumstances overwhelmingly support Claiborne's entitlement to an

26 award of its attorneys' fees and related non-taxable expenses under 35 U.S.C. § 285. 27 Indeed, even Lemelson itself asserted in its Amended Complaints that this litigation met the 28 "exceptional case" standard of Section 285, and the Nevada District Court in the parallel
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1 Symbol/Cognex proceedings likewise convincingly reasoned that: "To characterize this 2 case as 'exceptional' in terms of the exhaustive history of the Lemelson patents-in-suit and 3 the equally exhaustive record adduced at trial, including pre- and post-trial briefing, would
5 4 be an understatement." 301 F.Supp. 2d at 1167 (emphasis added).

5 III. 6

REASONABLENESS OF REQUESTED AWARD As set forth in the Task-Based Itemized Statements of Attorneys' Fees and Related

7 Non-Taxable Expenses (Exhibits D and F hereto), Claiborne seeks a total award of 8 $39,067.53 for the amounts it has been charged by the two law firms which successfully 9 represented it throughout the six-year duration of this litigation. For the reasons discussed 10 below and in the attached Affidavit and Declaration by Claiborne's moving counsel 11 (Exhibits C and E hereto), the award requested by Claiborne is entirely reasonable.
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 13

A.

The Time and Labor Required by Counsel

The amount of time for which Claiborne seeks an award of attorneys' fees totals

14 129.90 hours. 43.00 hours were expended by Claiborne's lead patent counsel in New York, 15 Kirschstein, Ottinger, Isreal & Schiffmiller, P.C., and 86.90 hours were expended by 16 Claiborne's local Arizona counsel, Sacks Tierney P.A. To avoid duplication of effort, 17 Sacks Tierney and the Kirschstein, Ottinger firm carefully coordinated and divided the 18 tasks each would perform on Claiborne's behalf in defending the patent infringement 19 claims alleged by Lemelson. Thus, for example, Kirschstein, Ottinger was almost entirely 20 responsible for preparing Claiborne's detailed eight-page Answer to Lemelson's Complaint, 21 Affirmative Defenses, and Counterclaim that was filed on October 2, 2005, while Sacks 22 Tierney took the lead in drafting all of the various motion papers submitted by Claiborne 23 during this lawsuit, with research and drafting assistance from Kirschstein, Ottinger on 24 pertinent issues of patent law. This motion work included drafting Claiborne's Joinder in 25 26 Only Lemelson requested attorneys' fees under Section 285 in the Symbol/Cognex 27 case (the plaintiff manufacturers did not), so no fee award was made (even though the case was found "exceptional") because Lemelson was not the prevailing party. 301 F.Supp. 2d 28 at 1167.
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1 the successful motions to stay this case pending a final decision in Symbol/Cognex, 2 preparing Claiborne's Response to Lemelson's Motion to Dismiss this case following the 3 Federal Circuit's final ruling in Symbol/Cognex, and drafting Claiborne's Motion for Award
6 4 of Attorneys' Fees and related papers.

5

Sacks Tierney also expended necessary time in advising Kirschstein, Ottinger on the

6 Arizona District Court's Local Rules of practice and procedure, and in monitoring and 7 reviewing the hundreds of pleadings, motions, orders and other filings made in this lawsuit 8 over the past six years. Kirschstein, Ottinger likewise expended additional time in

9 monitoring the progress of the Symbol/Cognex litigation, in reviewing the patents at issue 10 in this case, and in preparing its own supporting fee documentation. 11
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

It must also be emphasized that the joint strategy of the moving Defendants

12 (including Claiborne) to stay the instant lawsuit until the validity of Lemelson's patents was 13 determined in the Symbol/Cognex proceedings saved substantial time, effort and attorneys' 14 fees that would otherwise have been wasted if the parties had been forced to litigate the 15 "merits" of Lemelson's infringement allegations. The time and labor expended by

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16 Claiborne's attorneys were therefore both reasonable and necessary to Claiborne's 17 successful defense of this case. 18 19 B. The Novelty and Difficulty of the Questions Presented

Because of the successful stay strategy employed by Claiborne and the remaining

20 Defendants, there were no particularly "novel" or "difficult" questions that needed to be 21 resolved in this case. This strategy, however, greatly reduced the amount of attorney time 22 incurred by Claiborne, as reflected in the relatively small sum it seeks to recover. 23 Moreover, although the "merits" of Lemelson's patent infringement claims were never 24 reached, Claiborne's efficient motion strategy required it to incur attorney time researching 25 26 "In statutory fee cases, federal courts, including [the Ninth Circuit], have uniformly 27 held that time spent in establishing the entitlement to and amount of the fee is compensable." In re Nucorp Energy, Inc., 764 F.2d 655, 659-60 (9th Cir. 1985). 28
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1 and drafting various issues concerning the stay, the dismissal of this case under Rule 2 41(a)(2) of the Federal Rules of Civil Procedure, and Claiborne's entitlement to a fee award 3 under 35 U.S.C. § 285. 4 5 C. The Skill Requisite to Perform the Legal Service Properly

The attorneys retained by Claiborne in its defense of this action have significant

6 litigation, intellectual property and patent law experience which was instrumental in 7 obtaining the dismissal of Lemelson's claims. Indeed, a better result could not have been 8 achieved. 9 10 11
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

D.

A Preclusion of Other Employment by Counsel Because of the Acceptance of the Action

The agreement of Sacks Tierney and Kirschstein, Ottinger to work on this lawsuit

12 clearly required them to devote time that could have been spent on other matters where 13 there was a more legitimate dispute. Moreover, this lawsuit would not have been necessary 14 at all if Lemelson had simply waited until a final outcome was reached in the 15 Symbol/Cognex litigation before targeting the Defendants here. 16 17 E. The Customary Fee Charged in Matters of the Type Involved

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As explained in the attached Affidavit of James W. Armstrong and Declaration of

18 Martin W. Schiffmiller, the fees charged by their respective firms were consistent with or 19 below those customarily charged for matters of this type in the Phoenix and New York 20 legal communities. 21 22 23 As discussed in Mr. Schiffmiller's Declaration, Claiborne agreed to compensate F. Whether the Fee Contracted Between the Attorney and the Client is Fixed or Contingent

24 Kirschstein, Ottinger on a fixed hourly rate basis for its work on this case. As explained in 25 Mr. Armstrong's Affidavit, Claiborne also agreed to compensate Sacks Tierney on a fixed 26 hourly rate basis, subject to adjustment under the factors specified in E.R. 1.5 of the 27 Arizona Rules of Professional Conduct. 28
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1 2 3 G. Any Time Limitations Imposed by the Client or the Circumstances

The defense of this case did not involve strict time limitations beyond those set forth

4 in the Federal Rules of Civil Procedure and the Local Rules of this Court with respect to 5 the filing of pleadings and motion papers. The sheer length of this case, however, and the 6 need to monitor all intervening events, did increase the amount of attorneys' fees incurred. 7 8 9 In its Amended Complaint, Lemelson accused each of the Defendants in this case H. The Amount of Money, or the Value of the Rights, Involved, and the Results Obtained

10 with having willfully infringed over the preceding six years (and continuing to infringe) a 11 total of seven patents purportedly encompassing bar code scanners and similar "machine
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12 vision" equipment used by the Defendants in the normal course of their businesses. In 13 addition to injunctive relief, Lemelson's Complaint further sought an award of treble the 14 damages purportedly caused by the Defendants' "deliberate" infringements, as well as the 15 recovery of Lemelson's attorneys' fees under 35 U.S.C. § 285. Although Lemelson's

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16 Complaint did not specify the amount of treble damages it was seeking, given the massive 17 scope of the infringements it alleged, the potential liability was clearly in the millions of 18 dollars, and the injunction Lemelson sought would have seriously jeopardized Claiborne's 19 business operations. The dismissal of Lemelson's lawsuit in its entirety therefore

20 represented the best possible result for Claiborne. 21 22 I. The Experience, Reputation and Ability of Counsel

Sacks Tierney is a respected law firm in the state of Arizona and has a well-deserved

23 reputation for quality work, client service, and reasonable fees. The Kirschstein, Ottinger 24 firm has a similarly excellent reputation in the state of New York, where it is particularly 25 well known for its work on patent matters. Both firms have a great deal of experience in 26 civil litigation in both state and federal courts. The specific abilities and experience of each 27 individual lawyer who worked on this case are more fully discussed in the attached 28 Affidavit of Mr. Armstrong and Declaration of Mr. Schiffmiller.
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J.

The "Undesirability" of the Case

From counsels' perspective, undertaking the defense of Claiborne in this case was

3 not "undesirable," although, as mentioned above, this entire litigation could have been 4 avoided if Lemelson had waited until the conclusion of the Symbol/Cognex lawsuit before 5 deciding whether to file suit here. 6 7 8 Kirschstein, Ottinger has represented Claiborne in intellectual property matters since K. The Nature and Length of the Professional Relationship Between the Attorney and the Client

9 1979. That firm handles many areas of Claiborne's patent and trademark work, and has 10 represented Claiborne both as a plaintiff and a defendant in a number of past litigations in 11 the federal courts. Sacks Tierney was hired as local counsel for Claiborne in this matter on
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 the recommendation of Kirschstein, Ottinger. Sacks Tierney had no prior relationship with 13 Claiborne. 14 15 L. Awards in Similar Actions

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Claiborne believes that the amount it seeks herein is commensurate with fees

16 awarded in similar types of circumstances. 17 18 M. Other Matters Deemed Appropriate under the Circumstances

In addition to the successful stay strategy adopted by Claiborne, a substantial

19 amount of attorney time was saved through Kirschstein, Ottinger's and Sacks Tierney's 20 defense of another company (Del Laboratories, Inc.) in one of the other four parallel 21 lawsuits filed by Lemelson in the District of Arizona, Lemelson Med., Educ. & Research 22 Found., Ltd. P'ship v. CompUSA, Inc., No. CIV '00-0661 PHX HRH. Because both cases 23 proceeded on nearly simultaneous tracks with the same outcomes, the attorneys' fees 24 charged by Kirschstein, Ottinger and Sacks Tierney could be and were nearly equally 25 divided and shared between Claiborne and Del Laboratories, greatly reducing the fees 26 billed to each client. 27 28
Case 2:00-cv-00663-HRH Document 750 14 Filed 04/07/2006 Page 14 of 26

1 2 IV. 3 CONCLUSION For all of the reasons discussed above, Claiborne asks that it be awarded the full

4 amount of attorneys' fees and related non-taxable costs itemized on Exhibits D and F 5 hereto. Rather than await the outcome of the Symbol/Cognex litigation. Lemelson

6 recklessly and in bad faith chose to file this baseless, far-flung lawsuit against Claiborne 7 and the other 134 named Defendants hoping to force them into settlements rather than incur 8 the extraordinary expense and risk of litigating the "merits" of Lemelson's patent 9 infringement claims, which (as found by the Symbol/Cognex courts) were built upon its 10 systematic abuses and extensions of the patent registration process. Such conduct clearly 11 renders this case "exceptional" under 35 U.S.C. § 285, justifying the compensation of
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12 Claiborne for the legal expenses it was forced to bear in successfully defeating Lemelson's 13 Draconian claims for damages and injunctive relief. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case 2:00-cv-00663-HRH Document 750 Filed 04/07/2006 Page 15 of 26

SACKS TIERNEY

RESPECTFULLY SUBMITTED this 7th day of April, 2006. SACKS TIERNEY P.A.

By: s/ James W. Armstrong Attorneys for Defendant Liz Claiborne, Inc.

1 2

CERTIFICATE OF SERVICE

I hereby certify that on April 7th, 2006, a complete, duplicate copy of this document 3 was forwarded directly to Judge Holland by Priority Mail, at the following address: 4 Judge H. Russell Holland 5 United States District Court 222 West 7th Avenue, Unit 54 6 Anchorage, Alaska 99513 7 8 I further certify that on April 7th, 2006, I electronically transmitted the attached 9 document to the Clerk's Office using the CM/ECF System for filing and transmittal of a 10 Notice of Electronic Filing to the following CMECF registrants: 11 Louis J. Hoffman, Esq. Peter C. Warner, Esq. 12 Victoria Gruver Curtin, Esq. 13 Steven G. Lisa, Esq. 14614 North Kierland Blvd., Suite 300 14 Scottsdale, Arizona 85254 15 Email: [email protected] [email protected] 16 [email protected] [email protected] 17 Attorneys for Plaintiff 18 Jennifer P. Nore, Esq. 19 Michael R. Ross, Esq. 20 MEYER HENDRICKS & BIVENS, P.A. P. O. Box 2199 21 Phoenix, Arizona 85001 22 Email: [email protected] [email protected] 23 Attorneys for Defendant American Retail Group, Inc. 24 Richard A. Halloran, Esq. 25 Lewis and Roca LLP 40 North Central Avenue 26 Phoenix, AZ 85004-4429 27 Email: [email protected] Attorneys for Defendant Avnet 28
Case 2:00-cv-00663-HRH Document 750 16 Filed 04/07/2006 Page 16 of 26

s/ James W. Armstrong

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

1 Michael A. Beale, Esq. John A. Micheaels, Esq. 2 Beale & Micheaels, P.C. 3 1440 East Missouri Avenue, Suite C-150 Phoenix, Arizona 85014 4 Email: [email protected] [email protected] 5 Attorneys or Defendants Ann Taylor, Inc. 6 Cheryl Lee Johnson, Esq. 7 Squire Sanders & Dempsey, L.L.P. 8 801 South Figueroa Street, 14th Floor Los Angeles, California 90017-5554 9 Email: [email protected] 10 Attorneys for Defendant Bax Global, Inc. 11 Donald A. Wall, Esq. Mark A. Nadeau, Esq. 12 Squire Sanders & Dempsey, LLP 13 Two Renaissance Square 40 North Central Avenue, Suite 2700 14 Phoenix, Arizona 85004-444 1 15 Email: [email protected] [email protected] Attorneys for Defendants Arrow Electronics and BAX Global, Inc. 16 Douglas W. Seitz, Esq. 17 Timothy J. Casey, Esq. 18 Jennifer H. Dioguardi, Esq. Laura Jean Zeman, Esq. 19 Michael K. Kelly, Esq. 20 Bradley W. Petersen, Esq. Snell & Wilmer L.L.P. 21 One Arizona Center 22 400 East Van Buren Phoenix, AZ 85004-2202 23 Email: [email protected] [email protected] 24 [email protected] [email protected] 25 [email protected] 26 [email protected] 27 Attorneys for Defendants Best Buy, Ingram Industries, Micro Warehouse, Inc., Nash-Finch, and Target 28
Case 2:00-cv-00663-HRH Document 750 17 Filed 04/07/2006 Page 17 of 26

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

1 Paul E. Burns, Esq. 2 Steptoe & Johnson, LLP 3 Collier Center 201 East Washington, Suite 1600 4 Phoenix, AZ 85004-2382 5 Email: [email protected] Attorneys for Defendant Consolidated Stores 6 Robert R. Brunelli, Esq. 7 Sheridan Ross P.C. 8 1560 Broadway, Suite 1200 Denver, Colorado 80202 9 Email: [email protected] 10 Attorneys for Defendant Corporate Express, Inc. 11 Barry R. Sanders, Esq. Michael S. Rubin, Esq. 12 Mariscal, Weeks, McIntyre & Friedlander 13 2901 North Central Avenue, Suite 200 Phoenix, Arizona 85012 14 Email: barry@sanders ,mwmf.com michael@rubin mwmf.com 15 Attorneys for Defendants Corporate Express, Inc., 16 7-Eleven, Inc., Smart & Final, Inc. 17 Jonathan M. James, Esq. 18 Perkins Coie Brown & Bain PA P.O. Box 400 19 Phoenix, AZ 85001-0400 20 Email: [email protected] Attorneys for Defendant Genuine Parts Company 21 22 Brett L. Dunkelman, Esq. Osborn Maledon, PA 23 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 24 Email: [email protected] 25 Attorneys for Defendants CompUSA, Rexel, Systemax, The Gap, Neiman Marcus Group, and Zale 26 27 28
Case 2:00-cv-00663-HRH Document 750 18 Filed 04/07/2006 Page 18 of 26

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

1 Peter J. Brann, Esq. Brann & Isaacson, L.L.P. 2 P. O. Box 3070 3 Lewiston, Maine 04243-3070 Email: [email protected] 4 Attorneys for Defendants L.L. Bean, Inc. and Talbots, Inc. Ray K. Harris, Esq. 6 Fennemore Craig P.C. 3003 North Central Avenue, Suite 2600 7 Phoenix, AZ 85012-2913 8 Email: [email protected] Attorneys for Defendants Haworth, Inc., L.L. Bean, Inc., and Talbots, Inc. 9 10 Benjamin C. Thomas, Esq. Susan Elizabeth Irwin, Esq. 11 Thomas & Elardo, P.C. 2700 North Central Avenue, Suite 1500 12 Phoenix, Arizona 85004 13 Email: [email protected] [email protected] 14 Attorneys for Defendant Walmart 15 16 17 I further certify that on April 7th, 2006, I served the attached document by U.S. mail, postage prepaid, on the following, who are not registered participants of the CM/ECF 19 System: 20 18 21 Andrew Abraham 22 Burch & Cracchiolo PA PO Box 16882 23 Phoenix, AZ 85011-6882 24 Hugh A Abrams 25 Sidley Austin Brown & Wood LLP Bank 1 Plaza 26 10 S Dearborn St 27 Chicago, IL 60603 28
Case 2:00-cv-00663-HRH Document 750 19 Filed 04/07/2006 Page 19 of 26

5

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

s/ James W. Armstrong

1 Robert E B Allen Mariscal Weeks McIntyre & Friedlander PA 2 2901 N Central Ave 3 Ste 200 Phoenix, AZ 85012-2705 4 5 Larry C Boyd Ingram Micro Inc 6 1600 E St Andrew Pl Santa Ana, CA 92705 7 8 J Bennett Clark Senniger Powers Leavitt & RoeClaiborne 9 1 Metropolitan Sq 10 16th Floor St Louis, MO 63102 11 Kevin B Collins 12 Venable Baetjer Howard & Civiletti LLP 13 1201 New York Ave NW Ste 1000 14 Washington, DC 20005-3917 15 Jennifer E Cook 16 Senniger Powers Leavitt & RoeClaiborne 1 Metropolitan Sq 17 16th Floor 18 St Louis, MO 63102 19 William D Coston 20 Venable Baetjer Howard & Civiletti LLP 1201 New York Ave NW 21 Ste 1000 22 Washington, DC 20005-3917 23 John H Cotton John H Cotton & Associates Ltd 24 2300 W Sahara 25 Ste 420 Las Vegas, NV 89102 26 27 28
Case 2:00-cv-00663-HRH Document 750 20 Filed 04/07/2006 Page 20 of 26

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

1 Rita Coyle DeMeules Robins Kaplan Miller & Ciresi LLP 2 2800 LaSalle Plaza 3 800 LaSalle Ave Minneapolis, MN 55402-2015 4 5 David W Denenberg Gibbons Claiborne Deo Dolan Griffinger & Vecchione 6 1 Pennsylvania Plaza 37th Fl 7 New York, NY 10119 8 Martin I Eisenstein 9 Brann & Isaacson LLP 10 PO Box 3070 Lewiston, ME 04243-3070 11 Albert E Fey 12 Fish & Neave 13 1251 Ave of the Americas New York, NY 10020 14 15 Mark A Flagel Latham & Watkins 16 633 W 5th St Ste 4000 17 Los Angeles, CA 90071-2007 18 Lee A Freeman 19 Freeman Freeman & Salzman PC 20 401 N Michigan Ave Ste 3200 21 Chicago, IL 60611 22 John N Gallo 23 Sidley Austin Brown & Wood LLP Bank 1 Plaza 24 10 S Dearborn St 25 Chicago, IL 60603 26 27 28
Case 2:00-cv-00663-HRH Document 750 21 Filed 04/07/2006 Page 21 of 26

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

1 Scott H Gingold Latham & Watkins 2 5800 Sears Tower 3 233 S Wacker Dr Chicago, IL 60606 4 5 Jennifer P Goetsch Marshall O'Toole Gerstein Murray & Borun 6 233 S Wacker Dr Ste 6300 7 Chicago, IL 60606 8 Thomas O Gorman 9 Porter Wright Morris & Arthur LLP 10 1919 Pennsylvania Ave NW Ste 500 11 Washington, DC 20006
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12

SACKS TIERNEY

George Gottlieb 13 Gottlieb Rackman & Reisman PC 270 Madison Ave 14 8th Floor 15 New York, NY 10016 16 Lee F Grossman Marshall O'Toole Gerstein Murray & Borun 17 233 S Wacker Dr 18 Ste 6300 Chicago, IL 60606 19 20 Herbert J Hammond Thompson & Knight LLP 21 1700 Pacific Ave 22 Ste 3300 Dallas, TX 75201 23 John E Hedstrom 24 Porter Wright Morris & Arthur LLP 25 1919 Pennsylvania Ave NW Ste 500 26 Washington, DC 20006 27 28
Case 2:00-cv-00663-HRH Document 750 22 Filed 04/07/2006 Page 22 of 26

1 Jesse J Jenner Fish & Neave 2 1251 Ave of the Americas 3 New York, NY 10020 4 Darin M Klemchuk 5 Cash Klemchuk Powers Taylor LLP Campbell Centre II 6 8150 N Central Expressway Ste 1575 7 Dallas, TX 75206 8 Emily S Lau 9 Fenwick & West LLP 10 2 Palo Alto Sq Ste 700 11 Palo Alto, CA 94306
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12

SACKS TIERNEY

James T Malysiak 13 Freeman Freeman & Salzman PC 401 N Michigan Ave 14 Ste 3200 15 Chicago, IL 60611 16 Lisa Meyerhoff Jenkens & Gilchrist PC 17 1445 Ross Ave 18 Ste 3200 Dallas, TX 75202 19 20 David A Nelson Latham & Watkins 21 5800 Sears Tower 22 233 S Wacker Dr Chicago, IL 60606 23 Bart James Patterson 24 University & Community College 25 5550 W Flamingo Rd Ste C-1 26 Las Vegas, NV 89103-0137 27 28
Case 2:00-cv-00663-HRH Document 750 23 Filed 04/07/2006 Page 23 of 26

1 David Anthony Plumley Christie Parker & Hale LLP 2 350 W Colorado Blvd 3 Ste 500 Pasadena, CA 91105 4 5 Susan E Powley Jenkens & Gilchrist PC 6 1445 Ross Ave Ste 3200 7 Dallas, TX 75202 8 Terryl K Qualey 9 Merchant & Gould 10 3200 IDS Ctr 80 S 8th St 11 Minneapolis, MN 55402-2215
P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

12

Charles Quinn 13 Fish & Neave 1251 Ave of the Americas 14 New York, NY 10020 15 James Samuel Rigberg 16 Mariscal Weeks McIntyre & Friedlander PA 2901 N Central Ave 17 Ste 200 18 Phoenix, AZ 85012-2705 19 Clyde A Shuman 20 Cobrin & Gittes 750 Lexington Ave 21 Ste. 21 22 New York, NY 10022 23 George M Sirilla Pillsbury Winthrop LLP 24 1600 Tysons Blvd 25 McLean, VA 22102 26 27 28
Case 2:00-cv-00663-HRH Document 750 24 Filed 04/07/2006 Page 24 of 26

SACKS TIERNEY

1 Bruce S Sostek Thompson & Knight LLP 2 1700 Pacific Ave 3 Ste 3300 Dallas, TX 75201 4 5 Stefan V Stein Holland & Knight LLP 6 100 N Tampa St Ste 4100 7 Tampa, FL 33602-3644 8 Jay Todd Stewart 9 Perkins Coie Brown & Bain PA 10 PO Box 400 Phoenix, AZ 85001-0400 11 Mark Michael Supko 12 Kenyon & Kenyon 13 1500 K St NW Ste 700 14 Washington, DC 20005-1257 15 Raymond L Sweigart 16 Pillsbury Winthrop LLP 1600 Tysons Blvd 17 McLean, VA 22102 18 William M Wesley 19 McAndrews Held & Malloy Ltd 20 500 W Madison St Ste 3400 21 Chicago, IL 60661 22 Christopher C Winslade 23 McAndrews Held & Malloy Ltd 500 W Madison St 24 Ste 3400 25 Chicago, IL 60661 Darryl M Woo 26 Fenwick & West LLP 27 275 Battery St Ste 1600 28 San Francisco, CA 94111-3305
Case 2:00-cv-00663-HRH Document 750 25 Filed 04/07/2006 Page 25 of 26

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

1 Donald L Zachary 2 Bass Berry & Sims PLC 3 First American Ctr 315 Deaderick St 4 Ste 2700 5 Nashville, TN 37238-0002 6 Elizabeth L Zepeda 600 CitaClaiborne Dr 7 Commerce, CA 90040 8 Norman H Zivin 9 Cooper & Dunham LLP 10 1185 Ave of the Americas New York, NY 10036 11 Thomas Zych 12 Thompson Hine & Flory LLP 13 3900 Key Ctr 127 Public Sq 14 Cleveland, OH 44114-1216 15 16 17 18
607129.01

SACKS TIERNEY

P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD FOURTH FLOOR SCOTTSDALE, ARIZONA 85251-3693

s/ James W. Armstrong

19 20 21 22 23 24 25 26 27 28
Case 2:00-cv-00663-HRH Document 750 26 Filed 04/07/2006 Page 26 of 26