Case 1:19-cv-00488-RBJ Document 85 Filed 11/23/20 USDC Colorado Page 1 of 7
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`Judge R. Brooke Jackson
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`Civil Action No 19-cv-00488-RBJ
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`ALTIGEN COMMUNICATIONS, INC.,
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`Plaintiff,
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`v.
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`CTI COMMUNICATIONS, LLC, a Colorado limited liability company, and
`RICHARD BROWNE, an individual,
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`Defendants.
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`ORDER ON MOTION FOR ATTORNEY’S FEES
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`Altigen Communications, Inc. sued CTI Communications, LLC (“CTI”), a former
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`reseller of Altigen systems, and its principal, Richard Browne, on claims of trademark
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`infringement, copyright infringement, and violation of the Colorado Consumer Protection Act.
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`The case was tried to a jury July 27-29, 2020. The jury found that plaintiff proved its trademark
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`infringement claim, but not its claim that the infringement was willful. It awarded $3,190 in
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`disgorgement of profits but no “actual damages.” The jury found in favor of the defendants on
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`the claims of copyright infringement and violation of the Colorado Consumer Protection Act.
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`ECF No. 67 (Jury Verdict, redacted).
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`In an Amended Final Judgment the Court stated,
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`The Court finds that, although the plaintiff prevailed on a portion of its trademark
`claim, the jury’s award on that portion was only a tiny fraction of the damages
`plaintiff was seeking on the trademark claim. The defendant prevailed on the
`remainder of the trademark claim and on the plaintiff’s copyright and Colorado
`Consumer Protection Act claims. The Court finds that, overall, the prevailing
`party was the defendant. Therefore, the Court awards costs to the defendant to be
`determined by the Clerk pursuant to Fed. R. Civ. P. 54(d)(1) and
`D.C.COLO.LCIVR 54.1.
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`Defendants paid the $3,190 portion of the judgment. Costs were taxed by the Clerk in
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`favor of the defendants in the amount of $3,854.24. ECF No. 83. I am not aware whether
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`plaintiff has paid the taxed costs.
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`Defendants now move for an award of attorney’s fees in the amount of $89,248.50 and
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`non-taxable costs in the amount of $1,652.93, pursuant to 17 U.S.C. § 505 (concerning fees and
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`costs in copyright actions). ECF Nos. 72 and 74.1 Alternatively, defendants seek the same relief
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`pursuant to the Colorado Consumer Protection Act. Id. Plaintiff opposes any award of
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`attorney’s fees and non-taxable costs. ECF No. 79. Plaintiff further argues that, in the event the
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`Court does award fees or non-taxable costs, the Court should reduce the amount by one-third to
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`account for defendants’ “loss” on the trademark claim, and it should further exclude $15,850.50
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`of the amount requested as excessive and unreasonable. Id. In reply, plaintiffs quibble a little
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`with the suggested $15,850.50 reduction, arguing that at most only $13,935 should be
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`disallowed. ECF No. 84. Neither party has requested a hearing.
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`CONCLUSIONS AND ORDER
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`A. Entitlement to an Award of Attorney’s Fees and Costs.
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`1. Copyright Claim.
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`Altigen owned three copyrights on versions of its software. ECF No. 63 at 8 (Instruction
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`No. 5). To establish a claim under the United States Copyright Law plaintiff had to prove that
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`defendants reproduced or distributed a copyrighted work during the term of the copyright. Id. at
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`12 (Instruction No. 8). It failed to do so. ECF No. 67 at 6-7 (Jury Verdict, Redacted).
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`The United States Copyright Law provides, as pertinent to the pending motion, that:
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`In any civil action under this title, the court in its discretion may allow the
`recovery of full costs by or against any party other than the United States or an
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`1 In their motion defendants sought $1,243.09 in non-taxed costs, ECF No. 72, but they increased that
`amount by $418.84 as indicated and explained in a supplement. ECF No. 74. The supplement was filed
`before the filing of plaintiff’s response brief.
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`officer thereof. Except as otherwise provided by this title, the court may also
`award a reasonable attorney’s fee to the prevailing party as part of the costs.
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`17 U.S.C. § 505.
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`Altigen vigorously pursued its copyright claim even though, as defendants note, its CEO
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`and primary fact witness, Jeremy Fleming, could not articulate the basis for the claim. See ECF
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`No. 72 at 4. The claim as advocated by counsel was grounded generally in the notion that
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`defendants willfully and illegally continued to hold out defendant CTI Communications, Inc. or a
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`related entity (collectively “CTI”) as authorized to sell Altigen software licenses and service
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`customers after Altigen revoked CTI’s authorized reseller status. The jury rejected the claim. I,
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`too, was not persuaded by plaintiff’s copyright claim. Rather, I find that the copyright claim was
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`groundless, and that an award of fees is appropriate not only to compensate the defendants but
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`also to deter others from pursuing objectively unreasonable copyright claims. Accordingly, I
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`elect to exercise the discretion granted by the Copyright Law and award “full costs” including a
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`reasonable attorney’s fee to the defendants.
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`2. The Colorado Consumer Protection Act Claim.
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`To establish a claim under the Colorado Consumer Protection Act (“CCPA”), plaintiff
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`had to prove that the defendants engaged (or caused another to engage) in a deceptive trade
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`practice that significantly affected the public as actual or potential consumers of defendant’s
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`goods or services. ECF No. 63 at 13 (Instruction No. 9). The CCPA mandates an award of fees
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`and costs if the claim is found to be “frivolous, groundless and in bad faith, or for the purpose of
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`harassment.” Colo. Rev. Stat. 6-1-113(3).
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`In denying summary judgment on the CCPA claim I noted, “I might have dismissed the
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`Colorado Consumer Protection Act Claim, but the motion and reply make only conclusory
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`comments without meaningful argument.” ECF No. 47 at 4. Even if I assume for the sake of
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`argument that there was a deceptive trade practice, although in my judgment that was not proved,
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`there was no credible evidence that the practice significantly affected the public.
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`However, while I find that the claim was groundlessness and borderline frivolous, I
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`cannot find from the evidence that it was brought in bad faith or for purposes of harassment. To
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`be sure, there was a suggestion of bad faith. Defendants believe that Altigen filed the suit in
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`retaliation for defendants’ recent successful state-court prosecution of a claim against Altigen for
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`wrongfully terminating CTI as an authorized reseller. However, there was no direct evidence of
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`that motive; and I find that there was insufficient circumstantial evidence of that motive to
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`support a finding of bad faith to a preponderance of the evidence. Bad judgement yes, but
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`neither bad faith nor the purpose to harass was proven.
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`3. Trademark Claim.
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`I mention the trademark claim because the plaintiff spends a portion of its response brief
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`arguing that this was not an “exceptional” trademark case. ECF No. 79 at 2-5. A trademark case
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`can be deemed “exceptional” even if not entirely unfounded if it was pursued in a meritless and
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`improper manner. National Ass’n of Professional Baseball Leagues, Inc. v. Very Minor Leagues,
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`223 F.3d 1143, 1149 (10th Cir. 2000) I also note that plaintiff devotes large portions of its
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`response brief to arguing that its case was meritorious despite the vote of the jurors. Id. at 1-2.
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`However, I need not decide whether the claim was “exceptional,” because I am awarding full
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`costs including reasonable attorney’s fees under the Copyright Law.
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`B. Amount of Fees and Costs.
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`Generally, in determining the reasonableness of attorney’s fees the Court first determines
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`the “lodestar,” meaning the product of hours reasonably expended times a reasonable hourly rate.
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`The lodestar is presumed to a be a reasonable rate, although it is subject to adjustment by the
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`Court. See Robinson v. City of Edmund, 160 F.3d 1275, 1281 (10th Cir. 1998). In determining
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`the reasonableness of the hours and rates, courts often apply the factors articulated in Johnson v.
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`Georgia Highway Express, Inc., 488 F. 2d 714 (5th Cir. 1974].2 The Colorado Rules of
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`Professional Conduct provide a similar list of relevant factors.3 See also Hensley v. Eckhart, 461
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`U.S. 424, 433-34 (1983) (noting that the result obtained is one important factor in determining
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`whether to adjust the fee upward or downward from the lodestar). I have reviewed defense
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`counsel’s itemized billing records. ECF No. 72-1 at 9-25.
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`I do not agree that the fees and costs should be reduced by one-third to account for
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`plaintiff’s “success” on the trademark claim. I have no basis to distinguish between the time
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`devoted to the copyright claim and the time devoted to the trademark claim or to find that the
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`time billed would have been significantly different had plaintiff not included the trademark
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`claim, nor has plaintiff even attempted to provide a basis for doing so. Moreover, plaintiff
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`essentially lost the trademark claim. It sought $2 million in actual damages and was awarded
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`nothing. It sought $275,000 in disgorgement of profits and was awarded $3,190. Considering
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`the overall result obtained, discounting the lodestar by one-third would not be reasonable.
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`Plaintiff’s objections to line items in defendants’ fee bills fall into two categories: (1)
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`$1,488 in fees and $135 in costs said to be related to defendants’ unsuccessful effort to obtain
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`attorney-client privileged information, and (2) $14,227.50 in fees said to be related to
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`2 Johnson lists 12 factors for courts to consider in determining reasonableness: (1) the time and labor
`required; (2) the novelty and difficulty of the questions; (3) the skill required; (4) preclusion of other
`employment; (5) the customary fee in the community; (6) whether the fee is fixed or contingent; (7) time
`limitations imposed by the client; (8) the amount involved and the results obtained; (9) the experience,
`reputation and ability of the attorney’s; (10) the undesirability of the case; (11) the nature and relationship
`of the professional relationship with the client; and (12) awards in similar cases. Id. at 717-19.
`3 The Colorado Rules of Professional Conduct are found as an Appendix to Chapters 18 to 20,
`COLORADO COURT RULES – STATE (2018). These factors identified in Rule 1.5 are (1) time and labor
`required, (2) likelihood of preclusion of other employment, (3) fee customarily charged in the locality, (4)
`amount involved and results obtained, (5) time limitations imposed by the client or circumstances, (6)
`nature and length of the professional relationship, (7) experience, reputation, and ability of the lawyer(s),
`and (8) whether the fee is fixed or contingent.
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`defendant’s unsuccessful motion for summary judgment. ECF No. 79 at 14-15. Notably,
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`plaintiff did not dispute the hourly rates charged by defense counsel, and on the Court’s review
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`of the rates, it agrees that they were reasonable for this community. See ECF No. 72-1 at 4.
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`Plaintiff did not dispute the hours recorded other than those noted above. I note that the itemized
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`billings include 14.1 hours of “no charge” and three courtesy discounts. Id.
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`I do not agree that the relatively small amount of fees and costs incurred in pursuing what
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`was determined to be privileged information should be discounted. Discovery disputes are
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`common in civil litigation, and the fact that the defendants were unsuccessful in this one does not
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`mean that the effort was unreasonable. However, I do agree that the fees incurred in defendants’
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`unsuccessful pursuit of a motion for summary judgment should not be awarded. That is not to
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`say that such fees should never be awarded. However, in denying the motion for summary
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`judgment, the Court listed ten different fact disputes that it found to be material and genuine.
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`ECF No 47 at 3-4. Summary judgment motions should not be a routine or “just because we can”
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`occurrence. They contribute significantly to the costs incurred by both parties and Court time.
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`In this instance a summary judgment motion had essentially no chance of prevailing. Both
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`because it would be unfair to make plaintiff pay defendants’ fees for pursuing a non-meritorious
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`motion for summary judgment and as an example to others, the Court declines to award those
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`fees.
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`In its reply brief defendants indicted that if the Court disallowed fees related to the
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`summary judgment effort, the amount disallowed should be $13,835 rather than $14,227.50 as
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`requested by the plaintiff. ECF No. 84 at 7. The difference is minimal, but defendants’
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`explanation for it is reasonable. Plaintiff did not dispute the non-taxable costs other than the
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`$135 noted above. Inasmuch as the statute allows for the award of “full costs,” the requested
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`amount will be awarded.
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`ORDER
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`Defendants’ motion for an award of attorney’s fees and non-taxable costs, ECF No. 72, is
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`GRANTED IN PART and DENIED IN PART. Attorney’s fees are awarded to the defendants
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`and against the plaintiff in the amount of $75,413.50. Costs not already taxed by the Court are
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`awarded in the amount of $1,652.93. A Second Amended Final Judgment will issue reflecting
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`those awards and reflecting the award of costs taxed by the Clerk in the amount of $3,854.24 in
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`favor of the defendants and against the plaintiff.
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`DATED this 23rd day of November, 2020.
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`BY THE COURT:
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`___________________________________
`R. Brooke Jackson
`United States District Judge
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