Case 1:17-cv-02097-RBJ Document 326 Filed 01/20/22 USDC Colorado Page 1 of 10
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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 17-cv-02097-RBJ
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`REALTIME ADAPTIVE STREAMING LLC,
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`Plaintiff,
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`v.
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`SLING TV L.L.C.,
`SLING MEDIA, L.L.C.,
`ECHOSTAR TECHNOLOGIES L.L.C.,
`DISH NETWORK L.L.C
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`
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`Defendants.
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`ORDER re ATTORNEY’S FEES
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`The Court granted summary judgment dismissing plaintiff’s remaining claims on July 31,
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`2021, concluding that the subject patent was invalid because it claimed an abstract idea ineligible
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`for patenting. ECF Nos. 305 (order) and 306 (final judgment). Defendants then moved for an
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`award of attorney’s fees. Plaintiff objects. The Court finds that this was an “exceptional case”
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`warranting an award of attorney’s fees but will need additional information and likely a hearing
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`to determine the reasonable amount of fees to be awarded.
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`BACKGROUND
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`Briefly, by the time summary judgment was granted, the remaining claim was Realtime
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`Adaptive Streaming LLC’s claim that defendants had infringed Claim 1 (and possibly other
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`claims) of U.S. Patent No. 8,867,610 (“the ‘610 patent”). Entitled “System and Methods for
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`Video and Audio Data Distribution,” the ‘610 patent concerns data compression and
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`decompression algorithms. It purports to optimize compression time for digital files to prevent
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`problems such as download delay, data buffering, and reduced system speeds. First it assigns a
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`data profile based on the frequency that the data is accessed or written. Then it assigns a
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`compression algorithm to each profile, depending upon whether the read to write ratio is
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`balanced (symmetrical) or unbalanced (asymmetrical).
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`The Patent Act does not permit patenting of “laws of nature, natural phenomena, and
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`abstract ideas.” Alice Corp. Pty. Ltd. v. CLSBank Int’l, 573 U.S. 208, 216 (2014). In addressing
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`defendants’ argument that the ‘610 patent claimed an ineligible abstract idea, I followed a two-
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`step process: first, was the claim directed to an abstract idea; and second, did the claim
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`nevertheless contain an “inventive concept” sufficient to transform the abstract idea into a
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`patent-eligible application. See Mayo Collaborative Services v. Prometheus Laboratories, Inc.,
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`566 U.S. 66, 77-79 (2012).
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`At the first step I found that the patent was indeed directed to an ineligible abstract
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`concept, and that Realtime’s reliance on this Court’s definition of the claim term “throughput of
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`a communication channel” to distinguish law on which defendants relied was unpersuasive
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`because that term itself embodied an abstract idea. Id. at 10-11. At the second step I found that
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`there was no “inventive concept” that rescued the claim, notably because it provided no details as
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`to how the invention would work to solve the problems the patent claimed to solve, such as an
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`unconventional encoding or decoding structure or other compression, transmission, or storage
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`techniques. Id. at 14.
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`The merits of those findings and conclusions are currently on appeal to the Federal
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`Circuit. However, the attorney’s fee issue remains before me, and I regret that I have been
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`unable to turn to it until now.
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`STANDARD OF REVIEW
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`“The court in exceptional cases may award reasonable attorney fees to the prevailing
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`party.” 35 U.S.C. § 285. “An exceptional case ‘is simply one that stands out from others with
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`respect to the substantive strength of a party’s litigating position (considering both the governing
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`law and the facts of the case) or the unreasonable manner in which the case was litigated.’”
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`University of Utah v. Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V., 851
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`F.3d 1317, 1322 (Fed. Cir. 2017. There is no precise formula for making that determination.
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`Biax Corp. v. Nvidia Corp., 626 F. App’x 968, 970-71 (Fed. Cir. Feb. 24, 2015) (unpublished).
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`ANALYSIS AND CONCLUSIONS
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`A. Defendants’ Entitlement to a Fee Award.
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`I find that this case was “exceptional” because Realtime disregarded repeated indicators
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`that the ‘610 patent was likely invalid and pressed on at great expense to the defendants (and
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`itself). A chronology of key events serves to explain this finding.
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`This case was filed on August 31, 2017. Initially Realtime claimed that defendants
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`(collectively “Dish”) had infringed three patents: U.S. Patent Nos. 8,275.897 (“the ‘897 patent”);
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`8,867,610 (“the ‘610 patent”); and 8,934,535 (“the ‘535 patent”). This was not Realtime’s first
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`venture into infringement litigation. In its motion for attorney’s fees Dish characterizes Realtime
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`as a “serial litigant,” having filed some 145 cases, and Dish claims that Realtime was created by
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`a patent attorney for the purpose of licensing and monetizing patents. ECF No. 308 at 10-11.
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`That description does not bear on the merits of a particular case. If Dish infringed a valid patent
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`it deserves a defeat in court, no matter what Dish speculates about Realtime’s underlying
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`business plan. However, Realtime’s litigation experience does suggest that it should be
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`particularly alert to the risks of pursuing a potentially invalid claim too long.
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`Shortly after the case was filed Dish (and then co-defendant Arris Group, Inc.) filed
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`motions to dismiss and for judgment on the pleadings. ECF Nos. 47 and 48. The motions were
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`based on defendants’ contention that the patents were invalid because they were directed to an
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`abstract idea. See ECF No. 47, passim; ECF No. 48 at 1. The Court denied those motions
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`during the course of a Scheduling Conference on March 7, 2018, finding that it would proceed to
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`claim construction first. ECF No. 80 (transcript) at 14. But the Court also expressed its concern
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`about validity:
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`[I]f all you’re talking about is algorithms and applying some formula, my
`intuition, my gut instinct would be, well, maybe the defendants have a point.
`Maybe this is just an abstract concept. This doesn’t sound like something you
`would patent. It doesn’t sound like it’s technology. It just sounds like an idea.
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`Id. at 9.
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`Later in 2018, two courts found that Claim 15 of Realtime’s similar ‘535 patent was
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`invalid as directed to an abstract idea without an “inventive concept” that revived its
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`patentability. Those rulings were highly significant to this Court’s ultimate determination that
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`the ‘610 patent suffered the same fate. The two patents have nearly the same title.1 More
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`importantly, the specifications for the two patents are virtually identical. ECF No. 305 at 2, 6.
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`Most importantly, Claim 1 of the ‘610 patent and Claim 15 of the ‘535 patent are so similar as to
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`be essentially the same in substance. See id. at 6-7 (chart comparing the components of the two
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`claims). Thus, the reasoning in the two cases, Realtime Adaptive Streaming LLC v. Google LLC,
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`No. CV 18-3629-GW(JCx) (C.D. Cal. Oct. 25, 2018) (slip op. filed at ECF No. 234-6) and
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`Realtime Adaptive Streaming, LLC v. Netflix, Inc., No 17-1692-CFC-SRF, 2018 WL 6521978
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`1 The ‘610 patent is titled “System and Methods for Video and Audio Data Distribution.” The ‘535 patent
`is titled “System and Methods for Video and Audio Data Storage and Distribution.”
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`(D. Del. Dec. 12, 2018), featured prominently in my order granting summary judgment in this
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`case. ECF No. 305 at 7-9.
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`In my view, the two cases should have featured prominently in Realtime’s thinking about
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`the present case. However, Realtime attempted to distinguish Google, largely based on Claim
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`1’s term “throughput of a communication channel,” which is not found in the ‘535 patent, and on
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`my interpretation of the term in the Claim Construction Order.2 The only reference to the term
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`in the ‘610 Specification states: “In one embodiment, a controller marks and monitors the
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`throughput (data storage and retrieval) of a data compression system and generates control
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`signals to enable/disable different compression algorithms when, e.g., a bottleneck occurs as to
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`increase the throughput and eliminate the bottleneck.” ECF No. 2-2 at 9:53-58. The problem is,
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`absent any indication of how the system tracks the number of pending requests to determine the
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`throughput of the communication channel, i.e., a mechanism for determining the number of
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`requests, the term is itself an abstract idea. See ECF No. 305 at 11.
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`Realtime attempted to discredit the Netflix case as wrongly decided, in part because it
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`found Claim 15 of the ‘535 claim to be a representative claim. But the California court also
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`implicitly found Claim 15 to be representative of at least Claims 16-30. More importantly,
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`representative or not, Claim 15 is so similar to Claim 1 of the ‘610 patent that the two courts’
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`rulings should have served as a red flag that Claim 1 faced serious trouble.
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`This case was stayed on February 26, 2019, pending an Inter Partes Review (“IRP”) of
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`the ‘610 patent’s validity by the Patent Trial and Appeal Board. See ECF Nos. 157 and 161.
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`While the stay was in effect certain events bearing somewhat on this case took place.
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`2 In the Claim Construction Order, issued on January 11, 2019, I defined “throughput of a communication
`channel” to mean the “number of pending transmission requests over a communication channel.” See
`ECF No. 151 at 8-10.
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`First, two administrative patent judges found claims 1-14 of the ‘535 patent (the claims
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`not addressed in the California court’s invalidity order) unpatentable on obviousness grounds.
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`See Netflix, Inc. v. Realtime Adaptive Streaming, LLC, 2020 WL 120083, at *14 (P.T.A.B. Jan.
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`10, 2020); Google LLC v. Realtime Adaptive Streaming, LLC, 2020 WL 959190, at *16
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`(P.T.A.B. Feb. 27, 2020).
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`Second, the Federal Circuit issued an unpublished decision in Adaptive Streaming Inc. v.
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`Netflix, Inc., 836 F. App’x 900 (Dec. 14, 2020). The case involved a patent that claimed systems
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`for communicating audio and video signals between devices that use different formats. The
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`court affirmed the dismissal of plaintiff’s case, finding that the claims at issue failed the first
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`Alice step because they “were directed to the abstract idea of ‘collecting information and
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`transcoding it into multiple formats.’” Id. at 903. At the second step, the court determined that
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`the claims “do not incorporate anything that would transform their subject matter into an eligible
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`application of the abstract idea. . . .In particular, there is no identification in the claims or written
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`description of specific, unconventional encoding, decoding, compression, or broadcasting
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`techniques.” Id. at 904. An unpublished opinion does not create a binding precedent, but it was
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`another red flag for the present case. The case was later highlighted in defendants’ notice of
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`intent to file a motion for summary judgment based on invalidity. See ECF No. 204 at 2.
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`The IRP was terminated on jurisdictional grounds (untimeliness) on January 31, 2020,
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`and rehearing was denied on February 4, 2020. See ECF No. 172. Appeals were filed, and the
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`Court elected to continue the stay in effect until the conclusion of the IPR proceedings. See ECF
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`No 173. In a joint status report filed on January 14, 2021, the parties informed the Court that no
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`IRPs were still pending. ECF No. 178 at 2. Accordingly, the Court lifted the stay on January 15,
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`2021. See ECF No. 179 (minute order). That marks the date when defendants began to incur the
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`attorney’s fees that they are seeking in this case. See ECF No. 308-2 at 1.
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`On February 11, 2021, in a letter to Realtime’s counsel, defendants reiterated their
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`position on invalidity, noted that substantial litigation expense would be incurred if the case
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`continued, and asked plaintiff to dismiss its claims. ECF No. 308-5. Realtime chose not to do
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`so.
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`On February 4, 2021 and June 9, 2021 a PTO examiner conducting an ex parte
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`reexamination of the ‘610 patent issued first and second non-final office actions rejecting Claim
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`1 and several other claims as unpatentable on obviousness grounds. See ECF No. 305 at 4, n.1. I
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`did not consider those non-final office actions in my decision on the motion for summary
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`judgment. Id. However, they could have served as additional red flags regarding the viability of
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`Realtime’s case.
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`Finally, on May 28, 2021, as an exhibit to a motion for summary judgment, defendants
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`filed a declaration of Dr. Alan C. Bovik. ECF No. 223-1. A modified version of the declaration
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`was filed on June 2, 2021 as an exhibit to defendant’s Motion for Summary Judgment of
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`Invalidity Based on Lack of Subject Matter Eligibility – the motion that I ultimately granted.
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`ECF No. 234-1. Realtime promptly filed a Rule 702 motion to exclude certain of his opinions.
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`ECF No. 237. I understand that parties to litigation typically are not persuaded by the opinions
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`of the opposing party’s retained expert. In my view, however, Dr. Bovik’s opinions merited
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`serious consideration, at least as another red flag concerning the potential resolution of the
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`invalidity issue. I gave them weight in my summary judgment order. ECF No. 305 at 13-14.
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`The parties completed briefing on summary judgment and, meanwhile, they were
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`preparing for trial. To be clear, I am not critical of Realtime or counsel for believing it their case
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`and wanting the opportunity to present it to a jury. Rather, my point is that by carrying on
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`despite numerous danger signals or red flags as I have called them, Realtime accepted the risk of
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`having to reimburse defendants’ reasonable attorney’s fees. In sum, when I consider the totality
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`of the circumstances leading up to this Court’s grant of summary judgment on July 31, 2021, I
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`find that Realtime’s dogged pursuit of the case notwithstanding those danger signals renders this
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`an exceptional case. I conclude that defendants are entitled to an award of reasonable attorney’s
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`fees.
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`B. Amount of Fees.
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`Defendants seek an award of $5,075,519, claiming that those are the attorney’s fees it
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`reasonably incurred in the six and one-half months after the stay was lifted. Included in that
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`amount are fees attributed to extensive discovery by both sides; multiple letters of intent to file
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`and then the filing and briefing of multiple summary judgment motions; the filing and briefing of
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`Rule 702 motions; motions in limine; and trial preparation. Defendants ask the Court to evaluate
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`these fees in the context of Realtime’s seeking damages in the range of $42 million.
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`In support, defendants file the declaration of one of its lawyers, Adam Shartzer,
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`describing the members of the Fish & Richardson PC team that worked on this case: 13 lawyers
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`(six at the partner level); three litigation paralegals; four discovery analysts; four library and
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`search analysts; an IP operations specialist; and a graphic artist. ECF No. 308-1. Their rates
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`ranged upward to $900 per hour; overall, these individuals had an average billing rate of
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`approximately $668 per hour. That includes a 15.5% discount that Dish uniquely receives. Id. at
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`11-12. In addition, the Denver law firm Wheeler Trigg O’Donnell LLP was retained in April
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`2021 to assist in trial preparation. According to the affidavit of Hugh Gottschalk, their fees
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`totaled $103,986.50, representing the work of one partner, one associate and one paralegal, at
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`rates between $685 and $220 per hour, with an overall average billing rate of approximately
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`$637 per hour.
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`The backgrounds of the several lawyers are impressive. But given the number of lawyers
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`and others working on the case, it is inevitable that there are duplications and other inefficiencies
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`in the numbers. There is no indication that the time entries have been reviewed and culled to
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`eliminate inefficiency and assure that the time was necessarily and productively recorded.
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`In determining the reasonableness of attorney’s fees, the Court starts with the “lodestar”
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`(reasonable hours times reasonable rates), which is presumptively reasonable. See Robinson v.
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`City of Edmund, 160 F.3d 1275, 1281 (10th Cir. 1998). However, the lodestar can and
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`frequently is adjusted after applying factors such as those articulated in Johnson v. Georgia
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`Highway Express, Inc., 488 F. 2d 714 (5th Cir. 1974].3 The Colorado Rules of Professional
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`Conduct provide a similar list of relevant factors.4 Defendants have not yet explained or
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`defended their figures in that context.
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`In its response Realtime asserts that $5 million is unreasonable on its face. ECF No. 319
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`at 14. However, plaintiff declines to dig into the “84 pages of raw billing entries” to highlight
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`those it believes to be unreasonable, and it suggests that the Court should not have to do that
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`3 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.
`4 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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`either. Id. Realtime requests the opportunity for further briefing without indicating what
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`briefing it desires or how that would advance the ball.
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`The parties are entitled to a hearing on the reasonableness of the amount. Prior to the
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`hearing, however, I request that a responsible partner/principal carefully review the defense
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`teams’ time entries and cull all time that he or she finds to be duplicative, inefficient, or
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`otherwise unreasonable in view of the Johnson factors. The remaining time entries should then
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`be carefully reviewed by a responsible member of the plaintiff’s legal team to identify time that
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`plaintiff still regards as unreasonable or not satisfactorily explained. Counsel should then confer
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`and attempt to reach agreement. If agreement is not reached, then set an evidentiary hearing. In
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`that event, if plaintiff is willing to divulge information about the time spent by members of the
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`plaintiff’s team and their corresponding rates, the Court would consider that information in the
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`reasonableness determination. However, the Court is not requiring that plaintiff provide that
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`information.
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`ORDER
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`Defendants’ motion for attorney’s fees, ECF No. 308, is granted as to their entitlement to
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`an award of reasonable attorney’s fees. The Court makes no ruling on the amount of such fees
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`and has provided directions to counsel concerning that issue.
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`DATED this 20th day of January, 2022.
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`BY THE COURT:
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`___________________________________
`R. Brooke Jackson
`United States District Judge
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