Case 3:06-cv-00628-JRS Document 120 Filed 10/09/07 Page 1 of 10 PageID# 16
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`RICHMOND DIVISION
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`OREN TAVORY,
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`v.
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`NTP, INC.,
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`Plaintiff,
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`Action No. 3:06–CV–628
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`Defendant.
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`MEMORANDUM OPINION
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`THIS MATTER is before the Court on a Motion for Attorneys’ Fees (Docket No. 111)
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`by NTP. On September 20, 2006, Tavory sued NTP, seeking to be joined as an inventor to
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`six patents owned by NTP, as well as damages for copyright infringement and unjust
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`enrichment. After dismissing Tavory’s claim for unjust enrichment on December 26, 2006, the
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`Court granted summary judgment in favor of NTP on Tavory’s other claims. See Tavory v.
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`NTP, Inc., No. 06–CV–628 (E.D. Va. July 17, 2007) (“Tavory II”). Now, NTP asks the Court
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`to award it the attorneys’ fees that it incurred defending that suit. For the reasons stated below,
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`NTP shall be awarded attorneys’ fees of $36,899.57.
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`1.
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`Tavory’s copyright claims
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`The Court may “in its discretion” award “a reasonable attorney’s fee” to a party that
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`prevails in a suit under Title 17. 17 U.S.C. § 505. See Fogerty v. Fantasy, Inc., 510 U.S. 517,
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`534 (1994) (emphasizing that awarding attorneys’ fees in suits under Title 17 is discretionary).
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`See also Ale House Mgmt., Inc. v. Raleigh Ale House, Inc., 205 F.3d 137, 144 (4th Cir. 2000)
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`(stating that attorneys’ fees should not be awarded “as a matter of course”). In deciding
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`whether to award attorneys’ fees, the Court must consider four factors: “(1) the motivation of
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`the parties; (2) the objective reasonableness of the legal and factual positions advanced; (3) the
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`need in particular circumstances to advance considerations of compensation and deterrence;
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`and (4) any other relevant factor presented.” Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225,
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`234 (4th Cir. 1993).
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`Applying that standard, the Fourth Circuit affirmed an award of attorneys’ fees against
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`a party that alleged that using copyrighted material in litigation was not “fair use,” finding that
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`the claim was motivated by a desire “to block potentially relevant evidence from being
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`presented” in another suit. Bond v. Blum, 317 F.3d 385, 397–98 (4th Cir. 2003). Inconsistent
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`conduct also evinces motivation warranting an award of attorneys’ fees. See Superior Form
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`Builders, Inc. v. Dan Chase Taxidermy Supply Co., 74 F.3d 488, 498 (4th Cir. 1996) (affirming
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`an award of attorneys’ fees against a party who claimed that animal mannequins cannot be
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`copyrighted, while attempting to copyright his own animal mannequin designs).
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`Discussing the second factor established in Rosciszewski, the Fourth Circuit has held that
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`if a party has pursued a patently frivolous position, failing to award attorneys’ fees “will, except
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`under the most unusual circumstances, constitute an abuse of discretion.” Diamond Star Bldg.
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`Corp. v. Freed, 30 F.3d 503, 506 (4th Cir. 1994) (noting that a party’s refusal to settle a
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`frivolous suit does not justify awarding attorneys’ fees). But, attorneys’ fees may be awarded
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`even if a party’s position was not frivolous. Bond, 317 F.3d at 398.
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`The third and fourth Rosciezewski factors have rarely played an important role in the
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`Fourth Circuit’s analysis of attorneys’ fees awards. When the Fourth Circuit has discussed
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`compensation and deterrence, it has often conflated that factor with other relevant
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`considerations. See, e.g., Bond, 317 F.3d at 398 (stating without explanation that awarding
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`attorneys’ fees would deter the losing party from “bringing meritless actions,” suggesting that
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`the primary basis of the award was the strength of the losing party’s position).
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`A.
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`Tavory’s motivation
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`Tavory alleged that NTP infringed a copyright that he held on a piece of software. See
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`Tavory II. NTP sought to defeat Tavory’s claim by showing that his copyright was invalid
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`because he recently created his copy of the software. In two requests for admission and one
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`interrogatory, NTP asked whether Tavory possessed anything “that physically existed as of May
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`21, 1991 and which evinced the software in Exhibit A of the Complaint.” Def.’s Mem. Supp.
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`Mot. Att’ys’ Fees at 5–6. Tavory replied that he did.
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`In fact, Tavory possessed a copy of the software that was created recently, based on a
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`modified version of the original software, not a copy that existed in 1991. The Court regarded
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`that distinction as significant when it granted summary judgment to NTP on Tavory’s copyright
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`infringement claim, finding that Tavory’s registration of his copy of the software was invalid
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`because that copy was a reconstruction. See Tavory II, slip op. at 7. Tavory has acknowledged
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`that his copy of the software did not exist in 1991,1 but he argues that his answers were justified
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`because he had a “source code listing” of the software “as it existed as of May 21, 1991.” See
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`Pl.’s Opp. Def.’s Mot. Att’ys’ Fees at 5 (emphasis added). Tavory’s answer was a disingenuous
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`effort to conceal a glaring weakness in his case, not a good-faith – but confused – attempt to
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`respond to NTP’s discovery requests. Significantly, Tavory does not claim that in December
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`2006, when he replied to NTP’s discovery requests, he believed that he had something that
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`existed in 1991 and evinced the software at issue. Instead, Tavory purposefully attempted to
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`hide a fact that ultimately formed part of the basis of the Court’s grant of summary judgment
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`in favor of NTP, prolonging the litigation of this suit. The importance of the information NTP
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`1 In his brief opposing this Motion, however, Tavory repeats – falsely – that his copy of
`the software “existed as of May 21, 1991.” Pl.’s Opp. Def.’s Mot. Att’ys’ Fees at 5.
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`sought makes the fact that Tavory answered in a misleading way less excusable. Thus,
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`Tavory’s motivation in falsely answering NTP’s discovery requests warrants an award of
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`attorneys’ fees.
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`B.
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`The strength of Tavory’s position
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`NTP argues that Tavory’s claim of copyright infringement was unfounded because (1)
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`his suit was based on a copyright certificate that he obtained fraudulently, by concealing the
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`date his copy of the software was created; (2) his theory of copyright infringement – that NTP
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`violated his copyright by making copies for the purpose of litigation to enforce NTP’s patents
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`– was frivolous because no court has held that such copying is not “fair use”; and (3) Tavory
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`made unreasonable discovery requests of NTP, forcing it to search its attorneys’ files for copies
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`of his software.
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`Tavory responds that he did not fraudulently obtain a copyright certificate because he
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`created his copy of the software by referring to documents that allowed him to identify the
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`differences between that code and the original. Since he did not rely solely on his memory, he
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`argues, he reasonably believed that his copy of the software was legally sufficient. Moreover,
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`Tavory claims that the Copyright Office recently began granting copyrights based on a modified
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`version of source code accompanied by an explanation of the differences from the original,
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`suggesting that Tavory acted in good faith. To NTP’s allegation that Tavory’s legal theory was
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`frivolous, he argues that whether copying – even for the purpose of litigation – is fair use must
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`be determined on a case-by-case basis, and thus that his claim was not frivolous. And, Tavory
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`argues that his discovery requests were reasonable, given that he learned after a lengthy dispute
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`over discovery that NTP copied his software for purposes other than litigation.
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`The Court is not convinced by Tavory’s arguments. Tavory knew that his copy of the
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`software was created recently. The fact that the Copyright Office accepts modified versions of
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`source code in some circumstances does not mean that a copy knowingly produced on the
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`basis of other documents, years after the creation of the original, provides a legitimate basis for
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`a claim of copyright infringement. Moreover, Tavory does not justify why he omitted the date
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`that he created the copy of the software that he submitted to the Copyright Office, a significant
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`omission. Nor did Tavory cite any controlling precedent establishing that copying for the
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`purpose of litigation may not constitute fair use. While the Court refrained from “announc[ing]
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`a rule that categorically shields litigants from copyright liability,” Tavory II, slip op. at 11 n.10,
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`implicitly accepting Tavory’s view that allegations of copyright infringement should be
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`evaluated on a case-by-case basis, Tavory did not offer any compelling arguments that NTP’s
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`use of the software at issue constituted a copyright violation. Finally, although Tavory
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`discovered some relevant information, the Court ruled that NTP’s opposition to Tavory’s
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`discovery requests was, in general, legitimate. See Tavory v. NTP, Inc., No. 06–CV–628 (E.D.
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`Va. Mar. 30, 2007) (“Tavory I”). Thus, Tavory’s position was frivolous, justifying an award of
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`attorneys’ fees to NTP.
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`Even if Tavory’s claims were not frivolous, his allegations were sufficiently weak to
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`warrant an award of attorneys’ fees under the standard applied in Bond. See 317 F.3d at 398
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`(ruling that attorneys’ fees may be awarded even if a losing party’s position was not frivolous).
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`C.
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`Compensation and deterrence
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`NTP argues that Tavory’s claim was stale because it concerned a subject that was
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`addressed in depositions of Tavory taken in 2002, in litigation to which Tavory was not a party.
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`Although Tavory does not justify his delay in filing suit, NTP’s argument lacks a legal basis. A
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`deposition does not trigger a statute of limitations, and the fact that Tavory was asked about
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`a basis of this suit during a unrelated proceeding did not obligate him to bring it at that time.
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`While Tavory made statements in those depositions that are inconsistent with the
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`position he defended in this suit (e.g., in 2002 he claimed that he did not remember the role
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`that he played in the creation of the software, and in 2006 he alleged that he helped to author
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`it), see Tavory II, slip op. at 9, inconsistency is relevant for the purpose of evaluating a party’s
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`motivation in filing suit, not for weighing the need for compensation and deterrence. See
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`Superior Form Builders, 74 F.3d at 498.
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`In addition, NTP’s argument that Tavory waited to sue until the death of a key witness
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`– a person knowledgeable about the authorship of the patents at issue – is unconvincing. It is
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`far more plausible that NTP’s lucrative settlement of its claims in other litigation, making
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`ownership of its patents far more valuable, attracted Tavory’s attention. Thus, this factor does
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`not indicate that an award of attorneys’ fees is warranted.
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`D.
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`Other relevant factors
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`The fact that NTP succeeded on every claim brought by Tavory suggests that an award
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`of attorneys’ fees is appropriate.
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`Thus, three of the four factors established in Rosciszewski, including the two factors to
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`which the Fourth Circuit has given the most weight, indicate that NTP should be awarded the
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`attorneys’ fees that it incurred as a result of Tavory’s claim of copyright infringement.
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`2.
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`Tavory’s patent claims
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`Attorneys’ fees may be awarded in patent litigation only “in exceptional cases.” 35
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`U.S.C. § 285. The purpose of that provision is to enable a court to “award fees in an
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`extraordinary case to prevent gross injustice” – e.g., in a case that was “obviously instituted for
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`purposes of harassment.” Stillman v. Edmund Scientific Co., 522 F.2d 798, 800 (4th Cir.
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`1975); see Am. Chain & Cable Co. v. Rochester Ropes, 199 F.2d 325, 330 (4th Cir. 1952)
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`(ruling that attorneys’ fees should be awarded only in “situations involving vexatious and
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`unjustified litigation on the part of the patentee”). For example, courts have awarded
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`attorneys’ fees against a party that re-litigates an issue decided in a previous suit. See, e.g.,
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`Serrano v. Telular Corp., 111 F.3d 1578, 1585 (Fed. Cir. 1997). If a case is exceptional, “the
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`aggrieved party is entitled to an award of the portion of its attorney fees which related to the
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`vexatious litigation strategy and other misconduct.” Samsung Elecs. Co. v. Rambus, Inc., 439
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`F. Supp. 2d 524, 572 (E.D. Va. 2006) (Payne, J.).
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`The Court granted summary judgment in favor on NTP on Tavory’s patent claims,
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`holding that Tavory failed to show that he significantly contributed to the conception of the
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`patents and to corroborate his claims. Tavory II, slip op. at 14–15. However, the Court’s
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`opinion does not indicate that Tavory’s claims were frivolous. Nor did the Court find that –
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`contrary to NTP’s contention – that Tavory re-litigated claims that were raised during his 2002
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`deposition, taken for litigation to which Tavory was not a party. In fact, NTP’s argument is
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`puzzling, since the fact that a subject arises during a deposition does not create a cause of
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`action that the deponent must either pursue at that time or forfeit.
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`NTP also argues that Tavory’s unsuccessful attempt to amend his Complaint to add a
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`claim based on federal equity, after the Court dismissed his claim of unjust enrichment,
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`constitutes re-litigation. Tavory responds that the Federal Circuit has ruled that a federal
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`equitable remedy is distinct from a claim for disgorgement of profits, see Univ. of Colo. Found.,
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`Inc. v. Am. Cyanamid Co., 342 F.3d 1298, 1304 (2003), and thus that he sought “at most”
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`a “reasonable and good faith extension” of that holding. Regardless of the merits of that
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`argument, in the context of awarding attorneys’ fees “re-litigation” occurs only if a party
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`contests an issue that was decided in a previous suit. See Serrano, 111 F.3d at 1585. Tavory’s
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`suit against NTP was his first, so his attempts to obtain relief in more than one way do not
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`constitute re-litigation.
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`Tavory’s suit apparently sought to establish his claim to some of NTP’s property, not
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`solely to harass the company. Thus, under the higher standard for awarding attorneys’ fees
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`that applies to patent litigation, an award of fees is not warranted for Tavory’s patent claims.
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`3.
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`The amount to be awarded
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`NTP asks for fees based on its “lodestar,” calculated on the basis of a “reasonable
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`hourly rate.” See Hensley v. Eckerhart, 461 U.S. 424, 433–34 (1983); Synthon IP, Inc. v.
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`Pfizer Inc., 484 F. Supp. 2d 437, 443–44 (E.D. Va. Apr. 16, 2007) (Ellis, J.) (applying Hensley
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`to patent litigation). The Fourth Circuit has ruled that a court awarding attorney’s fees must
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`apply each of the factors discussed in Barber v. Kimbrell’s, Inc., 577 F.2d 216, 226 (4th Cir.
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`1978). See Nigh v. Koons Buick Pontiac GMC, Inc., 478 F.3d 183, 189 (4th Cir. Feb. 21,
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`2007); but see In re MRRM, P.A., 404 F.3d 863, 869–70 (4th Cir. 2005) (affirming an award
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`of attorneys’ fees that did not apply Barber in detail). Those factors are “(1) the time and labor
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`expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly
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`perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant
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`litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the
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`litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in
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`controversy and the results obtained; (9) the experience, reputation and ability of the attorney;
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`(10) the undesirability of the case within the legal community in which the suit arose; (11) the
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`nature and length of the professional relationship between attorney and client; and (12)
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`attorneys' fees awards in similar cases.” Barber, 577 F.2d at 226 n.28.
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`NTP’s attorneys charged their standard rates, billing a total of $323,756. According to
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`NTP, of that amount $36,900 was spent defending Tavory’s copyright claim, $27,490 was
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`spent on his patent claims, and $259,367 could not be allocated. NTP asserts, without
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`providing detailed justification, that most of the latter sum was used to defend Tavory’s
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`copyright claim. NTP’s failure to identify how those billings were spent precludes the Court
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`from awarding fees other than those specifically allocated to the defense of Tavory’s copyright
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`claim, since it could not justify any additional award in the way that Barber requires. That
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`result is consistent with the fact that the majority of effort expended on this suit concerned
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`Tavory’s patent claims, for which an award of attorneys’ fees would be improper.
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`NTP’s attorneys spent 141 hours defending Tavory’s copyright claim, which involved
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`complex factual and legal issues that required specialized knowledge. Tavory’s allegations
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`lacked merit, but they were not run-of-the-mill, and he pressed his claims vigorously – resolving
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`this dispute required multiple motions to dismiss and a motion for summary judgment, as well
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`as extensive discovery, including nine depositions in Chicago, Florida, and the District of
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`Columbia. NTP’s attorneys skillfully defended their client, achieving a successful result. Their
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`billing rates were reasonable and commensurate with their experience and standing in the legal
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`community, and this award is comparable to other awards in copyright litigation. Thus, upon
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`due consideration of the factors established in Barber, the Court finds that an award of
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`$36,899.57 to NTP is appropriate, given the nature of this suit, the quality of work performed
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`by its attorneys, and the results they obtained.
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`4.
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`Conclusion
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`Accordingly, NTP’s Motion for Attorneys’ Fees shall be GRANTED IN PART AND
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`DENIED IN PART, and NTP shall be awarded $36,899.57.
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` /s/
`James R. Spencer
`Chief United States District Judge
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`ENTERED this 9th day of October 2007
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