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Court Awards Millions in Attorneys’ Fees for Document Review Conducted by Contract Attorneys and Use of Computer-Assisted Review

Posted in CASE SUMMARIES

Gabriel Techs., Corp. v. Qualcomm, Inc., No. 08CV1992 AJB (MDD), 2013 WL 410103 (S.D. Cal. Feb. 1, 2013)

Following entry of judgment in their favor in this patent infringement case, Defendants filed a motion seeking attorneys’ fees, including $391,928.91 for document review conducted by an outside provider of discovery services and $2,829,349.10 “attributable to computerassisted [sic], algorithm-driven document review” utilized to reduce the number of documents requiring manual review.  The court found these amounts reasonable and granted the motion in part.  Ultimately, the court awarded Defendants a total of $12,465,331.01.

Defendants alleged that Plaintiffs “pursued objectively baseless patent and misappropriation claims in bad faith” and thus sought attorneys’ fees “with regard to Plaintiffs’ patent claims under 35 U.S.C. § 285 and with regard to Plaintiffs’ misappropriation claims under Section 3426.4 of CUTSA” (California’s Uniform Trade Secrets Act).  Sparing the details, the court concluded that an award of attorneys’ fees was appropriate under each statute and further determined that because “each one of Plaintiffs’ claims [was] covered under the ambit of one of the statutes, the Court need not apportion Defendants’ attorneys’ fees to the particular cause of action it addressed.”  Accordingly, the court indicated it would determine “the reasonable amount of the award using the lodestar determination.”

In addition to the fees attributable to lead counsel, Defendants sought recovery of fees related to the document review undertaken by an outside discovery service provider (using contract attorneys) and of fees “attributable to computerassisted [sic], algorithm-driven review.”  Specifically, after collecting almost 12 million records (mostly ESI), Defendants relied on an outside vendor to “employ its proprietary technology to sort the[ ] records into responsive and non-responsive documents” and then provided those documents identified as responsive to a separate discovery service provider whose attorneys manually reviewed them for “confidentiality, privilege and relevance issues.”

Addressing first the fees requested for document review conducted by a discovery service provider, the court noted that Plaintiffs’ initial claims involved 92 patents “resulting in voluminous document production,” and reasoned that if lead counsel had performed the review, “the resulting attorneys’ fees would have undoubtedly been exponentially higher . . . .”  Thus, “in light of the circumstances,” the court concluded that the rates charged and the hours spent for document review were “reasonable” and that the lodestar amount of $391,928.91 was reasonable as well.

As for those fees attributed to the computer-assisted review, the court reasoned that the technology provider and the document reviewers “accomplished different objectives with the H5 electronic process minimizing the overall work” for the review attorneys and found lead counsel’s decision “to undertake a more efficient and less time-consuming method of document review,” to be “reasonable under the circumstances.”  The court further reasoned that the approach “seemingly reduced the overall fees and attorney hours required” and thus found the requested amount of $2,829,349.10 to be reasonable.

Ultimately, the court awarded a total of $12,465,331.01 including fees for the work of lead counsel and the fees related to discovery as discussed above.  Plaintiffs were ordered to pay $12,401,014.51.

The court also awarded $64,316.50 in attorneys’ fees against local counsel, upon finding that sanctions were warranted under Rule 11 for for counsel’s failure to  conduct sufficient inquiry into the merits of Plaintiffs’ case, particularly after the judge “warned of substantial deficiencies in Plaintiffs’ case” and ordered a bond of $800,000.00.

It should be noted that the total award reflected a $1,000,000.00 reduction in the total amount requested by Defendants, as a result of the court’s determination that it was "appropriate to limit the imposition of fees to those incurred after the entry of the bond order."