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Losers, Weepers — Weepers with a Lot of Expenses • 2011 11 29 LosersWeepersMoney, money, money—that was the name of the game in the only IP decision last week. The Federal Circuit came to some interesting conclusions in its litigation cost analysis….

In re Ricoh Co., Ltd., Patent Litigation, No. 2011-1199 (Fed. Cir. Nov. 23, 2011) (Judges Lourie, Bryson, and Dyk)

Note to readers: if you’re thinking about suing someone, be aware that the Federal Rules of Civil Procedure say that a litigation loser has to pay the other side’s administrative costs. The law does limit what types of costs can be awarded, and a court gets to make the final decision on the total amount of costs. Even with these controls, costs in a complex patent litigation can be sky high.

In this case, for example, Synopsys, after winning on summary judgment, filed a Bill of Costs asking Ricoh to pay $1.375 million in litigation costs. Keep in mind, that amount does not include attorneys’ fees (for either side) or trial costs (since the case didn’t get to trial). Ricoh, understandably, objected. After some back and forth, the district court concluded that the right amount was $938,957.72, plus interest. Ricoh appealed that order to the Federal Circuit, challenging $688,465.42 of the costs.

The court put Ricoh’s objections to costs into 3 categories: (1) expenses for an e-discovery database, (2) copy costs for case materials and “exemplification fees” (costs for transcripts—yeah, I had to look that one up), and (3) deposition and interpreter costs. The court came to a different conclusion for each category.

 (1) The e-discovery database. This is, I think, the most interesting assessment of the three. Ricoh tried to argue that the Stratify database, which Ricoh itself had suggested because it insisted on getting e-mails produced in native format, was only a “document review database.” According to Ricoh, the database shouldn’t count as a necessary and allowable document production cost. The court disagreed, noting that production costs don’t just cover printing and Bates-numbering documents. So, the database costs could be charged.

But wait! The court went on to say that, while database costs could be charged generally, they couldn’t here. Why? Because the parties had a cost-sharing agreement. The cost-sharing agreement wasn’t time-limited, and nowhere did that contract say that the winning party could recover the database costs once the case was over. The Federal Circuit concluded that the terms of the contract override the general rule that database costs are allowed. The court knocked $234,702.43 off Ricoh’s bill.

(2) Copy costs. The district court awarded Synopsys $322,515.71 in copy costs. Ricoh contended that only $146,584.83 should have been allowed. The debate is over whether costs for certain copies were “necessarily obtained”—that’s the limitation that the law sets on copy costs.

The Federal Circuit said Synopsys’s documents were too vague to allow it to reach a conclusion. The court (relying on the law of other circuits) stated that the descriptions for copy costs need to be detailed and specific; general entries like “transcripts” and “document production” don’t cut it. The court found it particularly suspicious that most of the invoices show the copies in question being shipped to Synopsys’s counsel, not to Ricoh.

The court wasn’t too pleased with what it had to work with on this aspect, remarking that “both parties’ briefs were not as helpful as they should have been in assisting us to resolve this dispute.” (See page 10.) It wasn’t convinced that Ricoh’s proposed amount was correct either. The court sent this category back to the district court and told it to take a closer look.

(3) Deposition/interpreter fees. Ricoh claimed that it shouldn’t be on the hook for all of the deposition transcript costs because the parties only relied on six depositions in the dispositive summary judgment briefs. The court rejected that argument, and also approved charging Ricoh for the cost of both a written transcript and a video of the depositions.

As a final tally, Ricoh is definitely stuck with a cool half-million dollars in costs (the costs it didn’t challenge plus the deposition/interpreter costs). It might have to pay more in copy costs too. But at least it avoided the database costs. This is a good case to keep in mind if you’re negotiating discovery plans and cost-sharing agreements—tread carefully when making cost-incurring choices, in case they come back to bite you.

How much do you think Ricoh should fish out of its piggy bank? Read the opinion and offer your two cents.