United States District Court, D. Delaware
parties, Plaintiff Roche and Defendant Nova, each filed
motions for attorney's fees. (D.I. 1049, 1050). The
Magistrate Judge filed a Report and Recommendation
recommending that each motion be denied. (D.I. 1091). The
parties each filed objections to the denial of their motions,
and each has filed responses. (D.I. 1092, 1093, 1097, 1098).
As the parties both agree, I review their objections de
Magistrate Judge's Report is lengthy, and I will adopt
the factual findings and legal conclusions in the Report. I
do not separately recite any of them except as I think
necessary to explain my decision.
motion (D.I. 1049) is based on 35 U.S.C. § 285 and
Roche's complete failure on its patent infringement case.
Roche does not contest that Nova is the prevailing party.
(D.I. 1104 at 6). The Magistrate Judge recommended that the
Court find that the case is not exceptional. (D.I. 1091 at
24). "[A]n 'exceptional' case is simply one that
stands out from others with respect to the substantive
strength of a party's litigating position (considering
both the governing law and the facts of the case) or the
unreasonable manner in which the case was litigated."
Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
134 S.Ct. 1749, 1756 (2014). Nova objects to the
objection centers on what it considers an "improper
motion for reconsideration, " and a "claim
construction position [that] was unreasonable." The
centerpiece of this argument is that Nova's product used
electrodes with a width of 762 urn but the patent claims (as
construed) required a width of less than 100 urn, which
required Roche to make baseless arguments that the patent
claims only required a width of less than 1000 um. Interwoven
with this is an argument about what the dividing line between
a micro-electrode and a macro-electrode was. It is of course
true that Roche lost on these arguments, and that its
arguments morphed from the initial Markman before Judge
Farnan. Neither of these two points makes Roche's conduct
exceptional. One side always loses, and, in my experience, it
is routine (though frustrating) that arguments generally, and
claim construction arguments in particular, shift and are
recycled in different guises during litigation. See Sarif
Biomed. LLC v. Brainlab, Inc., 2016 WL 5422479, at *2
(D.Del. Sept. 27, 2016) (Judge Stark expressing similar
experience). Roche notes that none of the judges who partook
of this case contemporaneously expressed perceived
baselessness of Roche's positions. (D.I. 1098 at 4 (Judge
Farnan) & at 9 (Federal Circuit)). I do not think this matters.
Nor do I think it matters that another prevailing party has
not filed a motion for attorney's fees. (See
D.I. 1098 at 1).
end, I think the reasonableness of Roche's claim
construction positions are supported by the Federal
Circuit's opinion on the first appeal. See Roche
Diagnostics Operations, Inc. v. LifeScan Inc., 452
Fed.Appx. 989 (Fed. Cir. 2012). I remember that I read that
opinion as strongly implying that the panel thought Judge
Farnan had gotten the claim construction wrong. At a minimum, it
raised a lot of questions about the claim construction of
"electrode." Ultimately, I thought Judge Farnan had
gotten it right, and I thought the panel opinion did not
expressly say that his claim construction was wrong. Thus, I
thought I was free to reach the same conclusion in the second
Markman opinion as Judge Farnan had in the first.
(See D.I. 563 & 564; D.I. 1025 at 15).
docket reflects that it took me more than two years to issue
the second Markman opinion. That is not a coincidence. I
thought the Markman aspect of the opinion would be the
subject of a vigorous appeal. That is why I also spent
considerable time and effort thinking about whether the
reconsideration motion was "procedurally improper,
" and used my conclusion as an alternative basis for
decision. As for Nova's argument now that the
reconsideration motions were improper, I would simply note
that I was the only judge to state that I thought they were
procedurally improper. More importantly, Nova did not raise the
"procedurally improper" argument in the first
appeal (D.I. 1025 at 9), and I do think I can treat that as
contemporaneous evidence that it was less than clear that
Roche's reconsideration motions were procedurally
improper. Said another way, Nova's appellate approach is
inconsistent with its present argument that Roche was filing
motions that were clearly procedurally improper.
was a hard-fought patent infringement case, in which Nova was
the winner, but I do not think it is an exceptional case.
Thus, Nova's objections (D.I. 1092) are overruled, and I
will deny Nova's motion for attorney's fees (D.I.
motion (D.I. 1050) seeks attorney's fees based on Swiss
law analogous to the "English Rule, " that is, the
loser pays the winner's attorney's
fees. The issue arises because Nova asserted
four counterclaims (to wit, breach of contract,
misappropriation of trade secrets, unfair competition, and
conversion), which it lost. It was clear early on in the
litigation that Swiss law controlled on the breach of
contract claim (D.I. 211, p.3; D.I. 216, p.l), although the
applicability of Swiss law to the other three claims was not
determined until trial. The reason Swiss law applied to the
counterclaims was that the claims arose out of an alleged
breach of a two-page non-disclosure agreement, which had a
provision stating, in total, "This Agreement shall be
governed in all respects by the laws of Switzerland."
(D.I. 1054-1 at 129 [Exh. C at 2]). See Roche v.
LifeScan, 452 Fed.Appx. at 997.
argues that it is entitled to a "basic fee" of $45,
350, 000. (D.I. 1052, pp. 16-17). Its Swiss law expert
explains that it would usually get a surcharge of 30% (or
$13, 605, 000), for a total of $58, 955, 000. (D.I. 1054,
¶¶ 21, 26). Or, maybe not, as it is
"likely" that Swiss law might limit the surcharge
in this case because of "constitutional limitations on
excessive compensation that might appear
arbitrary." (Id., ¶ 26).
objections to the Report and Recommendation are two-fold. The
first is that the Magistrate Judge conducted the wrong
analysis, and the second is that the analysis she did conduct
was in significant part wrong. In order to resolve those
objections, I think it is necessary to decide exactly what
the analytical framework is that I should be using.
with the jurisdictional basis for the counterclaims. Nova
alleged that to be diversity of citizenship and supplemental
jurisdiction. (D.I. 47, p.8, ¶ 5). Roche initially
denied them. (D.I. 63, p.2). Roche later agreed, at a
minimum, that the court had jurisdiction on the basis of
supplemental jurisdiction. (D.I. 767, p.2). The point here is that
the counterclaims were the equivalent of state law claims.
Thus, "state law" (by which I mean either Swiss law
or Delaware law) applies to the issue of attorney's fees
on the counterclaims. See Alaska Rent-a-Car, Inc. v. Avis
Budget Group, Inc., 738 F.3d 960, 973 (9th Cir. 2013).
How to decide which "state's" law applies?
"The rule is that the federal court in which the case is
litigated should apply the forum state's choice of law
rules." Id. Thus, I apply Delaware's choice
of law rules.
courts look to the Restatement (Second) of Conflict of Laws
to determine choice-of-law issues. See Gavin v. Club
Holdings, LLC, 2016 WL 1298964, *3 (D.Del. Mar. 31,
Magistrate Judge's analysis followed the approach taken
by Delaware courts to analogous situations. The analysis
primarily tracked that of Relax Ltd. v. ANIP Acquisition
Co., 2011 WL 2162915 (Del. Sup. Ct. May 26, 2011).
See Microsoft Corp. v. Patent Revenue Partners, LLC,
2015 WL 6122331, *4 (Del. Ct. Ch. Oct. 15, 2015) (following
Relax, the Superior Court had a breach of contract
case in which the contract provided that it '"shall
be governed by English law, '" exactly parallel to
the non-disclosure agreement's provision that it
"shall be governed in all respects by the laws of
Switzerland." The parties disputed whether the
"English rule" or the "American rule"
should apply to the request for attorney's fees. The
Court held that it must "address two issues: (1) is the
right to counsel fees procedural or substantive; and (2) if
substantive, is [the winner] entitled to counsel fees under
the English rule." To determine whether the issue was
procedural or substantive, the Court conducted an analysis
pursuant to Restatement § 122, which states, "A
court usually applies its own local law rules prescribing how
litigation shall be conducted even when it applies the local
law rules of another state to resolve other issues in the
case." The Restatement's commentary noted that there
were issues that would "fall into a gray area between
issues relating primarily to judicial administration and
those concerned primarily with the rights and liabilities of