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Eli Lilly and Company v. Elizabeth LLC

January 22, 2013



This matter comes before the Clerk on the motion of Plaintiff Eli Lilly and Company ("Plaintiff," "Lilly," "the movant") for the taxation of costs pursuant to Federal Rule of Civil Procedure 54(d) and Local Civil Rule 54.1. Defendants Sun Pharmaceutical Industries Ltd. ("Sun"), Sandoz Inc. ("Sandoz"), Mylan Pharmaceuticals Inc. ("Mylan"), Apotex Inc.("Apotex") and Aurobindo Pharma Ltd. ("Aurobindo") (hereinafter, collectively, "Defendants") oppose this motion.

This is a patent infringement case involving a drug marketed by Lilly as Strattera. On August 19, 1997, Lilly was assigned U.S. Patent No. 5,658,590 ("the '590 patent"), a method-of-use patent covering methods of treating attention deficit/hyperactivity disorder ("ADHD") with tomoxetine (also referred to as atomoxetine). In its First Amended Complaint, filed on September 5, 2007 [Dkt. Entry 3], Lilly alleged that each of the above-captioned defendants violated Lilly's '590 patent by filing an Abbreviated New Drug Application for approval by the United States Food and Drug Administration of its generic version of Strattera. In their answers and counterclaims, the various defendants sought declarations that Lilly's patent was invalid, unenforceable and/or not infringed. On December 12, 2007, Lilly entered into a Consent Judgment and Order resolving its claims against Zydus Pharmaceuticals, USA, Inc. and providing that each party would bear its own costs [Dkt. Entry 105]. Lilly entered into a similar Consent Judgment and Order with Glenmark Pharmaceuticals Inc. USA on July 1, 2008 [Dkt. Entry 174]. On August 20, 2008, by Stipulation and Order of Dismissal, Lilly's claims against Synthon Laboratories, Inc. ("Synthon") were dismissed without prejudice as were Synthon's defenses and counterclaims [Dkt. Entry 215]. The Order again provided that each party was to bear its own costs.

On October 22, 2008, Sun filed a motion for partial summary judgment as to no direct infringement [Dkt. Entry 254] and the other Defendants herein, i.e., Sandoz, Mylan, Apotex, and Aurobindo, joined in, as did defendants Actavis Elizabeth LLC ("Actavis") and Teva Pharmaceuticals USA, Inc. ("Teva"). That motion was granted by this Court's Order of May 21, 2009 [Dkt. Entry 332]. On May 13, 2009, Sandoz, Mylan, Apotex, Aurobindo, and Sun, i.e., Defendants here, as well as defendants Actavis and Teva, filed a joint motion for summary judgment of invalidity [Dkt. Entry 294].*fn1

On the same date, Lilly filed motions for summary judgment of no inequitable conduct [Dkt. Entry 292], of no anticipation [Dkt. Entry 298], and of infringement [Dkt. Entry 299].

During the period of May through July 2009, Aurobindo, Sun, Mylan, Teva, Apotex, Sandoz and Actavis filed separate motions for summary judgment of no infringement. [Dkt. Entries 283, 304, 308, 380, 394, 412, 436, respectively].

By Order of December 29, 2009 [Dkt. Entry 491], the Court ruled on the various motions for summary judgment as follows: the defendants' motion for summary judgment of invalidity based upon lack of enablement/utility and obviousness was denied as was their motion for summary judgment of no infringement. Lilly's motion for summary judgment of no inequitable conduct before the Patent and Trademark Office was granted in part and denied in part. Lilly's motion for summary judgment of no anticipation was granted as was its motion for summary judgment as to induced infringement.

On January 19, 2010, the Court also granted the defendants' motion for summary judgment of no contributory infringement. [Dkt. Entry 506].

On February 8, 2010, the Court denied Apotex's motion to reconsider the Court's Order granting summary judgment of induced infringement. [Dkt. Entry 537]. Also denied, on February 23, 2010, was Lilly's motion to reconsider findings in the Court's Amended Opinion, addressing the defendants' motion for summary judgment of non-enablement. [Dkt. Entry 540].

On April 8, 2010, Lilly and Teva entered into a Joint Stipulation staying all of Lilly's claims against Teva and all of Teva's defenses until a final court decision from which no appeal could be taken. [Dkt. Entry 557]. The parties waived any and all claims against the other for costs.

On April 19, 2010, Lilly entered a virtually identical Joint Stipulation, staying the action with Actavis, and waiving the parties' claims for costs against the other. [Dkt. Entry 567].

After a six-day bench trial, held on May 18, 19, 24-27, 2010, the Court concluded that these Defendants, Actavis and Teva failed to prove that the '590 patent was invalid as obvious or not enabled to the full scope of its claims or that the patent should be held unenforceable as a result of inequitable conduct. However, the Court determined that the '590 patent was invalid for lack of enablement/utility under 35 U.S.C. § 112. [Dkt. Entry 657]. Final Judgment was entered in favor of Defendants on August 24, 2010. [Dkt. Entry 686]. Lilly filed its notice of appeal to the United States Court of Appeals for the Federal Circuit on August 25, 2010 [Dkt. Entry 687], and Defendants herein cross-appealed. [Dkt. Entries 689-94]. On August 31, 2010, the Federal Circuit granted Plaintiff's request for an injunction pending the appeal. On October 25, 2011, the Federal Circuit issued its mandate, reversing in part, affirming in part and remanding to this Court. [Dkt. Entry 743]. The Circuit Court reversed this Court's judgment that the '590 patent claims were invalid and its finding of no contributory infringement by the defendants. It affirmed this Court's finding of validity on other grounds and induced infringement by the defendants. Id. On December 6, 2011, Final Judgment was entered by this Court in favor of Lilly and against these Defendants, Actavis and Teva, and it provides for the defendants' payment of costs to Lilly. [Dkt. Entry 748].

Plaintiff filed the instant motion on January 5, 2012 [Dkt. Entry 749], seeking the taxation of costs as a "prevailing party" within the meaning of Fed. R. Civ. P. 54(d).*fn2 Specifically, Lilly requests the taxation of the fees of: the Clerk ($1,100.00)*fn3 ; hearing and deposition transcripts ($57,614.64)*fn4 ; witnesses ($1,150.00); and exemplification and copies ($275,103.40), or a total of $334,968.04. Defendants object to taxation of all categories of costs.

I.Standards for Awarding Costs

Under Federal Rule of Civil Procedure 54(d) (1), a prevailing party is entitled to costs unless the Court otherwise directs. A prevailing party is "one in whose favor a judgment is rendered, regardless of whether the party has recovered its entire claim or a portion thereof." Garonzik v. Whitman Diner, 910 F. Supp. 167, 168 (D.N.J. 1995) (citing Fahey v. Carty, 102 F.R.D. 751 (D.N.J. 1983)). That term has been even more broadly defined as a party who "succeeds on 'any significant issue in litigation which achieved some of the benefit sought in bringing suit.'" Reichhold, Inc. v. U.S. Metals Ref. Co., Civ. A. No. 03-453, 2009 WL 3761828, at *1 (D.N.J. Nov. 6, 2009) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)).

Indeed, there is such a strong presumption that costs should be awarded to the prevailing party that, " '[o]nly if the losing party can introduce evidence, and the district court can articulate reasons within the bounds of its equitable power, should costs be reduced or denied to the prevailing party.' " Reger v. Nemours Found., Inc., 599 F.3d 285, 288 (3d Cir. 2010) (quoting In re Paoli RR Yard PCB Litig., 221 F.3d 449, 468 (3d Cir. 2000)). The rationale behind this presumption is that the denial of costs is tantamount to a penalty. Id. at 288-289 (citing ADM Corp. v. Speedmaster Packaging Corp., 525 F.2d 662, 665 (3d Cir 1975)). Despite this strong presumption, courts do not have unfettered discretion to grant costs under Rule 54(d) but rather, are bound by statute. The United States Supreme Court has ruled that absent express statutory authorization, courts may reimburse only those costs which are enumerated in 28 U.S.C. § 1920. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441 (1987). Title 28 U.S.C. § 1920 provides for the taxation of the following costs:

(1) Fees of the clerk and marshal;

(2) Fees for printed or electronically recorded transcripts necessarily obtained

for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

(5) Docket fees under section 1923 of this title;

(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

The Supreme Court recently reinforced its Crawford Fitting holding in Taniguchi v. Kan Pacific Saipan, Ltd., 132 S.Ct. 1997 (2012). In Taniguchi, the Court limited the provision in §1920 (6) for the "compensation of interpreters" to the cost of oral translation, and denied the cost of document translation, stating that its decision was "in keeping with the narrow scope of taxable costs." Id. at 2006.

In addition to Rule 54(d) and 28 U.S.C. § 1920, the Clerk's decision is guided by Local Civil Rule 54.1, which "establishes the general procedures to be followed in those cases where a party is entitled to recover costs" under § 1920. Lite, N.J. Federal Practice Rules, Comment 2 to Rule 54.1 (Gann 2013 ed.) at 234.

Therefore, while a prevailing party is entitled to costs under Rule 54(d), "those costs often fall well short of the party's actual litigation expenses." In re Paoli, 221 F.3d at 458.

Furthermore, despite the presumption of granting costs to a prevailing party, that party must provide sufficient information to carry its burden of showing that the costs sought fall within the limits of § 1920. Romero v. CSX Transp., Inc. 270 F.R.D. 199, 201-202 (D.N.J. 2010).

Plaintiff is the prevailing party as Final Judgment was entered in its favor post-appeal and Defendants do not dispute this. Furthermore, Lilly has followed the procedural requirements set forth in L. Civ. R. 54.1 and 28 U.S.C. § 1924 by timely filing and serving a verified Bill of Costs with copies of invoices appended [Dkt. Entry 749]. As such, the Clerk will now examine the specific costs of which Plaintiff seeks taxation, as outlined in the Declaration of L. Scott Burwell, Esq. ("Burwell Decl.") [Dkt. Entry 749-2].

II. Fees of the Clerk and Marshal, § 1920 (1)

A. Filing Fee

Plaintiff seeks reimbursement, pursuant to § 1920 (1), of the $350 fee for filing its Complaint. At the time of filing its original Complaint on August 9, 2007, the fee required under 28 U.S.C. § 1914(a) to file a civil action was $350 and the docket shows that this fee was paid by Plaintiff. Defendants do not contest taxation of this cost, clearly allowed under § 1920 (1), and therefore, the Clerk taxes this $350 cost.

B.Pro Hac Vice Fees

The movant also seek reimbursement, under §1920 (1), of the $750 cost of the pro hac vice admission of five out-of-state counsel. A $150 fee was paid by Plaintiff to the Clerk for the admission of each of these attorneys on January 22, 2010, as required under L. Civ. R. 101.1(c) (3).

Section 1920 (1) allows the taxation of the "[f]ees of the clerk" but does not explicitly include pro hac vice fees as costs. The Third Circuit has not addressed whether these fees are taxable costs and federal courts have lined up on both sides of the issue. The Eighth Circuit has held that pro hac vice fees are recoverable under § 1920 (1), Craftsmen Limousine, Inc. v. Ford Motor Co., 579 F.3d 894, 898 (8th Cir. 2009), and the Eleventh Circuit has held otherwise, Beck v. Prupis, 162 F.3d 1090, 1100 (11th Cir. 1998), aff'd, on other grounds, 529 U.S. 494 (2000) (finding district court did not abuse its discretion in disallowing the taxation of pro hac vice fees).

Defendants assert that pro hac vice fees are not taxable under the governing statutes and cite two decisions by this Court. However, in the case of Dewey v. Volkswagen of Am., 728 F.Supp.2d 546 (D.N.J. 2010), rev'd on other grounds, 681 F.3d 170 (3d Cir. 2012), the Court there stated that Rule 54(d) was not controlling in that case. The case of Pretlow v. Cumberland Cnty. Bd. Of Soc. Servs., Civ. A. No. 04-2885, 2005 WL 3500028 (D.N.J. Dec. 20, 2005), also cited by Defendants, applied 42 U.S.C. § 1988, not 28 U.S.C. § 1920. Similarly, the case of Interfaith Community Org. v. Honeywell, Int'l, 426 F.3d 694 (3d Cir. 2005), cited by the Pretlow court, applied the cost provision for citizen suits found in 42 U.S.C. § 6972(e), not 28 U.S.C. § 1920. The Clerk is not guided by such case law which relies on fee-shifting provisions other than Fed. R. Civ. P. 54(d) and 28 U.S.C. § 1920. By its plain language, Rule 54(d) provides for such an exception: "[u]nless a federal statute . . . provides otherwise."

Plaintiff relies upon the case of Church & Dwight Co., Inc. v. Abbott Labs., Civ. A. No. 05-2142, 2009 U.S. Dist. LEXIS 58067, at *21 (D.N.J. July 8, 2009), in which this Court summarily taxed pro hac vice fees without discussion of case law or its rationale. Nevertheless, particularly in the wake of the Taniguchi case, the Clerk is persuaded by the reasoning of those courts within this Circuit which have relied upon § 1920 (1) and declined to tax such fees. In Sheffer v. Experian Info. Solutions, Inc., 290 F.Supp.2d 538, 552 (E.D. Pa. 2003) (quoting Romero v. United States, 865 F. Supp. 585, 594 (E.D. Mo. 1994)), the court explained that pro hac vice fees are "an 'expense of counsel for the privilege of practicing law in this Court' and, as such, are 'not normally charged to a fee-paying client . . . and are not recoverable' under § 1920." See also Montgomery County v. Microvote Corp., Civ. A. No. 97-6331, 2004 WL 1087196 , at *3 (E.D. Pa. May 13, 2004). Other courts have similarly held. See, e.g., Moss v. Spartanburg County School Dist., C.A. No. 7:09-1586-HMH, 2011 WL 1870280, at *1 (D.S.C. May 17, 2011); Lofton v. McNeil Consumer & Specialty Pharm., Civ. A. No. 3:05-CV-1531-L, 2011 WL 206165, at *1 (N.D. Tex. Jan 4, 2011); Knauff v. Dorel Juvenile Group, Inc., Civ. A. No. SA-08-CV-336-XR, 2010 WL 2545424, at *2 (W.D. Tex. June 21, 2010).

The Clerk agrees that Defendants should not be required to pay these fees simply because Plaintiff chose to be represented by counsel who are not admitted to practice in this district. Therefore, the Clerk denies the taxation of Plaintiff's pro hac vice fees.

II.Fees for Transcripts, § 1920 (2)

A. Trial Transcripts

Lilly seeks reimbursement, pursuant to § 1920 (2), of the $2,862.00 cost of the written transcript of the six-day trial, as well as the $967.20 charge for the Realtime transcript of the last four days of the trial, or a total of $3,839.20. Defendants object to taxation of the Realtime transcript which they view as duplicative and a convenience of counsel, but do not object to the taxation of the written transcript.

Fees for recorded transcripts are taxable under § 1920 (2) if the transcripts were necessarily obtained for use in the case. Local Civil Rule 54.1(g) (6) specifies:

The cost of a reporter's transcript is allowable only (A) when specifically requested by the Judge, master, or examiner, or (B) when it is of a statement by the Judge to be reduced to a formal order, or (C) if required for the record on appeal. . . Copies of transcripts for an attorney's own use are not taxable in the absence of a prior order of the Court. All other transcripts of hearings, pretrials and trials will be considered by the Clerk to be for the convenience of the attorney and not taxable as costs.

The comments to L. Civ. R. 54.1 further provide:

In submitting a Bill of Costs to the Clerk which includes a request to tax costs of transcripts, it is essential to specify how the transcript was used. Absent evidence of a request from the Court for the transcript or proof by way of supporting affidavit that the transcript was used in a way that gives rise to an entitlement to a costs award, it is the practice of the Clerk to deny the request.

Lite, N.J. Federal Practice Rules, Comment 4d. to Rule 54.1 (Gann 2013 ed.) at 245.

The cost of the written transcript is certainly taxable because it was used in several ways and therefore, the Clerk grants this $2,862.00 cost. In the Final Pretrial Order, the Court required that counsel submit trial briefs and post-trial proposed findings of fact and conclusions of law. [Dkt. Entry 566]. Trial transcripts are taxable when used to prepare findings of fact and conclusions of law, particularly in a complex case such as this. Merck Sharp & Dohme Pharms., SRL v. Teva Pharms., USA, Inc., Civ. A. No. 07-1596, 2010 WL 1381413, at *3 (D.N.J. Mar. 30, 2010). Trial transcripts are necessary when the proposed findings could not have been presented adequately without them. Manley v.Canterbury Corp., 17 F.R.D. 234, 235 (D. Del. 1955); Cottier v. City of Martin, No. CIV 02-5021, 2012 WL 397487, at * 3 (D.S.D. Feb. 7, 2012); Neuros Co., Ltd. v. KTurbo, Inc., No. 08-cv-5939, 2011 WL 3841683, at *3 (N.D. Ill. Aug. 25, 2011).

Additionally, the daily trial transcripts were used to prepare witnesses for examination and for the admission of exhibits into evidence. Pl.'s Br. at 2, n.2. Furthermore, they were necessary to brief Plaintiff's appeal to the Federal Circuit. Id. Regarding the cost of the Realtime transcript of four days of the trial, Defendants maintain that this transcript was not essential to the smooth functioning of the trial, not necessary for the record on appeal, and was merely for the convenience of counsel. Defs.' Br. at 3. The Clerk agrees and notes that, as stated by Defendants, attorneys have conducted trials without them for decades. Absent a showing of necessity, this type of litigation support cost is deemed to be for the convenience of counsel and therefore not taxable under ยง 1920 (2). See e.g., United States ex rel. Davis v. U.S. Training Center, Inc., 829 F. Supp. 2d 329, 339 (E.D. Va. 2011) (denying costs of transcript drafts and realtime transcript services as convenience of counsel and not necessary to successful trial preparation); Evert Fresh Corp. v. Pactiv Corp., Civ. A. No. 4:09-cv-1936, 2011 WL 2672353, at *2-3 (S.D. Tex. July 7, 2011) (denying cost of electronic version of transcripts even though counsel ...

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