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Depomed, Inc. v. Actavis Elizabeth LLC

United States District Court, D. New Jersey

February 21, 2018

DEPOMED, INC. and GRUNENTHAL GMBH, Plaintiffs/Counterclaim Defendants
v.
ACTAVIS ELIZABETH LLC and ALKEM LABORATORIES LIMITED, Defendants/Counterclaim Plaintiffs. AND CONSOLIDATED CASES

          CLERK'S OPINION GRANTING IN PART AND DENYING IN PART DEPOMED'S MOTION TO TAX COSTS

         This matter has come before the Clerk on the motion [Dkt. Entry 584][1] of Plaintiff/Counterclaim Defendant Depomed, Inc. (“Depomed”) to tax costs against Defendants/Counterclaim Plaintiffs Actavis Elizabeth LLC, Actavis UT (collectively, “Actavis”), Alkem Laboratories Limited (“Alkem”), and Roxane Laboratories, Inc. (“Roxane”) (collectively, “Defendants”) pursuant to Fed.R.Civ.P. 54 (d) and Local Civil Rule 54.1.

         Defendants oppose this motion.

         This is the first of two motions to be considered by the Clerk in these consolidated cases. A second opinion will address the separate motion of Plaintiff Grunenthal GmbH (“Grunenthal”) to tax costs against these same Defendants.

         In these six consolidated Hatch-Waxman cases, Depomed and Grunenthal (together, “Plaintiffs”) asserted that three of their patents were infringed by the Defendants' filing of Abbreviated New Drug Applications .[2] The patents-in-suit, i.e., U.S. Reissue Patent No. 39, 593 (the “RE593 patent”), U.S. Patent No. 7, 994, 364 (“the ‘364 patent”) and U.S. Patent No. 8, 536, 130 (“the ‘130 patent”) are directed to compositions and methods relating to Plaintiffs' NUCYNTA® tapentadol hydrochloride products. Grunenthal owns the patents and licenses them to Depomed. Plaintiffs asserted that Defendants' generic versions of tapentadol hydrochloride products for which they sought approval from the United States Food and Drug Administration (“FDA”) infringed their patents.[3]

         The Clerk, who is somewhat hampered by the sealing of many of the docket entries, gives a very cursory procedural history herein. As in the normal course of Hatch-Waxman litigation, the Defendants filed counterclaims for declaratory judgments of non-infringement, invalidity and/or unenforceability of the patents. The cases were governed by a Stipulated Discovery Confidentiality Order [Dkt. Entry 127] and a Stipulation and Order Concerning Protocol for Discovery of Electronically Stored Information [Dkt. Entry 154]. They proceeded through a Markman hearing on the claims of the RE593 and ‘364 patents on November 25, 2014 [Dkt. Entry 180], and the filing of in limine motions on January 11, 2016 [Dkt. Entries 301-04].

         By January 25, 2016, all six cases were consolidated for all purposes, including trial. [Dkt. Entry 326]. The various in limine motions were denied on February 22, 2016 [Dkt. Entry 364], and so too were Plaintiffs' and Roxane's motions for summary judgment, and Plaintiffs' motion to dismiss Actavis Elizabeth's third counterclaim to correct or delete the use code for the ‘130 patent on March 4, 2016. [Dkt. Entries 390-94].

         Also on March 4, 2016, the parties entered into a Stipulation and Order of Infringement, whereby they agreed that the Defendants would be liable for infringement of each asserted claim of the RE593 and ‘364 patents found to be not invalid. [Dkt. Entry 400].

         On March 6, 2016, the parties consented to the bifurcation of Actavis Elizabeth's third counterclaim from the trial. [Dkt. Entry 407].

         The Court conducted a 10-day bench trial on March 9-11, 14-17, 21-23, 2016 [Dkt. Entries 409, 412, 414, 416-19, 421-23]. Between the conclusion of the trial and closing arguments on April 27, 2016 [Dkt. Entry 460], the parties filed post-trial briefs and proposed findings of fact and conclusions of law [Dkt. Entries 448-49, 451-52, 454-57].

         On May 18, 2016, the Court enjoined the Defendants from launching their allegedly infringing products pending the earlier of the entry of the Court's trial decision or September 30, 2016. [Dkt. Entry 468].

         The Court issued its trial order on September 30, 2016 [Dkt. Entry 537], finding no invalidity of the three patents, or unenforceability of the ‘364 patent. Therefore, pursuant to the Stipulation and Order of Infringement, all Defendants were found to have infringed the RE593 and ‘364 patents. Alken alone, not Actavis Elizabeth or Roxane, was determined to have induced infringement of the ‘130 patent. The injunction was renewed, pending the Court's entry of final judgment. Also, Actavis Elizabeth's third counterclaim was severed from the action and returned to the reopened Civ. A. No. 15-6797.

         On October 28, 2016, Alkem filed a notice of appeal to the Federal Circuit [Dkt. Entry 540] but the appeal was deactivated due to Actavis' pending severed third counterclaim [Dkt. Entry 560]. However, the FDA changed the use code for the ‘130 patent and consequently, on January 30, 2017, Actavis and Depomed consented to the withdrawal of Actavis Elizabeth's third counterclaim without prejudice. Civ. A. No. 15-6797 [Dkt. Entry 87].

         Thereafter, the parties exchanged letters concerning the proposed form of final judgment, disagreeing on the taxation of costs. Actavis asserted that taxation should be stayed pending the appeal and that it was also premature because the judgment to be entered would be certified pursuant to Fed.R.Civ.P. 54(b) due to the pending, stayed proceedings on the ‘060 patent. [Dkt. Entries 556, 566, 569]. Actavis argued that taxation should await final judgment as to all claim against all parties. Alternatively, it maintained that Plaintiffs were not the prevailing party because Roxane and Actavis Elizabeth prevailed on the infringement of the ‘130 patent, a central issue in the case. Further, Actavis argued that the Court could find that neither party prevailed or that even if Plaintiffs were deemed the prevailing party, the Court should exercise its discretion in this case of mixed judgment and not award Plaintiffs any costs. [Dkt. Entry 569].

         Depomed's position was that Plaintiffs were the prevailing party because they prevailed on all but one adjudicated issue and that in accordance with this Court's local rule, a judgment on costs should not be stayed pending the appeal. [Dkt. Entry 565, 570]. Rather, the Court was required to make the determination of the prevailing party following the trial on the merits and there was no just reason to delay an award in this costly litigation. Also, piecemeal litigation could be avoided by including the appeal of this Court's cost decision with the appeal on the merits of the case.

         The Court ultimately accepted Depomed's position. On April 11, 2017, the Court entered its Final Judgment and Injunction [Dkt. Entry 582], reflecting the findings of its September 30 order in favor of Plaintiffs on all claims except the claims of infringement of the ‘130 patent by Actavis Elizabeth and Roxane. Due to the pending ‘060 patent proceedings, the Court certified pursuant to Fed.R.Civ.P. 54(b) that there was no just reason for delay in entering final judgment as to all claims adjudged in that final judgment. The Court further ordered that “[p]ursuant to Fed.R.Civ.P. 54, Plaintiffs are the Prevailing Party entitled to costs” and that “Plaintiffs shall serve and file their Bill of Costs and Disbursements in accordance with Local Rule 54.1.”[4] Id.

         In accordance therewith, on May 10, 2017, Plaintiffs each filed a bill of costs. [Dkt. Entries 584-1, 584-3].

         On May 9 and 10, 2017, Alkem, Roxane and Plaintiffs all filed notices of appeal to the Federal Circuit. [Dkt. Entries 583, 586, 587]. The appellate court reactivated Alkem's appeal and consolidated them all on May 25, 2017. [Dkt. Entry 608]. They remain pending.

         Now before the Clerk is Depomed's bill of costs, amounting to $282, 666.33, and consisting of the fees for: filing ($1, 600.00); service ($388.34); printed and electronically recorded transcripts ($41, 320.43); witnesses ($58, 151.92); exemplification and copies ($132, 125.64); and trial support technicians ($49, 080.00). [Dkt. Entry 584-1]. Defendants object to all categories of costs except for the filing and service fees.

         I. Standards for Awarding Costs

         Depomed's motion is controlled by Fed.R.Civ.P. 54(d) (1), which provides that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs---other than attorney's fees---should be allowed to the prevailing party.”

         In patent cases, the definition of “prevailing party” is governed by Federal Circuit law, which defines that term as one who obtains relief on the merits of its claim that materially alters the legal relationship between the parties by modifying its opponent's behavior in a way that directly benefits that party. Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1181-82 (Fed. Cir. 1996) (citing Farrar v. Hobby, 506 U.S. 103, 111-13 (1992)).

         While the first inquiry of determining prevailing party status is a matter of Federal Circuit law, the second, i.e., that of whether and how much to tax, is a matter of regional circuit law. Id. at 1183. Therefore, Third Circuit law controls the Clerk's decision as to the types and amount of costs to be taxed.

         In this Circuit, there is a strong presumption in favor of awarding costs to the prevailing party. “‘Only 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)).

         Despite the presumption favoring the prevailing party, the district court and Clerk may tax only those types of costs set forth in 28 U.S.C. § 1920:

(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.

Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441 (1987).

         More recently, the Supreme Court reiterated that § 1920 taxable costs are “limited to relatively minor, incidental expenses, ” and are “narrow in scope.” Taniguchi v. Kan.Pacific Saipan, Ltd., 566 U.S. 560, 573 (2012). In Taniguchi, the Court interpreted the “compensation of interpreters” provision in § 1920 (6) as allowing for the cost of oral translation but not document translation. While this specific subsection of § 1920 is not invoked here, the Clerk is cognizant of the Supreme Court's overriding concern with curbing taxable costs.

         In applying the above principles, a prevailing party's costs “often fall well short of the party's actual litigation expenses.” In re Paoli, 221 F.3d at 458. Moreover, 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).

         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 2018 ed.) at 284.

         Pursuant to Manildra Milling, Plaintiffs are the prevailing party because the Court's finding of infringement of the patents-in-suit materially altered the legal relationship of the parties in a way that directly benefitted Plaintiffs. Moreover, this Court already made such a determination, after having reviewed the parties' letter submissions, and so provided in its final judgment.

         Additionally, Depomed has complied with the procedural requirements of L. Civ. R. 54.1, as mandated by the final judgment. It timely filed and served a notice of motion, verified AO 133 form, Plaintiff Depomed, Inc.'s Bill of Costs and Disbursements (“Depomed's Bill of Costs”), and the Declaration of Michael A. Sitzman, Esq. (“Sitzman Decl.”), appending supporting invoices. [Dkt. Entry 584]. Therefore, the Clerk will now examine the specific costs requested by Depomed, in the order in which they appear in § 1920.

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

         Under subsection (1) of § 1920, Depomed seeks the cost of filing five of the six complaints as a fee of the clerk and that of serving the complaints as a fee of the marshal. Defendants do not object to either cost.

         A. Filing Fees

         Depomed asks for the cost of filing five of the six complaints, i.e., all but Civ. A. No. 13-6929 (for which Grunenthal asks), or $400.00 each. These fees consist of the $350.00 fee set forth in 28 U.S.C. § 1914(a) for the filing of a civil action, and the $50.00 administrative fee established in the Judicial Conference's “District Court Miscellaneous Fee Schedule.” Subsection (b) of § 1914 allows the clerk to collect fees in addition to the $350.00 fee of subsection (a), as prescribed by the Judicial Conference. Accordingly, the entire $400.00 amount per complaint constitutes “fees of the clerk.”

         The Clerk notes that the $400.00 fee was paid for each of these five complaints, Sitzman Decl., Ex. 2, and yet, Depomed mistakenly asks for just $1, 600.00. The Clerk will award $2, 000.00 in filing fees.

         B. Service of Process

         Depomed wishes to recoup a total of $388.34 paid to private process servers as a § 1920 (1) fee of the marshal. This consists of service of the summons and complaint in Civ. A. No. 13-4507 upon Ascend Laboratories ($120.00), the “Actavis Defendants” ($90.00), and Alkem ($95.00), and the summons and complaint in Civ. A. No. 14-4617 upon Watson ($83.34). Sitzman Decl., Ex. 3.

         Subsection (1) explicitly authorizes taxation of the costs of just the “clerk and marshal.” However, this Court has held that the fees of private process servers are taxable under the combined reading of § 1920 and § 1921, which allows the court to tax as costs the fees for serving a subpoena on a witness. Ricoh Corp. v. Pitney Bowes Inc., Civ. No. 02-5639, 2007 WL 1852553, at *3 (D.N.J. June 26, 2007); Hurley v. Atlantic City Police Dep't, Civ. Nos. 93-260, 94-1122, 1996 WL 549298, at *8 (D.N.J. Sept. 17, 1996).

         Therefore, the Clerk taxes this cost as well, with the exception of the $120.00 cost of service on Ascend. The Clerk will not tax against these Defendants the cost of service on a party which was dismissed from the lead case about two months after its filing. [Dkt. Entry 64]. The cost of service is taxed in the amount of $268.34.

         Combining the costs of filing and service, § 1920 (1) costs are taxed in the total amount of $2, 268.34.

         III. Costs of Printed or Electronically Recorded Transcripts, § 1920 (2)

         Pursuant to § 1920 (2), Depomed requests the $41, 320.43 cost of printed hearing transcripts and both printed and videotaped deposition transcripts. Defendants oppose both.

         A. Hearing Transcripts

         Of the requested total, $11, 380.78 consists of the cost of the transcripts of the March 8, 2016 Pretrial Conference, the 10-day trial and summations on April 27, 2016.

         As the parties recognize, 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) identifies circumstances under which the transcripts will be deemed necessary:

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.

         Defendants maintain that none of the costs are recoverable because the transcripts merely served the convenience of counsel. They assert that Depomed has not segregated from an entire set of transcripts those pages which were actually used, that the invoices do not separate taxable from non-taxable services and further, that there ...


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