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Supernus Pharmaceuticals, Inc. v. Twi Pharmaceuticals, Inc.

United States District Court, D. New Jersey

May 9, 2018

SUPERNUS PHARMACEUTICALS, INC., Plaintiff,
v.
TWI PHARMACEUTICALS, INC. and TWI INTERNATIONAL LLC, Defendants.

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

         This matter has come before the Clerk on the motion [Dkt. Entry 368] of Plaintiff Supernus Pharmaceuticals, Inc. (“Plaintiff, ” “Supernus”) to tax costs against Defendants TWi Pharmaceuticals, Inc. and TWi International LLC (together, “TWi, ” “Defendants”) pursuant to Federal Rule of Civil Procedure 54(d) and Local Civil Rule 54.1, and to tax expert witness fees pursuant to Fed.R.Civ.P. 26(b)(4)(E).

         This Hatch-Waxman case, filed on January 16, 2015 [Dkt. Entry 1], concerned the alleged infringement of patents held by Plaintiff for anti-epileptic, extended-release tablets containing 150, 300 and 600 mg of oxcarbazepine, marketed as Oxtellar XR®: United States Patent Nos. 7, 722, 898 (“the '898 patent”); 7, 910, 131 (“the '131 patent”); 8, 617, 600 (“the '600 patent”); and 8, 821, 930 (“the '930 patent”). Supernus alleged that Defendants' filing of an Abbreviated New Drug Application (“ANDA”) for approval by the United States Food & Drug Administration (“FDA”) to market its generic version of the Oxtellar XR® tablets prior to the expiration of Supernus' patents constituted infringement of those patents. Defendants answered with counterclaims of non-infringement and invalidity. [Dkt. Entry 13].

         The case proceeded to a Markman hearing [Dkt. Entries 81, 85], through fact and expert discovery, including depositions in Taiwan, and in limine motions [Dkt. Entries 224-27], which were denied [Dkt. Entry 242].

         Before trial, the parties stipulated to limiting the litigation to the ‘898, ‘131 and ‘930 patents, setting aside Plaintiff's third count of infringement of the ‘600 patent. [Dkt. Entry 198]. A four-day bench trial was held on April 3-6, 2017. [Dkt. Entries 249, 253-55]. The trial was followed by counsel's post-trial briefing, hyperlinked pursuant to the Court's directive. [Dkt. Entry 269].

         On August 15, 2017, the Court issued its bench opinion [Dkt. Entries 329, 352], finding that all of the asserted claims of the patents-in-suit were not invalid and had been infringed. Accordingly, on August 28, 2017, final judgment was entered in favor of Plaintiff [Dkt. Entry 339], thereby setting the effective date of FDA approval of TWi's ANDA no earlier than the expiration date of the patents-in-suit and enjoining Defendants' commercial activity involving their ANDA product until such time. Also, Plaintiff's third count, claiming infringement of the ‘600 patent, was dismissed with prejudice.

         TWi filed their notice of appeal to the United States Court of Appeals for the Federal Circuit on August 31, 2017 [Dkt. Entry 345] and that appeal remains pending.

         On September 7, 2017, Supernus filed a motion for attorney's fees. [Dkt. Entry 348]. The Court denied Defendants' motion to stay Supernus' fee application. [Dkt. Entry 358]. It did, however, order bifurcation of the briefing of the motion, allowing Plaintiff to brief just entitlement to such fees, and not the requested amount, until after a determination of liability has been made. [Dkt. Entry 366]. That motion too remains pending. [Dkt. Entries 385, 395-97].

         Supernus timely filed the motion to tax costs now before the Clerk on September 27, 2017. [Dkt. Entry 368]. Plaintiff later revised its bill of costs after deducting an erroneous $166.25 in copying charges. In its amended AO 133 form [Dkt. Entry 375-3], it seeks the costs of: filing ($400.00); service of summons and complaint ($353.60); printed and videotaped transcripts ($36, 977.27); witnesses ($7, 389.25); exemplification and copies ($70, 041.31); and interpreters ($1, 920.00). These costs are requested pursuant to Rule 54(d) and the allowable categories of 28 U.S.C. § 1920, discussed below. Supernus also lists on its amended AO 133 form as “Other costs” expert fees in the amount of $37, 775.00, which it seeks pursuant to Fed.R.Civ.P. 26(b)(4)(E). Entries on the amended bill of costs total $154, 856.43.[1]

         TWi does not object to taxing the costs of filing, service, equipment rental or interpretation, but does contest the remaining costs and asserts that only $20, 062.86 should be granted. [Dkt. Entry 373].

         I. Statutory Framework

         Sunovion's motion is brought, for the most part, pursuant to Fed.R.Civ.P. 54(d)(1), which allows costs to the “prevailing party, ” absent a federal statute, rule or court order providing otherwise.

         In patent litigation, the definition of a “prevailing party” is governed by Federal Circuit law. Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1181-82 (Fed. Cir. 1996). To be a prevailing party, a party must obtain 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. Id. at 1182 (citing Farrar v. Hobby, 506 U.S. 103, 111-113 (1992)). While the threshold issue of deciding prevailing party status is a matter of Federal Circuit law, the second inquiry, that of whether and how much to award, is a matter of regional circuit law. Id. at 1183. Therefore, the decision of whether to award costs to the prevailing party and the amount are matters of Third Circuit law here.

         In this Circuit, there is a strong presumption in favor of awarding costs to the prevailing party, Reger v. Nemours Found., Inc., 599 F.3d 285, 288 (3d Cir. 2010), but even so, absent express statutory authorization, the Clerk may reimburse only those costs enumerated 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). Therefore, the Clerk does not grant costs falling outside the above parameters, even if uncontested.

         The Supreme Court reinforced its Crawford Fitting holding in Taniguchi v. Kan.Pacific Saipan, Ltd., 566 U.S. 560 (2012), wherein it limited the provision in §1920 (6) for the “compensation of interpreters” to the cost of oral translation. In denying the cost of document translation, the Court stated that its decision was “in keeping with the narrow bounds of taxable costs, ” which are “limited to relatively minor, incidental expenses.” Id. at 573.

         While the prevailing party enjoys a presumption in its favor, in this district, it still bears the burden of showing that the costs sought fall within the limits of § 1920. Romero v. CSX Transp., Inc., 270 F.R.D. 199, 201-02 (D.N.J. 2010). And, the procedural aspects of a taxation motion are governed in this district by our above-cited local rule, L. Civ. R. 54.1. Lite, N.J. Federal Practice Rules (Gann 2018 ed.).

         Undoubtedly, Plaintiff is the prevailing party within the meaning of Fed.R.Civ.P. 54(d) and TWi does not contest that fact. As a result of the Court's final judgment, Defendants were enjoined from marketing their generic oxcarbazepine tablets through the expiration date of the patents-in-suit. Defendants' behavior was clearly modified in a way that directly benefits Supernus.

         Furthermore, Sunovion has satisfied the requirements in L. Civ. R. 54.1 and 28 U.S.C. § 1924 of timeliness, verification and invoice submittal: this motion was filed within 30 days of the entry of judgment and includes a notice of motion with return date [Dkt. Entry 368] and bill of costs, AO form 133 [Dkt. Entry 368-3]; Plaintiffs' counsel has verified that the costs are correct, the services were actually and necessarily performed, and the disbursements were necessarily incurred in this action, Declaration of Jonathan A. Herstoff, Esq. (“Herstoff Decl.”) [Dkt. Entry 368-2], and attached invoices thereto, id., Exs. 1-51. The Clerk has also considered Plaintiff's brief [Dkt. Entry 368-1] and reply brief [Dkt. Entry 375-1], along with the Declaration of William C. Baton, Esq. (“Baton Decl.”) [Dkt. Entry 375-2] and amended AO 133 form [Dkt. Entry 375-3], as well as Defendants' brief in opposition [Dkt. Entry 373], sur-reply [Dkt. Entry 379] and Declaration of Dustin L. Taylor, Esq. (“Taylor Decl.”) [Dkt. Entry 379-1].

         Before turning to the matter of costs, the Clerk first addresses Supernus' application for $37, 775.00 in expert fees.

         II. Expert Fees Pursuant to Fed.R.Civ.P. 26(b)(4)(E)

         The $37, 775.00 in expert fees sought by Supernus is described by its counsel as the cost of “preparing for and testifying at [these] depositions, for Dr. Steven Little, Dr. David Bugay, and Dr. Leonard Chyall.” Herstoff Decl. ¶10. For their professional services, these experts charged between $500 and $850 per hour. Id. at Exs. 41-44.

         In the above-cited Crawford Fitting case, the Supreme Court held that unless expert witnesses are court-appointed, as provided in § 1920 (6), their fees are taxable only to the extent allowed in 28 U.S.C. § 1821. 482 U.S. at 445. That is, their attendance may be taxed at $40 per day and their reasonable travel and subsistence costs allowed, but not their charges for professional services. No. doubt aware of this limitation, Plaintiff's counsel argues that expert fees should be awarded in this case under Rule 26(b)(4)(E). Pl.'s Br. at 12-14.

         Upon Plaintiff's filing of this application, the Clerk reviewed it and advised counsel that the allowance of expert fees pursuant to Rule 26(b)(4)(E) is not properly before the Clerk. [Dkt. Entry 377]. That rule provides that “the court” must require the payment of reasonable expert fees under certain circumstances. Unlike Rule 54(d)(1), which empowers the Clerk to rule on motions for taxation in the first instance, Rule 26 does not grant “the clerk” the power to require the payment of expert fees. In advising counsel to take this matter to the district judge, the Clerk makes no comment on the merits of Plaintiff's request or Defendants' arguments against awarding such fees.

         The Clerk turns then to the taxation of the remaining requested fees in the order in which they appear in § 1920.

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

         Costs sought by Supernus as § 1920 (1) “fees of the clerk and marshal” are the $400.00 fee for filing its complaint and a private process server's charges totaling $353.60 to serve the summons and complaint on the two defendants. Herstoff Decl. ¶ 3, Ex. 1. Both are unopposed by TWi.

         Filing Fee

         This fee consists 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. Therefore, the entire $400.00 amount constitutes “fees of the clerk” and will be granted.

         Service of Process

         Guaranteed Subpoena Service, Inc.'s charges of $176.75 and $176.85 to serve TWi are fees of the marshal within the meaning of § 1920 (1). Subsection (1) explicitly authorizes taxation of the costs of just the “clerk and marshal, ” but 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 uncontested cost as well, granting a total of $753.60 pursuant to § 1920 (1).

         IV. Fees for Printed or Electronically Recorded Transcripts, § 1920 (2)

         Under the § 1920 (2) category of “fees for printed or electronically recorded transcripts, ” Plaintiff seeks the $10, 154.27 cost of printed hearing and trial transcripts, and the $26, 823.00 cost of printed and videotaped deposition transcripts. Herstoff Decl. ¶¶ 4, 5, Exs. 2-27. Defendants maintain that transcripts should be taxed in the reduced amount of $14, 411.20, not $36, 977.27. Defs.' Br. at 3.

         Hearing Transcripts

         This requested $10, 154.27 item consists of the $1, 905.72 cost of thirteen transcripts of telephonic and in person conferences and hearings, and the $8, 248.55 cost of the trial transcript. Pl.'s Br. at 6-7. The costliest hearing transcripts cover the Markman hearing ($660.54) and an appeal of the Magistrate Judge's decision ($330.33). Id.

         The § 1920 (2) standard of “necessarily obtained for use in the case” applies to hearing and deposition transcripts alike. The Clerk usually grants the cost of the transcript of the Markman hearing because it is a crucial proceeding in patent litigation, establishing claim construction. It was particularly necessary for counsel to obtain the transcript in this case [Dkt. Entry 85] because the Court did not immediately issue an opinion containing its reasoning. In its October 9, 2015 order [Dkt. Entry 84], the Court referenced the hearing and stated that the Court would set forth the bases for its construction in an opinion to be issued at a later date. The Clerk is unable to locate such an opinion on the docket and indeed, it is this transcript that the Court cited in its bench opinion after the trial. [Dkt. Entry 352 at 17].

         Likewise, Judge Bumb's order [Dkt. Entry 159] denying Defendants' appeal of the Magistrate Judge's decision ordering Defendants to produce clawed back documents [Dkt. Entry 117] referenced the hearing and indicated that an opinion would be issued at some later date. Like the Markman hearing transcript, this transcript [Dkt. Entry 308] provided guidance to counsel in the absence of a written opinion. The Clerk finds them both necessary.

         The remaining $900 or so in hearing transcripts covered various proceedings, such as the Initial Scheduling Conference, discovery conferences, the Final Pretrial Conference and telephone conferences with both Magistrate Judge Schneider and Judge Bumb. The Clerk does not usually grant the cost of transcripts of pretrial conferences absence a showing of need, particularly if note-taking by counsel would have sufficed as a substitute.

         In this instance, Supernus argues that it fulfilled a need for the pretrial hearing transcripts, i.e., submission on appeal, as outlined in our local rule, L. Civ. R. 54.1(g) (6):

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. Mere acceptance by the Court of a submitted transcript does not constitute a request. 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.

         Accompanying Supernus' reply brief is the Declaration of William C. Baton, Esq., to which counsel attaches the joint Appendix Designations for Defendants' appeal of the final judgment in Plaintiff's favor. [Dkt. Entry 375-2, Ex. 52]. Every transcript which Supernus asks the Clerk to tax is contained within that joint appendix.

         However, TWi responds that “[n]either does TWi agree that the court transcripts of the pretrial hearings are required for the record on appeal. TWi did not place these transcripts on the joint Table of Appendix Designations and disputes that they are required.” Defs.' Sur-Reply at 3 n.2.

         As the Clerk understands the situation, to support its appeal to the Federal Circuit, TWi designated portions of the record before this Court and Supernus then supplemented TWi's designations with the transcripts of the various pre-trial hearings. Pursuant to Fed. R. App. P. 30 (b)(1), TWi was obligated to include in the appendix the additional parts designated by Supernus, whether it deemed them necessary or not.

         Therefore, contrary to Supernus' assertion, Pl.'s Reply at 3, the fact that these transcripts were included in the joint appendix is not an admission by TWi that they were in fact necessary for the appeal. Indeed, TWi continues to assert that the transcripts were not required and frankly, the Clerk does not appreciate the significance of them, several of which have been described by Supernus merely as “Transcript of Teleconference, ” without even any indication of the topic of the teleconference. Pl's Br. at 6-7.

         Plaintiff does not assert that during the teleconferences or other hearings, Magistrate Judge Schneider or Judge Bumb issued oral rulings, instructions or the like which made it necessary for Plaintiff to obtain the transcripts to effectively prepare for trial or to draft proposed orders for submission to the Court. In contrast, in the case of Prometheus Labs., Inc. v. Roxane Labs., Inc., the Court granted the cost of the transcripts of ten pre-trial hearings containing the Magistrate Judge's opinions on matters such as “motions to seal, motions for reconsideration and appeals, motions regarding invalidity contentions, discovery motions, a motion for sanctions, and Daubert motions.” Civ. Nos. 11-230, 11-1241, 2016 WL 1559144, at *6 (D.N.J. Apr. 18, 2016).

         The docket contains references to these transcripts. Some are sealed [Dkt. Entries 150, 188, 204] and unavailable to the Clerk, and others reviewed by the Clerk contain scant substance that could have been captured by note-taking. [Dkt. Entries 41, 115, 127, 199, 264]. Failing its burden of showing the necessity of these pre-trial hearing transcripts, Plaintiff is allowed just the costs of the transcripts of the Markman hearing ($660.54) and the hearing on the appeal of the Magistrate Judge's decision ($330.33), or a total of $990.87.

         Trial Transcripts

         The requested $8, 248.55 cost of the 995-page transcript of the four-day trial includes charges for an original ($3, 621.80), a first copy ($1, 194.00) and a second copy ($1, 343.25), all at the hourly rates, and a Realtime charge of $2, 089.50. Relying upon the earlier-cited L. Civ. R. 54.1(g)(6), TWi concedes that the original was necessary for the appeal and agrees to allowing just $3, 621.80. Defs.' Br. at 7-8.

         In response to Defendants' objection that Realtime services were not necessary, Plaintiff cites the decision of this Court in another patent case, Otsuka Pharm. Co., Ltd v. Sandoz, Inc., which stands in contrast to the Clerk's usual allowance of the costs of just an original and one copy of the transcript. Civ. No. 07-1000, 2015 WL 5921049 (D.N.J. Oct. 9, 2015). The Court there taxed the costs of Realtime and ASCII, finding them ...


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