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LG Electronics, Inc. v. Bizcom Electronics

July 21, 2005

LG ELECTRONICS, INC., PLAINTIFF AND COUNTERCLAIM DEFENDANT,
v.
BIZCOM ELECTRONICS, INC., COMPAL ELECTRONICS, INC., AND SCEPTRE TECHNOLOGIES, INC., FIRST INTERNATIONAL COMPUTER, INC. AND FIRST INTERNATIONAL COMPUTER OF AMERICA, INC.,Q-LITY COMPUTER, INC., QUANTA COMPUTER, INC., AND QUANTA COMPUTER USA, INC., DEFENDANTS AND COUNTERCLAIMANTS.



The opinion of the court was delivered by: Claudia Wilken United States District Judge

THIS DOCUMENT RELATES TO ALL CASES

ORDER AMENDING CLERK'S AWARD OF COSTS AND DENYING PLAINTIFF'S MOTION FOR STAY OF AWARD OF COSTS

In separate motions, Plaintiff LG Electronics (LGE) moves for review of the Clerk's taxation of costs in favor of Defendants Bizcom Electronics, Inc., Compal Electronics, Inc., and Sceptre Technologies, Inc., (collectively, Compal), Defendants First International Computer, Inc., and First International Computer of America, Inc., (collectively, FIC), and Defendants Q-Lity Computer, Inc., Quanta Computer, Inc., and Quanta Computer USA, Inc., (collectively, Quanta), and for a stay of any award of costs pending appeal. Compal, FIC and Quanta oppose the motions. In addition, FIC and Compal separately move for review of the Clerk's taxation of costs. LGE opposes the motions. The matters were taken under submission on the papers.

After consideration of all the papers filed by the parties, the Court increases in part and decreases in part the Clerk's award of costs, as described below, and denies LGE's motion for a stay pending appeal.

BACKGROUND

LGE brought separate cases for patent infringement against Defendants, all third party computer manufacturers who purchase microprocessors and chipsets from Intel or its authorized distributors. In its November 20, 2004 Order addressing the parties' cross motions for summary adjudication, the Court granted Defendants' motion for summary adjudication of their counter-claims of non-infringement of the '733, '645, and '379 patents and granted Defendants' motion for summary adjudication that claims of infringement of the '509 patent were barred by the LGE-Microsoft Agreement. On January 31, 2005, judgment was entered in favor of Defendants on LGE's infringement claims, and the Court denied as moot Defendants' remaining counter-claims. LGE has filed a notice of appeal.

Defendants, as the prevailing parties, filed Bills of Costs. Compal sought to tax $304,602.65 in costs; FIC sought to tax $139,274.03 in costs; and Quanta sought to tax $286,584.00 in costs. The Clerk awarded costs to Compal in the amount of $102,229.61, to FIC in the amount of $91,508.43, and to Quanta in the amount of $126,844.80. The objections of LGE, Compal and FIC are described in the discussion section below.

LEGAL STANDARD

Federal Rule of Civil Procedure 54(d)(1) authorizes the Court to grant the prevailing party its costs. The determination of taxable costs is governed by 28 U.S.C. § 1920 and, more particularly, Local Rule 54-3, which specifically enumerates the standards for costs recoverable in this District. This Court may only tax costs explicitly authorized by § 1920. See Alflex Corp. v. Underwriters Labs., Inc., 914 F.2d 175, 177-78 (9th Cir. 1990); see also Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987). Section 1920 permits the taxing of costs for various items, such as deposition transcripts and copying of papers, if they are "necessarily obtained for use in the case." 28 U.S.C. § 1920.

DISCUSSION

I. Compal's Reasonable Costs

LGE and Compal have filed cross motions for review of the Clerk's taxation of costs. The Court does not address LGE's objections to costs that were in fact not taxed by the Clerk, including inter alia $111,664.51 for the cost of conversion of source code to .tif files, $32,532.67 for electronic legal research,*fn1 $1,718.79 for creating an attorney working set of opinions of counsel, and costs for Bates stamping and confidential labeling.

A. Fees for Service of Process by Private Process Server

Compal seeks an order increasing the Clerk's taxation of costs against LGE by $835.00 for costs related to personal service of filings upon opposing counsel by a private process service.

Civil Local Rule 54-3(a)(2) provides in relevant part, "Fees for service of process by someone other than the marshal acting pursuant to FRCivP 4(c), are allowable to the extent reasonably required and actually incurred." Private process servers' fees are properly taxed. Alflex, 914 F.2d at 178.

LGE argues that because none of the filings served (e.g., Defendants' Joint Opposition to Miscellaneous Administrative Request of LG Electronics, Inc.) is a subpoena or summons, costs for service are not properly taxed. LGE relies on Alflex, which noted that marshal's fees "are governed by 28 U.S.C. § 1921 which provides, inter alia, for the collection of fees for serving a subpoena or summons." 914 F.2d at 178; see also Willis Corroon of Utah, Inc., v. United Capitol Ins. Co., 1998 WL 196472, *5 (N.D. Cal. Apr. 9, 1998) (noting "messenger fees for the filing of pleadings (rather than service of process) are not included" in § 1921).

Although Alflex is not directly on point, Compal has provided no contrary authority suggesting that "service of process" includes service of court documents other than a summons or subpoena. Instead, Compal notes that the expedited schedule under which filings often took place "frequently had the effect of requiring personal service in order to provide LGE's counsel adequate time to respond." This argument is not relevant to the question of whether taxable "service of process" includes service of all court documents. Therefore, the Court denies Compal's request for an order increasing the Clerk's taxation of costs for this personal service.

B. Copying Costs

LGE seeks an order reducing the costs taxed for reproduction of documents produced to LGE, in response to LGE's discovery requests, on the grounds that charges incurred by defendants in response to a patent holder's discovery requests are not taxable. The total amount taxed in this category was $20,823.44. Compal, on the other hand, seeks an order increasing the Clerk's taxation of costs against LGE by $2,463.46 for certain copying costs that were not taxed. See Walker Decl., Ex. 6, Invoices Dated October 28 and November 27, 2002.

The cost of reproducing disclosure or formal discovery documents is allowable. Civ. Local R. 54-3(d)(2). Unlike the Local Rules, the two cases cited by LGE rely on contrary interpretations of § 1920 that are not binding on this Court. See Pehr v. Rubbermaid, 196 F.R.D. 404, 407 (D. Kan. 2000) (applying Tenth Circuit's interpretation of necessary copying costs); Fulton Fed. Sav. & Loan Assn. of Atlanta v. American Ins. Co., 143 F.R.D. 292, 299 (N.D. Ga. 1991) (relying on Georgia case for proposition that copying of discovery documents is not allowable). The Court concludes that Compal may recover its costs for reproduction of documents produced to LGE. Therefore, the Court denies LGE's request for an order reducing the Clerk's taxation of costs by $20,823.44.

The Court also grants Compal's request for an order increasing the taxation of costs for reproduction of documents excluded by the Clerk. See Hult Decl., Ex. 4, Oct. 28, 2002 and Nov. 27, 2002 Invoices. According to Compal, these invoices were also for reproduction of documents produced to LGE. This contention is supported by the Hult Declaration. However, Compal's $2,463.46 figure includes $581.90 in costs for Bates stamping and confidential labeling. The Court therefore deducts $581.90 from Compal's request, and increases the Clerk's taxation of costs by a total amount of $1,881.56.

C. Demonstrative Aids

Compal seeks an order increasing the Clerk's taxation of costs against LGE by $26,312.09 for costs of demonstrative aids to be used at trial, specifically a computer animation of the '509 patent and the technology it disclosed. The disputed $26,312.09 sum represents the costs charged by a computer graphics company for approximately 132 hours of staff time for nine employees, including producers, graphic artists, computer animators and a production assistant. Walker Decl. Ex. 1, Hult Decl. Ex. 5, Invoice No. 1763.

Section 1920(4) allows for the taxation of "[f]ees for exemplification and copies of papers necessarily obtained for use in the case." Civil Local Rule 54-3(d)(5) more specifically provides that the cost of "preparing charts, diagrams, videotapes and other visual aids to be used as exhibits is allowable if such exhibits are reasonably necessary to assist the jury or the Court in understanding the issues at the trial." The Ninth Circuit has explained that "'exemplification and copies of papers' has been interpreted to include all types of demonstrative evidence, including photographs and graphic aids." Maxwell v. Hapag-Lloyd Aktiengesellschaft, Hamburg, 862 F.2d 767, 770 (9th Cir. 1988). However, permissible exemplification fees are narrowly construed "only for the physical preparation and duplication of documents, not the intellectual effort involved in their production." Romero v. City of Pomona, 883 F.2d 1418, 1428 (9th Cir. 1989). In other words, parties may not "shift their expert witness [or lawyer or lay witness] costs to plaintiffs under the guise of exemplification costs." Id.

LGE does not dispute that the computer animation would have been reasonably necessary to assist the jury in understanding the issues at the trial. Despite its reliance on Romero, LGE also does not dispute that the graphics professionals had no expertise in the substantive technology issues, but instead relied on the intellectual effort and direction of Compal and its attorneys and witnesses. Therefore, the Court agrees with Compal that the staff time of graphics ...


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