Mobile Telecomms. Techs., LLC, v. Samsung Telecomms. Am., LLC, 2015 WL 5719123, (E.D. Tex. Sept. 28, 2015)

In this patent infringement case, M-Tel contested a prior ruling by the District Court, which held that Samsung had not infringed upon patents owned by M-Tel. M-Tel claimed that Samsung was not the prevailing party as both the plaintiff and defendant won on certain of the underlying claims (MTel obtained a jury finding that its patents were not invalid, and Samsung obtained a jury verdict of no infringement), and, as a result, because both parties “prevailed” in part, M-Tel was entitled to recover on document production costs.

Although a unique argument, the District Court disagreed with M-Tel.  The Court stated that Federal Rule of Civil Procedure 54 does not allow every party that prevails on some claim to be deemed a “prevailing party.”  Indeed, the Court noted that Rule 54 has no special rule or exception for mixed judgment cases, where both parties have some claims decided in their favor.  Rather, calling upon the Shum v. Intel Corp. case (629 F.3d 1360, 1367 [Fed. Cir. 2010]), the Court noted that where, as here, there was a mixed judgment, “punting [wa]s not an option;…[f]or the purposes of costs and fees, there can be only one winner” and only the prevailing party – meaning the party who wins on a claim that “materially alter[s] the legal relationship” between the plaintiff and defendant, can receive costs.

Here, the Court determined, under that standard, that Samsung was the prevailing party.

However, the Court, calling upon 28 U.S.C. § 1920, found that, in regards to recovering electronic production costs, Samsung could only recover the costs associated with “making copies” of any materials where the copies were necessarily obtained for use in the case, which includes only the electronic document production steps that “are, in fact, necessary to make copies of information requested…and not incurred just to make copies for the convenience of the producing party.”   As such, the Court held that the defendant could recover against the plaintiff for producing the necessary documents, but not for the costs the defendant incurred in utilizing other services that were not necessary for production including the “OCR costs incurred” as part of Samsung’s document production to MTel because Samsung “has not shown that this step was necessary for making copies” and neither party cited controlling authority holding that the Court may award OCR costs under § 1920.

The Court further noted its conclusion was consistent with its own Court’s standing order, which states: “Electronic discovery costs are generally not allowed, including costs for document collection, document processing, and document hosting.”

Because the case law interpreting what falls within the statute’s ambit of “making copies” is still developing, practitioners should be explicit in their joint discovery plan and state precisely which of their e-discovery costs are recoverable if they prevail in the suit.  As we all know, the lion’s share of the costs associated with e-discovery are not pure copying costs.  Rather, critical needs such as collecting, processing, hosting, and reviewing (did I mention reviewing?) the documents are the larger source of e-discovery costs.