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YAMANOUCHI PHARMA. CO. v. DANBURY PHARMA.

June 1, 1999

YAMANOUCHI PHARMACEUTICAL CO., LTD., AND MERCK & CO., INC., PLAINTIFFS,
v.
DANBURY PHARMACAL, INC., AND SCHEIN PHARMACEUTICAL, INC., DEFENDANTS. YAMANOUCHI PHARMACEUTICAL CO., LTD., AND MERCK & CO., INC., PLAINTIFFS, V. MARSAM PHARMACEUTICALS, INC., AND SCHEIN PHARMACEUTICAL, INC. DEFENDANTS.



The opinion of the court was delivered by: Owen, District Judge.

  MEMORANDUM AND ORDER

I presided over the trial here that lasted four days in April 1998. I found that the defendants willfully infringed the plaintiffs' patent for famotidine in violation of the Hatch-Waxman Act, Yamanouchi Pharmaceutical Co. v. Danbury Pharmacal, Inc., 21 F. Supp.2d 366, 378 (S.D.N.Y. 1998), familiarity with which is assumed. I found that this case constituted an "exceptional case" within the meaning of Section 285, and on that basis awarded attorneys' fees to the plaintiffs, in an amount to be determined. The parties have since submitted post-trial declarations and briefs on this issue.

Central here is the reasonableness of the plaintiffs' request. The starting point in determining a fee award is arriving at the lodestar amount — that is, multiplying the reasonable hours spent by a reasonable billing rate. Blanchard v. Bergeron, 489 U.S. 87, 94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989). Reasonable rates are those "normally charged for similar work by attorneys of like skill in the area." New York State Assoc., for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1140 (2nd Cir. 1983). Reasonable hours are those which are "1) thoroughly documented; 2) spent upon the issues which gave rise to the finding of exceptional circumstances; 3) non-duplicative; and 4) not spent in a manner inconsistent with a standard of reasonable efficiency and productivity." Codex Corp. v. Milgo Electronic Corp., 541 F. Supp. 1198, 1203 (D.Mass. 1982) (citations omitted).

As to reasonableness, the defendants assert several objections, which I address in the order presented.

First, the defendants claim that the billing rates charged by plaintiffs' attorneys are too high. In determining a reasonable rate, the court may refer to American Intellectual Property Law Association (AIPLA) surveys. See Mathis v. Spears, 857 F.2d 749, 755 (Fed.Cir. 1988).*fn1 I do so, noting, however, that the AIPLA survey's high mark represents the hourly billing rate of the 75th percentile of attorneys reporting, which means that 25 percent of attorneys actually reported above that figure. Moreover, notwithstanding the AIPLA survey, some consideration may be given to the experience, reputation and ability of the attorneys, as well as to the difficulty of the issues presented and the amount at stake in the litigation. See Hensley v. Eckerhart, 461 U.S. 424, 429-30, n. 3, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (citing the twelve factors listed in Johnson v. Georgia Highway Express, 488 F.2d 714, 717 (5th Cir. 1974)); Howes v. Medical Components, Inc., 761 F. Supp. 1193, 1195-97 (E.D.Pa. 1990) (upward departure from AIPLA survey for intellectual property law practitioners because "a party should be entitled to retain the most competent counsel available, particularly in the highly specialized area of complex patent litigation," and plaintiffs' fees were comparable to those of other New York City firms which handle complex litigation); Stryker Corp. v. Intermedics Orthopedics, Inc., 898 F. Supp. 116, 125 (E.D.N.Y. 1995) (downward departure from AIPLA "based on the type of work performed and the experience of the attorneys").

Yamanouchi's various counsel were highly experienced. The AIPLA guidelines set the rate at $225 to $300 for partners with experience in intellectual property law. However, plaintiffs submitted surveys conducted by Aspen Law & Business in 1998, by the National Law Journal in 1996, both of which indicate that partners in some of the prominent law firms in New York City charge between $400 and $475 per hour. Each of these surveys include at least one firm which specializes in patent litigation, and the rates listed for those firms are comparable with the others. Thus, although many of the plaintiffs' attorneys billed above the AIPLA rate,*fn2 I find that the hourly rates were ball-park reasonable for New York City.*fn3

As to paralegals, the defendants rely on case law for a rate of $50 per hour.*fn4 Plaintiffs used paralegals from within the law firm as well as from temporary employment agencies. Those from temp agencies billed $23 to $30 per hour, while those from within the law firm were billed at $70 to $95 per hour. With such a range of rates charged, I conclude that the average rate charged is comparable to other paralegals' working on this type of litigation. I do agree with defendants that plaintiffs may not charge a paralegal rate when the paralegal is performing only clerical tasks. Missouri v. Jenkins, 491 U.S. 274, 288 n. 10, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989). Plaintiffs note that their paralegals performed numerous tasks, including organizing the case file, preparing materials for attorneys, and keeping track of discovery documents. Since plaintiffs' time records list the attorney or paralegal by their initials, not their full name, it is not reasonable for this court to look through the submissions to find what tasks each paralegal was performing. While perhaps there may have been some billing for clerical tasks such as "putting documents into boxes," that should have been billed at lower rate, I do not see any specific evidence that the use of paralegals by Yamanouchi and Merck was essentially unreasonable in other ways. Some adjustment hereafter may deal with these uncertainties.

The defendants next contend that the plaintiffs over-staffed the case. First, they contend that Merck did not need to hire separate attorneys since Yamanouchi and Merck had the exact same interest in the litigation, that is, that the patent be found valid (which it was).*fn5 I disagree. Merck's attorneys performed most of the discovery tasks, which were significant in this case. Second, defendants argue that both Yamanouchi and Merck employed too many attorneys. Nine attorneys are listed in Yamanouchi's submissions, but four of those nine spent less than three hours each on the case. Counsel for Merck did not submit summaries of their billing in a way that facilitates an analysis of their staffing. However, the defendants' implication that this case was a simple one has no merit, and given the time constraints imposed on plaintiffs to prepare their case, as well as the complexity of the issues and the stakes involved, I cannot with confidence say that plaintiffs staffing was unreasonable. I do question why it was necessary to have two Merck attorneys present at trial, in addition to the five Yamanouchi attorneys.

As noted above, the submissions from the firm of Arnold, White & Durkee, Merck's outside counsel, do not include cumulative totals for each attorney. However, they do contain contemporaneous daily records of the time spent by each attorney and each paralegal, along with specific descriptions of the work done. In as much as the total fees billed by Arnold White & Durkee are $379,414, this is sufficient to conclude their appropriateness.

Defendants next contend that the plaintiffs have over-billed for the time between the original trial date, which was February 24, and the actual trial date, which was April 6. This trial was originally before Judge Baer, but on the morning of the first day of trial he announced that he had a conflict of interest and withdrew. The case commenced before me six weeks later. Some 365 hours were billed in March, at a cost of over $70 thousand. Plaintiffs contend, and the contemporaneous records submitted show, that these hours were spent outlining expert testimony, preparing witnesses, preparing additional trial exhibits, and making up a list of technical terms for the court reporter's use at trial. They contend that these tasks were necessary and would have been done for the trial even if it had gone forward as scheduled, and that some of tasks for trial preparation are necessarily repeated once the trial date was changed. I am not persuaded that the work done was in any meaningful part unnecessary.

The defendants point to four entries on the time sheets kept by both law firms, and claim that plaintiffs have sought fees for matters not related to the claims for which they achieved success, specifically, plaintiffs' investigation into counterclaims of libel, slander, tortious interference, champerty and barratry. While it appears that defendants' complaint concerns only about ten hours for Yamanouchi's counsel out of a total of 6,849.5 billed, defendants are correct in this,*fn6 and this is figured in hereafter.

I need not labor over all of the hotel invoices and the reasonableness of each charge, nor over whether it was reasonable for some Yamanouchi attorneys to spend the night in the hotel (plaintiffs point out that Fitzpatrick Cella attorney Hugh Barrett lives in Darien, Connecticut) and not for others (Robert Baechtold and Brian Slater live in New York City). Obviously, some expense for a hotel was reasonable given the international magnitude of this case and the amounts at stake. Trial preparation, I am sure, went on into the night with various parties necessary at various times, and it was expedient to coordinate at least some of this preparation by using the services of a hotel. Plaintiffs point out that defendants' counsel (based in Stamford, Connecticut) also stayed at a hotel during the trial, the Marriott at the World Trade Center. I reject defendants' contentions that Merck's counsel is not entitled to hotel expenses because they could have employed a local firm.*fn7 However, I have a little dis-ease, notwithstanding plaintiffs assert they got a discount from the Waldorf-Astoria, at the over $80 thousand cost of the hotel sought to be reimbursed under court order from the defendants. Approximately $30 thousand of this was the cost of moving into the hotel in preparation for the first trial date. As to this, I note that Yamanouchi's counsels' offices are located at Rockefeller Center, which is only three blocks away from the Waldorf. Similarly off-putting are plaintiffs' additional bills for over $3,100 for renting office furniture, including desks.

Defendants argue that Merck's in-house counsel fees are improperly included in the fee award. I conclude that these in-house fees are proper because this case was found to be exceptional and awarding fees in such cases is proper under Section 285. There is nothing in the law that persuades me that there is a meaningful distinction between compensation for legal work done by outside counsel as opposed to in-house counsel.*fn8 Not only was the time spent by Merck's in-house counsel time that could have been spent on other matters, but also it was more efficient and less costly for Merck to use its in-house counsel to perform those tasks.*fn9 See Revlon, Inc. v. Carson Products Co., 622 F. Supp. 362, 364-5 ...


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