Parallel Networks Licensing v. Microsoft Corporation

Case: 20-1669 Document: 43 Page: 1 Filed: 01/08/2021
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
PARALLEL NETWORKS LICENSING, LLC,
Plaintiff-Appellant
v.
MICROSOFT CORPORATION,
Defendant-Appellee
______________________
2020-1669
______________________
Appeal from the United States District Court for the
District of Delaware in No. 1:13-cv-02073-KAJ-SRF, Cir-
cuit Judge Kent A. Jordan.
______________________
Decided: January 8, 2021
______________________
CHRISTOPHER THOR BOVENKAMP, McKool Smith, PC,
Dallas, TX, for plaintiff-appellant. Also represented by
LEAH BURATTI, JOHN BRUCE CAMPBELL, JAMES ELROY
QUIGLEY, Austin, TX; RAYMOND MITCHELL VERBONCOEUR,
Washington, DC.
NITIKA GUPTA FIORELLA, Fish & Richardson, PC, Wil-
mington, DE, for defendant-appellee. Also represented by
JUANITA ROSE BROOKS, JASON W. WOLFF, San Diego, CA.
______________________
Case: 20-1669 Document: 43 Page: 2 Filed: 01/08/2021
2 PARALLEL NETWORKS LICENSING v. MICROSOFT
CORPORATION
Before MOORE, HUGHES, and STOLL, Circuit Judges.
MOORE, Circuit Judge.
Parallel Networks Licensing, LLC, appeals a United
States District Court for the District of Delaware order
awarding costs under 28 U.S.C. § 1920 to Microsoft Corpo-
ration for depositions, documents, and trial exhibits.
J.A. 1–3. For the following reasons, we affirm-in-part, va-
cate-in-part, and remand.
BACKGROUND
Parallel Networks sued Microsoft in the District of Del-
aware for patent infringement. The district court granted
summary judgment of no indirect infringement, and a jury
returned a verdict of no direct infringement.
Microsoft, as the prevailing party, then submitted a bill
of costs, declaring $191,130.18 in total taxable costs. It
identified $38,421.30 for deposition transcript and record-
ing fees, $8,445.50 for trial transcript fees, $71,708.20 for
trial exhibit fees, and $72,555.18 for document production
fees. J.A. 1000, 1003. The district court clerk denied the
entire bill of costs. J.A. 4–8. Microsoft filed a motion with
the district court to review the taxation of costs, and Par-
allel Networks opposed. The district court granted costs in
the amount of $182,684.68, only denying the trial tran-
script costs. Parallel Networks appeals, disputing
$153,775.10 of the $182,684.68 award. Microsoft seeks af-
firmance of $141,488.28 of the $182,684.68 award: the full
award for deposition transcripts and for trial exhibits, and
$31,358.78 of the $72,555.18 award for document produc-
tion. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
DISCUSSION
As relevant to this appeal, a district court may tax as
costs under § 1920: “(2) Fees for printed or electronically
recorded transcripts necessarily obtained for use in the
Case: 20-1669 Document: 43 Page: 3 Filed: 01/08/2021
PARALLEL NETWORKS LICENSING v. MICROSOFT 3
CORPORATION
case; . . . [and] (4) Fees for exemplification and the costs of
making copies of any materials where the copies are neces-
sarily obtained for use in the case. . . .”
28 U.S.C. § 1920(2), (4). We review the award of costs un-
der § 1920 according to the law of the regional circuit law,
in this case Third Circuit law. Summit Tech., Inc. v. Nidek
Co., 435 F.3d 1371, 1374 (Fed. Cir. 2006). Under Third Cir-
cuit law, there is a “strong presumption” that costs are to
be awarded to the prevailing party, and we review a district
court’s award of costs for abuse of discretion. In re Paoli
R.R. Yard PCB Litig., 221 F.3d 449, 458, 462 (3d Cir. 2000),
as amended (Sept. 15, 2000). “Whether a particular ex-
pense may be recovered under section 1920 is an issue of
statutory construction, subject to de novo review.” Sum-
mit, 435 F.3d at 1374.
A
Parallel Networks disputes $20,388.50 of the
$38,421.30 the district court awarded Microsoft for deposi-
tion costs. It argues that the district court lacked statutory
authority to grant the following costs:
• Realtime transcription ($2,793);
• Laptop fees ($180);
• Litigation package fees ($275);
• Rough transcripts ($3,931.20);
• Certified Early Transcripts ($2,190.60);
• Video services and “video extended” fees
($5,263.75); and
• Exhibits ($5,754.95).
In taxing all deposition costs against Parallel Net-
works, the district court explained, “[a]s to the fees for dep-
osition transcripts and deposition recordings . . . [Parallel
Networks’] argument is solely that Microsoft was not spe-
cific enough in its justification under [Delaware] Local Rule
Case: 20-1669 Document: 43 Page: 4 Filed: 01/08/2021
4 PARALLEL NETWORKS LICENSING v. MICROSOFT
CORPORATION
54.1. But, having seen at trial and in motions practice that
discovery record has been put to good use, and concluding
that the depositions have aided in the resolution of mate-
rial issues, I order the taxation of the deposition costs.”
J.A. 1–2 (citing § 1920(2)). The district court did not ad-
dress, however, Parallel Networks’ argument that the costs
delineated above are not taxable. See J.A. 1231, 1233.
Section 1920 permits the recovery of “[f]ees for printed
or electronically recorded transcripts necessarily obtained
for use in the case.” The district court’s analysis addressed
“deposition transcripts and deposition recordings” but then
ordered the taxation of “the deposition costs.” Microsoft ar-
gues that because the depositions themselves were neces-
sary, it should be entitled to all of the challenged costs,
even costs which can be fairly characterized as conven-
ience, not necessary, costs such as realtime transcription
or early transcripts. And it is entirely unclear what the
fees delineated as laptop fees and litigation package fees
even are much less whether they were necessary for the
printed or recorded transcript of any deposition. It is not
enough that the depositions themselves were “necessary,”
§ 1920(2) allows only for “[f]ees for printed or electronically
recorded transcripts necessarily obtained for use in the
case.” We thus vacate and remand for the district court to
consider whether these fees are the type that the Third Cir-
cuit would agree constitute fees for printed or electronically
recorded transcripts or whether such convenience fees are
beyond the scope of taxable costs.
B
The district court granted Microsoft’s $71,708.20 in
costs for trial exhibits. Parallel Networks does not dispute
that fees for trial exhibits are taxable under § 1920(4). In-
stead, Parallel Networks reiterates the arguments it made
to the district court that (1) Microsoft provided insufficient
detail to assess the necessity of printing close to 650,000
pages of trial exhibits and (2) that costs for labels and
Case: 20-1669 Document: 43 Page: 5 Filed: 01/08/2021
PARALLEL NETWORKS LICENSING v. MICROSOFT 5
CORPORATION
folders for those exhibits are not taxable. Microsoft re-
sponds by pointing to Ronald P. Golden III’s Declaration in
Support and Verification of Microsoft’s Bill of Costs, which
attached an invoice for the $71,708.20 amount, and which
explained that the amount represented the costs for print-
ing trial exhibits and the labels and folders associated with
those exhibits. J.A. 1021, 1201.
Trial exhibit copies and their associated folders and la-
bels are taxable costs. See § 1920(4); see also, e.g., In re
Ricoh Co., Ltd. Patent Litig., 661 F.3d 1361, 1368 n.3
(Fed. Cir. 2011) (it would not be an abuse of discretion to
award costs for tabs and folders if “related to categories of
documents as to which the recovery of reproduction costs
under section 1920(4) is appropriate”). Given that these
types of costs are taxable under § 1920(4), we review the
district court’s award of these costs for abuse of discretion.
Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d
158, 167–68 (3d Cir. 2012). Contrary to Parallel Networks’
argument, there is no statutory requirement that copies be
admitted at trial in order to recover costs for those copies.
See § 1920(4); see also In re Ricoh, 661 F.3d at 1367 (apply-
ing Ninth Circuit law) (section 1920(4) “does not require
. . . that the copies actually be used in the case or made part
of the record.”). Because the invoice attached to the Golden
Declaration seems to be reasonably consistent with a com-
mercial exhibit printing order, the district court acted
within its discretion in taxing these costs in what it deemed
to be a complex patent litigation.
C
Microsoft only seeks affirmance of $31,358.78 of the
$72,555.18 the district court awarded for document produc-
tion costs. Parallel Networks agrees that $10,876.78 of the
$31,358.78 amount is recoverable as costs for entries in Ex-
hibit 36 to the Golden Declaration titled “Ebates,” “Elec-
tronic Bates Number or POD,” “Native Conversion to
TIFF/PDF,” and “OCR Processing.” Microsoft explains
Case: 20-1669 Document: 43 Page: 6 Filed: 01/08/2021
6 PARALLEL NETWORKS LICENSING v. MICROSOFT
CORPORATION
that the remaining $20,482.00 represents the total amount
of “Production – Image Conversion and Export” entries in
Exhibit 36 to the Golden Declaration. J.A. 1122–1191. De-
spite agreeing that costs such as “Native Conversion to
TIFF/PDF,” and “OCR Processing” are taxable, Parallel
Networks argues that “Production – Image Conversion and
Export” costs are not taxable as “costs of making copies”
under 28 U.S.C § 1920(4). We do not agree.
The Third Circuit has held that “scanning and conver-
sion of native files to the agreed-upon format for production
of ESI constitute ‘making copies of materials’” under 28
U.S.C. § 1920(4). Race Tires, 674 F.3d at 167. Because
these costs are taxable under § 1920(4) and are reasonably
supported by the Golden Declaration, we see no abuse of
discretion in the district court’s award of $31,358.78, which
includes the “Production – Image Conversion and Export”
costs. 1
CONCLUSION
Because the district court did not abuse its discretion
in its award of the trial exhibit costs and the document pro-
duction costs, we affirm-in-part. We vacate-in-part the dis-
trict court’s award of the challenged deposition costs and
remand for a determination of whether these costs were
“[f]ees for printed or electronically recorded transcripts
necessarily obtained for use in the case.”
1 Parallel Networks argues that Microsoft has not
shown that the disputed $20,482 was part of the district
court’s $72,555.18 award. A review of Exhibit 36 shows a
net total of $72,555.18 for all of the itemized entries, in-
cluding the “Production – Image Conversion and Export”
entries. J.A. 1191. It is clear, therefore, that the $20,482
was part of the district court’s award.
Case: 20-1669 Document: 43 Page: 7 Filed: 01/08/2021
PARALLEL NETWORKS LICENSING v. MICROSOFT 7
CORPORATION
AFFIRMED-IN-PART, VACATED-IN-PART, AND
REMANDED