Patent Law | Expert Legal Commentary
January 9, 2012
In re Ricoh Co., Ltd.: Federal Circuit Clarifies § 1920 Allowances for Prevailing Party to Charge Costs
In re Ricoh Co., Ltd.
Tom Zuber of Zuber Lawler & Del Duca and Sarah Brooks of Stradling Yocca Carlson & Rauth
The Federal Circuit recently clarified several aspects of § 1920’s allowances for a prevailing party to charge its costs against the losing party. In In re Ricoh Co., Ltd., 661 F.3d 1361 (Fed. Cir. 2011), the Federal Circuit upheld the use of cost-sharing agreements over default statutory rules, allowed the taxing of both printed and recorded depositions, and signaled its displeasure with vague copying charges billed to the losing side.
Ricoh filed and lost a patent infringement action against Synopsys on the latter’s motion for summary judgment. Synopsis filed a Bill of Costs against Ricoh for over $1.2 million, to which Ricoh ultimately appealed to the Federal Circuit. Id. at 1363-64.
Under FRCP 54(d)(1), costs are generally allowed to the prevailing party. However, 28 U.S.C. § 1920 limits these costs to include fees for transcripts, fees for exemplification of making copies obtained for use in the case, and compensation of certain experts and interpreters (among others). Id.
Court Upholds Use of Cost-Sharing Agreements
Ricoh disputed three costs. First, Ricoh disputed over $200,000 in costs awarded to Synopsis for the use of a third-party electronic discovery service called Stratify. Ricoh and Synopsis agreed to use the Stratify system to enable Synopsys to produce internal documents and emails during discovery. Ricoh and Synopsys also agreed to divide the costs of using Stratify. However, Synopsis later argued that it did not have to pay for the use of Stratify because its purpose fell under one of § 1920’s permitted costs – “fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” 28 U.S.C. § 1920(4).
While the Court agreed with the district court’s notion that fees related to a discovery service like Stratify ordinarily could be charged under § 1920(4), the Court ultimately held that the parties’ clear agreement to split the costs was controlling and reversed this charge. The Court noted that while there is limited authority on whether a cost-sharing agreement is controlling, the Court cited Crawford Fitting v. J.T. Gibbons, 482 U.S. 437 (1987) and Thomas v. Duralite, 524 F.2d 577 (3d. Cir 1975), in which courts allowed cost-sharing agreements to control in lieu of the statute. Ricoh, 661 F.3d at 1366.
Parties Must Keep Clear Records of Discovery Costs
Second, Ricoh challenged over $300,000 in copying costs claimed by Synopsis under § 1920(4), which allows Synopsis to charge the cost of copies made for use in the case. The burden is on the prevailing party to establish the amount of costs entitled, and in this case, to show that the discovery was copied at the opposing side’s request and was actually tendered. Id. at 1367.
Synopsis claimed that the copies in question were for Ricoh and tendered to Ricoh. However, the Court focused on Synopsis’ copying invoices, which showed that some of the copies were actually sent to Synopsis’ own counsel and not to Ricoh. Additionally, some of the invoices stated vague descriptions of what was copied or the purpose of such copies. The Court empathized that “parties cannot be expected to track the identity of each photocopied page,” but demanded that “a bill of costs must represent a calculation that is reasonably accurate.” Id. at 1368 (citing Summit Tech Inc. v. Nidek Co., 435 F.3d 1371, 1378 (Fed. Cir. 2006)). Thus, the Court found that Synopsis produced inadequate documentation and did not meet its burden. The Court then vacated the district court’s award and remanded, allowing the court to “make a reasonable estimate” of recoverable copying costs. Id. at 1368-69.
Printed and Recorded Deposition Charges Allowed
Third, Ricoh challenged more than $100,000 in transcription and interpreter fees related to Synopsys’ depositions, alleging that Synopsis should only be able to charge for the depositions actually used in its summary judgment motion. Under § 1920(2), a party can charge fees for printed or electronically recorded transcripts necessarily obtained for use in the case. To define “for use in the case,” the Court cited Ninth Circuit precedent that a document “need not be offered as evidence to have been necessarily obtained for use in the case.” Id. at 1369 (citing Crockett v. Shields, 8 Fed. Appx. 604, 606 (9th Cir. 2001)). In addition, the Court noted that the general standard on whether deposition costs can be charged is whether the deposition reasonably seemed necessary at the time it was taken. Id. at 1369.
The Court agreed with the district court’s finding that the depositions in question touched on relevant aspects of the case, and thus it was reasonable for Synopsys to expect that they were for the purpose of trial preparation. Id. at 1370. Moreover, the Court rejected Ricoh’s alternative argument that statute allows recovery for only one method of deposition recording – printed or electronically recorded. The Court noted that while the Ninth Circuit has not spoken on the issue, other circuits have allowed charging for both. Thus, the Court upheld the district court’s award for these fees. Id.
In Ricoh, the Federal Circuit clarified a number of § 1920 charges and parties in discovery-heavy patent litigation should be aware of how to best take advantage of these new standards. Ricoh signals that courts will tend to uphold cost-sharing agreements over default statutory rules, as well as examine large discovery costs closely if proper records are not kept. Parties with foreseeable or pending patent litigation should contact experienced patent counsel to see how Ricoh may affect your case.
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