California Federal Court Awards Millions for Predictive Coding Costs in Document Review

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A federal court in California recently awarded defendants in a patent infringement case more than $2.8 million in attorneys’ fees relating to the use of “predictive coding,” also known as “computer-assisted technology,” to review 12 million electronic records. In Gabriel Technologies Corp. v. Qualcomm Inc., the U.S. District Court for the Southern District of California determined that Qualcomm’s computer-assisted approach to document review was “reasonable under the circumstances” of the case. This decision may encourage litigants to use such technology for document review in cases involving a high volume of documents.

After prevailing in the underlying case, the defendants filed a motion seeking attorneys’ fees. The defendants sought attorneys' fees for patent-related claims under federal patent law and for misappropriation claims under the California Uniform Trade Secrets Act (CUTSA).

The court determined that the case met the “exceptional” standard under federal law due to “[p]laintiffs’ bad faith in pursuing objectively baseless claims that had no reasonable expectation of success” and consequently held that attorneys’ fees were appropriate in this instance. The court also found that “[p]laintiffs’ misappropriation claims were objectively specious and maintained in subjective bad faith” and attorneys’ fees were warranted in this case under CUTSA.

In assessing the reasonableness of the fees sought, the court first evaluated the $10.2 million in fees charged by defense counsel and found that this amount represented “an appropriate lodestar amount for” defense counsel’s fees. Next, the court assessed the fees charged by the contract attorneys who reviewed the documents after they had been culled by the predictive coding approach. The court held that the almost $400,000 in contract attorneys' fees sought by the defendants were reasonable, finding that “[h]ad [defense] counsel performed the document review themselves, the resulting attorneys’ fees would have undoubtedly been exponentially higher than those charged” by the contract attorneys.

Finally, the court considered the more than $2.8 million in attorneys’ fees incurred in the use of computer-assisted technologies to review electronic documents. Ultimately, the court concluded that the amount was reasonable because defense counsel’s decision to use computer-assisted technology “to undertake a more efficient and less time consuming method of [manual] document review” was “reasonable under the circumstances” of the case.

Gabriel Technologies Corp. is the latest in a recent line of federal court opinions holding that the use of computer-assisted technologies for document review is appropriate and reasonable. The case will likely encourage the use of such technologies in large, document-intensive cases, particularly where statutory attorneys’ fees may be awarded.

For more information on this decision or the use of predictive coding, please contact Philip N. Yannella at 215.864.8180 or yannellap@ballardspahr.com, or Christopher Corsi at 856.761.3455 or corsic@ballardspahr.com.