Keith Manufacturing, Co. v. Butterfield

256 F. Supp. 3d 1123, 2017 WL 2730888, 2017 U.S. Dist. LEXIS 98208
CourtDistrict Court, D. Oregon
DecidedJune 26, 2017
DocketCase No. 3:15-cv-02008-SI
StatusPublished
Cited by9 cases

This text of 256 F. Supp. 3d 1123 (Keith Manufacturing, Co. v. Butterfield) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Keith Manufacturing, Co. v. Butterfield, 256 F. Supp. 3d 1123, 2017 WL 2730888, 2017 U.S. Dist. LEXIS 98208 (D. Or. 2017).

Opinion

OPINION AND ORDER

Michael H. Simon, District Judge.

Keith Manufacturing Co. (“Keith”) brought this lawsuit against its former employee Larry D. Butterfield (“Butter-field”). Eighteen months later, the parties stipulated to the dismissal of all claims with prejudice. The stipulation was silent on the issue of attorney’s fees. Twelve days after Keith filed the stipulated dismissal, Butterfield filed a motion for attorney’s fees under Rule 54 of the Federal Rules of Civil Procedure. That rule permits a prevailing party to move for attorney’s fees within fourteen days after entry of judgment. Butterfield argues that a stipulated dismissal with prejudice is an appealable order and thereby qualifies as a judgment for purposes of Rule 54. Butter-field also argues that because Keith dismissed its claims with prejudice, Butter-field is the prevailing party.

Keith opposes Butterfield’s motion and raises three arguments. First, Keith argues that the filing, of the voluntary dismissal by stipulation ends the lawsuit and, thus, divests the Court of jurisdiction to award attorney’s fees. Second, Keith argues that a motion for attorney’s fees under Rule 54 requires a judgment and a voluntary dismissal by stipulation is-, not a judgment because it is not an appealable order. Third,.Keith argues that, no one in this case is a prevailing party and, thus, Butterfield is not entitled to recover attorney’s fees. Finally, Keith has filed its own conditional motion for attorney’s fees, asserting that if the Court rejects Keith’s arguments regarding the unavailability of attorney’s fees in this case, then Keith is entitled to recover its attorney’s fees as a prevailing party, either instead of Butter-field or in addition to Butterfield. For the reasons stated below,.the Court concludes that: (1) the Court has jurisdiction to resolve the parties’ cross-motions for attorney’s fees; and (2) attorney’s fees are not available to either party because, based on a recent decision from the Supreme Court, a voluntary dismissal by stipulation (even with prejudice) is not an appealable order and, thus, not a judgment .for purposes of Rule 54. Accordingly, the Court denies both parties’ motions for attorney’s fees.

BACKGROUND

On October 23, 2015, Keith filed this lawsuit against its former employee But-terfield. According to Keith, during But-terfield’s employment with Keith, Butter-field filed a patent application that led to the issuance of U.S. Patent No. 9,126,520 (“the ’520 patent”). Keith alleges that But-terfield’s patent application was based on [1126]*1126inventions made in cooperation with one or more of Keith’s employees during the course of Butterfield’s ■ employment and used Keith’s trade secrets. Keith further alleges that Butterfield breachéd his employment contract with Keith by sending a demand letter to Keith in which Butter-field threatened to sue for infringement' of the ’520 patent unless Keith withdrew certain products from the market. Itt this lawsuit, Keith asserted five claims against Butterfield: (1) declaratory judgment of noninfringement of the ’520 patent; (2) declaratory judgment of invalidity of the ’520 patent; (3) breach of contract; ■ (4) trade secret misappropriation; and (5) correction of inventorship of the’520 patent, seeking to add one or more of Keith’s employees as named inventors.

Oh May 3, 2016, Keith filed its second amended complaint. On May 16, 2016, But-terfield sent to Keith a covenant not to sue (the “Covenant Not to Sue”). The preamble to Butterfield’s Covenant Not to Sue states that “Keith’s advertisement and sale of its products ... do not infringe and are not likely ever to infringe Butterfield’s patent rights at a level sufficient to warrant the substantial time and expense of continued litigation.” ECF 23-1 at 2. Butter-field’s Covenant Not to Sue continues, in relevant part:

Butterfield for and on behalf of himself, his “LoadBacker” business, licensees, contract manufacturers, assigns and/or all other related business entities, as well as any of their predecessors, successors, directors, officers, employees, agents, attorneys, representatives and employees of such entities hereby unconditionally and irrevocably covenants to refrain from making any claims(s) or demand(s), or from commencing, causing, or permitting to be prosecuted any action in law or equity, against Keith or any of its parents, subsidiaries, divisions, related companies, affiliated companies, assigns, and/or other related business entities, as well as any of their predecessors, successors, directors; officers, employees, agents, attorneys, representar fives and employees of such entities, on account of any possible cause of action involving infringement of U.S. Patent No. 9,126,520 based on the manufacture, use, sale, offer for sale or importation of any Keith product, including without limitation the Keith BSH-58 “Bulk Sweep” product, any predecessor version thereof, any colorable imitation thereof, or any other prior or future Keith product, regardless of whether that product is manufactured, distributed, used, offered for sale, sold, imported or exported before or after the Effective Date of this Covenant.

Id.

The following day, May 17, 2016, Butterr field filed a motion to dismiss four of Keith’s claims, excluding only the claim for correction of inventorship. .Butterfield argued that his Covenant Not Sue renders moot Keith’s claims that sought a declaration of noninfringement of the ’520 patent and a declaration of invalidity of the ’520 patent. Butterfield also argued that the applicable statutes of limitation and the doctrine of laches bars Keith’s claims for breach of contract and trade secret -misappropriation. On August 2, 2016, the Court granted in part and denied in part Butter-field’s motion to dismiss. The. Court ruled that Keith’s declaratory judgment patent claims are moot in light of Butterfield’s unconditional and irrevocable Covenant Not to Sue, but Keith’s state claims for breach of contract and trade, secret misappropriation may proceed. Two weeks later, on August 16, 2016, Butterfield filed his answer to Keith’s second amended complaint. On April 21, 2017, more than eight months after the Court issued its ruling on Butterfield’s motion to dismiss, the parties [1127]*1127filed a Stipulation of Dismissal with Prejudice. The parties’ stipulation was silent on the issue of costs1 and attorney’s fees.

DISCUSSION

Butterfield moves for an award of attorney’s fees pursuant to Fed. R. Civ. P. 54(d), Or. Rev. Stat. § 20.096, Or. Rev. Stat. § 646.467, and 35 U.S.C. § 285. Rule 54(d)(2) of the Federal Rules of Civil Procedure provides, in relevant part:

A claim for attorney’s fees ... must be made by motion.... [T]he motion must be filed no later than 14 days after the entry of judgment [and] specify the judgment

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Bluebook (online)
256 F. Supp. 3d 1123, 2017 WL 2730888, 2017 U.S. Dist. LEXIS 98208, Counsel Stack Legal Research, https://law.counselstack.com/opinion/keith-manufacturing-co-v-butterfield-ord-2017.