Berkla

Opinion by Judge TASHIMA; Partial Concurrence and Partial Dissent by Judge SEDWICK.

ORDER

The opinion filed on May 9, 2002, slip op. at 6739, and reported at 290 F.3d 983 , is withdrawn and replaced by the amended opinion filed concurrently with this order. With the filing of the amended opinion, the panel has voted to deny the petition for panel rehearing. Judge Tashima votes to deny the petition for rehearing en banc and Judges Hug and Sedwick so recommend. The full court has been advised of the petition for rehearing en banc and no judge of the court has requested a vote on en banc rehearing. See Fed. R.App. P. 35(f).

The petition for panel rehearing and the petition for rehearing en banc are denied.

OPINION

Dennis Berkla designs electronic databases that allow users to create realistic images of natural settings on the computer screen. In 1997, Berkla contacted Corel Corporation (“Corel”) and they initiated discussions aboiit the possibility of Corel licensing Berkla’s image file databases for inclusion in upcoming versions of Corel’s software. After the parties executed a nondisclosure agreement (“NDA”), Berkla submitted to Corel some of his image file databases for…

concurring in part and dissenting in part:

I concur in the majority’s opinion on all issues, save one. I respectfully dissent from the holding that the district court erred when it denied an award of costs to Berkla because Corel faded to make an offer of judgment pursuant to Federal Rule of Civil Procedure 68. The majority adopts an inflexible rule that it is always error to deny costs on the basis that a prevailing party ignored an offer to settle and thereby prolonged litigation, unless the defending party’s offer to settle was made pursuant to Rule 68.

The majority begins its analysis with the observation that Federal Rule of Civil Procedure 54(d) provides for an award of costs to a prevailing party unless the court otherwise directs. To be more precise, it is Rule 54(d)(1) addressing costs other than attorneys’ fees that is pertinent to the disputed issue. 1 The majority then reasons that because Corel did not make an offer of judgment pursuant to Rule 68, the district court could not rely on the fact that Berkla ultimately recovered far less than Corel had informally offered in deciding to deny costs to Berkla.

There are several problems with the majority’s approach.…