best practices in patent litigation survey
TRANSCRIPT
5/3/2013
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Best Practices in Patent Litigation Survey
Professor Colleen [email protected]
Co-presented with Wesley Helmholz (SCU Law ’13)
Patent Litigation has changed over the past 8 years…
New Plaintiffs: 62% of 2012 patent lawsuits brought by patent assertion entities (PAEs)
New Defendants: through large tech cos capture headlines, targets are increasingly non‐tech, small, and customers
New Trends: low‐cost, low‐risk patent assertion by PAEs,investor‐driven monetization
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These changes have led to efforts to “fix” the patent system
Decisions
Laws, Hearings, Bills
Model Rules, Self‐help,Marketofferings
Case Management
This research asks: how’s it going?
‐ What has been the impact of PAE cases?‐ How are the fixes going? Do/will they work?
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In Today’s Presentation, we will …
1. Describe what we did
2. Summarize what people said
3. Invite Conversation (Wes Helmholz)
In Today’s Presentation, we will …
1. Describe what we did
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The Surveys
ObjectiveHow goes? What does or doesn’t work?
ProcessDevelop questions with judges and in‐house counselApply survey best practices
Responses116 in‐house counsel from ~ 100 cos (mostly $100M+, tech) Companion survey ‐ 115 outside counsel (all types)Patent “sophisticates”[%s are of in‐house counsel respondents unless otherwise indicated]
In Today’s Presentation, we will …
2. Summarize what people said
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82% said their customers got PAE demands for using or implementing their products
68%
15% 18%
0%
20%
40%
60%
80%
100%
Yes, based on use Yes, based onimplementation
No
Have Your Customers Received PAE Demands Based on Your Products?
The Fixes: what does/doesn’t work
Model e‐Discovery OrderDamagesCase ManagementLegislative Reforms
Questions asked: Is/Would the Fix Be Ineffective, Somewhat Effective, or Very Effective?Why or Why Not
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Model e‐Discovery Order
The Problem: Discovery is expensive and wasteful
The Fix: the Federal Circuit Advisory Council’s development of a model order to limit and streamline discovery
Has the model e‐Discovery order worked?
Yes“Somewhat” effective (67%); very effective (10%)It’s changed the norm, the conversationEmail, custodian limits principles have been most impactful
But there are still abuses“It all hinges on how difficult the other side wants to be”e.g. “plaintiffs make frivolous requests”; “defendants dump millions of irrelevant documents” and “withhold []relevant documents”
So…57% think greater sanctions/fee‐shifting for discovery abuse would be “very” effective.
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Damages Reform
The Problem: Damage figures are guestimates
The Fix: Reform damages law– require sound evidence and reasoning to determine damages
Has damages reform worked?
Yes… but parties and district courts need more guidance “Somewhat” effective 41% of the time; very effective 12% of the time “A lot of good ideas in the caselaw, but the practical upshot is very hard for parties to work [it] out.”
“Post‐Uniloc, there is no cost‐effective method for calculating
damages.”
So perhaps we need to…Devise new rules of thumb based on proportionality principles? “Nothing meaningful can be accomplished if the parties do not know the amount at issue.”
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Case management
The Problem: patent cases are complex and unwieldy, and judges are swamped
The Fix: manage the case to more efficiently resolve it
Does case management work?
Yes
76%71%
54%44%
72%
30%
46%52%
0%
20%
40%
60%
80%
Timely SJ decision Reexam Stays Timely TransferDecision
Claim limits/EarlyClaim Construction
Share of Respondents Who Thought The Intervention Was/Would Be “Very Effective”
Dark blue = inside counsel, Light blue = outside counsel
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Does case management work?
Yes, much more so than other interventions.
76%71%
54%44%
72%
30%
46%52%
0%
20%
40%
60%
80%
Timely SJ decision Reexam Stays Timely TransferDecision
Claim limits/EarlyClaim Construction
Share of Respondents Who Thought The Intervention Was/Would Be “Very Effective”
Dark blue = inside counsel, Light blue = outside counsel
Damages Reform
#1 Consensus Intervention: Timely SJ motion
76%71%
54%44%
72%
30%
46%52%
0%
20%
40%
60%
80%
Timely SJ decision Reexam Stays Timely TransferDecision
Claim limits/EarlyClaim Construction
Share of Respondents Who Thought The Intervention Was/Would Be “Very Effective”
Dark blue = inside counsel, Light blue = outside counsel
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Why timing matters
Reforms that target the beginning stages of litigation (e.g. early dispositive, stays) are more effective than reforms that target the end of litigation (e.g. fee‐shifting, damages reform)
Comments
Early Decisions Must be Decisive to be Effective “An early claim construction and summary judgment has been very effective for judges who are willing to make a clear decision. Other judges just sit on the papers for a long time, or render a claim construction that is subject to twisting by one party, such that a dispute on claim construction still remains.”
Without Stay, PTO Review Viewed as Unhelpful“Reexamination has only been effective when the district court has stayed the litigation. Otherwise, reexamination just complicates the presentation at trial.Many judges will not stay the trial during the pendency of a reexam, so there is no effect on trial costs. In fact, the reexam often adds to cost of the litigation.”
Some Believe Some Districts are Engaging in Sharp Transfer Practices“Misjoinder rules of AIA are effective. Consolidation and denial of transfer, however,[] makes a mockery of the process”
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Other Feedback …
Mediation: 4% very effective, 48% ineffective“As a member of a court mediation panel, it pains me to say that court‐ordered mediation is not effective. Mediation is effective only when the parties are ready to mediate. "Court‐ordered mediation” can come off as a mom telling a school‐aged child that they have to be friends with someone.”
Magistrates/Special Masters: 17% very effective/26.1% ineffective“Magistrate judges can also be effective at resolving some issues, but there is a loss of continuity at trial….[Re masters] they can add great expense and their cautious nature seems to reward bad behavior”; Masters often encourage more discovery disputes (because parties don't have the "wait this might annoy the judge" self‐check)
Consider the Needs of the Parties Before You “Patent local rules should not be considered ‘one size fits all’ for every case, as they significantly increase costs in cases involving simple patents/technologies and unfairly burden small defendants.”
Legislative Fixes
The Problem: Courts, the PTO, and parties don’t have the means to solve what ails the patent system.
The Fix: Give them the means
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Will Legislative Fixes Work? Maybe
64%57%
53% 53%
42%
0%
20%
40%
60%
80%
Fee-shifting toPrevailing
Parties
Fee-shifting forDiscovery
Abuse
Reform ITC End UserImmunity
HeightenedPleading
Share of Respondents Who Thought The Intervention Was/Would Be “Very Effective”
Early SJ
Comments
The ITC Has different rules“The misjoinder rules are leading to more ITC cases which are very expensive. “ (the misjoinder rules don’t apply there)
No Easy Way Exists To Resolve Consumer Cases“NPEs sue customers who buy components for use in their consumer goods instead of suing the component manufacturer. In some cases the NPEs refuse to license the manufacturer. The manufacturer usually refuses to indemnify its customer. This puts the consumer products company in a terrible position. “
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NB: “Reforms that target the beginning stages of litigation are more effective”
64%57%
53% 53%
42%
0%
20%
40%
60%
80%
Fee-shifting toPrevailing
Parties
Fee-shifting forDiscovery
Abuse
Reform ITC End UserImmunity
HeightenedPleading
Share of Respondents Who Thought The Intervention Was/Would Be “Very Effective”
Early Stage
In Today’s Presentation, we will …
1. Describe what I did
2. Summarize what people saidWhat is happeningWhat fixes works
3. Invite Conversation (Wes Helmholz)
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Questions for Clients
1. Who’s Responsible for Case Budgeting and Overruns
2. Selection of Counsel in Patent Cases3. Technology/Patent Valuation for In‐
Licensing versus in Litigation4. Venue and Forum (ITC, district court)
Decisions
Questions for Outside Counsel
1. Fee Arrangements2. Provisions for Sanctions3. Causes of Overbroad Discovery
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Questions for District Courts (Judges and Magistrates)
1. Patent Cases versus Other Complex Litigation
2. Primary Objective besides Fairness3. Effectiveness of Recent Reforms
(Misjoinder, PGR, Fee‐Shifting)4. What Additional Information can Help
Decision on Staying Cases?
Thank you!
Presentation downloadable from www.colleenchien.com
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Backup
The response population ‐ sophisticated
Profile:54% of in‐house counsel had overseen 6+ patent lits, 70% were tech70% of outside counsel had 10+ years of experience