I recently started writing a column for the Southeast Texas Record, and its sister publications the West Virginia Record and the Madison (Illinois) Record. The column is titled "IP for Your Business" and focuses on IP issues faced by businesses of all sizes. The columns are not Chicago-specific, but I will post them here anyway, and with the Record’s permission I will post them on the Blog because many Blog readers will find it valuable to have articles addressing bedrock IP issues, as well as how to deal with real world IP issues with a special emphasis on protecting against third party IP and monetizing your IP. The first column (click here and here to read it) lays out seven steps for reducing patent litigation budgets while improving the quality of your case:
Increasingly, every industry and size of business feels the pain of patent litigation. Even small or medium-sized businesses are not exempt.
Most cases start the same way. A letter is sent to your company’s president, CEO or general manager. The letter lists one or more patents, warns of patent infringement often with little other detail, and offers a license.
You turn to a search engine such as Google or Bing and quickly learn several facts: 1) the patent holder is a shell company, not a company that makes a product or offers a service; 2) you are one of many actual, potential or past defendants; and 3) you are angry and frustrated.
Once you get over your initial reaction, you need a plan. But how do you handle the increasing number of similar cases you are seeing, without destroying your legal budget and diverting your legal team’s valuable resources from projects that are mission critical for your business?
Or as a company new to patent litigation, how do you handle your first patent dispute?
After dealing with these issues both as in-house counsel at a Fortune 100 company and as outside defense counsel, I have found that seven straightforward strategies significantly streamline case budgets while positively impacting case strategies.
1. Hire a Patent Litigator
The first thing you need to do, particularly if you do not have a general counsel or someone else with litigation experience, is to hire a patent litigator. You might be inclined to use your normal counsel, but before making that decision, make sure they have patent litigation experience. Patent litigation is a unique and complex area of law.
Many federal district courts even have special local rules for patent litigation. You want a lawyer who you trust and who has patent litigation experience. If you do not know a lawyer fitting your needs, ask lawyers and business contacts for recommendations.
You can also search for lawyers that are skilled in your technology or have expertise in your court. Also, resist the urge to delay hiring a patent litigator until you see if settlement efforts work.
Spending a little on a patent litigator during settlement talks can save large sums if the settlement falls through. Too often, a business person or lawyer that does not understand the intricacies of patent litigation will unintentionally make a statement that harms litigation positions down the road.
2. Establish A Joint Defense
If you have co-defendants, this is easy. Seek them out and set up a formal joint defense group. Make sure to determine whether you will split any costs.
You can often share invalidity experts. You can sometimes share noninfringement experts also, but even when you cannot, you can at least coordinate them. Determine who is in control amongst the co-defendants and how payments will be split before engaging the expert, not after the first bill is received.
If you are the only defendant in your case, seek out current and past defendants from other cases. They can provide valuable insights into invalidity, opposing counsel and the case strategies they found most effective. And if their case is ongoing, you likely have a common interest allowing you to establish a joint defense and take advantage of the benefits discussed above.
If your entire industry is being targeted, contact your competitors that have not been sued. They may have received a letter charging infringement. Even though they have not been sued, they can still have a common interest that allows you to collaborate.
3. Define Your Role and Manage Your Joint Defense Group
A joint defense group can be a valuable source of information and cost savings, but you must enter a joint defense group with a clear plan and clear goals. You should decide whether you want to lead the group, to actively participate or just to follow. Leading is the most expensive, but offers the most control over your defense.
Most, however, will choose active participation. This gives some control while moderating costs. Finally, smaller entities or those with little at stake in the litigation often choose to follow.
This role requires the least work and cost, while offering the benefit of at least the parties’ joint defenses, like invalidity. The downsides are less of a voice in strategy decisions and less cooperation from co-defendants that may see you as a free-rider.
Even with a plan, joint defense groups can become a significant cost, as well as a time sink. There can be heavy e-mail volume, group conference calls and meetings that increase in length and frequency, and it can be difficult to make the nimble strategy corrections required in litigation when you need group buy-in.
Of course, some group communication is required. But you can manage meetings by agreeing ahead of time that every meeting requires an agenda and a time limit. Agendas and time limits avoid endless meetings full of off topic and unexpected issues that no party is prepared to answer.
Also, for larger joint defense groups and during busy portions of any multi-defendant case, like the close of discovery or claim construction, consider scheduling a set call, with agendas and a time limit allowing people to raise issues ahead of time.
Regular meetings can cut down on email traffic over small issues. When you know one or two co-defendants will require convincing of a position, consider contacting those parties one-on-one before the meeting to avoid delaying the entire group and building consensus for your ideas.
Finally, whenever possible hold meetings live. When all co-defendants are on a conference call, you run the risk of the call dragging because one or more participants are distracted with other work, office visitors, e-mail or the internet. Putting everyone in a room together minimizes distractions and encourages active participation, leading to shorter meetings.
4. Data Mining
If your patents have been litigated before, get as many of the prior pleadings as possible.
Many get the prior cases’ final decisions, but it is a mistake to stop there. You want to see answers and counterclaims, any court orders, pretrial filings, jurisdiction motions, summary judgment motions and even discovery motions. You can learn a lot about plaintiff’s case strategy and fact issues based upon what plaintiff says in discovery disputes.
For example, you may learn what documents plaintiff is missing, details of how plaintiff keeps financial information, and what documents plaintiff does not want to provide.
Additionally, privilege disputes can tell you what documents to look for on plaintiff’s privilege log that may not be privileged and you may find old privilege logs which you can use to confirm plaintiff has provided a complete log.
Finally, claim construction, noninfringement, and invalidity briefing and supporting declarations are important sources of both plaintiff’s case strategy and potentially contradictory statements by plaintiffs, their experts and party witnesses. You should review these papers whenever you are preparing a technical pleading from plaintiff.
5. Prepare Your Noninfringement and Invalidity Positions Early
Too often plaintiffs, expecting a pre-trial settlement, do not prepare their technical case until immediately before claim construction begins.
As a defendant, you can leverage this by preparing your case early. You can then use your deep understanding of the case and your positions to build your defenses in depositions, interrogatories and requests for admission. And your strong discovery position can set you up for a more effective summary judgment motion or a more favorable settlement.
6. Staff and Run a Lean Team
In addition to decreasing your litigation budget, a lean defense team protects against a favorite tactic of patent trolls – using the size of a corporate defendant’s legal team against it.
When your legal defense is put on by two, or at most three, lawyers working principally with one corporate contact, every member of your team will know the entire case. You will avoid the cost of the technical specialist without litigation knowledge or the invalidity specialist that is not grounded in your noninfringement positions.
A lean team with each member having a larger percentage of their time on your case also avoids decision-making without case perspective and makes sure that plaintiffs cannot shop for answers by calling different specialists on your team.
7. Engage With Your Legal Team
Too often outside counsel are retained and take over a case. They proceed to develop a strategy for "winning" the case and periodically report their progress toward that goal, usually after major milestones like briefs being filed or opinions issuing.
Unfortunately, "winning" a litigation at all costs is not always a win for the defendant. It is critical to define what winning means for the defendant in each case. Once winning is defined, you should clearly communicate those goals to outside counsel and work closely with them to make sure each strategy, action item and expense in the case is focused on you winning.
I suggest a weekly, at least, update from outside counsel explaining what has been done and outlining what they plan to do next. Scheduled updates allow you to actively manage outside counsel’s strategy, review task lists to make sure case strategy remains focused on your goals, and approve or modify plans at a fairly grander level.
These seven straightforward steps will decrease your patent troll litigation costs while increasing the effectiveness of your defense.