Jay Kesan - Role and Impact of Special Masters in Patent Cases

8/7/2019 Jay Kesan - Role and Impact of Special Masters in Patent Cases

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Mastering Patent Law: The Role andImpact of Special Masters in Patent Cases

Jay P. Kesan & Gwendolyn G. Ball

University of Illinois at Urbana-Champaign

Thanks to Joe Cecil and Rebecca Eyre at the

Federal Judicial Center (FJC)


2/22

Relevance

In House versions of the Patent Reform Bill,Congress sought a study of the role andimpact of Special Masters in patent cases

Special masters and more broadly, judicialadjuncts, have been widely employed forcenturies

But empirical work analyzing the role andeffectiveness of Special Masters (SMs) isvirtually non-existent


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Historically.

Common law English courts of chanceryutilized masters to handle workload startingfrom the time of King Henry VIII

Chancery courts used masters for accountingand evidentiary matters

Used in the colonial period in the U.S. to deal

with congestion Largely ministerial, as opposed to the

adjudicative and decision-making role today


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Recently, at the federal level FRCP Rule 53 in the original enactment in 1938

Quite limited in scope; for non-jury trials, required anexceptional condition to appoint SMs; and for jury

trials, required that issues be complicated

FRCP 53 revised in 2003 to greatly expand the role of

SMs; but safeguards were put in to anticipate

problems that might arise: appointment, conflicts of

interests, functions of SMs, payment, standards of

review, and the like U.S. v. AT&T; Love Canal litigation; Vioxx; In re U.S.

DoD; Asbestos; DDT; Agent Orange Products Liability;

New York Navy Yard; Victims Compensation Fund

9/11; Childhood Vaccine Injury Act of 1986


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Perceived Advantages of SMs

Less time constraints and more focused

attention

Technical and specialized expertise

Facilitating settlements; being creative

Effective buffer, and conduit between the

parties Less limitations compared to judicial conduct


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Perceived Disadvantages of SMs

Conflicts of interestincluding potential ones

No disclosure requirements

Ex parte communications

Expense

Time

Constitutional concerns (Art. III and Due Process);

Formal vs. Pragmatic views; values of structuralindependence and impartial adjudication

Informal; imprecise; promoting deference


8/22

Empirical Work on Understanding the

Role and Impact of SMs Krafka et al. conducted surveys from 1991 to 1998 to examine

handling of scientific evidence (SE); found SMs appointed in

16.6% of cases involving SE issues

Joan B. Kelly found that the rate of re-litigation of child

custody cases in CA was lower when a SM was involved

Thomas Willging et al. study in 2000 seeking to determine if

FRCP 53 should be revised; observational research of court

dockets to determine the conditions surrounding SM

appointments; led to the 2003 revision Relatedly, other studies of specialization among judges in

patent cases

No studies of the SMs role and effectiveness in efficient

and/or accurate adjudication


9/22

Incidence of Use of SMs

Willging et al. did a textual search of the

dockets of over 400,000 civil and criminal

cases terminating in 1997 and 1998;

appointment of a SM was formally considered

in 0.27% of all cases across all fields

They found that appointment of a master was

formally contemplated in 2.7% of all patentcases


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Year Cases in which a Masterwas Contemplated

Cases in Which a Master wasActually Appointed

Number Percentage

1988 1 1 1.15

1991 1 1 1.15

1993 1 1 1.15

1995 2 0 0.001997 4 3 3.45

1998 3 3 3.45

1999 7 7 8.05

2000 6 4 4.60

2001 11 8 9.20

2002 21 14 16.092003 35 28 32.18

2004 21 15 17.24

2005 3 2 2.30

Total 116 87 100.00

Sample of Cases with Special Masters: Distribution by Filing Year


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Patent Case Outcomes: 1995, 1997, 2000, and 2002

Non-Merit Dispositions Settlements and Probable

Settlements

Rulings and Verdicts

Outcome Number of

Cases

Outcome Number of

Cases

Outcome Number of

Cases

Dismissed

WithoutPrejudice

208 2.3% Identified

Settlements

3378 41.3% Summary

Judgments

533 5.8%

Lack of

Jurisdiction

107 1.2% Consent

Judgments

591 17.4% Judgment on

Jury

Verdict

237 2.6%

Want of

Prosecution

119 1.3% Stipulated

Dismissals

836 9.2% Judgment on

Bench Trial

81 1%

Default Judgments 128 1.4% Agreed

Dismissals

3 0% Judgment as

a Matter of

Law

22 0%

Voluntary

Dismissal

(Complaint not

Answered)

1152 12.6% Voluntary

Dismissals

(Complaint

Answered)

230 2.5% Dismissals

With

Prejudice

117 1.3%

Arbitration 3 0 %

Sub Totals1

1714 18.8% 6434 70.4% 990 10.4%

Total of Outcomes 9138

Other Dismissals 46

On-going 131

Unidentified 190Total 9505


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Who Serves as a SM?

44 individuals served as SMs, suggesting certain

individuals tend to serve as SM in a number of cases.

8 individuals served in two cases each, 3 individuals

served in three cases each, 1 in six cases, 1 in eightcases, and 1 in fifteen cases

Average ranking of law schools attended was 20.7%;

30% graduated from a Top 10 law school

Almost 80% had a technical undergraduate degree

On average, upwards of 30 years of work experience;

other public credentials


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Compliance with Rule 53(b) in

Appointing Special Masters Rule 53(b) of FRCP describes the procedure for appointment

of a SM. It specifies the important features of the order of

appointment, as follows:

The appointing order must state:

A) the masters duties.

B) the circumstances, if any, in which the master may

communicate ex parte.

C) the nature of the materials to be preserved and filed

D) the time limits, method of filing the record, other

procedures, and standards for reviewing the masters orders,

findings, and recommendations; and

E) the basis, terms, and procedure for fixing the masters

compensation.


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Compliance with Rule 53(b) in

Appointing Special Masters

The actual order of appointment was available for 56

cases in this study

84% specified the basis of the masters

compensation Compliance with the other requirements was lower

68% specified the rules for ex parte communication

39% described the procedure for reviewing themasters work

27% described the materials to be retained as a

record of the masters work


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Issue Number Percent of Cases

Discovery 27 35.53

Claim Construction 34 40.96

Infringement 10 12.05

Invalidity 7 8.43

Enforceability/InequitableConduct

4 4.82

Trade Secrets 1 1.20

Sanctions against parties 3 3.61

Fees and Damages 2 2.41

Settlement Negotiations 1 1.20Inventorship 1 1.20

Total 90

Issues Addressed by the Master


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Power Number Percent of Cases in

which Special Master

was authorized to

perform this function

Managed Schedule 14 16.87

WroteReport/Recommendation

59 71.08

Drafted Orders/Opinions 8 9.64

Evaluated Motions 1 1.2

Conducted Hearings 31 37.35

Evaluated and Analyzed

Evidence

1 1.20

General Advice 18 21.69

Functions Performed by SpecialMasters


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Nature of Cases with SMs

The average length of the cases in this study was

1321 days; 50% of the cases were over 980 days in

length.

For comparison, in our study of the outcome andduration of patent cases filed in 1995, 1997 and

2000, we found that the average case lasted 444

days; and 50% of all cases terminated in less than

300 days


18/22


Over 25% of these cases were terminated through

judgments, rather than settlements. Of these, 9%

were jury trials, 5% were bench trials, and 13% were

summary judgments For comparison, in our study of the 1995, 1997 and

2000 patent cases, just under 12% of all patent cases

were resolved through judgments. 7.4% were

resolved through summary judgment, 3% were juryverdicts, and 1% were bench trials


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On average, these SM cases had been ongoing for

1100 days when the SMs were appointed

50% of all cases in the sample had been ongoing for

475 days when the SM was appointed Over half of the SM patent cases had already lasted

longer than the total duration of the average patent

case when the master was appointed


20/22

Appeal Outcomes in SM Cases

Comparison with All Patent Cases

Approximately 1700 appeals were filed in the 17,500

patent cases filed between 1995 and 2003. About

10% ofall patent cases are appealed on some issue

In the SM sample, appeals were filed in less thanabout 14% of those cases

38% of the SM appeals were at least partially

reversed. This is nearly identical to that of the total

population, where, among all patent cases filedbetween 1995 and 2003, approximately 40% of all

appeals resulted in at least a partial reversal


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Appeal Outcomes in SM Cases

Comparison with Long-Duration Cases

Appeals were filed in approximately 20% of the

patent cases with a duration of 1000 days or more

The appeal rate in cases with special masters was

about half of that of other long-duration (1000 days

or more) patent cases

The reversal rate in long-duration patent cases is

11.7%. In contrast, the reversal rate was 3.6% in theSM sample


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Summary

Given the concerns about delegation of authorityand impartiality, are SM appointments justified?

Special masters are appointed in patent cases for the

same reasons as in civil cases in general

Special masters recommendations in patent cases

are given considerable deference

Special masters make a difference in outcomesas

measured by the appeal rate and the reversal ratewhen compared to complex patent cases

All forms of specialized patent adjudication need to

be studied more carefully

Documents

Jay Kesan - Role and Impact of Special Masters in Patent Cases