What to do in the first 30 days of an IP suit

You’ve just been sued – What to do in the first 30 days

Lee Cheng, Newegg, Inc.; John Sganga and

Lynda Zadra-Symes, Knobbe Martens

April 30, 2013

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You just got sued, so you need to:

1. Comply with initial deadlines

a) Retain counsel

2. Find someone else to pay for it

3. Evaluate risk

a) In-house case assessment

b) Exposure/merits

c) Is plaintiff a troll?

4. Convince IP owner their case is weak

5. Counterpunch!


Parallel Paths

ASSESS INTERNALLY

DEADLINES/COUNSEL

INVESTIGATE FACTS

LITIGATE

Time & Cost

Pri

ori

ty


I. Deadline oriented issues:

1. Getting someone else to pay

a) Insurance:

• Tender early

• Continue to pursue after denial

b) Indemnity:

• Suppliers

• Contractors

c) Indirectly:

• Joint defense group


I. Deadline oriented issues (cont’d):

2) Court-related deadlines

a) Document preservation – litigation hold memo

b) Timely responsive pleading

• When were you served?

• State court (30 days)/federal court (21 days)

• Waive service? (60/90 days from request)

• Remove to Federal Court (30 days firm)

c) Compel arbitration?


I. Deadline oriented issues (cont’d):

3) Possible counterclaims/cross claims

a) Is Plaintiff infringing your IP?

b) Breaching license agreement?

c) Other competitive torts

d) DJ claims/counterclaims

4) Possible motion to dismiss/transfer

a) Jurisdiction

b) Failure to state a claim

• Indirect infringement

c) Lack of standing

• Does Plaintiff own the IP?


II. Assessing Merits & Exposure:

1) How is plaintiff funded?

a) Key competitor or IP holding company?

b) Allocate resources for defense accordingly

2) Focus on defenses and exposure early in case

a) Is defendant's activity licensed?

b) Is injunction a risk?

3) Identify options to resolve dispute:

a) $$ exposure

b) $$ to settle

c) Design around options


II. Assessing Merits & Exposure

4) Trademark (Supplemental or Principal)?

a) Check file history for statements made to PTO regarding no likelihood of confusion with other marks

5) Patent

a) Has it been litigated/re-examined before?

b) Pending related applications

c) Claim limitations added/arguments in file history

d) Prior art

6) Copyrights -- obtain certified copy of file and deposit copy


II. Assessing Merits & Exposure (cont’d)

7) Should defendant's activity cease pending outcome of suit?

a) Avoid potential willfulness finding

b) Reduce damages liability

c) Effect on strength of defenses


III. Fact Investigation: Defense side

1) Gather/preserve relevant documents from client

2) Identify key witnesses

a) Obtain declarations?

3) Inform employees about publicity policies

4) Third parties to be contacted:

a) former employees

b) Joint inventors

c) Other co-owners

d) Contact before Plaintiff does?


III. Fact Investigation: Plaintiff and its IP

5) Identify Plaintiff and its relationship to defendant

6) Confirm status of asserted IP rights

a) Is Plaintiff the owner?

b) Are maintenance fees/renewals up to date?

7) Has plaintiff enforced the same IP rights?

a) Are other defendants cooperative?

8) Is Plaintiff in good corporate standing?

a) paid State dues/taxes

b) filed corporate documents


III. Fact Investigation: Plaintiff and IP (cont’d)

9) Review copyright registrations

a) Check dates of publication/registration

b) Statutory damages/attorneys fees may be unavailable to prevailing plaintiff,

c) But still available to prevailing defendant

10) Search for prior rights

a) Do you predate the plaintiff?

b) If a third party predates, can you acquire rights?

c) Countersue? Attack in PTO?


IV. Fee Arrangements/Joint Defense Issues

1) Retaining counsel

2) Joint defense agreements

a) Confidentiality issues

b) Privilege/common interest

c) Settlement control

3) Cost-saving tactics:

a) Using one firm

b) Sharing costs

c) Shifting defense burden to other party

d) Mesh strategy with long-term objectives


V. Litigation tactics to reduce costs:

1) Choice of counsel/managing counsel

2) Reduce discovery costs

a) Manage vendors

b) Early disclosures of documents/witnesses

c) Reduce costly discovery disputes

d) Demonstrate preparedness

3) Leverage pre-existing work-product

4) Stay litigation - File IPR in PTO

5) Mediation

6) Offer of judgment

Lee Cheng, Newegg, Inc.; John Sganga and

Lynda Zadra-Symes, Knobbe Martens

Education

What to do in the first 30 days of an IP suit