Best Practices in Patent Litigation Survey

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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)


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]


2. Summarize what people said

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What is impact of PAE suits

PAEs can have significant operational impacts

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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%





Damages Reform

#1 Consensus Intervention: Timely SJ motion

76%71%

54%44%

72%

30%

46%52%

0%

20%

40%

60%

80%





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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


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


Early Stage


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

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The CAFC model order: custodian and email limits matter the most

Discovery: who oversees what

Health & Medicine

Best Practices in Patent Litigation Survey