Intellectual Property, Patents, Trials

Managing The Unmanageable Patent Case (Part 1)

From a court’s perspective, settlement is as good a case management tool as it gets.

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Whenever I need a reminder of how much patent litigation has changed from when I started practicing, I think back to one of my first large patent cases. At that point, I was a junior associate at a large law firm. The case I was working on could be aptly described as a battle between two software giants, involving a patent on critical and then-ubiquitous technology. The dispute lasted for years, involving a number of major law firms, numerous experts and witnesses on each side, and even a Federal Circuit appeal.

Today? That same case would likely have been tossed out within six months on an Alice motion, or perhaps would have quickly settled after the inevitable IPR institution by the PTAB. Furthermore, the plaintiff would have likely had to contend with potential IPR filings by a host of third-parties, including from potential future targets interested in nipping a potential threat in a proverbial bud.

In short, the days of the big-ticket patent case involving a single asserted patent are effectively passe in the age of IPR’s and early Alice motions. While certain hardware patents may be immune from the latter avenue of attack, there is no doubt that IPR risk percentage for patent plaintiffs rises and falls in inverse proportion to the number of patents asserted. Until the Supreme Court decides Oil States (reviewing the constitutionality of IPRs), cases involving a single asserted patent are almost assured of an IPR filing.

Want to minimize the risk? Assert more patents. (It is no surprise that one of the recommendations offered to anxious branded pharmaceutical companies — worried about increased susceptibility to generic companies filing IPR’s — was for them to file more patents on their drugs.) Prospective patent plaintiffs know that the most sure-fire (but not foolproof) way to avoid seeing their enforcement campaigns wither under an IPR onslaught is to assert as many patents as possible.

It is understandable, therefore, that many of the big-ticket patent cases remaining in this age of dwindling filings involve multiple asserted patents. Considering the difficulty even single-patent cases often present for crowded district court dockets, it is also no surprise that busy judges have been forced into employing creative measures to try and manage cases involving multiple asserted patents. Remember that even a case involving only two or three patents could contain allegations that dozens of claims of the asserted patents are being infringed, potentially by dozens of accused products. Throw in the typical complexity of a patent case in terms of the various legal issues involved — including the multitude of defenses that sophisticated defendants raise in response to a single claim of patent infringement — and there is no doubt that a single patent case could cause more trouble to a court’s docket than a bunch of other more routine criminal or civil matters.

Because of the docket disruption caused by patent cases, particularly the larger ones, a number of streamlining approaches have been adopted by savvy district court judges. For example, at least one judge has looked to streamline a large patent case by calling for a best-claim-first “shootout” very early in the case’s lifespan. By forcing the plaintiff to demonstrate that their best arguments in the case have merit early on, this approach can help a court decide how much leeway to give the litigants the rest of the way forward.

Likewise, some judges have looked to tackle the issue how to handle a large patent case later in the process, by ordering a mini-trial on a subset of the asserted patents as a stepping stone to a fuller trial should the plaintiff succeed. Regardless of the espoused approach, these proposals share a common premise — that large patent cases are effectively unmanageable, particularly when it comes to trying them before a jury. Whether or not that is true is a matter for debate. What is not debatable, however, is that plaintiffs will often be challenged on their decision to assert multiple patents by courts, even as the assertion of multiple patents has become almost a necessity nowadays.

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Even as these creative case management approaches seem driven by a bit of a nihilistic recognition of the futility of trying a multiple patent case, there are important benefits that arise from forcing plaintiffs to streamline their cases. Perhaps the biggest one of those benefits is that forcing plaintiffs to focus on their best arguments actually can be a driver of settlement, a benefit those judges ordering streamlining of cases are no doubt aware of.  We will explore why that may be true next week, but for now, it is important to remember that just like most types of civil litigation, patent cases nearly always settle at some point in their lifespan. Obviously, any settlements that happen early in cases are favored by courts, because of their reduced burden on judicial resources. Either way, it is clear that multiple parties have an interest in figuring out how to manage the unmanageable patent case. From a court’s perspective, settlement is as good a case management tool as it gets.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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