Intellectual Property

Simplifying The Complex In Patent Cases

The complexity only gets more challenging when damages are present in a patent case.

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Intellectual PropertyPart of the fun in trying patent cases to a jury is the fact that there are three big issues that need addressing as part of a complete verdict. But addressing those issues in a coherent and cohesive way is also the greatest hurdle for patent trial lawyers to clear. As a result, the mark of a great patent trial lawyer is the ability to make complex concepts understandable to those less familiar with the specifics of a given case. As I explain to investors when I try to help them handicap ongoing patent litigation, each one of those three cardinal patent issues — infringement, validity, and damages —  requires serious analysis, in even the simplest patent case. When you add in that infringement and validity are issues that are intertwined in their dependence on claim construction, things get even more complicated for the lay observer. Making things worse is that in district court both the burdens and standards of proof are different on those issues, with the plaintiff bearing the burden of proving infringement by a preponderance of the evidence and the defendant having to prove invalidity by clear and convincing evidence. It is a lot, even for the highly educated and smart analysts that are expected to be found at some of the world’s most sophisticated investment firms.

The complexity only gets more challenging when damages are present in a patent case. Just take a look at even the simplest pre-trial Daubert decision on patent damages. Even financial professionals with the ability to analyze complex financial statements and projections for the publicly traded companies they invest in find patent damages complex. I can sense them start to fidget on the phone as I explain that even the simplest reasonable royalty calculation in a patent case involves both a hypothetical negotiation — in and of itself a difficult construct to work with — as well as a 15-factor analysis in order to try to approximate what would have happened during the imaginary negotiation. Throw in case-specific damages issues like lost profits, noninfringing alternatives, and the like, and it is clear that damages is another issue in patent cases where the complexity can be overwhelming, even for sophisticated jurists asked to perform the gatekeeper role demanded by Daubert pre-trial.

A recent decision out of Delaware’s District Court confirms that judges understand the complexity of patent cases — and take seriously their responsibility as gatekeepers, in terms of making the job of a jury in a patent case a workable endeavor. On August 8, 2023, Delaware’s Judge Christopher J. Burke entered an order in Hilti Aktiengesellschaft v. Specified Technologies, Inc. (D. Del. Case No: 1-22-cv-01248) granting the defendant’s motion to sever claims from one patent case pending against them so that those severed claims could be consolidated in a second pending patent action.

In particular, Burke agreed with the defendant that a set of three patents in the first case should be severed, as “multiple factors weigh in favor of severance of claims regarding” those patents. Chief among those factors was the “overly complex” nature of the first pending case, which prior to severance involved “11 patents in total (including two asserted by Defendant), five different patent families, and five different categories of accused products.” Seeking to spare the jury the “herculean task” of sorting through that morass was vital, as “even a substantial reduction in the number of asserted claims would not save the jury from an incredibly complicated undertaking.” As the court recognized, not only are juries charged to “learn the ins and outs of a large number of patent families and multiple accused products, all with different features,” they are challenged to do so at the same time as they are forced to “grapple with the complexities of patent law.” To make things easier, in both cases, the court found that severance of at least three of the asserted patents — which were all related — was appropriate.

At the same time, the court was quick to acknowledge that even post-severance and consolidation the two reconfigured proceedings would still be challenging for their respective juries to resolve. (We can set aside for now the evergreen debate on whether specific patent trial courts are needed or whether patent juries are even capable of getting to a proper decision in any given patent case.) What mattered to the court was that the juries in each case be given the opportunity to conduct “meaningful” deliberations, based on the trial presentations that were made to each set of jurors by the parties.

Also counseling in favor of severance was that the set of severed patents differed in substantive ways from the patents remaining in the case. For example, they involved different accused products and had no overlapping inventors. In contrast, the patent asserted in the second case shared “the same title, claimed priority date, and named inventors” as the severed patents. Accordingly, the court found that consolidating the severed patents into that second case made “good sense” and would streamline both cases going forward.

Ultimately, this decision highlights the sensitivity of experienced patent jurists to the needs of juries asked to act as fact finders in patent cases. As even the simplest patent case can present manifold complexities, any assistance from the court — and the parties — in alleviating the burden placed on juries helps allow those juries to do their jobs properly. Better handling of issues presented to juries helps to reduce appeal risk and can lead to increased confidence in the legal system for litigants and the general public. At the same time, we all know that one of the best ways to increase the pressure on an accused infringer is to assert a diversified set of patents, ideally against a range of accused products. For now, we can focus on how at least one court decided to simplify the complex. Down the road, we can talk about how patent litigants often try to make the complex even more complex.

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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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