Patent litigation is not for the faint of heart as it carries tremendous risk and reward. Typically, patent litigants are "betting the company." The stakes are high: one case awarded almost $1 billion in damages. The successful patent-owner almost always secures a court order prohibiting further infringement, which removes a competitor from the market the very next day. The cost can be major: $2.5 million in fees is average for a patent case. What's more, patent litigation is among the most challenging forms of litigation. The complexity of patent law is compounded when the technology is complicated.
There are, however, a few rules to help assure success.
Rule 1: Stay Involved
Perhaps due to the difficulty of patent law, the temptation is simply to defer to outside counsel on every matter. You should participate in key decisions throughout a case because certain decisions can affect the entire course (and cost) of a litigation.
Strictly deferring to outside counsel can be a costly mistake. First, youÂ–not the lawyersÂ– should remain in charge. Second, your managerial involvement will make for better long-term business decisions. For example, outside counsel might make the right strategy call on litigation, but the unanticipated business ramifications could spell disaster. Finally, your involvement can assure a well-managed case; your familiarity with the market and the technology can help litigation counsel think through difficult decisions more thoroughly and effectively.
Naming a point-person to interact with patent counsel can promote efficiency (i.e., reduce cost) and assure better decisions are made.
Rule 2: Look Before You Leap
A full pre-litigation investigation leads to better decisions before and during the suit. Key components are:
The merits. To assess the claim's strength, the potentially infringing activity is reviewed alongside the patent, the patent's history before the Patent Office, and the "prior art" (what came before the invention). Competent patent litigation counsel is essential, but have your lawyer explain the conclusions and underlying reasoning. You should also estimate potential damages, including the value of an injunction (e.g., the value of future sales corresponding to forcing a competitor out) and any value to being aggressive (such as sending a message to others).
Competitive intelligence. You should also investigate the potential defendant(s), including:
- Resources available for defense.
- Past litigation and settlement behavior.
- Possible counterclaims (particularly, patent counterclaims).
- "Equitable" considerations (who will judges and juries think is wearing a "white hat"?).
Choice of party. In most patent cases, there are many potential defendants. For a patent on a chair, for example, you could sue the chair manufacturer, any distributor, retailer, or even employer who uses chairs in its offices. With counsel, work through the many concerns that affect defendant selection.
Where to sue. All patent cases are heard in a federal trial court, but courts vary greatly by location. One factor is time to trial; some reach resolution (trial) much faster. Another factor is the judges' perceived sophistication. Where the accused activity involves imports, a proceeding before the International Trade Commission may also be possible. Although the ITC cannot award damages, it can bar goods from being shipped into the U.S. and its proceedings are speedy.
Rule 3: Know Your Chances
Surprisingly, statistical analysis is seldom used in case assessment. While each patent infringement case is different, some sort of statistical sense is appliedÂ–usually based on nothing more than an attorney's "gut" sense. But more information is available. According to a survey published in 2000, patent-owners win about 58% of the time. An up-to-date statistical analysis can help you decide how to handle (1) the litigation, (2) other business decisions (such as product modification or dealing with customers), and (3) settlement posture (such as how much to settle for based on the likelihood of winning).
Rule 4: Beware of "Markman"
One decision that can affect the course, cost, and outcome of a case is when and how to request a "Markman hearing" (where the court decides what the patent covers). This decision is critical to what happens in the case and when.
Markman hearings are a critical part of a patent case. While the vagaries of patent litigation can set a layperson's head spinning, your lawyer should be able to clearly explain even subtle issues like the timing of a Markman hearing, and to discuss the relative strengths and weaknesses of various approaches to the hearing's timing and handling.
Rule 5: Help With Fact Investigation and Expert Selection
Cases are won or lost on their facts. Your company's engineers and scientists usually will know the technology better than any lawyer, and employees are often a great source of "prior art" useful for defending an infringement claim.
Another critical step is selecting experts. Frequently, the bestqualified experts are known only to company scientists, who are never asked for their input. The right expert, however, can be the difference between a jury accepting or rejecting your arguments.
To assure the best outcome for your business, in-house counsel and the business people responsible for the case should stay involved. RememberÂ–quality representation includes thinking through each important issue and seeking input from the client where appropriate. By participating in key decisions, the business can stay in charge and help assure that the interests of the business are pursued in the most effective way possible.