Law - Upsize Magazine, June • July 2010

[Business Builders]

Law

Originally Published: May 2008

by Dan McDonald and Joe Lee

Early assessment
can streamline
patent litigation

IN A PATENT CASE the decision to sue or refuse to license is typically driven by business reasons. For example, a business may be protecting its market share or an alleged infringer may be trying to break into the market.

This focus on the business issues, combined with a common misperception that the outcome of a patent case is unpredictable, often results in a pre-filing legal analysis that does not fully assess the likelihood of winning the case.

Waiting to assess the likelihood of winning until after the suit has been filed, however, has drawbacks. For one thing, the discovery phase in litigation is slow, expensive and burdensome. Also, ironically, after spending thousands or even millions on discovery, a party to a patent litigation action can find itself in a worse negotiation position than it was before the litigation even started. Discovery airs both sides? dirty laundry, so that often the parties will learn of each other?s weaknesses simultaneously.

One way to avoid these problems is to evaluate whether the case is a true winner as early as possible in a pre-suit investigation. Public documents relating to the patenting process provide virtually all the information needed to predict how the court will interpret the claims. Often enough information about the accused product is publicly available to assess infringement with confidence.

Benefits of early start
Even at the negotiation stage and absent any plans to sue, an early assessment can provide substantial guidance regarding business objectives and, perhaps most importantly, ensure that you do not negotiate based on an unrealistically optimistic or pessimistic view of a lawsuit?s likely outcome.

Understanding the merits and overall appeal of a patent claim early better enables one to determine the value of an out-of-court resolution and plan a course of action. In addition, the information generated from the pre-suit investigation can be used to compare how the case actually develops to how it was expected to develop, permitting deliberate strategy adjustments that can lead to a win.

Due to the magnitude of typical patent cases, a litigation team can easily find itself reacting to the litigation, rather than driving it. An early assessment enables your team to hit the ground running and focus on building the case, should it become necessary.

A pre-suit investigation can save time by helping one to maintain focus on the core issues. The assessment can keep litigation costs down by allowing well-founded and early decisions regarding abandoning claims or defenses that have been identified as weak.

Mock trials can help
An early case assessment should be conducted by someone with experience in contested-matter counseling and patent law. The patent and its file history are critical to assessing the scope of a patent. On-the-shelf infringing products, maintenance or user manuals, trade show information and press releases, for example, may be gathered to analyze the opponent?s products for infringement.

The assessment may include identifying all the patents the other party owns that might be asserted in a countersuit, and determining if and why each of the identified patents are not infringed, unenforceable or invalid.

This broader analysis can help ensure a potential plaintiff is not blind-sided by counterclaims that make it feel more like a defendant and help determine if cross licensing is a viable option to resolve the dispute.

For an even more objective and thorough pre-suit assessment, analysis such as a mock trial or focus groups research can be conducted based on the available information. Both liability and damages themes can be tested early for their likely appeal at trial. Just as important, this process can identify the information that a jury may consider critical in its decision, and thus provide strong guidance as to what areas are worthy of focus.

The assessment might also include a recommendation regarding alternative means for resolving the dispute, including filing suit in District Court, licensing, arbitration, International Trade Commission actions, patent reexams and interferences. It might also address procedural issues such as potential jurisdictions and trial schedules.

An early assessment can lead to decisions when considering patent litigation. In some cases, it may lead to a decision not to sue at all, potentially saving massive amounts of money.

Assessments can be done for a fraction of the cost and time spent on litigation. Money spent on an early assessment of a potential patent matter is money well spent.

contact Dan McDonald is an intellectual property trial attorney at Merchant & Gould in Minneapolis: 612.336.4637; <

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