What every in-house lawyer needs to know about IP litigation
Posted: 11:55 am Mon, June 4, 2012
By Meredith Ainbinder
It may be necessary to fend off an attack on a company’s business practices and defend against accusations of trademark, patent or copyright infringement, false advertising or trade secret misappropriation.
Perhaps you need to stop a competitor’s infringing conduct by bringing your own lawsuit. Maybe a license arrangement has gone awry and a broken relationship needs mending.
Being aware of a few simple ideas will help get you through it without letting it take over your law department — and your life.
Strategy is more than a buzzword. Many lawyers and business people use words like “strategy,” “tactic” and “execution” without really understanding how they come into play in a complex lawsuit.
Here, actions speak louder than words. Identify your objectives, make plans to reach them and commit to retaining the flexibility to adapt as goals change.
When formulating a strategy, consider how the case fits into your business, whether a product at the center of a lawsuit has a lifecycle that justifies the fight, and how your litigation positions you in your industry.
Weigh options such as early settlement, alternative dispute resolution or seeking preliminary injunctive relief.
Keep outside counsel updated on business plans and check in with them as priorities shift internally. Hearing information from you rather than on the business page of your trade paper helps your lawyers give you better advice.
Be aware of your budget. Consider IP litigation costs at different stages. Recognize true case costs: the number of experts, extensive third-party discovery, international travel for site inspections, local counsel fees, potentially contentious discovery motion practice, claim construction, summary judgment, etc.
Find out if alternative fee arrangements are sensible for the size and type of your case. Perhaps a fixed fee would work for one phase of the case. Or maybe you can negotiate a plan for capping costs for particular motion practice.
In addition to alternative fee arrangements, there are often ways to control costs by limiting your claims. Alternatively, grouping or consolidating a variety of issues will save you time and money in the long run.
Launching an IP case will likely put your IP in play. A key risk in launching an IP case is that your opponent will invalidate your intellectual property rights.
In a patent case, for example, defendants routinely claim that the asserted patent is invalid. While defendants need some specifics for that, many will also argue that a patent is procured through inequitable conduct and is therefore unenforceable.
IP litigation proceeds despite those risks because parties learn to anticipate and manage them. IP owners deserve the chance to protect their inventions, ideas and brands.
Companies and lawyers should work together to evaluate the contents of a patent’s prosecution history and any binding effects from the process of obtaining the patent, what a company has to lose if a patent is invalidated, and the cost of unchecked infringement. That may include sales lost to the infringer and other infringers who will enter the market if you don’t pursue your rights.
Not every wrong will be remedied. No in-house counsel likes to hear that the company’s patent or trademark is being used by a competitor and there is nothing that can be done about it.
After all, developing an IP portfolio is no easy task. It takes time, diligence, and coordination of the legal department with other groups such as R&D, marketing and sales. In addition, there are significant legal fees and costs associated with applications, renewals and policing.
Yet there are some circumstances in which it is difficult or impossible to right a wrong. For example, there may be no likelihood of confusion arising from another party’s use of a federal registered trademark and, thus, no relief. That may be the case when the other user is geographically remote, using the mark for different goods or services, or sells in distinct channels of commerce.
Also, IP protection has geographic limitations, and there are legal repercussions for attempts to capitalize on non-existent rights.
It is important to have realistic discussions of your expectations and your goals with your lawyers not only before you file a lawsuit but as you go through the process of developing a strategy and a budget for obtaining IP protections for different parts of your product lines in various markets throughout the world.
Electronic discovery is here to stay. Gone are the days of discovery involving a simple exchange of boxes of papers.
Discovery in cases implicating sophisticated technological issues often means using sophisticated technology to find and assess evidence. Because so many companies work largely by email, electronic records are key evidence.
Your IP litigation counsel will develop a plan for identifying, collecting, reviewing and producing your company’s electronically stored information. It requires the cooperation of your IT department and maybe reliance on your counsel’s in-house litigation support personnel or vendors.
While the pressure is on outside counsel to keep costs down and spare clients the indignities of turning over their emails to strangers, there are competing pressures that won’t be ignored. Outside counsel must protect a client’s interests by conducting defensible searches, producing vast amounts of information in a timely fashion, protecting privileged documents, recommending document retention plans and following up on litigation hold obligations.
IP is emotional. A common mistake is to think that an IP dispute just involves nuts and bolts, computer code or slide rules.
Intellectual property is about innovation. Inventors, authors and creators of any improvement feel passionately about their contributions to areas such as medicine, visual and performing arts, and computer networking. Behind every utterance of “I’ll see you in court” is a feeling of violation arising from the idea that one’s creations are being infringed.
Moreover, defendants take exception when wrongly accused of stealing another party’s secrets when they believe they developed something on their own.
Learning to manage those feelings and arrive at results that validate them without making a poor business decision will serve you in good stead. You should be able to rely on outside counsel to provide a reality check and help you navigate outcomes that balance the economic and emotional sides of these disputes.
An expert witness can make or break a case. In a case involving complicated technology, an expert witness may be the star of a trial. Jurors who find an inventor’s description complex or self-serving may feel differently about a technical expert who is smart and accessible.
Make sure your expert can explain things in plain English, make effective use of hypotheticals and appear credible in court.
When looking for an expert, you may find it useful to consult with your own technical staff for suggestions of leaders in the field or key qualifications.
There is more to a jurisdiction than whether it is a “rocket docket.” Parties seeking speedy resolution of cases often file complaints in certain jurisdictions known to move lawsuits along quickly. The Eastern District of Texas in particular sees a lot of traffic because its juries have been characterized as pro-patent owner.
Today, with somewhat of a backlash on District courts that retain cases when another venue is far more appropriate, one should consider a number of factors in selecting a forum.
Some jurisdictions have adopted local patent rules that require identification of the parties’ infringement and invalidity positions separate from the traditional fact discovery period. Others have introduced guidelines to focus electronic discovery.
If you anticipate extensive motion practice, you may want to keep in mind a given jurisdiction’s procedure around discovery and other motions. In some jurisdictions, a party can set its own hearing date within days of filing a motion. In Massachusetts, by contrast, parties have more response time and may not have a hearing on every issue.
Depending on your facts and your opponent, location may be key to achieving your desired outcome.
Injunctions are no longer issued as a matter of course. Over the past several years, patent owners have seen an erosion in their ability to obtain both preliminary and permanent injunctive relief, even when infringement is clearly demonstrated.
While courts are far more likely to enjoin infringement when the parties are direct competitors than when the patent owner is a nonpracticing entity, a court may well refuse to issue an injunction, even in a case with head to head competitors.
Managers and sales staff must be educated that even a win on the merits of the case will not always stop the misconduct, regardless of what happened in the company’s last IP case.
Being up-front about this changed reality may help you shape your strategy, inform whether you agree to a license arrangement and help your colleagues understand your challenges.
Meredith Ainbinder is a partner in the litigation practice of Sunstein, Kann, Murphy & Timbers in Boston.