IP for Your Business: Seven Steps for Reducing Patent Litigation Budgets While Increasing Effectiveness (Part I)

By R. David Donoghue Increasingly, every industry and size of business feels the pain of patent litigation. Even small or medium-sized businesses are not exempt. Most cases start the same way. A letter is sent to your company's president, CEO or general manager. The letter lists one or more patents, warns of patent infringement often with little other detail, and offers a license. You turn to a search engine such as Google or Bing and quickly learn several facts: 1) the patent holder is a shell company, not a company that makes a product or offers a service; 2) you are one of many actual, potential or past defendants; and 3) you are angry and frustrated. Once you get over your initial reaction, you need a plan. But how do you handle the increasing number of similar cases you are seeing, without destroying your legal budget and diverting your legal team's valuable resources from projects that are mission critical for your business? Or as a company new to patent litigation, how do you handle your first patent dispute? After dealing with these issues both as in-house counsel at a Fortune 100 company and as outside defense counsel, I have found that seven straightforward strategies significantly streamline case budgets while positively impacting case strategies. 1. Hire a Patent Litigator The first thing you need to do, particularly if you do not have a general counsel or someone else with litigation experience, is to hire a patent litigator. You might be inclined to use your normal counsel, but before making that decision, make sure they have patent litigation experience. Patent litigation is a unique and complex area of law. Many federal district courts even have special local rules for patent litigation. You want a lawyer who you trust and who has patent litigation experience. If you do not know a lawyer fitting your needs, ask lawyers and business contacts for recommendations. You can also search for lawyers that are skilled in your technology or have expertise in your court. Also, resist the urge to delay hiring a patent litigator until you see if settlement efforts work. Spending a little on a patent litigator during settlement talks can save large sums if the settlement falls through. Too often, a business person or lawyer that does not understand the intricacies of patent litigation will unintentionally make a statement that harms litigation positions down the road. 2. Establish A Joint Defense If you have co-defendants, this is easy. Seek them out and set up a formal joint defense group. Make sure to determine whether you will split any costs. You can often share invalidity experts. You can sometimes share noninfringement experts also, but even when you cannot, you can at least coordinate them. Determine who is in control amongst the co-defendants and how payments will be split before engaging the expert, not after the first bill is received. If you are the only defendant in your case, seek out current and past defendants from other cases. They can provide valuable insights into invalidity, opposing counsel and the case strategies they found most effective. And if their case is ongoing, you likely have a common interest allowing you to establish a joint defense and take advantage of the benefits discussed above. If your entire industry is being targeted, contact your competitors that have not been sued. They may have received a letter charging infringement. Even though they have not been sued, they can still have a common interest that allows you to collaborate. 3. Define Your Role and Manage Your Joint Defense Group A joint defense group can be a valuable source of information and cost savings, but you must enter a joint defense group with a clear plan and clear goals. You should decide whether you want to lead the group, to actively participate or just to follow. Leading is the most expensive, but offers the most control over your defense. Most, however, will choose active participation. This gives some control while moderating costs. Finally, smaller entities or those with little at stake in the litigation often choose to follow. This role requires the least work and cost, while offering the benefit of at least the parties' joint defenses, like invalidity. The downsides are less of a voice in strategy decisions and less cooperation from co-defendants that may see you as a free-rider. Even with a plan, joint defense groups can become a significant cost, as well as a time sink. There can be heavy e-mail volume, group conference calls and meetings that increase in length and frequency, and it can be difficult to make the nimble strategy corrections required in litigation when you need group buy-in. Of course, some group communication is required. But you can manage meetings by agreeing ahead of time that every meeting requires an agenda and a time limit. Agendas and time limits avoid endless meetings full of off topic and unexpected issues that no party is prepared to answer. Also, for larger joint defense groups and during busy portions of any multi-defendant case, like the close of discovery or claim construction, consider scheduling a set call, with agendas and a time limit allowing people to raise issues ahead of time. Regular meetings can cut down on email traffic over small issues. When you know one or two co-defendants will require convincing of a position, consider contacting those parties one-on-one before the meeting to avoid delaying the entire group and building consensus for your ideas. Finally, whenever possible hold meetings live. When all co-defendants are on a conference call, you run the risk of the call dragging because one or more participants are distracted with other work, office visitors, e-mail or the internet. Putting everyone in a room together minimizes distractions and encourages active participation, leading to shorter meetings. R. David Donoghue is a partner in the Intellectual Property Group of Holland & Knight in Chicago, Ill. He may be contacted at (312) 578-6553 or david.donaghue@hklaw.com.

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