Articles
Managing Lawsuits for Favorable Results
DigiTimes
October 20, 2009
Lim, Lily ,
Martens, David J.
Article
When a company successfully sells its products in the global market, it may find that along with increased revenues from sales made to the United States comes an increased risk of being sued in the United States for patent infringement. When facing a patent suit, companies, whether U.S.-based or not, are only likely to have successful outcomes if they dedicate appropriate resources. A key to managing risk and maximizing the probability for a favorable outcome is assigning a key business person with regular decision-making authority, to work with the company’s U.S. legal counsel to coordinate the company’s internal and external response. This approach allows the company to quickly assess the risks by gathering the appropriate information from internal sources. For instance, a key business person can quickly contact the persons within the company who can determine exactly how the product operates, thus, enabling U.S. legal counsel to put together the best defensive position possible. Moreover, the key business person also can coordinate closely to assess alternatives to going to trial, such as implementing a possible design-around or disposing of the litigation with a quick settlement. All these avenues are open when a key business person is intimately involved in the litigation, but are often missed when they are not. In this article, we describe the best practices for companies to employ in order to obtain favorable results when they are defendants in U.S. patent infringement lawsuits.
Managing the Discovery Phase
One of the major phases and most expensive phases of a U.S. patent litigation is the discovery phase, which encompasses all the action after the complaint is filed in court and up until the trial. Unlike most countries in the world, the United States allows adversaries in a litigation matter to obtain broad discovery. This means that courts will allow the outside counsel for each party in litigation to see the confidential, internal information of the opposing party. As a result, the party accused of infringement will be obligated to collect and produce the confidential, internal information that is relevant to the design, marketing, and sales of the products. The U.S. courts protect that information with protective orders that prohibit outside counsel from disclosing the other party’s confidential information. At the same time, the U.S. courts will punish a company that does not collect and produce the relevant information, including ordering hefty fines or instructing a jury that because the withholding company did not collect and produce relevant information that the jury can assume that is because all the evidence would prove infringement. Thus, a key business person at the company is usually critical to facilitating that employees at the company give the company’s U.S. legal counsel access to the relevant information, avoiding severe sanctions against the company.
The discovery phase also includes making key employees available for formal interviews (“depositions”) about the accused product. The results of these interviews may be presented in court as evidence. Therefore, a key business person in the company should facilitate that each company deponent be granted adequate time to prepare for their deposition.
When a key business person does facilitate access to employees with knowledge of the operation and design of the accused product and ensures that they are granted time to assist with the litigation, which also greatly improves the company’s defensive position. Often the company’s employees have information that can help solidify why the company’s products do not infringe. Also, employees may also be aware of products or articles that predate the asserted patent. Those pieces of prior art could be key to invalidating the asserted patent at trial or in an independent review of the patent by the U.S. Patent Office in a Reexamination proceeding. Also, if the prior art is strong enough, then the company will have considerable leverage to force the patent holder to settle the litigation. Thus, when a key business person manages the litigation such that company employees are aware that they should to search for and to pass on information to the company’s U.S. legal counsel, which leads to maximizing the company’s defenses in the litigation.
Conclusion
When a company is named a defendant in a U.S. patent litigation, one of the best practices for managing risks and increasing the likelihood of favorable results is to have a key business person involved with U.S. legal counsel to ensure that the company can put up the best defense possible.