March 2016
Just Resolutions
By Donald R. Dunner; John M. Williamson
Authored by Donald R. Dunner and John M. Williamson
Patent infringement disputes often exhibit the classic characteristics that make arbitration a tempting alternative to traditional litigation. For instance, given that the disputes usually involve complex technical subject matter and expert opinions, the parties may benefit from an arbitrator with specialization in the technical field. Similarly, because large patent infringement disputes often traverse national boundaries, one well-crafted ADR proceeding can supplant multiple expensive enforcement proceedings in disparate national courts. And while certain jurisdictions are notoriously slow to reach final judgment in patent infringement disputes, parties to arbitration are likely to reach final resolution relatively quickly. In sum, arbitration befits certain patent infringement disputes, delivering advantages of relative speed, expertise, and efficiency.
It is unsurprising, therefore, that a number of formal arbitration organizations publish rules tailored to patent infringement disputes. Specifically, the American Arbitration Association (“AAA”) administers patent infringement disputes under its Supplementary Patent Rules (where parties desire a final binding award) and its National Patent Board Rules (where parties desire a non-binding decision). Similarly, the International Institute for Conflict Prevention and Resolution (“CPR”) maintains Rules for Non-Administered Arbitration of Patent and Trade Secret Disputes. The AAA and CPR rules address many of the same procedural and logistical issues addressed in standard commercial arbitration rules, including proposed arbitration clauses, procedures for selecting arbitrators, jurisdiction of the tribunal, procedures to commence the arbitration, protocols for the hearing, and the nature of the award. But the rules also address certain issues unique to patent infringement disputes.
Specifically, the AAA and CPR patent rules address matters, such as infringement contentions, invalidity contentions, core technical discovery, and patent claim construction. In many respects, these arbitration rules parallel local patent rules adopted by many U.S. federal courts. The phenomenon began in the patent-savvy Northern District of California and has now reached over 20 other districts. And while each court implements its own rules in its own way, the various local rules share many common attributes. Generally speaking, local patent rules ensure early exchange of key information unique to patent cases—technical contentions, technical discovery, and patent claim construction positions. Typically, the rules set forth sequenced deadlines requiring a patent owner to first provide detailed infringement contentions and a document production bearing on patentability and claim construction. The accused infringer must then provide detailed invalidity contentions and a production of technical documents regarding its accused devices. Many courts mandate that parties fully commit to these early disclosures, permitting supplementation only for good cause and requiring expert reports and trial presentations to conform to the disclosures. Accordingly, key technical positions do not become a moving target during the course of the litigation. Local patent rules also mandate a structured process for patent claim construction, requiring the plaintiff and defendant to develop, exchange, and brief their claim construction positions early in the case. Because local patent rules force early exchange of key technical positions, parties are often able to maintain a targeted and focused approach during the more thorough and burdensome phases of fact, expert, and third-party discovery.
Unlike local patent rules in federal court, the AAA and CPR rules do not mandate any specific contentions, disclosures, or discovery. Rather, they flag the issues as “matters to be considered” during a pre-hearing conference. In essence the rules provide an exemplary framework that is similar to that found in local patent rules, but allow the parties and the arbitrator to fashion appropriate procedures for the particular matter at hand. At first pass, the procedures found in local patent rules may seem ill-suited for the arbitration setting. If a goal of arbitration is to avoid costly pretrial discovery and briefing, then why should the parties agree to apply rules that force them through these paces just as if they were in federal court? The primary reason is that it would be inefficient to arbitrate a patent infringement case without some mechanism for the early exchange of fundamental contentions on technical issues. Likewise, it would be difficult to prove a case without core technical discovery. And it would be unusual to decide issues of infringement or validity without conducting claim construction. The principles of local patent rules are tried and true in these respects. So while the full spectrum of discovery involved in federal court proceedings might be unnecessary in arbitration, the early structured exchange of technical contentions, core technical discovery, and patent claim construction positions envisioned by the AAA and CPR rules would, in most cases, nevertheless enhance the efficiency of the proceeding just as patent local rules enhance efficiency in federal court litigation.
Originally printed in Just Resolutions in March 2016. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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