Patent Law

Killing the Crap Shoot

By Gary Odom and Jordan Kuhn

Over a third of patent cases are reversed and remanded on appeal. Faulty claim construction is the reason half the time. As it is, district court trial resembles a $3-$5 million roll of the dice. Hal Wegner's prescription: "One of the single most important reforms of the patent system is a direction from the legislature that all patent cases should be handled by a pool of patent-experienced trial judges. No reform is more critical, nor glaring in its absence from Leahy S. 1145." What this country needs is a dedicated patent trial circuit, preferably with shortcut arbitration capability.

Recent cases point to too-frequent overzealous counsel, negligent of their duty as officers of the court. These are not isolated cases. Like children that see what they can get away with, so with some patent litigators before what they perceive a less-than judicious judge.

Wegner: "The court in A.G. Design was highly critical of the patentee for what seems from the court's opinions to be sharp practices."

The appeals court in last week's LSI ruling:

At the claim construction hearing, the district court judge communicated his lack of familiarity with patent law, J.A. at 282 ("I get a patent case about every three years. In the 27 years, I've only had about five of them. And this seems to be the most complex so far."), and repeatedly requested guidance from counsel on both sides on how to construe the claims, id. at 285, 286, 292. The record reveals that counsel made little effort to simplify the case, but instead presented the district court with a firestorm of issues and arguments, fueled by the voluminous reexamination record and an aggressive use of statements in that record to support multiple contentions that subject matter was disavowed. In the end, counsel for LSI was successful in persuading the district court to adopt constructions for each of the disputed terms that, in most instances, inappropriately imported limitations from the specifications and prosecution histories into the claims. The victory was short-lived, however, and warrants our reemphasizing that an attorney has a duty not only to zealously advocate on behalf of his client, but also to aid the court in the fair and efficient administration of justice. Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1356 (Fed. Cir. 2002) ("Counsel must remember that they are not only advocates for their clients; they are also officers of the court and are expected to assist the court in the administration of justice, particularly in difficult cases involving complex issues of law and technology."). The district court also has an obligation, despite any obfuscation or lack of assistance of counsel, to carefully consider, and independently decide, the issues in the case.

Given the recent flux in patent case law (KSR), and the courts practically soliciting patent litigation (MedImmune), patent disputes are both inevitable and invariably before the court.

Patent litigation is too expensive precisely because it is so error-prone. Proper claim construction appears to many judges as a black art.

A dedicated patent circuit is the only practical remedy. Even the modest correlation of rocket docket district decisions both avoiding and withstanding appeal tangibly demonstrate the hoary adage that experience counts.

With an experienced pool of judges to draw upon, court-sanctioned arbitration: essentially, a shortcut, lesser-cost dispute resolution mechanism, becomes an even more appealing possibility.

Even now, arbitration should entice more often than it does. Granted, arbitration becomes less viable if substantial discovery is necessitated.

Almost three-fourths of the 375 2006 IP cases with the American Arbitration Association took seven days or less of hearing time. Median pendency was 396 days, including complex cases with more than a million at stake. Contrast that to 18 months and weeks of trial in the average patent litigation. Imagine the improvement with better adjudication.

Parties may tailor their arbitration provisions to fit their business needs. But that promise comes along with a responsibility to plan. Howard Wisnia at Baker & McKenzie: "If time is spent on the front end to draft a well-laid-out plan, a party can achieve cost reduction later if a dispute arises. If a party puts in a boilerplate provision, it can be more uncertain."

Arbitration is only a viable alternative with some meeting of the minds for the parties involved. Alan Anderson at Fulbright & Jaworski: "There is a lot of criticism leveled at arbitration as a process, but the criticism is there because there hasn't been a buy-in to the process. Arbitration by nature is supposed to involve limited judicial review, not full-fledged discovery. A lot of folks draft provisions that basically turn arbitration into litigation."

With court-sanctioned arbitration, the developed record of those cases where arbitration falters still affords streamlining the litigation process.

Full post as published by The Patent Prospector on March 26, 2008 (boomark / email).