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March 25, 2008

Killing the Crap Shoot

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.

Posted by Patent Hawk at March 25, 2008 9:26 PM | Litigation

Comments

The new patent reform will actually complicate litigation by complicating the damages phase. If you don't believe me, ask Judge Michel.
The ironic thing is that CPF/BSA and the business press (who over the years have taken in a LOT of ad revenue from CPF/BSA companies) disseminate propaganda about how this legislation "STREAMLINES" litigation (and patent prosecution for that matter - though this is for another post).
This is quite dishonest !!

Posted by: anonymousAgent at March 25, 2008 10:51 PM

Hawk, this "pool" of "patent-experienced judges". Does it exist today? Will it emerge overnight? Given a "loser Pays" principle, as in England, its the system, and the winner, rather than the judge, that absorbs the brunt of the loser's anger. No such protection for the judge in the USA. Can't think why any litigator with any worthwhile "patent experience" would contemplate for a single moment taking a dip in the judging pool. English patents judges (Hoffmann most recently) can rise to the Court of Appeal and on to the House of Lords. What promotion prospects would there be, out of Hal's judging pool?

Posted by: MaxDrei at March 25, 2008 11:30 PM

Hi MaxDrei:

Thanks for your comment.

My, you see problems. Please extend to seeing solution possibilities.

However small the pool of actual and potential patent/IP judges there are at the moment, growing a circuit would be a gradual process. Those interested in judgeships on such a court would naturally be motivated to study patent case law and come up to snuff.

The problem with the current system is judicial lack of focus. Patent law is one of the most complex areas of law. The LSI judge, Senior Judge William O. Bertelsman, humbly admitted he lacked patent experience, and “repeatedly requested guidance from counsel on both sides.” That showed excellent character. But, instead of help, he got hammered. If he had the inclination, and opportunity to focus, Judge Bertelsman might acquit himself well as a patent judge.

I would not be so hasty to condemn patent litigators to spurning judgeships. Ambition in the form of “promotion” is by no means a universal motivation. I suspect that many senior litigators would welcome capping their careers as respected patent judges; a very honorable profession.

Posted by: Patent Hawk at March 26, 2008 1:19 AM

Well, that's encouraging, Hawk. You've set me imaging a sooccer referee in South America (or England) explaining to the players before the match that he will be needing "counsel" from the players during the match. But I agree that judging carries much kudos, so should attract worthy public servants, tough enough to keep the players under control, provided they have confidence that they're not going to get undermined, by the appeal court above.

Posted by: MaxDrei at March 26, 2008 4:07 AM

Wegner doesn't go far enough, at least as you've described his position here.

We need more than a stable of techno-competent judges, we need an entire IP court modeled roughly after the tax courts and BR courts. One IP trial court for each circuit and a single IP circuit court. And one common IP common law -- no more of this idiocy of applying the common law of the local circuit.

Max doesn't tell you, but he has the solutions you were jibing him about. Correct me if I'm way wild here, Max, but I believe it is common in Europe for law students to choose a litigation track or a judicial track before leaving law school. Judges start as clerks, become appointed as judges, and work their way up through the system in an orderly way -- at least a lot more orderly than being elected as in many states or sucking up to politician as in the rest of the states.

The American system is atrocious. Why should a law professor who has no judicial experience whatsoever, and likely no litigation experience, get appointed to a circuit court or the Supreme Court? Think about it -- it's absolutely insane.

Judges should be trained in judicial administration, judicial reasoning, judicial writing, etc. right from their third year in law school. The same could and should apply to IP judges.

Posted by: Babel Boy at March 26, 2008 7:55 AM

Babel Boy, every European country has its own system. Polyglot chaos but, out of fierce competition, sometimes things improve. England draws its IP judges from the ranks of the brightest and best IP Queens Counsel barristers. After 20 years of plotting with the litigants (patent owner or infringer)when they step up to the judge's seat they don't get fooled by any smart litigation lawyer. Germany is as you surmise.

Posted by: MaxDrei at March 26, 2008 11:06 AM