Chief Judge Rader: Improving Patent Litigation

Today, Chief Judge Rader delivered an important speech to a joint meeting of the Federal Circuit Bar Association and the Eastern District of Texas Bar Association. The focus was on the current and future state of patent litigation. His two word synopsis: Needs Improvement.

The Chief Judge identified what he sees as the primary, overarching problem with the US Court System: Its expense. Patent litigation is particularly expensive. Driving this is the high cost of discovery (even though fewer than 1 out of every 10,000 pages disclosed prior to trial actual result in a trial exhibit).

The Chief Judge expanded on his thoughts – listing six ways that patent litigation needs to be improved.

1.Discovery: Controlling costs through the management and control of the discovery process. In particular, the Chief Judge pointed to blanket production orders that lead to wasteful production and review. As discussed below, the Federal Circuit Advisory Council has also released a new model order relating to e-discovery issues.
2.Summary judgment. Increasing the use of summary judgment as a tool for the efficient resolution of disputes. As an alternative, summary judgment is also an efficient mechanism for narrowing disputes.
3.Transfer motions and Joinder. Both the bench and bar should work to "find venues that best suit the convenience of parties" and have a more logical distribution of cases across the country – and especially to the jurisdictions that have self-identified as having expertise in patent law. We should also move away from the trend of having an excess of parties involved in the litigation.
4.Early procedural and substantive valuation of cases. The court may want to have different procedures for billion-dollar cases as compared with thousand-dollar cases. (The UK has attempted to do this in its recent creation of a low-cost patent court designed for smaller disputes). Chief Judge Rader suggests that judges should proactively probe the parties to establish a value for the case based upon a legitimate damages model. That approach will hopefully have the beneficial effect of promoting better settlement discussions. (DDC Note: I typically begin my patent class with a discussion of remedies).
5.Rules and Practice. Courts should implement a dependable set of pre-announced rules that apply to patent cases so that the parties can understand the nature of the litigation well in advance.
6.Troll and Grasshopper Control. Chief Judge Rader's defines a problematic patent troll as someone simply seeking litigation-cost settlements, or, in other words, "any party that attempts to enforce a patent far beyond its actual value or contribution to the prior art." Chief Judge Rader also identifies problematic "Grasshoppers" who steal innovations and then "refuses to license even the strongest patent at even the most reasonable rates." The solution: Attorney Fees and Costs should be awarded in meritless cases. As the Chief Judge writes "I strongly advocate full-scale reversal of attorney fees and costs!"
Coordinated with his speech, Chief Judge Rader has worked with the Federal Circuit Advisory Council to develop a model order relating to discovery issues – with a goal of streamlining e-discovery, particularly email production, and to require litigants to focus on the proper purpose of discovery—"the gathering of material information—rather than on unlimited fishing expeditions." The core of the model rule is a cost-shifting associated with excessive production requests. General disclosures would not require e-mail disclosures unless specifically requested. And, e-mail disclosures would only be required for "specific issues" rather than general discovery associated with a product or business. The basis for the e-mail limitations comes from the FCAC's notion that:

Most discovery in patent litigation centers on what the patent states, how the accused products work, what the prior art discloses, and the proper calculation of damages. These topics are normally the most consequential in patent cases. Thus, far reaching e-discovery, such as mass email searches, is often tangential to adjudicating these issues.

The model rules are not being forced upon any court, but may well be persuasive. The potential for immediate cost shifting could certainly alter some practices.

Documents:

•Text of CJ Rader's Speech: Download RaderStateOfPatentLit
•Model Discovery Order: Download Ediscovery Model Order
Notes: Members of the team who worked on the model order include Chief Judge Rader of the Court of Appeals for the Federal Circuit, Chief Judge James Ware of the Northern District of California, Judge Virginia Kendall of the Northern District of Illinois, Magistrate Judge Chad Everingham of the Eastern District of Texas, Tina Chappell of Intel, Richard "Chip" Lutton of Apple, Joseph Re of Knobbe Martens, Edward Reines of Weil Gotshal, Steve Susman of Susman Godfrey, and John Whealan of GWU Law School.

Posted on Sep 27, 2011

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