Best Practices in Multi-Defendant Litigation and Discovery... · Best Practices in Multi-Defendant...

IPO 2010 Annual Meeting 1

Best Practices in Multi-Defendant Litigation

IPO Annual Meeting

September 12-14, 2010


Speakers

• Moderator: Elizabeth Ann "Betty" Morgan –The Morgan Law Firm P.C.

• William Bergmann – Baker & Hostetler

• Julianne Hartzell – Marshall, Gerstein & Borun

• Preston Ratliff – Paul Hastings

• Jayna Whitt – Apple Inc.


Considerations at Different Stages of the Case

• Filing and Initial Case Assessment

• Discovery

• Claim Construction

• Summary Judgment

• Trial

• Settlement


Plaintiff’s Initial Considerations

• Who to name and what to accuse?

– Expense

– Goals

• Where to file?

– Transfer potential

– Severance potential

– Staging of case phases and trial

– Time limits on trial

– Speed of jurisdiction


Defendants’ Initial Considerations

• Counsel Sharing and fee arrangements

• Actual or potential conflicts

• Co-Defendant relationships

– Alignment and trust

– Indemnity

– Philosophy (e.g., reexaminations, early resolution potential, discovery and disclosures, motion practice, etc.)


Common Interest / Joint Defense Agreements - A More Detailed Look


Overview and Advantages of a Joint Defense Agreement (JDA)

• Joint Defense Agreement allows defendants with a common interest to share information

• Facilitates coordination of defense strategy– Defendants benefit from having a consistent theme and

consistent positions, particularly in patent cases (claim construction, invalidity, and noninfringement)

– Courts would rather receive coordinated filings from defendants

• Defense tasks can be divided up (brief writing, prior art searching, etc) to reduce costs and increase efficiency

• Memorializes understanding of parties and increases chances of privilege being upheld


Background of Privilege

• Protection of communications among clients and attorneys “allied in a common legal cause” has long been recognized

– In re Regents of University of California, 101 F.3d 1386, 1389 (Fed. Cir. 1996), citing In re Grand Jury Subpoena Duces Tecum (S.D.N.Y. 1975)

• Privilege has its origins in criminal cases in which defendants jointly retained counsel and has been expanded to civil cases

• Privilege goes by several names and courts have defined it variously

– community of interest privilege

– common interest rule or doctrine

– joint defense privilege• See Intex Recreation Corp., 471 F.Supp.2d 11, 15-16 (D.DC 2007)


Representative Elements of Joint Defense Privilege

• The party asserting the privilege must show:– Communications were made in the course of joint

defense effort (common legal interest and joint defense effort)

– The statements were designed to further the effort

– Underlying privilege (attorney-client or work product) has not been waived

Intex, citing In re Bevill, 805 F.2d 120 (3rd Cir. 1986)


Litigation is Not Always Required for Privilege to Attach

• 1st, 4th, 7th, 9th, and Federal Circuits have held that a threat of litigation is not required in order for privilege to attach

– BDO Seidman, 492 F.3d 806, 816 (7th Cir. 2007)

• 5th Circuit requires “palpable threat of litigation”

– U.S. v. Newell, 315 F.3d 510 (5th Cir. 2002)


Privilege Applies in Patent Cases

• In Re Regents of Univ. of Cal. (Fed Cir 1996)

– Inventor worked with his company’s patent attorneys and then later with patent attorneys representing exclusive licensee to obtain patents

– Common defense privilege held to apply to communications between attorneys and their clients (even though litigation not imminent)

– Federal Circuit follows law of the Circuit from which appeal arises in interpreting JDAs.


Considerations When EnteringInto Joint Defense Agreements

• Define Common Interest of Group• Enter into an oral (email memorialized) JDA as early

as possible• Promptly enter written agreement• Update and include the law of the relevant circuit in

written agreement and ensure that required elements of privilege are enunciated in JDA

• Structure the JDA such that it is open-ended (i.e. does not end when defendants settle)

• Structure the JDA such that it is flexible enough to add new parties


JDA Clauses to Establish Privilege

• Statement defining common interest

• Reference to proceedings creating interest

• Intent to work together to jointly defend

• Intent not to waive attorney-client or work product privileges

• Need to share information to further interest


JDA Clauses Relating to Useof Joint Defense Information

• Definition of joint defense information

• All parties agree to keep joint-defense information as confidential and will limit access to it

• Provisions that continue to limit access to information even if party withdraws (e.g. settlement), when a third party requests access to information, and governing use of joint defense information by defendants in other proceedings


Other Important JDA Clauses

• Participation in JDA does not create new attorney-client relationships, does not limit counsel’s defense of his own client or ability to present case, and cannot be used to disqualify any party’s counsel in other litigation

• Participation in JDA and receipt of prior art does not constitute notice of prior art for purpose of disclosing it in unrelated prosecution proceedings or for purpose of establishing willful infringement

• Provisions must allow parties to independently settle litigation and withdraw


JDA Negotiated/Optional Clauses

Conflicts provisions

– Can counsel representing one defendant depose or cross-examine another defendant that is a member of the joint defense group, or are they “conflicted out”?

• Standstill and tolling of indemnity or other claims between parties (can be separate side agreement)

• Provisions governing initiation of reexamination proceedings by parties to JDA

• Cost Sharing, Task Sharing, Expert Selection?


Next Steps


Defendants’ Early Decisions

• Answer or file motion to dismiss

• Move to sever and/or transfer

• Move to advance some Defendants ahead of

others (e.g., suppliers or primary defendants)

• Coordinate and divide up labor

– In-house involvement

– Divide prior art searching and other invalidity

analyses

– Common interest fund for shared costs and

expenses


Motion to Sever

• Split of authority on whether mass patent cases can be severed under FRCP 20(a)

• Likely to succeed if:– False marking case with different products accused

– Single manufacturer and multiple retailers accused for single product. Retailers agree to be bound by findings against manufacturer

• More difficult:– Infringement allegations against similar products

and Court finds shared claim construction, invalidity, and unenforceability issues


Discovery Issues

• Limits on number of depositions, duration and interrogatories (common and individual)

• Attendance at co-defendants’ depositions

• Division of time and labor for key depositions of plaintiff

• Protective Order


Protective Order Provisions

• Challenge: Reaching consensus

• Heavily negotiated provisions

– Access by competitor co-defendants and in-house representatives of plaintiff and defendant

– Patent prosecution bar provisions and competitive decision making restrictions when large numbers of counsel are involved

– Source code inspection provisions

– Restrictions on experts


Expert Selection

• Challenge for Plaintiff: Finding experts without conflicts

• Challenge for Defendants: How many are needed? Can the group share experts?

– Invalidity

– Non-infringement

– Damages

– Inequitable conduct if needed


Contentions and Claim Construction

• Plaintiff’s challenge – cover all accused products and avoid prior art

– Consider settlement with some defendants if accused products weaken position

• Defendants’ challenge – reasonably limit number of disputes while accommodating different interests


Summary Judgment

• Plaintiff’s and Defendants’ Challenge:

Limiting number of issues to address on

Summary Judgment

• Judges may limit ability to file summary

judgment motions

• Defendants may want to file individual

motions that may depend on confidential

information

• Plaintiff may have to handle a large number

of motions


Trial

• Plaintiff’s challenge: Consistency and ability to create record on large number of products

• Defendants’ challenge: To share time with large number of parties

• Confidentiality concerns

• Due process concerns


Settlement

• Plaintiff’s challenge:– Identify optimal timing to approach defendants– Settle with parties who weaken case– Create licenses that strengthen and do not weaken

damages case and settlement ability with remaining parties

– Overcome group dynamic and strength in numbers

• Defendants’ challenge:– Remain able to take primary role if needed without

losing efficiency– Assess potential to negotiate as a group versus

plaintiff’s offer for an early discount

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