I. The Basics
Litigation is the process whereby disputes between two or more parties may be resolved legally. Traditionally, litigation was handled by the court system, i.e. by filing and prosecuting lawsuits. Modernly, more and more disputes are being handled via ADR – Alternative Dispute Resolution – typically via mediation and/or arbitration. Even when a case is now filed within the court system, many courts now encourage or force litigants to first attempt to resolve their dispute in a court sponsored ADR format.
Regardless of the rules at play and format that litigation may take, make no mistake, litigation is war. A war of words, but a war nonetheless. Your opposing litigant is your enemy. And make no mistake we will use every weapon at our disposal, and ruthlessly so. But we will do so professionally, ethically, and cordially.
As fundamentally an IP lawfirm, most of the litigation matters we handle involve infringement – patent infringement, trademark infringement, and/or copyright infringement. Often times such traditional IP litigation will bring collateral issues, such as anti-trust claims and breach of contract claims from licenses.
As you also probably know, litigation is very time consuming and long – often taking years to reach a final adjudication of all the issues. And as you also probably know, IP litigation is very expensive. It is not unusual for litigation IP lawfirms to require retainers on the order of $25,000. We will generally start an infringement matter with a $5,000 retainer, but that may only cover some initial pre-filing due diligence and possibly filing of suit or responding to a filed complaint. Other litigation matters we may require less or more to get started depending upon your own unique situation.
Also, we represent both plaintiffs and defendants.
Lastly, a note on jurisdiction. Patent matters (e.g. patent infringement) are always exclusively heard within our federal courts. Whereas, patent licensing matters may not be so much a patent law issue as a contract issue and thus depending upon the facts and the claims plead, patent licensing matters could be adjudicated in a state court, such as California’s superior courts. Generally, copyright matters are also heard within our federal courts. But trademark matters may generally be heard in either federal court or state court. Our below discussion on litigation generally addresses cases filed in federal court and not California state court. However, for many points we make about litigating in the federal courts, there may be equivalent or similar California state court counterparts.
II. Litigation Stages
Litigation generally progresses through fairly distinct and defined stages, beginning with the period of time when a dispute arises but before suit is filed; to the filing and pleading stage; to discovery; to summary adjudication; to trial; and lastly the possibility of appeals.
Before briefly discussing each of these stages, a note on settlement. The vast majority of cases still settle before trial. And as you may have heard, settlement may occur literally on the court house steps right before trial begins. This does happen. Settlement may also occur during trial. But often settlement occurs at some point during discovery.
Before Filing Stage
Before filing suit, you and your attorney need to make absolutely sure that the facts alleged in the planned filing will satisfy FRCP 11 (federal rule of civil procedure) – or the both of you may face sanctions, i.e. financial costs that the court may impose upon you. This generally involves conducting due diligence and investigations of the facts on hand before filing. In patent matters, this may involve doing some preliminary claim construction and in purchasing the products to be involved in the suit. In patent matters, this may mean doing some reverse engineering. This may mean bringing on a consulting expert in your technical field of invention. At some point (e.g. discovery and trial) you may also need a second expert, a testifying expert. Generally what your consulting expert produces will be protected under attorney-work-product doctrine; whereas what your testifying expert produces will generally be discoverable.
Additionally, depending upon the type of suit being contemplated and/or who the defendants may be, you need to make sure any pre-filing requirements are met. Some pre-filing requirements may be jurisdictional – and thus satisfying such requirements is essential. For example, if you are contemplating suing various governmental entities (e.g. cities, municipalities, counties, etc.), you often need to put such defendants on notice of the claims you plan to bring before you file. For example, see the California Government Torts Act. Failure to provide proper and timely notice, may actually provide such a defendant with a powerful basis for a FRCP 12(b)(6) motion to dismiss, on the basis that the court lacks subject matter jurisdiction.
Further, putting the defendant on notice before filing suit, e.g. by mailing various demand letters and/or cease and desist letters may be important to open up the possibility of certain statutory damages. In some matters, a properly drafted cease and desist letter may be sufficient to enable a settlement and end the dispute. Generally, the availability of statutory damages is preferred over having to proof up actual damages, which may be expensive and/or difficult to proof.
Filing and the Pleading Stage
The lawsuit will officially commence with the filing of the Complaint in the appropriate court and proper service of that Complaint to the Defendant(s). Presently, in federal court, FRCP 8’s historical “notice” pleading threshold requirement has been supplanted with a heightened pleading threshold requirement, a “plausibility” requirement under Icbal and Twombly. This means in order to get past a FRCP 12(b)(6) motion to dismiss, you must plead sufficiently plausible facts to substantiate your causes of action. If you have done your due diligence before filing, to satisfy FRCP 11, then often you’ll have sufficiently plausible facts on hand to satisfy this plausibility pleading standard of Icbal and Twombly.
The pleading stage commences with the filing of the Complaint and may end with the filing of the defendant’s Answer, Amended Complaint, and/or Amended Answer. Before the pleading stage ends and discovery really begins in earnest, various motions for dismissal, to strike, for venue changes, and the like may be filed.
If you are the Plaintiff, your goal is to have made sufficiently strong pleadings, in your Complaint or Amended Complaint to make it past the pleading stage and into discovery. If you are the Defendant, your goal is to eliminate the Plaintiff’s pleadings in total or in part during the pleading stage by filing various motions dismiss and/or to strike.
As you might expect, Plaintiffs in IP infringement matters are usually the party whom believes is being infringed by the Defendants. But note, in many cases, such would be Defendants, may actually file a Complaint first and thus may be styled the Plaintiffs in the matter. In such cases, the would be Defendant files for a declaratory action seeking declaratory relief, either of invalidity and/or of non-infringement. When such a would be Defendant files first, and acts a declaratory Plaintiff, such a Plaintiff needs to have standing in order to file. Generally such standing may be shown if the other party has threatened suit with a cease and desist letter.
It is not unusual for both parties to file in their own respective federal courts. Generally, then the cases will get consolidated and the heard in only one of the venues.
Discovery Stage
Discovery makes up maybe 98% or more of litigation activity. However, discovery is inevitably misunderstood and resented by clients, the litigants. Discovery is a process, dictated by law, in which you get to learn, to a certain extent, what the other side has before trial. And by the same token, they get to learn what you have, to a certain extent, before trial. Thus, when you are getting the goods on the other side you love it. But when you are forced to turn over potentially damaging information you hate and resent it. Discovery is thus a double-edged sword.
The first thing you probably understand is that the scope of discovery is broader than what may be admissible evidence. Thus a “relevance” objection to a discovery request is mis-guided. Any matter, not privileged, which is relevant to the claim or defense of any party…reasonably calculated to lead to the discovery of admissible evidence is discoverable. FRCP 26(b)(1). Thus if a discovery request relates to a pleading, it is generally discoverable, assuming the requested information is not privileged or attorney-work-product.
Under the federal discovery rules, even before the affirmative discovery tools are utilized, each side is obligated to turn over certain mandatory disclosures per FRCP 26. Failure to timely do so may constitute a discovery violation, punishable by sanctions. Note, discovery in California state courts does not have an equivalent mandatory disclosure counterpart.
Additionally you must be careful to avoid “spoliation.” Spoliation is when potential discoverable information is erased, cleaned out, altered, or even repaired. Generally if this occurs, the burden will be on the spoliator. Sanctions for spoliating can be severe. For example, in Zubulake v. Warburg the spoliator was hit with a $29 MM verdict after “adverse jury instruction” for failing to produce some emails.
Discovery violations and abuses are taken seriously, and FRCP 38 does provide escalating enforcement tools, which may culminate in terminal sanctions such as dismissal, default judgments, and adverse inferences. But before sanctions may be imposed, you generally must attempt in good-faith to have a “meet & confer” with the opposing counsel to see if the issue may be resolved before filing a motion seeking sanctions.
The affirmative discovery tools may include RFA’s (requests for admissions), interrogatories (rogs), requests/demands for production of documents and/or real evidence, depositions, exchanges of testifying expert reports, motions to compel, motions for protective orders, motions for FRCP 38 sanctions, and the like.
In patent infringement, during discovery, each side will likely be engaging in claim construction, wherein their claim construction will be favorable to their position. This often occurs with input from the client, as well as consulting and/or testifying experts. Generally before trial (often during or at the end of discovery and sometimes during trial), a Markman Hearing, also known as a Claim Construction Hearing will be held before your judge, no jury, and the judge will determine the claim construction to be used by both sides as the case progresses. Often the outcome of a Markman Hearing will prompt settlement and may often form a basis for a summary judgment motion.
Summary Adjudication Stage
At the close of discovery, one or both parties often file for Summary Judgment under FRCP 56. This occurs when there are no material facts remaining in dispute. From an overall perspective, a party seeking summary judgment would like to construct two overall arguments, one procedural and one substantive. In the procedural argument, you want to argue that the opposition has repeatedly failed to comply with valid discovery requests and that such abuse warrant’s a default or dismissal; but that all the while you complied and provided everything the opposition was entitled to. In your substantive argument, you essentially want to argue that there is no legitimate basis for the opposition’s claims or defenses on the merits, i.e. “the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” So if at the summary judgment stage, there remains material facts in dispute, such facts will need to be decided during trial and a motion for summary judgment should be denied.
Trial Stage
If motions for summary judgment were not successful, some material facts remain to be decided, some or all legal issues remain and a settlement was not reached, then the case will eventually go to trial. In IP infringement trials, you are essentially looking at a battle of testifying experts. The judge will decide law and a jury, if properly demanded, will decide facts. In patent infringement cases, the jury will decide facts within the framework of the claim construction decided earlier by the judge in the Markman Hearing.
Appeals
Because the stakes may be so high in IP infringement matters, it is not unusual for one or both parties to timely appeal a judgment from the lower trial court, i.e. the federal district court. Once appeals are exhausted, res judicata sets in making the appellate decision the final say in the matter; which may then be used in raising collateral estoppel arguments if either party tries to initiate subsequent new litigation addressing already finally adjudicated issues.