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5 tips for cutting patent litigation costs

Jason Schwent November 17, 2015

Ever since the U.S. Supreme Court’s Alice Corp. v. CLS Bank decision, the number of patent litigation cases, which for years leading up to that case had been on the increase, have been on the decline. Projections are that the IP litigation market will decrease from $2.76 billion in 2015 to $2.72 billion in 2016. But even with these decreasing trends, patent litigation still remains a realistic concern, especially for businesses in the technology, biotechnology, and pharmaceutical markets. One of the biggest concerns with patent litigation (and one of the potential reasons such litigation is on the decline), is the significant costs associated with conducting a patent litigation. These costs continue to make it difficult for even those who find themselves facing dubious claims of infringement to fight the matter to a final judgment. But there are ways that may  lessen the financial pain of litigation. Following just some of these suggestions, may help make patent litigation more affordable and justice more accessible.

1) Fight ‘em at the source

One of the best weapons for decreasing the costs of patent litigation is to utilize the U.S. Patent and Trademark Office’s administrative options for challenging issued patents. While technically available in one form or another for some time, most of these options were strengthened and enhanced with Congress’s America Invents Act of 2011. From post grant review to inter partes review to covered business method, these administrative remedies allow those accused of patent infringement to pursue the defense of invalidity in venues where discovery (and its huge costs) is limited and the burden of proof favors the accused infringer. Further, with the statutory deadlines imposed in the America Invents Act significantly shortening the pendency of these procedures, District Courts are increasingly likely to grant stays of pending patent infringement litigation in favor of these proceedings. This means that challengers frequently do not have to fight their battle on two fronts. While cheaper, these administrative proceedings are not cheap — filing fees start at $9,000 to request an inter partes review, and if it’s granted, an additional $14,000 fee is required to proceed (and these costs do not take into account attorneys’ fees in preparing the necessary paperwork). Full proceedings typically run in the upper six-figure range. But, when compared with patent litigation costs, which routinely see costs in the upper seven-figure range (and can go much higher), the Patent and Trademark Offices administrative remedies are a cost-effective way for patent defendants to fight the validity of issued patent claims without breaking the bank.

2) Work together

Often, patent holders will accuse multiple defendants of infringement at the same time. In the past, these other defendants were all likely to be named as co-defendants in the same suit. However, changes in the law have increased the likelihood that these other defendants will be sued in co-pending cases in the same jurisdiction where you find yourself sued. Whether in the same lawsuit or in the same jurisdiction (or even when in multiple jurisdictions), it is in the defendants’ interests to pool their resources when fighting the same patent and patent claims. First of all, by pooling resources, defendants can increase the effectiveness of collective efforts like prior art searching or third party discovery. This allows defendants maximum return for far less individual expense. Second, defendants can further help reduce their costs by sharing responsibility for key activities. By having one of the defendants take the lead role in handling invalidity contentions, another in handling expert discovery, another responsible for claim construction, etc., defendants can again limit their individual expenses while still covering all the necessary bases. Third, by pooling resources, defendants make it much harder for plaintiffs to bring the financial burden of the litigation to bear on any one party to leverage a settlement. This makes it easier for all defendants to fight the litigation more efficiently, more effectively and for a longer period of time.

3) Cut discovery corners where possible

One of the biggest expenses in any patent litigation is discovery. Not only is discovery (especially electronic discovery) expensive, but when dealing with patent trolls, this expense is also not proportional. The patent owner likely has no ongoing business — giving it very little (if anything) to produce in discovery. Whereas the accused infringer has multiple employees involved in making and/or selling the accused product and an entire business worth of documents and communications that are all subject to discovery. So, cutting costs in discovery, wherever possible, is always a good way to lower patent litigation costs. One of the best ways to lower discovery costs is to understand, very early in the case, what discovery defendants have and what discovery defendants need to take. This can help defendants focus their discovery efforts and not waste time or money fighting about discovery that does not exist or is not necessary. Defendants can also seek agreements with patent plaintiffs to limit discovery. Generally speaking, patent plaintiffs are no more eager to spend money going through the discovery defendants produce than defendants are to gather and produce that discovery. It, therefore, makes sense to come to an agreement on what each party needs and wants out of discovery and focus on just those areas. This agreement should cover not just the scope of discovery but also the form of discovery, including the types and form of metadata to be included in electronic document production — data that can drastically reduce the amount of time necessary to review and process that document production when received. In addition, it is important for defendants to utilize the most advanced technology when collecting, processing, and producing discovery. Software and databases exist that allow discovery to be digested, searched, labeled, and produced with the fewest possible attorney hours involved in the process — resulting in huge cost savings. Working with a firm that understands this software, can pay huge dividends. Similarly, utilizing third party resources when necessary is another way to limit discovery costs. Bringing in contract attorneys to review and code documents and working with third-party electronic discovery vendors can maximize efficiency and minimize costs across discovery, resulting in huge savings over the course of patent litigation — so long as the lawyers involved can properly manage the work being done.

4) Help yourself to cut costs

Another way parties can help cut costs in patent litigation is to be actively involved in the litigation. By working closely with the outside attorneys, the client can help minimize the inconvenience and better save and manage costs. For instance, parties can help cut discovery costs by making sure that all necessary documents are identified and collected once — so that multiple document pulls are not necessary throughout the litigation. This may require a period of intrusive questioning at the onset of litigation to identify all the discovery that may exist — but that’s a small price to pay to save thousands of dollars in fees. Parties can make sure that key personnel are available to outside attorneys throughout the litigation to assist counsel in not just responding to litigation, but effectively strategizing and responding to litigation tactics. This is especially important where it comes to knowing the defendant’s own business. While outside counsel can spend time going through documents and developing an understanding for how defendant’s business actually works and operates, the same may be able to be accomplished in an hour-long phone conference or meeting — saving scores of attorney man-hours.

5) Pick your battles carefully

Litigation, even patent litigation with its frequent extensive local rules, is not a single progression of events leading to an outcome. Litigation is a series of battles over a protracted period of time that ebb and flow with frequently modified arguments responding to evolving understanding of the facts of the case. Another way to control costs is to understand, early in the litigation, which battles are important to your strategic outcome. It is not necessary to resist every action taken by the patent holder throughout the litigation. Every party has certain key pillars of their case that need to be defended and protected at all costs. But by identifying those key pillars, and identifying them early, defendants can better determine which battles during the litigation need to be fought and which can be avoided. This not only helps save costs, but often leads to increased credibility with the court hearing your case. If you are not concerned with wasting time during litigation, I can assure that the court hearing your dispute most definitely is. Few things frustrate a court more than parties who force the court to adjudicate arguments on issues that are later willingly conceded.

The reality of patent litigation is that it is not cheap. But, it does not have to be as expensive as it has been in the past. Careful preparation, consideration, cooperation, and evaluation can help lower the costs of this litigation significantly. And by doing so, those accused of infringement can give themselves a better chance of success.

Jason Schwent is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of the Patent Billy Goat. You can find Jason on Google+Twitter, and reach him at (314) 552-6291 or jschwent@thompsoncoburn.com.