Multiple Defendant Patent Infringement Cases: Complexities, Complications and Advantages

1. Multiple Defendant Patent Infringement Cases: Complexities, Complications and Advantages Brian M. Buroker, Esq. Hunton & Williams LLP 1900 K Street, N.W., Washington, DC 20006 (202) 955-1894 bburoker@hunton.com Maya M. Eckstein, Esq. Hunton & Williams LLP 951 East Byrd Street Richmond, Virginia 23219 (804) 788-8788 meckstein@hunton.com www.hunton.com  

2. INTRODUCTION • Multi-defendant patent infringement suits are the norm. • Plaintiffs file them because: • reduce costs • let plaintiffs pursue multiple licensees simultaneously • increase settlement pressures

3. Introduction (con’t) • Make cases more complex • Especially if defendants are competitors • Increase in defendants exponentially increases logistical issues • Increase complexities • Can complicate defense • Can also bestow advantages.

4. COMPLEXITIES • Protective Orders • Difficult to negotiate when defendants are competitors. • Standard POs don’t address multi-defendant issues. • Competing defendants less concerned about the plaintiff than about the other defendants. • Especially so if the plaintiff is a non-competing patent holding company.

5. COMPLEXITIES -- POs • Should co-defendants’ access confidential information? • Concerns require multi-layered POs • Each confidentiality level defines what type of information can be reviewed by what types of people. • Example: In-house counsel/personnel can access Confidential documents, but not AEO documents. • Example: Only in-house counsel, not business executives, can access confidential documents.

6. COMPLEXITIES – POs • Should PO include patent prosecution bar? • In-house lawyers who draft patent applications and have access to competing defendant’s confidential information could unknowingly use that information in preparing patent applications. • Competing defendant could acquire patents to later assert against co-defendant. • Merits of this view are debatable, but courts recognize it as a concern.

7. COMPLEXITIES -- POs • Patent Prosecution Bars • Patent prosecution bars preclude participation in patent prosecution for those with access to confidential information. • Questions arise regarding scope and length. • Example: in-house patent attorney working for large software company.

8. COMPLEXITIES -- POs • Should source code escrow be used? • Crown jewels • Serious financial damage if gets in wrong hands. • Risk increases with number of people who may have access: • Lawyers • Paralegals • Professional Assistants • Copy Vendors • Trial Strategy Vendors • Experts and Assistants • Court • Risk especially increases when competing defendants have access.

9. COMPLEXITIES -- POs • Source Code Escrow • PO defines access rules for escrow agent. • Defendants deposit source code with escrow agent. • Approved individuals can view source code at escrow facility • Under escrow agent’s watchful eye. • Copying prohibited/restricted. • Information may not leave facility. • Agent maintains log of visitors.

10. COMPLEXITIES – JDAs • Joint Defense Agreements • Extremely common. • More complex in multi-defendant cases. • Joint defense privilege precludes disclosure of shared information among parties with common interest.

11. COMPLEXITIES – JDAs • Joint Defense Agreements • Issues on which to assert common defense • Invalidity • Unenforceability • Lack of ownership • Must define common issues • Enforceable only as to communications related to common issues • Cost Sharing: prior art searches, preparing/taking depositions of inventor(s) and plaintiff’s witnesses, briefing various issues

12. COMPLEXITIES – JDAs • Joint Defense Agreements • Issues to address: • What if disagreements arise in areas of common interests? • What if one defendant settles? • What if shared activity greatly benefits one defendant over others? • Who can obligate defendants to payment? • Advance agreements prevent disputes.

13. COMPLEXITIES – JDAs • Prior Art • Prior art search often lengthy and costly. • Multi-defendants increase resources/reduce costs. • But defendant who locates prior art can use it strategically, i.e. to negotiate better settlement. • JDA should specify prior art obligations amongst defendants.

14. COMPLEXITIES – Time • How many lawyers does it take to screw in a light bulb? • Meetings • Hearings • Depositions • Briefing • Joint Experts • Added “noise”.

15. COMPLICATIONS -- Differences • Not all issues are common • Various non-infringement issues • Various defenses • Various damages issues

16. COMPLICATIONS -- Differences • Markman Issues • Differences in defendants’ products. • Results in need to emphasize different claim terms. • Single Markman brief required. • Hearings similarly limited.

17. COMPLICATIONS -- Differences • Discovery Issues • Courts limit: • Interrogatories • Total deposition time • Total length of inventor depositions • Total length of expert depositions • Restricts each defendant’s ability to pursue discovery. • Defendants must prioritize issues and convince JD group to address them. • Some issues may take back seat.

18. COMPLICATION – Settlement • Effect on remaining defendants • Expertise on particular subjects could be lost. • Each defendant must have knowledge of all issues. • Increases settlement pressure. • “Last man standing” syndrome. • Individual costs/responsibilities increase. • Agreement on infringement/invalidity/royalty affects others.

19. COMPLICATION – Trial • Trial Issues • Can’t control other’s witnesses. • Witnesses can be substantively harmful or just not likeable. • Can affect other defendants. • Cross-examination of each defendant’s non-infringement expert.

20. ADVANTAGES • Cost Sharing • Prior art search • Experts • Briefing • Depositions • Written discover • More Heads Are Better Than One • Collective thinking. • Especially helpful to inexperienced defendants.

21. ADVANTAGES • Overwhelmed Plaintiff • Less capable to timely address discovery deficiencies. • Defendants have more time: • to develop case • to schedule defendants’ depositions

22. CONCLUSION • Often saves costs • But can add costs • Advantages from cost sharing probably offset (are overtaken) by complexities and complications.