Monday, March 2, 2015

Is Patent Discovery Different?

Greg Reilly (Cal. Western School of Law) has posted Linking Patent Reform and Civil Litigation Reform.The article considers whether discovery reform in patent cases should be viewed in a vacuum. The abstract:
Patent reform increasingly focuses on discovery. Discovery is perceived as disproportionately expensive and burdensome in patent cases. Excessive discovery is said to fuel so-called “patent trolls” and impose an unhealthy tax on innovation and competition. These supposedly exceptional problems have led to exceptional patent-only reform proposals, such as delaying most discovery for over a year and reversing the 75-year old allocation of discovery costs.
Treating patent litigation as exceptional has a siloing effect. Patent reform debates ignore parallel debates over general civil litigation reform that raise the same arguments about disproportionately expensive and burdensome discovery and propose their own set of reforms. This Article links patent reform to civil litigation reform, arguing that patent discovery is not exceptional in its costs, supposed effects, or causes. Instead, patent discovery is representative of a subset of discovery-intensive civil cases. The main problem with discovery in patent cases is not abusive tactics of “patent trolls” or inherent technical complexity but rather complex and open-ended remedial doctrines. Doctrinal complexity is not unique to patent litigation.
Pinpointing the source of patent discovery problems also suggests a solution – delaying costly and burdensome remedial discovery until after liability is established. This solution need not be limited to patent cases. Greater use of staged litigation – litigating and resolving some potentially case-dispositive issues before any discovery or other litigation occurs on more discovery-intensive issues – is a potentially valuable tool for reforming general civil litigation. Notably, staged litigation preserves the plaintiff’s access to information and right to a jury trial, overcoming objections to other efforts to reduce civil litigation costs, like Twombly/Iqbal plausibility pleading.
I think the abstract and the paper speak for themselves quite nicely, and comport with my experiences litigating complex cases, both patent and non-patent alike. I do have a few thoughts to add.

I've long argued that litigation costs are one of the primary problems facing the patent system today, and in fact one of the driving forces behind complaints about patent trolls. It's just too expensive to resolve disputes, especially if the value of the patent is not huge. I've had colleagues tell me that you can tell a nuisance case if the settlement is $2 million or less. Well, no wonder people are flocking to this business model; for $2m as a nuisance, who wouldn't want a piece of the action?

The goal, then, is to figure out ways to litigate disputes about small value patents. I think a system where only the $10 million inventions get to go to court is not a great system. This leads to two thoughts on the discussion in the paper.

First, as Professor Reilly points out, shifting all costs threatens access to justice. There is a reason that many view patent reform as just a subset of broader tort reform - just making it harder for plaintiffs to win. The interesting thing is that many of the people who have no problem shifting burdens to patent plaintiffs would choke on a proposal to do so for, say, products liability or securities fraud. This says a lot about priors on the merits. On the flip side of this, electronic discovery can be very expensive, and plaintiffs (of all kinds) should somehow be forced to shoulder some of that burden to avoid the moral hazard problems of unfettered discovery requests.

Second, the idea of staged discovery makes sense. Much of the costly discovery is related to particular issues, many of which have little to do with the core infringement question: damages, willfulness, inequitable conduct. But there's a downside to limiting discovery - you lose the art of storytelling. This could go both ways, but probably favors the defendant. It's one thing to show a device infringes. It's another thing to have the admission that a device infringes, even if there's no willfulness finding. Consider how powerful the Samsung emails about keeping up with the iPhone were in the Apple v. Samsung trial. Those documents don't come out under new discovery rules, and that changes the story.

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