CEO Food Fight: Sun NetApp Blogs Patent Litigation & Mediated Resolutions
(photo: Sun Pavilion in Second Life)
When Law.com writes about open-source software, patent litigation, and blogging, we can't help but weigh in. See Is Fighting Your Patent Case in Public Really a Good Idea?
The IP ADR's Patent Hero has been Sun Microsystem's CEO Jonathan Schwartz ever since he coined the phrase "innovate, don't litigate" in his famous "Advice for the Litigious" post. Our esteem grew when he invited the opposition over to dinner -- "I'll cook, you bring the wine."
The only way that dinner invitation might have been more forward-looking would have been to include a mediator who could not only have brought the desert, but also the cloak of confidentiality for mediated conversations which are quite robustly protected in California by Evidence code section 1119 et seq.
But we digress.
Now people (read: lawyers) are questioning the wisdom of blogging major patent litigation. Those bloggers are pretty high-profile players in the tech market -- Dave Hitz, co-founder of NetApp on the one hand and Sun GC Mike Dillon and CEO Jonathan Schwartz on the other.
The concerns being expressed are the common ones
- CEO and GC comments could be "used as evidence down the road." (Stephen Yu, Macrovision GC).
- GC comments risk the waiver of the attorney client privilege
- CEO remarks might broaden the scope of a deposition into matters that might not otherwise be "relevant" (these last two concerns raised by Edward Reines, a Weil, Gotshal & Manges partner representing NetApp).
Litigator George Newcomb of Simpson Thacher, however, brings to mind Google CEO Eric Schmidt's comment that patent litigation is just one "chip" in the "negotiation being conducted in the courts." Although Newcomb would also advise his client not to publicly talk about litigation, he wisely notes that the potential "damage," if any, would be negligible because Sun's and NetApp's blog entries "had very little to do with the litigation -- [having been] directed at the tech community," i.e., the marketplace, which is where business lives.
Because These New Litigation Players are Not Cautious by Nature and Their Patent Litigation will Likely Be Settled, They are Right to Be More Concerned about Their Market than their Potential Legal Liability
Lawyers are cautious by and large. Even the best of us are risk-averse, taking jobs upon the completion of Ivy League Law School educations. Well-paid jobs, but jobs nonetheless. With a lot to lose if those jobs evaporated because of a misplaced modifier. Hence the caution.
Dillon, Jonathan Schwartz and Dave Hitz, on the other hand, are not cautious. They are, however, savvy. Hitz, for instance, took time in his blog to assure his customers and his work force that Sun's lawsuit would not leave employees jobless nor customers without support.. In response to Sun's request for a permanent injunction, Hitz wrote, among other things,
Your job is safe. Our products are all still for sale.
Can you ever remember a Fortune 1000 company being shut down by patents? It just doesn’t happen! Even for the RIM/Blackberry case, which is the closest I can think of to a big company being shut down, it took years and years to get to that point, and was still averted in the end. I think it’s safe to say the odds of Sun fulfilling their threat are near zero.
Will this end up hurting Hitz in the litigation? I cannot imagine a scenario in which any trial lawyer would stride toward the jury waving the printed blog entry in his hand saying "he assured his employees and customers that NetApp would survive, ladies and gentlemen!"
The Problems Litigation Brings and Their Potential Solutions
Sun and NetApp have more in common than than they have apart. Their management also seems committed to avoiding litigation if possible. Once litigation begins, however, the parties stop communicating in a constructive manner and fall prey to all of the cognitive biases that an active dispute magnifies.
- they search for and interpret information in a way that confirms their own factual and legal positions ("confirmation bias")
- to preserve their freedom of choice in the face of a coercive threat, they do the opposite of what their "opposition" wants them to do -- whether it's a good idea or not ("reactive devaluation")
- they see patterns of wrong-doing where none exist ("clustering illusion")
- they overestimate their likely chances of success ("overconfidence bias")
- they overestimate the harm they will likely suffer (in duration and effect) if they don't get what they believe they might be entitled to ("impact effect")
- they tend not to compensate for their own cognitive biases ("bias blind spot")
(For an excellent article on how biases such as these interfere with our ability to resolve conflict, see Judgmental Biases in Conflict Resolution and How to Overcome Them by Kellogg School of Business Professor Leigh Thompson and Janice Nadler, summarized at BeyondIntractability.org here.)
The best reason to bring a mediator into a patent dispute at an early stage, especially for companies that have so much at risk in the marketplace, is that the tech market and its products change more rapidly than the legal process can move.
There are lots of truly gifted patent infringement mediators out there who understand both the law and the market. Although a few of them appear on this site, there are many, many more who can help attorneys and executives negotiate a better business deal than the blunt instrument of litigation could possibly deliver. I'm sure Sun, NetApp and their counsel all have short lists of these specialist mediators in hand.
Eventually, after a year or two or five, during which time the parties collectively expend several tens of millions of dollars in attorneys fees, Sun and NetApp will hire a mediator anyway.
With so much at stake, why not start now? I'm sure the mediator, whoever s/he is, will be happy to bring the desert.
