IP ADR Blog

R. David Donoghue over at the Chicago IP Litigation Blog is hosting a "Carnival" of Blogs that is new to me -- The Carnival of Trust.  

As David explains:

The Carnival of Trust is a monthly, traveling review of ten of the last month's best posts related to various aspects of trust in the business world. It is much like the weekly Blawg Reviews that I post links to and have hosted, but those generally contain far more than ten links. My job this month was to pick those ten posts for you and provide an introduction to each post that makes you want to click through and read more.

We're pleased that our sister blog -- Settle It Now -- is included in the category Trust in Leadership and Management along with Charles H. Green's Trust Matters; George Ambler's Practice of Leadership;  and Stephen Albainy-Jenei's Patent Baristas  (if they gave awards for blog template design, PB would win in my book every day of the week).  In this crowd I feel like Zelig!

Here's David's generous mention of the Settle It Now Negotiation Blog and my recent post on convincing your clients to give up more than you (their attorney) predicted while still maintaining your credibility.

On the subject of trust-based leadership, Victoria Pynchon at the Settle It Now, Negotiation Blog has an excellent guide for maintaining your client's trust during a difficult negotiation: How Can I Convince My Client to Lose More than Predicted and Still Maintain My Own Credibility? The answer is complex and multi-faceted, but it boils down to the fact that you have to get the stakeholders and decision makers face-to-face, get their buy in on resolution as a goal (in addition to winning), explore all avenues of resolution, and you have to let them explore all aspects of the dispute, even those that do not matter. The last point is a difficult one for lawyers. As a lawyer you generally want to remain focused on the settlement inputs -- money, confidentiality provisions, sale of existing product if something about the product is being changed, etc. -- but from a trust perspective it is important that the stakeholders resolve not just those issues that go into a final agreement, but any problems or concerns they have related to the dispute or the parties to the dispute.

And let me just add here -- though I'll sound like a broken record to my regular readers -- that business people seek out lawyers because they believe themselves to be victims of injustice. (see my short-short video on this topic here)

Though I, as a mediator, am always seeking business solutions to legal problems, the client's injustice problem must be addressed to maintain your credibility (and retain your client's trust.).  Every great mediator I know will address this issue with your client unbidden.  If you're using less than great mediators --  raise the issue yourself -- all competent mediators should be prepared to address the issues foremost on your client's mind right including -- Will I lose?  How much more is this going to cost me? and Am I Being Extorted or Low-Balled?

Thanks for the mention, David!  We're happy to see Settle It Now mentioned by an IP Blog as influential as yours.  Every IP dispute involves the same issues as every other commercial dispute, requiring the parties to go beyond their legal positions; explore all of both parties' commercial interests; create value from potential business synergies; claim as much of that value as possible; craft business solutions to legal problems; and, frankly address the injustice issues that led your client to seek you out in the first place. 

They'll be yours for life.

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Check out Cumulative and Overlapping Innovation by Adam B. Jaffe and Josh Lerner over at  Harvard Business School Working Knowledge here as well as Jaffe and Lerner's book Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, one of the Economist's Best Books of 2004, Economics and Business Category.  Excerpt from HBSWK below: 

A classic example of the tradeoff between rewarding pioneering inventions and allowing improvements is the Edison electric light bulb. Edison was granted the basic patent on incandescent lighting in 1880. For the next dozen years or so, there was much dispute about the validity and breadth of this patent. Many companies offered competing products. A number of these contained important improvements in the design of the filament and the bulb itself, and the cost of the bulb trended steadily downward.

Then, in 1891, Edison General Electric Company won an infringement suit against its competitor, United States Electric Lighting,and subsequently won injunctions against a number of competitors. The flow of improvements then slowed, until the expiration of the patent allowed competitors to re-enter and resume their efforts to improve Edison's design.

Now, surely Edison's invention was about as novel as they get. And Edison and his assistants put a lot of time and money into testing different materials until they succeeded with the carbon filament, justifying a patent to allow significant profits to be earned on the invention. But acknowledging the legitimacy of Edison's patent and his efforts to enforce it is not inconsistent with recognizing that the monopoly thereby created temporarily inhibited the subsequent improvement of the invention and the development of the industry more broadly.

In principle, subsequent inventors with good ideas about improving an important invention ought to be able to negotiate an agreement with the owner of the original patent that allows the improvement to be implemented.

This could be done by granting the improver a license to use the original patent, or by selling or licensing the improvement back to the holder of the original invention.

After all, if the improvement is really a good one, both the original inventor and the improver have an incentive to see it implemented. In practice, however, such agreements often are difficult to work out. After the Wright brothers patented their basic design for an aircraft stabilization and steering system, there were many others who wanted to work on a wide variety of different ideas for aircraft. But the Wright brothers refused to license anyone, and engaged in protracted litigation with a number of designers.

With the entry of the United States into World War I, the U.S. government in fact pushed the major aircraft manufacturers, including the Wrights' firm, to license their patents as a package, in order to ensure the rapid manufacture of planes and the development of new designs. The rapid development of numerous different aircraft concepts in the years after the establishment of this "patent pool" suggests that the pioneering patent—combined with the unwillingness or inability of the inventors to cooperate with their technological followers—temporarily retarded the development of technology.

Continue reading here

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The significant problems we face cannot be solvedby the same level of thinking that created them.--Albert Einstein

Lawyers, philosophers and scientists are all trained to question first principles.  The right of one individual to the absolute and exclusive right of dominion over property by virtue of creation or payment (by money or barter) is one of the first principles of capitalism and is rarely questioned. /**

The ownership of ideas, however, and one's entitlement to preclude others from interfering with another's dominion over them, is more slippery today than ever.  In this month's Harvard Business School Working Knowledge journal, for instance, Professor James Heskett kicks off a reader's forum -- Who Owns Intellectual Property -- (open until April 24) with the following:

I [recently] visited the website of the branding consultancy Wolff Olins, responsible for creating the branding for (RED), which raises money for The Global Fund being promoted by Bono and Bobby Shriver. (RED) is a brand, a piece of intellectual property that was designed purposely to be co-opted by others wishing to incorporate it into their advertising. Organizations such as Apple, Gap, and American Express have promoted their products and services using (RED) while raising money for The Global Fund.

Wolff Olins' homepage presents a provocative redefinition of brands as practical platforms that enable people to do things. In its words, "As brands become less the property of an organisation and more the banner of a movement, ownership will become even looser. Logos will be things other organisations, and individuals, can borrow and adapt." That belief, they maintain, will require that some companies, in their own best interests, relinquish control over brands and "be more generous" with consumers. In other words, they take the risk of transferring ownership and quality control of what used to be called their brand to others. In this case, who owns the intellectual property?

More generally, are views of ownership of intellectual property changing? If so, how will it affect the way intellectual property is valued for financial purposes? Are laws worldwide regarding intellectual property out of date? What do you think?

To add your own thoughts, click here.

____________________

/**  Though possibly apocryphal, in responding to the question "what proof need I present to demonstrate my ownership of this slave," a trial judge sitting in a non-slave state in 1840's America is said to have answered, “a bill of sale from God Almighty.” 

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See The Unlucky Troll at Forbes.com, excerpt below:.

[Chicago lawyer Anthony] Brown first noticed the JPEG patent after quitting his corporate law practice in 1996 and raising just under $1 million from friends and family to fund his new patent-licensing firm. After several months of trolling the national patent database, he found what he'd been looking for. The brainchild of two Philadelphia-area engineers, the JPEG patent lay dormant after being issued. Brown cold-called one patent holder, then 70, and the widow of the other, and persuaded them to assign him control in exchange for a chunk of any licensing fees recovered.

Then came Brown's first roadblock: A petition filed in 2000 by parties unknown asked the U.S. Patent & Trademark Office to reexamine whether the processes the patent described were novel enough to deserve a patent. The feds agreed to the review, a common practice if the questions raised seem substantial. The catch is that during the review the holder of the patent can't demand licensing fees, and the patent's life doesn't get extended accordingly. The reexam of the JPEG patent lasted seven years (the average takes less than two). In the end some fancy wordsmithery allowed Brown to retain control of the patent's pertinent provision.

Brown then launched a wave of lawsuits last summer, demanding anywhere from $25,000 to $15 million, depending on a company's revenues and reliance on the Web. One licensee, court records show, was Kraft Foods (nyse: KFT - news - people ), which was subject to a $5 million fee under Brown's "royalty schedule." Kraft agreed to an undisclosed fee.

But last year saw yet another anonymous challenge. This one was filed by Chicago patent attorney Vernon Francissen, who declines to identify his client. Francissen suggested the JPEG patent's current version had slipped through an overburdened system and was being applied too broadly. In March the Patent Office agreed to a second reexam, again putting up a roadblock to Brown's licensing campaign. . . . .

In late 2010 the patent expires--and there's no limit on the number of times "anonymous" parties can ask for a reexam.

See also TechDirt's February '08 article JPG Patent Holder Goes for the Sympathy Vote here; for more on patent trolling in general, see law.com's "Meet the Original Patent Troll" here.

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There are dozens of reasons why a negotiated settlement of a patent infringement case is superior to continued litigation, but only one reason why it's even better than winning.  As law.com recently reported, "over the last decade, 38 percent of the cases had at least one term found on appeal to have been wrongly construed [and] . . . 30 percent of the cases had to be reversed or vacated because of an erroneous claim construction." 

As usual, we have Dennis Crouch at Patently-O to thank for the statistics, which were gathered by David Schwartz, an assistant professor at The John Marshall Law School.  

"For some lawyers, the high reversal rate is worrisome," according to law.com's article Federal Circuit Tosses Out $104 Million Patent Verdict in DirecTV Case here. 

"It's higher than everyone would like," said Michael Barclay, an IP lawyer at Wilson Sonsini Goodrich & Rosati. "You can't advise your clients on what's going to happen."

One fix for the issue was proposed in the patent reform bill that is currently stalled in the Senate. It would change the rules to permit an interlocutory appeal to the Federal Circuit after the hearing on claims construction instead of waiting until the trial is finished.

Proponents said the change would cut out all the time wasted on trials that ultimately get overturned by the appeals court. But opponents, including Federal Circuit Chief Judge Paul Michel, said that the change would clog up the appeals court and cause even more delays in patent cases.

In the Finisar case, a Texas jury originally awarded the tech company $78.9 million in damages after it found that DirecTV willfully infringed on a patent involving methods for transmitting and broadcasting digital information. U.S. District Judge Ron Clark denied Finisar's request for an injunction but awarded $25 million in enhanced damages. DirecTV was also on the hook for prejudgment interest, post-judgment interest and a compulsory license.

The appellate panel vacated the verdict, ruled that the alleged infringement wasn't willful, and invalidated one of the seven patent claims in question.

DirecTV's appeal had challenged the construction of two terms in the district court's claim construction as too broad. The appeals court agreed, though it ruled that only one of the misinterpretations was harmful.

For the full article, click here.

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Check out this book -- Patent Mediation, Better Solutions for Business -- and other resources at the International Institute for Conflict Prevention and Resolution here today!

Provides a five-step roadmap for helping in-house counsel and corporate leaders utilize mediation, when appropriate, a strategy proven to substantially reduce the cost of patent disputes.

By CPR International Commission on Patent Disputes, chaired by Robert Copple. Edited by Kathleen M. Scanlon, Heller Ehrman LLP and Helena Tavares Erickson, International Institute for Conflict Prevention & Resolution

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Former Federal Magistrate and IP ADR Blogger, John Leo Wagner and I presented Tactics of the Adept in Modern Mediation Practice today at the ABA ADR Convention in Seattle. 

We had a lively discussion about the ways in which "at the table" tactics can be strategized in advance to assure that the right people are available for deployment at the optimal time to maximize the potential for the most effective and efficient settlement possible.  We also covered end-game strategy; deal points; and bridging techniques.

You can get a taste of the discussions by downloading our power point presentation linked above.   

Though there were a plethora of afternoon programs following our own, I was happy with my choice of the session conducted by Los Angeles complex commercial mediator Jeff Kichaven (JAMS). 

Jeff led a great discussion among mediators and litigators alike concerning settlement conferences in which coverage is an issue.  

The panel, entitled Hobbling through the Three-Legged World of Insurance Mediation:  How to Get More Third Party Liability Cases Settled was masterfully moderated by Kichaven, who drew from both panel and participants thoughtful questions and sophisticated answers.

Jeff was joined on the panel by Michael Wrenn, insurance recovery litigator in Heller Ehrman's Seattle office, who provided the viewpoint of the insured whose carrier is defending, but denying liability for any settlement by or eventual judgment against the insured.  Wrenn stressed the utility of pre-mediation conferences; the potential need for mediator assistance with client expectations; and, those rare but satisfying mediations where the mediator -- based on his ability to "bond" with the client -- sends both litigator and client away settled and satisfied.  

Also joining Jeff was Cozen O'Connor coverage litigator Thomas M. Jones (Seattle).  Jones stressed the need for neutrals to shoulder the burden of assessing and communicating the weak points of his own and his adversary's legal and factual weaknesses in a persuasive and even-handed manner.  Trust in the mediator's neutrality in providing all sides with candid assessments of risk was stressed as perhaps the most important of a mediator's usefulness to Mr. Jones and his carrier clients.

 

Finally, ACE-USA in house counsel Jonathan Roth added the client's perspective.  Mr. Roth was refreshingly candid and animated, stressing several times that his superiors "don't like to be surprised" and encouraging mediators to be as candid as possible with "bad news" they might think the client representative does not wish to hear.

 

 

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“Never before in history has innovation offered promise of so much to so many in so short a time.”

"Intellectual property has the shelf life of a banana."

These two quotes from world-class innovator and IP rights owner, Bill Gates, say it all about the state of intellectual property today. While most people are aware of the intellectual property concept - of copyright, patents, industrial designs and trademarks - many still view them as business or legal concepts with little relevance to their own lives. To address this gap, WIPO’s Member States decided in 2000 to designate an annual World Intellectual Property Day. They chose April 26, the date on which the Convention establishing WIPO originally entered into force in 1970.

Continue reading here.

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We mediators long for the day when we can no longer use the expense, delay and uncertainty of trial as a good reason to settle your patent litigation.  Why?  Because mediation, as Diane Levin recently wrote, is simply an alternative -- not necessarily the "appropriate" -- means of resolving your clients' dispute.  (See the Mediation Channel's post Debating the Meaning of "A" in ADR here)

It gives mediators no pleasure, and does our profession no good, for litigants to walk away from meritorious lawsuits because the chance to obtain justice through the justice system is not a genuine option anymore.    

So we're pleased to bring you the good news that the Northern District of California is making a serious effort to get your patent case to trial with fewer delays (and less cost) than has been the rule of late.

  Excerpt of a recent Duane Morris Client Update on the new Northern District Rules with a link to the full article below.

New Rules in the N.D. of California Seek to Accomplish More Efficient Patent Trials, with the Help of KSR

Patent litigants, patent rocket dockets, and entities seeking a more streamlined patent litigation should take notice of the U.S. District Court for the Northern District of California’s recent modification of its patent trial rules. Much is at stake in choosing where to file a multimillion-dollar patent litigation. Salient factors in selecting a forum include the court's docket backlog and its perception of patents. Now, the local rules are playing a much more prominent role and should be analyzed lest a patent party be beset with frustration and major setbacks. Here, the Northern District of California's recent actions in revising its local rules demand scrutiny by in-house and outside counsel in formulating a patent litigation strategy.

To read the full text of this Alert, please click here.

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This is the sort of statement I simply cannot resist.  Thanks to TechDirt!

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. . . . He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

-- Thomas Jefferson, courtesy of TechDirt's post On the Constitutional Reasons Behind Copyright and Patents -- click here for the full post.

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Someone once asked me whether IP ADR was too narrow a topic to justify an entire blog(!!!!)

Any regular reader will chuckle in response.  Check out, for instance, the IP Blogs listed on the ABA Blawg site.  This week's featured blog, Patently O, is one of the best IP blogs in the world.  And it doesn't hurt Dennis Crouch's readership one bit that he hosts Patent Law Job listings here.  

The ABA lists 151, count 'em, 151 separate IP Law Blogs!  Those bloggers read and link to their IP Sister Blogs and are not simply repeating what each has to say but adding the unique perspectives that arise from a decade or more of active IP practice (younger specialty bloggeres are rare).  .

You can pick up our RSS feed at the ABA Blawg site as well.  While there are 150 IP Blogs, there's only one IP ADR Blog and, with all due modesty, it's a valuable one to add to your daily, weekly or monthly reading list.

Why?  Because we search the IP Blawgosphere for you to come up with information useful to the settlement of IP cases.  Below, for instance, is a chart from Patently O (thanks to David Schwartz!) showing the reversal rate of claim construction decisions.  Why is this important to settlement?  You know the answer -- the cost benefit analysis or decision tree process you're preparing to help you and your client find just the right price for the "sale" of your lawsuit to your opponent.

 

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EBay Agrees to Buy Patents From MercExchange, Settling Long-Running Dispute 

EBay Inc. has settled a seven-year patent dispute with MercExchange LLC that prompted an important intellectual property ruling from the U.S. Supreme Court.

The online auction company said in a statement Thursday that it bought the three MercExchange patents it had been accused of violating. The price was not disclosed; eBay said the figure would not materially affect its financial results.

For remainder of story click here.

Hmmmmmmmm, wonder if this could have been accomplished sooner?

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(above, floodgates along the Bitan Dam by Poagao)

The U.S. Supreme Court just denied review of Convolve Inc. v. Seagate Technology.

Why do we care?

Because in Seagate, the Federal Circuit reversed a long established precedent and announced a new and higher standard for obtaining treble damages in patent cases, which could have the impact of making some patent cases more receptive to mediation or other ADR processes.

Prior to Seagate, a patent holder seeking to prove that a defendant willfully infringed (which opens the door for treble damages) had a pretty low burden to satisfy; the court even suggested that it was as low as a negligence standard. Infringers who had actual knowledge of the patent at issue had an affirmative duty to "exercise due care," which most sought to satisfy by way of an opinion of patent counsel.  See Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983). In fact, because of Underwater Devices, a whole new market opened for patent lawyers, the drafting of patent opinions. (This also raised numerous knotty privilege issues during discovery of these opinions, as one might imagine.)

The landscape changed last year with Seagate. There, the Federal Circuit overturned Underwater Devices, and abandoned the defendant's affirmative duty to demonstrate it had exercised "due care." Instead, the Court imposed a more stringent burden on patent holders to demonstrate that the defendant had willfully infringed. Under Seagate, a plaintiff now must show "by clear and convincing evidence" that the infringer acted "despite an objectively high likelihood that its actions constituted infringement of a valid patent," and that this objectively-defined risk was known (or should have been known) to the infringer.

So with the sweep of the pen (a click of the keys?) twenty-four years of precedent was wiped out, along with the need for patent counsel opinion letters (and some of the thorny privilege issues).

Needless to say, patent holders were less than thrilled, and the matter was taken to the U.S. Supreme Court.

To no avail. On Monday, the Supremes allowed the Federal Circuit opinion to stand as-is, without further review by the Court.

So what does this have to do with ADR?

Plenty. Assuming courts apply the new standard properly, the ability to trigger treble damages has just been significantly curtailed in patent cases. There is less of an upside to taking a flyer at trial. Which should meant that there is more of an upside in trying to work out a resolution that is based on the actual value of the dispute in question.

The dispute can be settled by the application of objective standards of value or other measures without having the settlement process derailed by the wish to achieve (or avoid) the home run treble damage award.

This cries out for a more cost effective resolution process, be that mediation or arbitration. Or some hybrid of the two.

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Unbelievably extensive link roll to global IP resources in a single week!  Check it out.  I just subscribed but am thinking I'd need to take a vacation to keep up!

Thanks Duncan!

By the way, the patent infringement case I was talking about involved one co-defendant selling its business to another co-defendant where the two businesses had different geographic markets; different distribution channels; different strengths; different weaknesses; and, the seller was cash poor due to the litigation.

Thanks for picking up our post.

And welcome to the neighborhood.  When I get a moment, I'll add IP Think Tank to our Blog Roll.

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Patent infringement settlements sometimes include the drastic remedy of selling your company.  It is the exception, but by no means any longer surprising, when the parties to a patent infringment mediation inform me that the co-defendants have been exploring the option of a buy-out while I was in separate caucus with the plaintiff.

That being the case, it is wise to come to a mediation prepared to explore valuation issues.  In that regard, I direct your attention to an article by Dennis L. Monroe of Krass Monroe entitled All Company Valuations are Not Created Equal.  Below is an excerpt.  For the full article, click here. 

“What is the value of my company?” is a question I am frequently asked. In the franchisor world (whether it be franchisors or franchisees), we usually focus on a multiple of earnings. In recent times the multiple of earnings have been going up; and there has been a feeding frenzy as it relates to the purchase of franchise companies.

What determines the value of a company? We normally look at the valuation in terms of a third-party sale. However, there are other times when we look at valuations for purpose of financing, estate planning, management compensation and other events that may necessitate a valuation.

There are a number of valuation firms in the country. I wanted to go to someone who is known for valuing businesses of all kinds and for various purposes, not just someone who values franchise businesses, because they can be formulaic in their approach. I had the honor of recently speaking with Mike Bochert, a [former?] Managing Director of Cherry Tree Companies, a 25 year old investment banking and investment management firm. Mike is a long-time investment banker and valuation expert of private companies, whether very small or very large.

Dennis Monroe question: How are company valuations not alike?

Mike Bochert response: To understand why all company valuations are not alike, think “P-C-A.” In other words, valuations vary in Purpose, occur under differing company Circumstances and each is directed to a specific Audience. Each of those variables has an effect on the judgments and considerations which are appropriate for any valuation.

Without trying to be exhaustive, the Purpose of the valuation could be:

• Determining value pursuant to a buy-sell agreement
• An estate valuation
• Obtaining growth financing
• Acquiring another multi-unit business
• Considering being acquired
• Strategic decision making
  

The company’s Circumstances might be:

• Profitable company with substantial growth opportunities
• Franchisee with multiple concepts, one performing well and one performing poorly
• An economically strong operation which is considering the acquisition of another operator
• Troubled operation considering an acquisition by another operator

The Audience for the valuation could be:

• Private equity firm
• Mezzanine financing firm
• Internal Revenue Service
• Litigation attorneys
• Management or Board of Directors

To continue reading, click here.

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(if you want to see other photos of heart stents -- the product at issue here -- go to commercial photographer Rick Lee's Blog -- On Location with Rick Lee)  

Why would we be talking settlement on the heels of the jury verdict Dickstein Shapiro attorney Gary Hoffman just brought home for his physician-inventor client as reported in law.com's article Boston Scientific Ordered to Pay $432 Million for Patent Infringement?

Boston Scientific blames the venue -- the Eastern District of Texas -- which Bryan Cave IP litigator Larry Kurland ** describes as a "patent-friendly jurisdiction."   (for all patent infringement cases pending in the Eastern District, take a look at the Eastern District of Texas Weblog here)

We're not, however, talking runaway juries here -- as Hoffman's co-counsel  Eric Albritton explained it, the award reflects an 8 percent royalty on U.S. sales and a 6 percent royalty on foreign sales.  As someone who mediates patent infringement cases, I know that these percentages are subject to differences of expert opinion, but are likely within a reasonable range for products of this type. 

Hoffman low-keyed the verdict -- among the largest jury awards ever in a U.S. patent infringement case -- stressing the justice issues. 

Plaintiff -- Dr. Bruce Saffran -- said Hoffman,  "is an independent inventor, and his contributions to the advancement of medical technology needed to be recognized and rewarded . . . " .

A Bird in the Hand

Why would anyone consider settlement at a time like this? 

• Well, there's Kurland's report that the patent infringement verdict returned against his client was recently overturned -- a crushing blow for the Plaintiff-inventor.  
• A Plaintiff's bargaining strength doesn't get much better than this.  So while the champagne flows, a strategic plan should be forming to maximize the the power of a verdict that can cause your opponent's stock prices to fluctuate.
• Whatever the defeated party may say -- "we're not changing the fourth-quarter $365 million loss to $432 million because we're going to win on appeal" -- they've got to be hunkered down in a very high-level  pow-wow to find a way to stop the bleeding.
• Boston Scientific isn't the only fish Dr. Saffran has to fry -- he has a similar patent lawsuit against against Johnson & Johnson's Cordis Corp. unit in the same court. 
• All good things must eventually  come to an end -- Dr. Saffran's patent expires in 2013
• Corporations live forever -- physician inventors do not. 

As Google CEO Eric Schmidt has been reported saying -- litigation is a business negotiation being conducted in the courts.  

Advantage Saffran. 

Let the games begin.

_______________________

** Law.com reports that Kurland prevailed on appeal from an E.D. Texas patent infringement verdict against his client just last year.  

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($5700 by Andrew Magill)

I just ran across this terrific resource for IP practitioners -- Insurance Coverage for IP Assets. Were I still in practice today, I wouldn't make a move without this great source of IP settlement wisdom. 

Here's the thing about the law of insurance coverage (a sub-specialty of mine for the last ten or so years of my practice) -- you cannot simply read your clients' insurance policies nor simply read the pertinent case law in deciding whether to make -- or more importantly to press -- a claim for coverage. 

There are no easy coverage answers and the difficult questions raised by every coverage dispute vary from state to state.

I live with policy-holder counsel and he can't answer my questions unless I look up the answers and give them to him, at which point he'll tell me why I'm wrong (I usually am) unless I've asked six or seven additional questions.  (thanks honey!)

So add this valuable book to your research library in 2008.  

Publisher's description of contents below; link to publisher's web page featuring the book above. 

Insurance Coverage of Intellectual Property Assets is the first resource to comprehensively analyze the insurance protection issues that must be considered when an intellectual property dispute arises. From determining the scope of coverage under a policy, to tendering of a claim, to seeking remedies when coverage has been denied, this essential guidebook details the interactions among policyholders, insurers and the courts.

You'll find comprehensive and timely analysis of federal and state case law and major commercial insurance policy provisions that address:

• The extent of insurance coverage under the "advertising injury" and "personal injury" provisions
• Language in policies that limits or excludes coverage for intellectual property claims
• Public policy exclusions to coverage for claims of an infringement undertaken with intent to harm
• Interpreting ambiguous language in insurance policies
• Defending a claim under a "reservation of rights" and potential conflicts of interest triggered thereby
• Forum selection and choice of law

And more.

In addition, there's detailed discussion and comparison of the actual language used in most commercial insurance policies and the 1976 and 1986 Insurance Services (ISO) policies.

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(photo: Long Conversation by renatela)

Thanks for the head's up from Ron Coleman at Likelihood of Confusion about the new Securing Innovation Blog from IP.com.

Here's what S.I. has to say about its "mission" -- one with that distinctive Kevin O'Keefe LexBlog flavor that we intuited before we saw his name in the Why We Believe In Business Blogs post (excerpts below)  

We hope you'll read our corporate blog, Securing Innovation, and join with us discussing patents, trademarks, trade secrets, law and policy, and the latest and greatest tools to strengthen your intellectual property assets and manage your IP portfolios more effectively.

What Is IP.com and why read our blog?

In our little corner of the online world, there's a lot happening with patents, trademarks, and trade secrets, and a lot of relevant stuff is being said on interesting blogs by people who really know what they're talking about. So we're joining the conversation, and blogging about how innovation is managed by corporations with a vested interest in their Intellectual Property.

Find the conversation. Join it. Contribute to it. "Conversing is how we learn. It's how we network. It's how we grow as professionals," says Kevin O'Keefe, CEO of LexBlog, whose team of experts guided us in the development of our corporate blog, "Blogging is a conversation. Not only do you learn and grow your reputation by joining in, you will not be conspicuous by your absence." 

Why We Believe in Business Blogs

The IP ADR Blog and IP ADR Services welcomes IP.com and Securing Innovation to the IP Blawgosphere -- it's collaborative, reciprocal and abundant.  It doesn't get much better than that.   

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(photo:  Entering Hyperspace by Éole)

Let's face it.  Unless you're a P.D., D.A., a Federal Prosecutor or a Federal Defense Attorney, the only true alternative dispute resolution mechanism is trial.

The good news is that some federal district courts are adopting new local patent rules that

provide predictable and uniform treatment for intellectual property litigants and streamline the process by which a patent case is litigated, shortening the time to trial or settlement and thereby reducing costs for all parties involved.

Where?  In the Southern District of California for one, say Heller Ehrman attorneys David Kleinfeld and John Benassi in their article New local rules pave way to speedier patent trials.  Those rules also establish what we commonly think of as an ADR process -- an Early Neutral Evaluation option as described in the linked article in full and as excerpted below.

[T]he new rules set up a schedule that will bring the parties to the all-important claim construction (or Markman) hearing approximately nine months after the complaint is filed.

Having the Markman hearing as early as practically possible is crucial for litigants seeking a timely resolution because the claim construction order issued by the court after the hearing generally has a profound impact on the rest of the case.

The parties will sometimes be inclined to settle once they have seen how the court construes the patent claims at issue. If not, the Markman ruling provides focus for the remaining discovery, dispositive motion practice and trial preparation.

Indeed, it is largely because of the early-scheduled Markman hearing that Southern District judges can now set trial dates for 18 months after complaints are filed. . . .

The new patent local rules also incorporate an existing feature unique to Southern District litigation practice: the Early Neutral Evaluation (ENE). As local practitioners know, and as out-of-town litigants will learn if they choose to avail themselves of the southern district, the ENE provides the parties with a real opportunity to settle the case before spending substantial time and money.

Experienced magistrate judges with the power to compel principals to appear in chambers will try to help the parties reach a deal and will usually remind both sides that it is often wise to settle rather than roll the dice on a jury trial.

If you're practicing patent litigation in California, the full article here is well worth a careful read. 

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I've been shopping puppies this holiday season.  Still, I shouldn't have given Mr. Thrifty sticker shock this morning when I told him the puppy in the window over at puppies & babies on the corner of Third and Kings  retailed at $2K.

I don't know what makes one puppy garner two grand and another win a trip to the gas chamber at the local ASPCA, but I have located an expert who can value the patent in the window.

Coats and Bennett patent attorney Ed Green has a lot more letters after his name than "my" pedigreed  puppy does and a lot to say about valuation that I know Mr. Thrifty would respect.  

Because patent mediation -- which is a lot of what we do at IP ADR -- is all about valuing one's intellectual property rights and because Ed's an experienced and careful practitioner of the art,  we'll be posting an interview with him on negotiating the resolution of patent infringement litigation really soon -- before Festivus. 

To whet your appetite for more, we give you a bit of his wisdom on the topic culled from LinkedIn here.

[If you already have] a working knowledge of patents. . . so you know about the scope of the claims, perusing the prosecution history for the strength of the claims, how crowded the art is, the cost of designing around, etc.

The other side of the issue is the market: how many products or industries does the patent reach, what are their sales, who are the players, what are the consequence of an injunction, etc.?

It is impossible to value a patent the way one can, say, real estate. You have to put a patent lawyer and CPA together, both of whom know the technology and the market, and study the business issues on a case by case basis, and even then you'll only get an educated guess -- something to open negotiations with.

Other factors are whether the patent stands alone or is part of a family; the likelihood of litigation and the relative strength of the parties; whether the patent's validity has been tested by licensing or litigation; whether the technology it covers is in a standard or regulation; whether the deep pockets are direct or contributory infringers; how easily infringing activity can be moved offshore; and many more that don't come to mind right now...

As others mentioned, entire books have been written on this question. Having said all that, it is my firm conviction that most patents are ultimately worthless. The relatively few that are not, however, are waaaay not!

Look for the full development of Green's thoughts on patent valuation and our joint thoughts on negotiating the resolution of patent litigation before everyone leaves for the winter holidays. 

In the meantime, thanks to LinkedIn member Vinod Kumar Singh's blog Competitive & Technical Intelligence Toolbox, we give you this basic article on valuing patent rights -- Patent Valuation:  is Fair Market Fair by David E. MARTIN and Jason O. WATSON at M•CAM, Inc in Virginia. 

 Voice over Internet Protocol allows you place long-distance phone calls on your computer at very low cost.  There are many options in the showcase from which to choose when you need to decide what kind of voip is best for you.  One of those options is voip com -- a leading provider of internet phone service. If you are considering using the skype download, make sure the technology is up to date. Alternatives to skype are vonage and handheld ip phones, both of which can place voip calls.

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Lawrence Lessig.  You know who we mean.  We just posted his pitch-perfect power point presentation here just the other day.

But who could have predicted at any time before this very moment, a day on which an Austrian art-technology-philosophy group working at the "proto-aesthetic fringe [with] pop attitude, subcultural science, context hacking and political activism" (Monochrom) would make a video recording of a love song to an internet & society law school professor.  Who knew law schools would ever offer a course on the internet?  Who could have foreseen . . . oh, never mind . . . 

Thanks to Boing Boing (first) and Concurring Opinions (second) for allowing us to mark this staggering milestone in international-legal-cultural history. 

Skip the Mr. Wizard science experiment and go straight to the Monochrome Melody at 2 minutes and 30 seconds.

Take it away boys!

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(right: author and IP litigator and mediator Michael D. Young, an IP practitioner at Weston Benshoof and mediator with Southern California's Judicate West)

Is the IP world ready to mediate its disputes yet?

While many of us believe IP practitioners are late in coming to the mediation party, at least one prominent mediator is banking that the right time is now.

London's Mark Jackson-Stops, founder of In Place of Strife and a fellow Fellow with the International Academy of Mediators has recently established a specialty mediation panel for  disputes "in the UK and jurisdictions around the world in unfair competition and passing off, patents, trade marks and copyright and competition and anti-trust law, as well as franchise, music, media and domain name disputes."

Jackson-Stops noted "this is an excellent fit with the often cross-border nature of disputes in intellectual property and technology."

Obviously, I support the efforts of any mediators who band together in a specialty mediation practice or joint venture (or even simply a cross-pollination site like this one).

Mark's efforts do, however, raise a question that has been nagging me for some time.

Why has it taken IP attorneys and disputants so long to hear the siren call of negotiated resolution?

I have heard some disputants say that sophisticated high-stakes patent infringement disputes are so significant that the parties simply can't afford to "compromise."

Aside from the fact that negotiated resolutions needn't result in compromise, no one specializing in the field could give this explanation much credence.  

Almost all of these disputes end up settling -- sometimes before and sometimes after Markman hearings -- so compromise is a fact of life unless you're able, with the help of a great mediator, to expand the parties' opportunities to obtain better benefits from a negotiated agreement than they could obtain by victory at trial.  

Given the opportunties created by interest-based negotiation and the inevitability of compromise if the parties wait to settle on the courtroom steps, why does the mediated or negotiated resolution continue to be a "last step" and one of "giving up" and "giving in" rather than "finessing impasse by transforming it into an opportunity to make a deal" (as our friend Lou Meisinger so often counsels).

Are IP litigators pessimists who just don't believe that mediators are up to the intellectual challenge of mediating complex technology and business disputes?  Or are they overly optimistic, believing that they can win by turning over their own and their client's decision-making to a judge or a jury?

Whatever the reasons, reluctance seems to be the rule.  

Case in point.

In the Oracle v. SAP lawsuit concerning claims that SAP employees stole Oracle's copyrighted software by hacking into a website to steal software codes, the parties are preparing for a February 2009 trial. Despite the looming trial date (and the misery of the holidays caused by a February trial) the parties apparently had no intention of attempting to mediate their way into a happy holiday season with their families.  Rather, the Court took matters in hand and ordered counsel and litigants to proceed to mediation.  

Still, the parties resist.

Granted, there are often legitimate means to postpone a mediation -- particularly when information gathering is incomplete and necessary to asses the risks of trial.  But is seems to me that more arm-twisting is necessary to bring IP litigants to the negotiation table than required in most other civil disputes.  

Another case in point.

A few days ago, LeapFrog Enterprises settled an East Texas patent dispute involving devices that allow children to use blocks or other objects to control their computers. The details of the dispute (claims of patent trolling, forum shopping, etc.) can be found on any number of blog sites, including The Prior Art here.  

It was just reported yesterday that the plaintiffs in LeapFrog -- two attorney/inventors -- will share the $7.5 million settlement.  A very good day for plaintiffs.

For present purposes, I note that the settlement occurred, "literally on the courthouse steps in Marshall, Texas, with jury selection 15 minutes away." (quote from the Los Angeles Daily Journal which, unfortunately, requires a subscription to read). 

Again, why the wait? Wouldn't an earlier negotiation with a bang-up IP mediator have made more logical sense, not to mention far greater financial cents.

After all, preparing a patent litigation case for trial in East Texas is not for the feint of heart, or shallow of pocketbook.

Some say the attorneys are to blame -- that they are reluctant to bring a significant IP matter to mediation any earlier because it's "bad for business."  But I'm not that cynical.  And my colleague Victoria Pynchon has to be positively restrained when someone suggests that attorneys, by and large, settle late to maximize the dollar value of litigation.

"That strategy," she says, "is a recipe for client-retention failure and a cynical, not to mention, unsupported libel of some of the most ethical people I have ever had the pleasure to know -- litigators -- particularly those engaged in IP and other sophisticated commercial litigation."

I refuse to believe this explanation as well.

So I'd like to open the floor to our IP litigators to weigh in on this issue:

Why the hesitation to use mediation for complex IP disputes?

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Don't Miss This Talk:  it's Not Long and It's More than Well Worth Watching.

He says:  "let's make  being young legal again."

Here's the description:

Larry Lessig gets TEDsters to their feet, whooping and whistling, following this elegant presentation of "three stories and an argument." The Net's most adored lawyer brings together John Philip Sousa, celestial copyrights, and the "ASCAP cartel" to build a case for creative freedom. He pins down the key shortcomings of our dusty, pre-digital intellectual property laws, and reveals how bad laws beget bad code. Then, in an homage to cutting-edge artistry, he throws in some of the most hilarious remixes you've ever seen.

About Larry Lessig

Stanford professor Larry Lessig is one of our foremost authorities on copyright issues. In a time when “content” is not confined to a film canister, Lessig has a vision for reconciling creative freedom with marketplace competition.

Thanks to Stephanie West Allen of Idealawg and Brains on Purpose for hipping me to this video.

By the way, Larry exemplfies all of the great speaking techniques that I learned from Faith Pincus and Sandy Linville in their "must attend" Public Speaking seminar for WLALA yesterday.

If you don't do anything else for your legal career in 2008, find out where Faith and Sandy are speaking about public speaking -- Faith's site is SpeechAdvice.com -- easy url to remember -- as are all her tips for making you the best speaker at your next speaking event, court appearance, CLE seminar or firm picnic..

I've been speaking publicly, first as a college professor in the mid-80's, then as a NITA coach and then as an Adjunct Law Professor at Pepperdine U. School of Law for more than twenty years. 

Sandy and Faith's half-day seminar yesterday changed my speaking life immediately and forever. 

Don't miss it.

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(right:  Time Magazine Cover of J. Craig Venter and his scientific competition -- Francis S. Collins -- in the race to sequence the entire human genome; which race, I understand, was declared a "tie" in the year 2000)

After spending the day hosting a research scientist/physician about town before returning him and his son to the airport for their trip home to the U.K., I heard this interview by Fresh Air's Terry Gross with J. Craig Venter.

The NPR web page describes Venter's claim to scientific fame as follows:

In his effort to decode the human genome, scientist J. Craig Venter volunteered his own DNA to be analyzed and made publicly available. . . Venter's early work to decode the genome through private research company Celera Genomics earned him both praise and criticism. His team competed with the National Institutes of Health publicly funded effort, the Human Genome Project.

Here's the reason I'm telling my readers about my semi-scientific day.

The first was my friend remarks about the way in which he believes the U.K.'s national health system is squashing dissent among U.K. physicians, which included this observation.  

The only way to reach consensus is to encourage dissent.

I've never heard this put quite so succinctly.  It impressed me.  

The second impetus for posting these matters is Gross' fascinating (and short) conversation with Venter, who describes the necessity of patent protection for the continued vitality of pharmaceutical research and development.  I've never heard patent protection and policy expressed as clearly as Venter did today.  It's worth a listen here. 

 

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