In earlier articles in this series we looked at the types of patent disputes most amenable to arbitration, what to look for in choosing an arbitrator or arbitrators for the dispute, relatively foolproof clauses to make sure the matter actually goes to arbitration without having to fight about it in court, arbitration clauses that may be useful in your patent dispute, and clauses to avoid or at least skeptically consider before using. We have now taken up the prehearing conference, the event that shapes the course of the arbitration and determines how effective and efficient the arbitration will be. These usually are conducted by phone conference.
Key questions you need to answer are: how much discovery do you need, what kind of discovery do you need, are there pre-hearing matters that we should take up before the hearing, and how long we should schedule for the hearing. To answer those questions, you will need to plan the basics of your case, from discovery to pre-trial motions, and from experts to other testifying witnesses. .
We first considered the types of discovery available and suggested that, particularly in a smaller case, the focus should be on the basics of the case: the patent, prosecution history, the specifics of the accused product, and the basic financials that go into damages or royalty computation. While some cases might justify more probing discovery, we noted that in many cases, limiting discovery to the main custodians of relevant documents and limiting depositions to those needed to obtain information not available from documents is the way to go. Indeed, one good approach to deciding whether to do a particular deposition should be to determine what expect to learn, what it will cost — including preparation, travel, taking the deposition, court reporter fees and the like — and whether there is an alternative, less expensive way to obtain that information.
Subpoenas. Another consideration is whether or not non-parties have critical information that will have to be subpoenaed. If so, you will need to factor in time for doing that and also research what you can and can’t subpoena in the jurisdiction you find yourself in. Many courts allow you to subpoena documents, but do not allow pre-hearing depositions. You will have to check the law in your jurisdiction. Your arbitrator won’t do that for you. You may want to negotiate with your opponent and the third party to obtain a deposition that can be used at the hearing rather than subpoenaing the witness for the hearing. Of course, not all witnesses will be within the arbitrator’s subpoena power, so you may need to rely on documents.
And remember that arbitrators cannot themselves enforce subpoenas. Only courts can do that. So you may need to build in time for that process if the third party is unlikely to cooperate.
Infringement and Invalidity Contentions. There are other activities in a typical patent case to consider. Among the most important is the exchange of infringement and invalidity contentions. The AAA Supplementary Patent Rules address these and other matters, by mandating their consideration but not necessarily requiring them in every case. (You can find these supplementary rules in the rules section at adr.org.) It may be that your case does not require a full exchange of this information depending on the nature of the dispute, but most cases will benefit from this type of exchange. Thus, you will want to set some time aside to have an exchange of this information.
Claim Construction. You may also want to provide for a relatively early claim construction hearing, as usually happens in a federal court patent case. But think this through. Typically, claim construction hearings are expensive and require the decision maker to consider things in a relative vacuum. In some cases, this may be unnecessary. I have arbitrated patent cases where “claim construction” was simply another issue to be determined after the evidentiary hearing on all issues. The technology was quite complex, but the disputes about the claims were relatively straightforward. Claim construction was much better presented and ultimately decided in the context of all the evidence presented at the hearing. Because there is no jury to instruct on claim construction, the decision could be made along with all the other issues in the case.
On the other hand, there are cases where claim construction is the real issue driving the entire case. I recently had just such a case. The parties agreed that the key to the dispute was the construction of two or three claim terms. If that is so, focusing the early part of the proceeding to what is needed for claim construction may well save time and money.
The point is to think about whether a separate claim construction hearing would genuinely make the proceeding more efficient, or it would just add unnecessary expense. That’s the advantage of arbitration. The process can be molded to the requirements of the dispute.
Invalidity. A separate, early hearing on invalidity is another thing to consider. Again, there may be cases where the real dispute focuses on validity of the patent or patents. It may be that there is a serious question whether the patent involves patentable subject matter, particularly in light of the recent decision by the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Internat’l. It may be that one party thinks it has uncovered some prior art that renders the patent invalid, or the on-sale bar applies. Determining validity early on may determine the whole case and, again, avoid other expensive discovery. But many cases won’t be amenable to that approach. You will want to determine the expense of a separate proceeding versus the likelihood it will actually resolve the case without need for a full hearing on all issues.
Summary judgment. Parties often want to bring summary judgment motions. Think that through carefully. Many arbitrators are reluctant to decide a case on summary judgment given the lack of an appeal on the merits in most cases. In many cases, it would be less expensive to simply present the facts at the hearing rather than take the time to present all the evidence in briefs and affidavits, only to discover that there is an important factual dispute that needs to be presented and determined.
The AAA rules now expressly provide for dispositive motions. But they condition their use upon the arbitrator first determining that “the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.” AAA Commercial Rule 33. Thus, if there is a discrete legal issue that will dispose of the whole dispute or part of it, providing for summary judgment may be in order. But if there are likely to be disputed facts or if the issue isn’t clear cut as a legal matter until it is informed by delving into the background facts, summary judgment motions are likely to be a waste of time and money.
To be sure, there are cases where it makes good sense to focus on the legal effect of clear cut facts and foreclose the need for an expensive hearing. But you will want to be prepared to explain how that is likely to be true in your case if you want to include a summary judgment motion in the schedule for your case.
Up next. In the next article, we will take a look at the role of experts and other witnesses in the patent arbitration.