Today, the willingness of many courts to consider early motion practice to resolve patent-eligibility questions provides cost-effective strategies to eliminate cases early in the proceedings and avoid excessive discovery costs.
Joseph Loy, intellectual property litigation partner at Kirkland & Ellis, recently sat down with Inside Counsel to discuss early motion practice and its effect on patent eligibility. Loy’s practice includes patent, copyright, trademark and trade secret disputes before federal trial and appellate courts nationwide.
Controlling Supreme Court precedent such as Bilski, Mayo, and Alice, proves that the question of patent subject-matter eligibility under Section 101 is a threshold test that provides a screening function, according to Loy.
“While not all cases will be ripe for early motion practice absent discovery, or claim construction to determine the bounds of the claims, there will be instances where questionable patent claims can be readily disposed of at the pleadings stage without any need for fact or expert discovery,” he explained.
Those patents tend to be abstract-such as fundamental economic practices, methods of organizing human activities, or the recitation of a generic computer to implement that, which was previously done by humans. In these case, justice may be served by foregoing expensive and time-consuming discovery and instead, addressing the question of patent eligibility early to determine whether the claims are abstract.
“Hiring nationally recognized counsel, engaging leading technical and economic experts, collecting, reviewing, and producing large volumes of document discovery, serving and responding to third-party subpoenas, preparing and defending fact and expert witnesses, providing technology tutorials to the court, engaging in Markman briefing and hearings, and preparing summary judgment and other pretrial motions, all adds up,” he said. “Of those tasks, discovery tends to be one of the largest costs associated with patent litigation.”
A typical patent plaintiff will seek discovery from all of the relevant divisions of the target company, and the defendant will then need discovery from the plaintiff’s executives, the inventors on the patents-in-suit, the attorneys involved in prosecuting the patent before the PTO, as well as regarding prior art publications and systems. So, the volume of documents that might be requested, need to be reviewed, and produced, coupled with the number of individuals to be deposed, can be huge.
But, none of this information may be needed to address the threshold question of patent ineligibility under Section 101, According to Loy. In certain cases, the most efficient way forward could be to analyze the issue of patent eligibility first with little to no discovery, and proceed to the discovery phase of the case if the court concludes that the patent meets the eligibility requirements under Section 101.
So, what exactly are the opportunities and challenges of early motion practice?
According to Loy, early motion practice provides several opportunities. It provides the court an opportunity to assist the parties in reaching early resolution of a case - this has advantages for the parties, but also for the court. From the judicial perspective, early motion practice will conserve judicial resources by not allowing patents of questionable validity to proceed through discovery.
Rather than the court monitoring discovery and resolving motions to compel, holding hearings for summary judgment and pretrial evidentiary issues, the court may be able to exercise its gatekeeping function early in the case and streamline it or resolve it entirely. According to Loy, while this has benefits in a single defendant case, where there are multiple lawsuits against numerous defendants, tackling this issue could have an even greater effect on conserving judicial resources by eliminating multiple actions with a single 101 opinion.
Whether or not to proceed with early motion practice will necessarily depend on the facts of the case and should be decided on a case-by-case basis. “Certain cases may be particularly ripe for early resolution because the patents-in-suit are unquestionably abstract and lack an inventive concept. Other cases may be more nuanced,” he explained.
In those latter cases, a patent challenger may benefit from developing a factual record, or a defendant may wish to have the court construe particular claims before proceeding to challenge validity. To minimize foot faults, those strategic decisions should be made in consultation with experienced patent counsel with a proven track record.
“Patent lawsuits often surprise corporations,” said Loy. “Because of the strict liability nature of patent infringement, a patentee can--and often does--sue an alleged infringer without ever informing the named defendant that there was a potential dispute.”
Traditionally, patent lawsuits have been difficult to dispose of early in the case because patent filings have historically been subject to minimal pleadings requirements, and courts have preferred to have developed records prior to resolving case dispositive motions. This can present unpredictability to a corporation from a budgetary and human resources perspective. Litigating the case requires competent and experienced outside counsel--which adds a non-negligible cost of defense. During discovery, both in-house legal and human resources are needed to respond to discovery requests and develop a winning trial strategy.
“Any time spent on the litigation is time away from advancing the corporation’s core business,” Loy said. “With early resolution on the merits, however, many of these expenditures and distractions can be avoided.”
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