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SAN JOSE — How successful are the Northern District of California’s patent rules? Judges and defendants seem to like them. But plaintiffs don’t, and they can easily “opt out” of those rules merely by selecting another venue for patent litigation. Because patent plaintiffs are voting against the local patent rules with their feet, new patent litigation filings in the Northern District have decreased since the new patent rules were adopted in 1997, notwithstanding a nationwide boom in patent litigation over the same period. While patent litigation increased nationwide by about 15 percent (from 2,112 to 2,483) in the five years from 1997 to 2001, filings in the Northern District decreased by 5 percent (from 163 to 154). By contrast, patent litigation in other major commercial centers increased — by 50 percent in the Central District of California, 20 percent in the Northern District of Illinois and 85 percent in the Southern District of New York. In addition, the District of Delaware has seen an 80 percent increase in patent filings, from 80 in 1997 to 141 in 2001. Clearly, plaintiffs are still filing patent litigation, but that litigation is not being filed in the Northern District of California. The classic reasons for selecting a different forum simply don’t apply in patent litigation. All district courts apply the same law, and all appeals are to the Federal Circuit, so there are no differences in substantive patent law among districts. Additionally, there is no reason to think that Northern District judges are any different from judges in other districts. Further, while there may be some differences in jury pool composition between the Northern District and other districts, there is no reason to think that a Northern District jury is less likely to favor plaintiffs than juries in other districts Interestingly, a recent study of patent jury trials shows that, from 1995-1999, plaintiffs won at trial in the Northern District 68 percent of the time, compared with 46 percent in Delaware. But these numbers don’t mean that Northern District juries are more pro-plaintiff than Delaware juries; rather, it suggests that weaker plaintiff cases never reach trial in the Northern District because of summary disposition or settlement. In contrast, Delaware plaintiffs with weaker cases can get to trial, but they are not guaranteed a win. It would seem, then, that California plaintiffs don’t select Delaware as a forum because they prefer Delaware juries. So, why are plaintiffs selecting Delaware and other venues? Two reasons — time and cost. Patent plaintiffs prefer faster jurisdictions like Delaware because a faster time to trial means lower litigation costs. Compliance with Northern District rules, on the other hand, requires time, and these rules provide ample opportunity for motion practice and delay by defendants. Let’s take a look at some of the issues. The local patent rules provide for a series of exchanges of document disclosures and contentions, culminating in a claim construction hearing (to determine what the patent claims mean) about 10-12 months after service of the complaint. Usually the district judge does not set a trial date until after the claim construction order is entered; thus cases in the Northern District typically take two to three years to reach trial. By contrast, in Delaware, patent cases reach trial within 18 months after filing. In addition, the local rules require the patentee to provide infringement contentions very early on — about six months into the case — and discourage later modification of those contentions. In the meantime, the defendant gets more than a year to find defenses. While it is true that the defendant must also provide early invalidity contentions, it is easier for the defendant to show the “good cause” necessary to modify its contentions. Patent cases rarely get better for the plaintiff after the first wave of discovery is complete. In fact, for most of the case, the patentee feels like a target in a shooting gallery. Moreover, the exchange of contentions in the form of claim charts leads to motion practice. No defendant is ever satisfied with the detail in the plaintiff’s contentions, and motions seeking additional detail take time and mean delay. Absent settlement, plaintiffs win (and defendants lose) only by getting to trial, and motions rarely translate into an earlier trial date. Despite these problems, the local rules do have many benefits. An important one is that by forcing an early claim construction, they permit both sides to more realistically assess their case before investing in trial. While it is clearly more expensive to go through trial in the Northern District than in Delaware, early settlement is far cheaper than the fastest trial. In Delaware about a third of all patent cases reach trial, and nearly one in six reaches a verdict. In the Northern District, only about one case in 30 reaches verdict. The Northern District’s emphasis on early exchange of contentions, and early claim construction, as well as a more leisurely pretrial schedule, means fewer cases reach trial. The local rules, therefore, provide a useful filter for eliminating the weaker cases, and a good tool for assessing the merits of a patent case long before trial. What might be done to resolve the local rules’ time and cost problems? While it does not appear that mimicking the patent “rocket dockets” is a solution — because doubling or tripling the number of patent jury cases in the Northern District is probably not wise judicial management — there are two ways the local rules could be tweaked to permit faster time to trial without losing the benefits of the current procedures. SPEEDING UP THE PROCESS First, judges need to identify the smaller, less complex cases for which an early trial may be appropriate. It should be possible to try simple patent cases for less than a million dollars, but not if the district court insists on following the local rules to the letter. For example, the initial case management conference is too often a scheduling setting formality, and not an effective management tool. Second, judges should insist on setting a trial date within 24 months of the filing of the complaint in most patent cases. That means sharply compressing the post-claim construction schedule, and requiring that the district judges issue claim construction orders promptly. That can be difficult given the number of claim construction issues that can arise in a patent case. But it can be done. One way is to use U.S. District Judge William Alsup’s technique in limiting the claim construction issues to be resolved early in the case. Under current practice, the parties identify and argue every possible issue in a single hearing. Judges seldom have the time, or patience, to wade through every issue. Limiting the hearing to specific major issues and reserving the rest for pretrial or dispositive motions, will permit the court and parties to focus on what is really important, without worrying that an overlooked issue will later prove dispositive. A commitment to trial within two years of commencement of the litigation is a reasonable compromise between the plaintiff’s desire to get the case resolved and the need to avoid unnecessary trials. It may not be as fast as Delaware or the Eastern District of Virginia, but it is about as fast as can be done with an early Markman hearing (claim construction hearing), which is the distinguishing feature and principal advantage of the Northern District Local Rules. There are, of course, other modifications possible, but these would affect the time to trial, which is a crucial question for most patent litigants. The local patent rules do permit early disposition of the weaker cases, but until the time to trial is significantly reduced in the Northern District, patentees will continue to look to other venues for their patent cases. Justin Beck is of counsel at Mount & Stoelker in San Jose and teaches copyright law and patent litigation courses at Golden Gate University School of Law.

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