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Computer technology has brought many new terms. Among the more nebulous (and overworked) is “real time.” Merriam-Webster defines it as “the actual time during which something takes place,” as in, “The computer may analyze the data in real time — as it comes in.” Real time also plays an important role for the tech-savvy litigator. With real-time products such as LiveNote and RealLegal Binder, trial lawyers can receive transcripts while court proceedings are in progress. This immediate transcription is becoming more common. But from its definition to the issue of who pays for it, real time has also been an issue in courts around the nation. The parties litigated the definition of real time in Engate Inc. v. Esquire Deposition Servs. LLC, 2003 U.S. Dist. Lexis 1459 (N.D. Ill. Jan. 30, 2003), a dispute over 12 patents related to real-time transcription systems used by attorneys and court reporters. Engate, the owner of the patents, sued various court-reporting firms for allegedly infringing them. Engate alleges that the court-reporting firms infringe its patents by using the software and services developed and sold by LiveNote and other companies, and by offering to sell real-time transcription services to attorneys. Thus, Engate argues, the reporting firms are joint direct infringers with the lawyers. The court-reporting firms deny infringement because they claim they’re not the ones allegedly using the patented technology. Instead, they argue it is used by the lawyers and independent-contractor court reporters. The reporting firms also argue that it is possible to offer real-time services without infringing Engate’s patents. “Engate does not have a patent for real time. Real time existed over a decade before Engate’s patents,” said Gina Steele of Chicago’s Marshall, Gerstein & Borum, one of the attorneys for defendant Wordwave Inc. As co-defendant Esquire Deposition Services argued in its motion for partial summary judgment, “Esquire offers real time reporting services, but Engate has not patented real time reporting services. Rather, Engate has patented various features for use in a real time deposition.” The case is ongoing, but the court has already rendered some decisions. First, the court held in December that the reporting firms were not liable for any alleged infringement by independent-contractor reporters. Second, in its January decision, the court defined real time. AND THE DEFINITION IS… U.S. District Judge Matthew Kennelly rejected Engate’s definition, agreeing with the reporting firms that Engate’s definition was too broad. Siding with the reporting firms, the court defined real time as: “As instantaneously as possible, limited by the ability of the reporter to transcribe text, the ability of the CAT [computer-aided transcription] system to convert the transcribed text into readable text, and the ability of the software/hardware that is directly connected to the transcription means to display the converted text.” George Summerfield of Chicago’s Stadheim & Grear, one of Engate’s attorneys, has no problem with the court’s definition, and doesn’t think it will hurt Engate’s efforts to defend its patents. “There really wasn’t that much of a disagreement over the definition,” he said. “We’ve already refiled using the court’s definition.” Not surprisingly, the defendants see it differently. Robert Nissen of Alexandria, Va.’s Oblon, Spivak, McClelland, Maier & Neustadt, one of the lawyers for defendant Esquire Deposition Services, said, “Their definition was too open-ended. We were pleased the court went with ours.” Speculating as to why Engate was going after the court-reporting firms, Nissen said, “Perhaps they feel there is more money to be had from the court reporters than from getting a one-time fee each time a copy of LiveNote is sold.” Graham Smith, founder and CEO of LiveNote, agrees. “Engate approached us about a partnership. We weren’t interested. In addition, I think they realized that the real revenue stream was with the court reporters,” he said. However, LiveNote may be next. Commenting on Engate’s decision not to sue LiveNote and the other real-time manufacturers, Stadheim & Grear’s Summerfield said, “We may very well do that in the future.” Commenting on the decision to sue the court-reporting firms first, he said, “By scheduling and advertising the depositions, they are engaging in conduct that infringes on patents.” Now that the court has held that the reporting firms are not liable for the actions of independent-contractor court reporters, Engate is taking its patent fight to the individual reporters. Laurel Eiler, president of the National Court Reporters Association, said that, on Engate’s behalf, Stadheim & Grear has written to court reporters across the nation, demanding a royalty of 35 cents per transcribed page for any deposition in which real-time reporting services are used. Engate has said that the amount will increase if it gets a favorable ruling on its patents from the court, she said. The court reporters are fighting back. Their organization is working with counsel for the defendant reporting firms. In a prepared statement echoing the sentiments of the reporting firms, Eiler said, “No valid patent has been infringed because the processes and technology were in use prior to the patent applications being filed.” The organization is also asking the real-time software vendors to work with its members and indemnify them for the use of the software. Noting that manufacturers of mass-marketed software obtain licenses from the holders of patents used in their products, Eiler said that the group “believes that the manufacturer of real time systems and software, not the consumer who buys it, should be responsible for assuring that their product doesn’t infringe on any valid patents.” RECOVERING COSTS Real-time transcription services have proliferated recently. “Our market research indicates that real time transcription is used at between 1,000 and 1,200 hearings a day in the U.S.,” Live-Note’s Smith said. According to Smith, the same market research indicates that LiveNote has about 90 percent of the U.S. market. Can real time be viewed as a necessary cost of litigation? A litigator knows a trial tool has become mainstream when courts allow the prevailing party to recover its cost from the losing party. Just who does pick up the tab for real time? According to a federal district court in Illinois, it’s not the losing party. In DeKalb Genetics Corp. v. Pioneer Hi-Bred Int’l Inc., 2002 U.S. Dist Lexis 15846 (N.D. Ill. 2002), the court held that the costs for lawyers’ use of real-time deposition transcription were not recoverable from the losing side. In a patent dispute over the technology for fertile transgenic corn, the court held that defendant Pioneer Hi-Bred was entitled to costs under Federal Rule of Civil Procedure 54. It rejected Pioneer Hi-Bred’s claim for approximately $38,500 for its attorneys’ use of the LiveNote real-time deposition transcription system. Using LiveNote, Pioneer Hi-Bred’s lawyers had real-time transcripts as they conducted depositions in the case. The company argued that these transcripts were necessary because its lawyers had to ensure that they did not duplicate questions after the court ordered the parties to consolidate discovery. The court didn’t buy it. Noting that it “regularly denies costs for items such as minuscripts or diskettes of deposition transcriptions because they are merely for the convenience of the attorneys,” the court said it “did not see why it should treat ‘LiveNote’ any differently.” Since lawyers have used Min-U-Scripts — deposition transcripts with indices and multiple reduced pages on a single page — for years, it may take a while before real time can be charged to a losing opponent. U.S. District Judge Philip Reinhard maintained that, while convenient, real-time deposition transcription was not necessary. He wrote that real-time transcription was not “part of the stenographic transcript necessarily obtained for use in the case,” quoting from the language of 28 U.S.C. 1920(2), the U.S. Code section providing for the taxation, or chargeability, of costs. Other prevailing litigants haven’t had any better luck in recovering the costs for real-time transcription. When a losing party made an objection to paying for the costs of real-time transcription in a Texas federal case, Anderson v. Siemens Med. Sys., 2002 U.S. Dist. Lexis 25113 (N.D. Texas 2002), the prevailing party withdrew its request. In an unreported Connecticut state court case, Alswanger v. Smego, 2001 Conn. Super. Lexis 2968 (2001), a case once again involving LiveNote, the court said that costs for real-time transcription were not chargeable because Connecticut’s legislature had yet to provide specifically for the recovery of such costs. Judge Kevin Tierney observed, “There is no doubt that the daily transcripts obtained during the trial were valuable in the preparation, prosecution and defense of the case.” That didn’t mean, however, that Tierney would make the losing side pay for them. Noting that, under the American Rule, each side must pay its own costs unless there is law to the contrary, Tierney held that losing parties in Connecticut would not have to pay for their opponents’ real-time transcription “until the legislature so indicates.”

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