This is the second article in a series about managing asymmetrical litigation. The first article described these David versus Goliath situations and some of the unique issues that they present.
As discussed in the first article in this series, the key to managing asymmetrical litigation is avoiding unnecessary expenses and focusing on substantive resolution. Unfortunately, discovery often can be expensive, and it typically takes place early in a litigation, before opportunities are presented for substantive resolution, even where a defendant has a very strong defense that does not require any discovery to present. Savvy plaintiffs have used the costs of discovery, and document production in particular, to extract nuisance value settlements before defendants have an opportunity to present these defenses. While the next article in this series will discuss how to structure discovery to minimize the costs and risks of document production, this article proposes strategies for avoiding discovery entirely in cases where you have very strong threshold defenses through early summary judgment.
Although scheduling orders often provide a last date for summary judgment motions to be filed (typically after the close of fact and expert discovery), there is no reason that an appropriate summary judgment motion cannot be filed along with a defendant’s answer or in advance of the initial case management conference. Such motions should be based on purely legal issues, for example, interpretation of a license agreement or, in the patent litigation context, interpretation of a patent claim that would be dispositive in the matter.
Care also should be taken to explain to the court why early resolution is appropriate and why discovery is not necessary to resolve the motion. Such a summary judgment motion should be accompanied by a request to stay discovery while the motion is pending. Some plaintiffs, not wishing to waste resources on a case or on a particular defendant (among many) that ultimately will be unsuccessful and hoping that a defendant will settle if his summary judgment motion is denied, may agree to the requested stay.
A modified version of this strategy may be appropriate in cases where there are a few discrete factual issues that would need to be investigated before summary judgment motions can be filed. Let’s take one of our recent experiences. A company was accused of infringing a patent directed to detect truck roll-over risks by comparing a left-side load sensor with a right-side load sensor. The accused product, however, had only a single-load sensor, giving rise to an open-and-shut, non-infringement defense.
The plaintiff, however, wanted to verify that the accused product really only had a single-load sensor. As it would not be feasible to move for summary judgment without giving the plaintiff some opportunity to test this issue, the defendant sought to provide the plaintiff with limited discovery on the issue. After some squabbling between the parties as to whether to stay general discovery, the parties ultimately agreed to do so after the court expressed concern “here, where a non-practicing entity has sued a large number of defendants, the defendants will be inclined to settle with plaintiff merely to avoid the costs associated with discovery, regardless of whether they believe they have a legitimate defense.”
The defendant then proceeded to provide the plaintiff with a limited document production and a single deposition on the issue. After this narrow discovery confirmed that there was no plausible theory of infringement, the plaintiff dropped its claim. Had it not, the defendant would have been in position to file a dispositive motion without having undergone full discovery.
A word of caution: While almost all defendants believe they have good defenses, early summary judgment only makes sense when there is a defense that cannot seriously be challenged. Examples of good defenses in the patent context include a slam dunk non-infringement argument that requires no or very limited claim construction or a straightforward licensing defense where the only dispute is over the legal scope of a licensing document.
Defenses that involve facts over which reasonable minds can disagree (or at least over which not-so-reasonable litigants can disagree without running afoul of Rule 11) are best handled in the ordinary course of litigation. Trying to stay discovery to raise such “good, but not unassailable” defenses will only give your adversary a free preview of your best defenses, squander your credibility with the court when it denies your early summary judgment motion and raise your costs through unnecessary briefing.
Where appropriate, filing an early summary judgment motion and seeking a stay of general discovery can get your company to a quick substantive resolution without spending many times more than it would cost to give a nuisance value settlement.