A General Trial Attorney
In Patent And Trade Secret Litigation
Niro, Scavone, Haller & Niro
Intellectual Property Law Institute
State Bar of Texas
It should be clarified at the outset that the issue presented here is limited to the context of patent and trade secret litigation and directed specifically to the importance of having a litigation team which is led by an experienced patent litigation attorney rather than a general trial attorney. Throughout this essay, the term "general attorney" or "general practitioner" will refer to an attorney who is not registered to practice before the United States Patent and Trademark Office (USPTO). The opinions and conclusions discussed herein are based on my own observations and experiences, as well as those of others that have been shared with me. It is acknowledged that there may be exceptions. The objective of this essay is to identify the issues rather than to necessarily gain the readers' acceptance of the author's opinions. It has been my experience that clients, regardless of their sophistication, including attorneys who are inexperienced in the field, do not recognize the problems associated with having a non-patent trial attorney in charge of patent or trade secret litigation. Some general trial attorneys who hold themselves out as being qualified to handle patent or trade secret litigation do not understand the problems, much less avoid or overcome them.
As in-house intellectual property counsel at a large and active industrial corporation for approximately the past four years I have worked with various outside counsel in the United States and abroad in a variety of contexts including intellectual property litigation. I have discussed issues and trends related to the topic of this paper with lawyers and non-lawyers who have had first-hand experience in these matters from various perspectives.
Any resemblance or similarity between hypotheticals presented in this essay and any actual events or entities is purely coincidental. INTRODUCTION
"The advantages we can offer you are reduced cost of litigation, our expertise in communicating complex technical facts and law to juries, and our knowledge of overall litigation strategy," said the general trial attorney as he and a young associate sat across the table from the client. The general practitioner was proposing that his general practice firm take on patent and trade secret litigation for the client in order to help the client keep litigation costs down.
"But what is your background in IP matters?" the client asked.
"Well, we handle IP matters regularly for other clients."
"Patents and trade secrets?" asked the client. "It's mostly trademarks and copyrights, but we are starting to get into the patent area."
"Do you handle patent and trade secret litigation?"
"We've had two patent lawsuits" he replied.
"What were the outcomes?" asked the client.
"The outcomes were favorable for our client in both cases."
"Then you completed two patent trials, right?"
"Well, they both settled. They settled favorably for our client," replied the general practitioner.
"So you've never actually tried a patent case, have you?"
"No, but we feel confident that we can based on what we've seen" he said.
"Any trade secret litigation?" the client asked.
"No." "Do you have any registered patent attorneys in your firm?"
"No," he answered, "but we have a girl with a computer background who handles software licensing and copyright matters. She's really bright."
"I worked on the patent suits," remarked the young associate. "I've always wanted to work with patents. I feel pretty comfortable with them."
"What was your undergraduate degree in?" the client inquired.
"Finance," he said.
"Tell me," the client said, "what if I were a new client and I came to you and said we were being sued for patent infringement...what would you do first, what would be your approach and how would you staff the case?"
There was a long pause and the general practitioner said, "I would first get with your engineers and talk about what your technology is." The general practitioner continued saying, "And then we would check to see if the patent was infringed."
The client then asked, "Can you elaborate? What issues would you look at for our defense?"
After several more moments of silence the general practitioner muttered," Best mode...yeah...uh..we would check to see the best mode...that...uh..recent federal case...uh..best mode..."
More silence followed as the client waited to see where this answer was going. After a pause the client said, "Well, it sounds like you are looking into the validity of the patent, right?
"Oh yeah," he said, "validity...I know that I don't have all of this in my memory right now, ..uh..but we've done this before and...you know... we can do it...as trial attorneys we're used to getting up to speed quickly in the relevant law..."
"Then you would look at the file history, right?" the client suggested.
"Oh, yeah" said the general attorney with enthusiasm, as it appeared that this was a topic for which he was eager to demonstrate his knowledge.
"What would you look for?"
"Well...the prior arts...having done it in the last case I worked on, I feel comfortable that I can examine a patent [prosecution] file [history]...you know... for... uh... validity."
"You can?" asked the client, somewhat surprised.
"Uh...yeah ...the best mode ..and the prior art.." he muttered once again.
"Do you have a thorough grasp on the basics...you know...102, 103, 112, literal...doctrine of equivalents...willfulness...?" the client asked.
After more silence, it seemed like the time to change the subject again. The client then said "I know of patent litigators who work in specialized patent law firms and who have practiced for years exclusively in patent and trade secret litigation. Some of them have had much success and possess great experience in these areas. Tell me, what advantage would there be in having your firm handle a patent suit instead of one of these firms?"
"Well for one thing," he said, "any patent attorney will tell you that he doesn't like to talk in front of a jury..they're not comfortable in there."
"But what about the patent lawyers who have been up in front of juries a number of times - on patent and trade secret cases?" the client asked.
"Well, there aren't many of them."
"Because everyone knows that patent suits usually settle, so they never get experience," he replied.
"Oh," said the client, "so if patent suits settle often then front-loading...or up-front preparation must be extremely important in a patent case, right?"
"Yeah. It is," he answered.
The client then asked, "Wouldn't you need a patent specialist to be on the case up front then?"
"That's where your patent counsel would come in. We would work with him and he would bring us up to speed on the technical issues and the patent concepts. We're the experts in trial procedure and strategy," he answered.
"But," the client replied, "we don't have the ability that a seasoned patent litigator, based on experience, has to predict the outcome of a position that will be tested in court. I don't believe that many general trial attorneys have that ability in patent cases either. Our business managers depend heavily on counsel's assessment of the strength of the position and the probable outcome in determining whether to settle and for how much. Wouldn't someone who has tried numerous patent cases be in a better position than you to give that advice?"
"Well, for things like that we can consult an experienced patent litigator from a boutique firm. We've already done that on one of the patent cases we handled an it worked well."
"How does that cut costs?" the client asked. "Why shouldn't we just have that patent specialist handle the case himself?"
"We know how to keep the costs down ... because we have a large operation and we have experience in litigation tactics and procedural strategy," he said.
"But not in patent litigation. And it's different," said the client. "Patent litigators also have experience in tactics and strategy - and their experience is in patent cases. Your knowledge of the substantive patent law is not as thorough as a patent attorney's. So, how could you strategize in an area unfamiliar to you?"
"That doesn't matter because we have to first decipher it and interpret it in layman's language for our own understanding so we can better explain it to a jury," he said.
"Tell me again - how would you cut costs?" the client asked.
"Well, we have more resources than a patent firm, because we're bigger," he said. "Also, I would have him [the associate] work on it as much as possible so you wouldn't have to pay my hourly rate for the background work. If we needed to get a patent specialist involved we would work with one from another firm. We've done that already. It works out pretty well."
"But then what about front-loading?" the client thought to himself.
The preceding hypothetical dialogue is a realistic illustration of how some general practice firms, otherwise reputable litigation firms, are unaware that they are in no way competent to handle patent or trade secret litigation.
When an otherwise reputable, competent general practitioner or general practice firm lacks even a basic understanding of an area of law and they genuinely do not even realize it, there exists a true danger that the public will be exposed to incidences of legal malpractice and, in the case of patent litigation, potentially devastating damages or fees that could have been avoided.
I have observed or heard of various situations in which litigation teams led by general attorneys have committed oversights or made adverse decisions that an experienced patent litigator probably would not have.
These situations can range from very basic, fundamental misunderstandings to more subtle but costly errors. For example, in a most basic context, there may be a general practitioner in charge of patent litigation who lacks an awareness or understanding of willfulness in patent infringement cases. Such an attorney may misunderstand the significance of obtaining and relying on sufficient opinion of patent counsel for avoiding enhanced damages. The same attorney may not understand how to select qualified, competent patent counsel for an infringement analysis and opinion, nor will he be able to meaningfully check the patent counsel's work.
In trade secret or patent cases, a general practitioner in charge of the case may not, even before a decision to recruit support from a specialist is made, recognize a viable position or defense that would warrant further action. An opportunity to enforce rights or defend may then be foregone. Furthermore, various actions such as preliminary injunction in a trade secret case require fast action and precise knowledge of required elements. The success of such actions depends on the ability to work quickly and accurately. This ability in such a specialized area of law is acquired through experience.
The situations described above are only a few instances in which general practice attorneys in charge of litigation may, through their lack an understanding of basic patent and trade secret law, jeopardize or mishandle a client's position.
I. PATENT ATTORNEY: "A LAWYER WITH AN ENGINEERING DEGREE"
Among the greatest misconceptions that the general public and many non-patent lawyers have concerning registered patent attorneys is that a patent attorney is nothing more than a lawyer who has an engineering degree and who has a demonstrated knowledge in preparing a particularly formatted document for applying for a patent before the U.S. Patent and Trademark Office (USPTO). An even greater misconception demonstrated by a number of general trial attorneys is that a patent attorney who is merely registered to practice before the USPTO, regardless of his or her patent trial experience, is sufficiently knowledgeable in all patent matters to serve as the sole patent attorney on a patent or trade secret litigation team led by and comprised mainly of general trial attorneys. Lastly, some general trial attorneys refuse to acknowledge the necessity of having patent or trade secret cases handled by patent attorneys who have years of experience in practices that exclusively deal in patent and trade secret litigation.
Registration to practice before the U.S. Patent and Trademark Office (USPTO) is merely the initial step toward developing the necessary knowledge and experience to handle patent or trade secret litigation. In general, the requirements for registration to practice before the USPTO according to 37 CFR 10.7 consist of verifying to the satisfaction of the Commissioner of Patents, pursuant to 35 USC 31, that the individual has demonstrated good moral character; possesses good legal, scientific and technical abilities pertaining to patents ; and has competency in performing and advising in all matters relating to preparation and prosecution of patent applications. This verification includes passing of the examination for registration to practice before the USPTO or at least four years of service as a USPTO Patent Examiner and individual approval of various USPTO management personnel.
At present, the scientific qualification usually requires at least a Bachelor Degree in one of various engineering or science disciplines. Competency to perform and advise in matters relating to preparation and prosecution of patent applications is measured by successful completion of the examination for registration which tests the understanding of technical matters, USPTO procedure, and the relevant patent laws of the United States. Such competency is the beginning of an understanding of 35 USC 101, 102, 103 and 112 which, over time and with practice, forms an intuitive foundation for basic areas related to patent litigation such as patentability, validity, obviousness, claim construction, and infringement.
Once the basic foundation is established, the practitioner is prepared to begin a much longer process toward developing competency in patent and trade secret litigation strategies and procedures. To develop a high level of competence, particularly in advising on the predicted outcome of a dispute, the practitioner must not only learn many nuances of the law and procedure specific to patents and trade secrets, but he must also develop an intuitive ability to make predictions regarding the potential outcome quickly and while under pressure. Often the most critical decision, at least to the client, is the initial decision of whether to bring the case to trial or settle. A client depends almost entirely on counsel's assessment to make this decision. Competency to quickly make such decisions with accuracy and while under pressure in an area of law as specialized as patent and trade secret litigation is developed only through extensive experience in actual patent and trade secret litigation. With few exceptions, patent attorneys with this kind of experience are found in patent litigation specialty firms or general practice firms having intellectual property departments headed by and comprised substantially of experienced patent litigators.
With regard to trade secrets, while there is no uniform federal law or required admission to a specialty bar as with patents, the required technical analytical skills and knowledge of specialized law have traditionally made registered patent attorneys with litigation experience the best suited individuals for trade secret work. Furthermore, a client possessing technical trade secrets may already have patent matters handled regularly by a patent specialty firm. Such a relationship between client and firm cultivates in the firm a thorough knowledge of the client's business, technology, procedures relating to security and confidentiality, business competition and personnel. These characteristics usually play a vital role in trade secret matters.
While technical trade secrets are best handled by a client's patent attorneys, there are instances when a non-patent attorney with knowledge and experience in trade secret law will be adequate. For example, trade secrets in the form of marketing information or other business information may not require a technical specialist. The growing industry dealing in communications technology, computer software and high technology reproduction has given birth to new forms of trade secret transfer and unique legal concepts. While a focused specialist in these unique areas, whether or not a patent attorney, may prove to be an adequate litigator, a patent specialty firm may still have the most experience and thus the most highly evolved expertise in trade secret litigation, regardless of the specific scope of the subject matter.
Patent specialty firms have traditionally handled the most patent and trade secret litigation and, thus, members of these firms acquire the most experience in such matters. Because of the high cost, high stakes and complexity, most patent and trade secret litigation is directed to reputable specialty firms which makes it nearly impossible for young start-up firms or new intellectual property departments in general practice firms to gain substantial experience. As a result, with some exceptions, the best trained patent and trade secret litigators are developed and maintained in patent litigation specialty firms.
II. "INTELLECTUAL PROPERTY ATTORNEY": THE SELF-PROCLAIMED SPECIALIST
At a time when much of the legal profession is diluted, patent and trade secret litigation remain generally lucrative. The recent increase in general practice firms seeking patent and trade secret litigation work raises concerns about competence and professional ethics. While there are some general practice firms that have well-established intellectual property groups comprised of experienced, competent patent attorneys, there are many that have only recently formed "IP" groups headed by partners who developed their careers in entirely different areas of law and now hold themselves out to clients as having expertise in handling patent and trade secret litigation. They often refer to themselves as "intellectual property attorneys."
A number self-proclaimed "IP attorneys" are non-patent attorneys who have had success in areas of law including copyright, trademark, franchise law, or anti-trust and unfair competition law. While copyright and trademark are indeed "intellectual property," these fields are sufficiently removed from patent law and, though perhaps to a lesser extent in certain instances, from trade secret law to make such practitioners ineffective in patent and trade secret litigation. That is not to say, however, that copyright and trademark practitioners are not in a true sense "intellectual property" attorneys. The fallacy lays in their representation to a client that they have expertise in patent and trade secret litigation based on their belief that these areas are sufficiently analogous to trademark or copyright law.
A common misconception held by self-proclaimed IP attorneys and unknowing clients is that a non-patent IP attorney can competently lead a patent or trade secret suit if assisted by a patent agent or a registered patent attorney, regardless of the patent specialist's litigation experience. In the case where the patent specialist has little or no litigation experience, the non-patent IP attorney will rely on the patent specialist to explain technology concepts and, perhaps, substantive patent or trade secret law on a very basic level. There is lacking, however, an adequate source of knowledge and skill in litigation matters unique to patent or trade secret law. It is the exercise of these skills that provides accurate forecasting regarding the outcome of potential disputes that the client will rely upon in making the most crucial decisions concerning whether or not to proceed with a certain course of action. The role of counseling the client, particularly concerning the potential outcome of a dispute, will be left in the hands of the lead counsel despite his lack of experience in patent or trade secret litigation.
III. THE ONE-STOP SHOP
A recent rise in the number of non-patent "intellectual property" attorneys may, at least in part, be due to general practice firms trying to capitalize on large corporate clients' desire to constantly reduce legal costs. The pressure to settle suits or to seek alternate dispute resolution rather than fight legal battles, coupled with intense competition among law firms, has given rise to creatively structured "packaged" legal services from one-stop shops. The advantage that some general practice firms have over patent specialty firms in attracting the uninformed client is a multi-faceted practice in areas much less costly than patent or trade secret litigation, enabling the general practice firm to have continuous and regular contact with some clients. Such packaged services involve a flat fee or projected annual budget for all or some legal services, sometimes for a given geographical region. While this "preferred provider" approach to legal services is not a new concept, it has only recently included patent and trade secret litigation in addition to other services traditionally grouped separately from patents and trade secrets.
The potential dangers that accompany the packaged or preferred-provider approach are significant. For example, a general practice firm may unintentionally undervalue the cost of handling patent litigation. Or, perhaps, in a zealous effort to submit a favorable bid to a corporate client the firm may deliberately undervalue the cost and take the risk that during a given fee period the need to litigate a patent or trade secret suit will not arise. On the other hand, because the cost of litigating a patent case can easily soar beyond one or two million dollars, the client may be persuaded to agree to a high fee for one or more periods in which litigation was never required.
In both instances, either the client or the firm must take a large risk. That risk may eventually be passed along to the client in either scenario. For example, if a client has no need for patent or trade secret litigation but has paid one or more flat fees for a given time period, the cost may surpass a simple fee for services arrangement. In the case where the firm has undervalued the cost of litigating or has been already called into action, and is then subsequently called into action, the motivation for the firm to settle or to not pursue an action may distort the judgment of the attorneys in advising the client of the best course of action.
Some general practice firms have considered the potential dilemma relating to undervaluing patent or trade secret litigation as one that can be tolerated, in theory, if the overall fees for an entire package of legal services will absorb the loss that may be incurred in the form of patent litigation costs. The flaw in that thinking, of course, is that patent litigation can be extremely costly in comparison to other types of litigation and thus it is rather unlikely that a client will pay a flat fee so large that it could provide an adequate cushion to absorb the cost of even one patent law suit. Moreover, if during a given period there are multiple patent or trade secret suits, the firm will most certainly expend more than it has received in the form of flat fees. Somewhere along the way this will cause a lapse in quality or feasibility.
Many general practice firms have been or are currently attempting to equip themselves with patent litigation capabilities in order to become "one-stop" or full service providers. Among these firms, some of the most reputable non-patent litigation firms in the country have had little success in attracting experienced, successful patent litigation specialists to their firms. As a result they are sometimes forced to seek out young, inexperienced patent attorneys to serve as members of a patent litigation team headed by a non-patent litigation attorney.
A patent litigation team led by a general trial attorney and lacking a significantly experienced patent attorney completely lacks the intuitive and in-depth knowledge of patent and trade secret substantive law and trial procedure and strategy. The usual arrangement calls for a group of non-patent attorneys with litigation experience in other areas and a young, inexperienced patent attorney to explain "the technical" or engineering aspects of the subject of the suit, and to explain patent law in a crude black-letter manner. Even when sufficiently knowledgeable, in such a setting the junior partner or associate patent attorney will probably not be in a position to control the important aspects of litigation which is led by a senior partner. For instance, the role of lead counsel will most likely go to the senior non-patent partner who, due to lack of training in the specific area of law, will not be able to think on his feet. Furthermore, there will be pressure for advice coming directly from the senior partner rather than the young patent specialist, regardless of special qualifications or merit.
The overwhelming response of general trial practitioners regarding the advantages they have over a patent litigation specialist in patent or trade secret litigation focuses on skill in communicating to a jury and cost-cutting.
Some general practice firms have argued that they can undercut the cost of patent litigation specialists. The reasoning presented is that the general practice firm is typically larger and, thus, has more available resources. In addition, the general trial attorneys allege that since they have more experience in litigation they can work more efficiently. Neither reason seems to have merit. The first reason assumes that all patent firms are small and implies that size and efficiency are necessarily related. The belief that general attorneys having experience in non-patent litigation are somehow more adept than experienced patent litigators in handling patent litigation, although they lack even a foundational knowledge, assumes that there are no patent litigators with substantial trial experience. That assumption, even if true, would not support the assertion. It seems that the very opposite is true - that an experienced patent litigation specialist can provide the best value through competence and efficiency.
Another common argument is that the general attorney can better explain technology and patent law to a jury in layman's terms because he has more experience in front of juries and he has to decipher things into layman's terms first for his own understanding. Such an argument falls flat on its face in the case of an experienced patent litigator who has presented cases to juries. Furthermore, even patent attorneys who do not have substantial litigation experience, in their daily activities and in many different contexts, explain verbally and in writing the application of patent or trade secret law to detailed functions and features of technology. Such an exercise is not only common, but is practically unavoidable in the practice of patent law. Patent attorneys have experience in communicating analyses and comparisons of various technical embodiments and prior art patents or other technical documents. Clearly, patent attorneys will have the advantage in explaining complex technical matters because it is what they often do in a variety of contexts. Experienced patent litigators have the knowledge and experience acquired by any attorney in dealing with juries, in the very specialized areas of patent and trade secret law.
V. SELECTING COUNSEL FOR PATENT & TRADE SECRET LITIGATION
The unique and specialized nature of patent and trade secret litigation requires a highly evolved specialist with a foundation in the substantive law, hands-on experience in procedure and tactics, an intuitive sense of the merits of a given position, and a proven history in handling such litigation. In general, the lead attorney in patent or trade secret litigation should be registered to practice before the USPTO, experienced in patent or trade secret litigation, and a member of a reputable firm that has a proven record in patent and trade secret litigation.
In selecting counsel for patent or trade secret litigation the prospective client should interview the member of the firm who will serve as lead counsel. It is essential that the lead counsel is a registered patent attorney and has substantial experience in leading patent or trade secret litigation. The lead counsel should disclose his record of successes and losses in patent or trade secret cases, as well as a list of client references. Depending on the technology involved, it may be necessary to explore the lead counsel's technical background or at least his ability to understand the subject matter. At the very least, one of the members of the litigation team should have a relevant technical background or a demonstrated grasp on the technical subject matter.
The abilities and background of the attorneys working under and relied upon by the lead counsel are equally important. The initial ground work is often carried out by someone other than the lead counsel. This ground work is relied upon to identify potential issues and outcomes, as well as to assess the merits and terms of potential settlement. The background of each individual who will work on or contribute to a case should be checked for registration to practice before the USPTO, experience in patent or trade secret litigation, and education or experience in the relevant technical area.
As members of the legal profession, we have an ethical and professional duty to confine our practices to areas in which we are competent to serve. The first step to gaining competency in a specialized area of law is to acquire a basic understanding or foundation in that area of law. From there, extensive experience and training are necessary prior to taking on a lead role in complex litigation. Such measures need to be followed to ensure that the public will not be exposed to incidences of legal malpractice and, in the case of patent or trade secret litigation, potentially devastating damages or fees that could have been avoided.
* * *
Lawrence Cruz is a registered patent attorney practicing in all areas of intellectual property litigation, counseling and procurement. Mr. Cruz is a member of the Chicago firm of Niro, Scavone Haller & Niro, whose practice encompasses all areas of intellectual property law with emphasis on patent and trade secret litigation.