Often out of the blue, video game companies find themselves the target of so-called patent trolls. If you find yourself on the receiving end, you must immediately mount a defense. Here are five key steps to an effective offensive plan.
by Michelle Marriott and Eric Buresh
Nearly every modern technology company has experienced some threat of patent litigation, and companies in the video game industry are no exception. Each year, console makers, video game developers, mobile app developers, publishers and distributors are targeted by so-called “patent trolls” – companies whose primary business is filing patent lawsuits in the hopes of generating revenue through licensing, settlements or litigation awards. Oftentimes, the lawsuit comes out of the blue with no warning. Yet, if you find yourself on the receiving end, you must immediately mount a defense.
Our advice: go on the offensive early. Waiting for the case to get started and then following a standard litigation defense playbook guarantees only that you rapidly incur defense costs without meaningfully attacking the merits of the case. In fact, this default approach often entails months, and sometimes years, of costs before key issues are presented for a decision. While this is certainly frustrating for the defendant, it also plays into one of the pillars of the patent troll’s business model – i.e., to collect settlements based on litigation costs, rather than the actual merits of the case. Many tech companies, even those who litigate patent cases regularly, simply are not aware there is a better way.
Often lost in the clamor for patent reform is the fact that Congress has already given patent defendants several new highly effective offensive tools, many of which are not being fully utilized. This article provides a roadmap for rethinking the standard patent defense playbook by mounting an offensive-minded defense, utilizing the new tools available, and, in doing so, positioning your company for a favorable resolution.
1. Hire Counsel Who Are Ready To Attack – And Know How To Do It.
To launch an early, offensive attack, hire counsel who not only share the same goal, but also know how to move quickly and efficiently. Your lawyers should already know the technology and the prior art landscape. The game space is replete with technological history, and hiring lawyers who know that history before they ever start on your case is essential. It is difficult, if not nearly impossible, to mount an early attack if your team has to outsource a prior art search, sit back and wait weeks or months for results only to provide additional instructions, further refine the search or start over. By the same token, lawyers who already know the technology deployed in your industry will be able to spot non-infringement positions right off the start. An experienced legal team will already know key information about the technology, or know where to find key information, and will not need a lengthy ramp-up period. On the other hand, if the initial case work-up entails weeks of interviews with engineers regarding how the technology at issue works, you may have lost your window for an early attack.
2. Identify Key Positions and Tactics Early.
Any offensive strategy must be informed and supported by the facts and the law. There is nothing more frustrating than building case strategies around positions that ultimately don’t hold water. The ability to identify key positions early in a case is crucial to a strategically-sound offensive strategy. Each strategy will have three main components: prior art to invalidate the patent, key non-infringement positions and the tactical options for raising those challenges early. For example, will the judge assigned to the case consider isolating case dispositive issues early in the case? Although the plaintiff chose the court in which to file its lawsuit, would a different court be more convenient for key witnesses or be uniquely suited – based on, for example, previous experience with the patent – to adjudicating the case? Will the court consider staying the litigation while the United States Patent and Trademark Office (PTO) reexamines the validity of the patent? How quickly will the litigation proceed? All of these questions play into developing a solid strategy. The counsel you hire must be familiar with these tactical questions to quickly assess options and recommend the best path forward.
3. Invalidity – IPRs and CBMs.
The America Invents Act (AIA), which went into effect in September 2012, created several tools for challenging the validity of a patent through the United States Patent and Trademark Office (PTO). Two of the most powerful tools are Inter Partes Review (IPR) and Covered Business Method (CBM) review. Both IPRs and CBMs allow you to attack the validity of the patent before the PTO, separate and apart from the litigation in court. Bringing an early IPR or CBM challenge is often a game changer. It immediately puts the defendant on the offensive in a forum of its choosing. This alone alters the calculus. Further, because both IPRs and CBMs must be completed within 12 to 18 months by statute and could invalidate the patent thereby resolving the litigation, courts have shown a willingness to stay, or put on hold, the litigation until the IPR or CBM is concluded. A stay drives litigation costs to zero while the question of patent validity is resolved, allowing decisions to be made on the merits of the case rather than cost of defense. Even if a court declines to stay the litigation pending the completion of the IPR or CBM, it is likely that an IPR/CBM filed early in the case will conclude before any trial in court. And according to the most recent statistics from the PTO, at least some if not all of the challenged claims are invalidated in over 90 percent of the instituted IPR petitions. IPR and CBM proceedings are an effective way to alter the dynamic from defensive to offensive, and to potentially end the threat altogether. Both IPRs and CBMs are highly technical proceedings, and it is critical, once again, to select counsel who understand the strategies and procedures that are most effective within the proceedings as well as the interface between the PTO proceedings and litigation. While IPRs and CBMs are effective weapons, you must have the know-how to wield them.
4. Targeted and Focused Non-Infringement Positions.
In almost every patent case, the defendant presents reasons why it does not infringe the patent claims at issue. The key is not only identifying non-infringement positions early, as discussed above, but to hone in on one or two targeted positions that define your case. While this may seem obvious, the instinct of many defendants – and their lawyers – is to pursue all of the non-infringement arguments they can even arguably articulate, and ultimately (after months of discovery) whittle the case down to a handful of issues. But by doing this, defendants lose their message and their ability to position the case around truly winning issues. The “kitchen sink” approach simply does not facilitate an early attack on non-infringement. One must have comfort with the technology and confidence in the ability to select the best arguments, but those who can make these decisions early vastly improve their chances for success. More and more, when defendants focus their case around one or two key theories, courts are willing to hear those issues quickly. This vastly changes the litigation dynamic in favor of the defendant by allowing a decision on the merits without the defendant needing to accrue a massive amount of fees.
5. Strength in Numbers.
The goal of an early, offensive attack is to end a case early without incurring disproportionate litigation costs. In addition to solid strategy, some cases present opportunities to share litigation fees and expenses with other similarly situated companies. Oftentimes, patent trolls will sue multiple companies for infringement of the same patent. Where the defendants’ goals and strategies align, it can make sense to jointly retain the same lawyers, which automatically results in cutting each defendant’s litigation fees and expenses for common tasks on a pro rata basis. Of course, you need to hire lawyers who are experienced in joint representation scenarios. Some offer fee structures that are creatively designed specifically for joint representation in patent cases. With litigation costs under control, you can focus on winning the case. While patent litigation has become increasingly common in the video game industry, you can alter the landscape by laying the right foundation and launching an early, offensive attack. Not every strategic option is available in every case, but following this roadmap will set a strategically aggressively course that puts you in the best position to resolve the case efficiently and on the merits.
Michelle Marriott and Eric Buresh are shareholders at Erise IP, an intellectual property litigation boutique law firm, where they regularly defend video game developers, publishers and console makers against patent lawsuits. You can find out more about their practice and philosophies at eriseip.com.
Michelle litigates patent, trademark, copyright, licensing and trade secret issues and can be reached at [email protected].
Eric has managed more than 65 intellectual property litigation cases across the nation, including each of the major patent litigation jurisdictions, and can be reached at [email protected].
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