March 02, 2017 The Woman Advocate

As in-house counsel, what's the best way to approach early resolution of a lawsuit when your company has just been served?

By Linda Kennedy

There are no guarantees for early resolution, but communication and creative thinking offer the best opportunities. The first communication is with your client. Analyze the complaint together to assess its merits. This involves interviewing key witnesses with the contemporaneous documents in hand. Is the case a candidate for early dismissal? Or is a factual dispute unresolvable by summary judgment likely to drag on for years? From this work, you can estimate a range of probabilities of liability.

Next, consider the potential magnitude of exposure. Is the case insured? Covered through indemnity by a solvent indemnitor? Early on in a patent case, which is typically not insured, investigate whether a preliminary injunction or willful infringement damages are real possibilities. If so, weigh appropriately the potential impact on the business. Either way, with your marketing and financial people, consider sales volumes in the relevant time period, the importance of the invention to sales, and reasonable royalty rates in the relevant industry.

Multiply the probabilities by the range of magnitude of potential damages. This generates a starting set of numbers to consider as a preliminary value range. Make sure your client understands and participates in the business analysis, and is fully aware of the costs of defense, interruptions caused by litigation, and the lay of the land of the particular venue, judge and jury pool.

The next communication is with the plaintiffs. What do they say they want? What do they really want? Why? Now comes the creative thinking. Not every settlement is a simple exchange of present-value money for a release. Perhaps a supply agreement may be in order. Or a price reduction on particular parts. Or an on-going license. Or even a cross-license, if there is little harm in offering the plaintiff access to a particular subsection of your patent portfolio.

Advocate for your judge to order an early settlement conference following minimal informal discovery. These bring everyone together with an impartial third party in charge. Sometimes, that is what it takes to minimize emotion and replace it with a cold-but-creative bottom line analysis.  In a patent case, by the time of the Rule 16 conference, if the parties exchange basic information on infringement, validity and damages, the right magistrate or mediator can often drive the parties to a business resolution that buys certainty and finality—and, importantly, a result consistent with your client’s business objectives.

The article reflects my personal thoughts and does not contain any endorsement, position, strategy or viewpoint of Pratt & Whitney or United Technologies Corporation.

Linda Kennedy - March 2, 2017