The document summarizes the results of surveys given to in-house counsel and outside counsel regarding patent litigation. It finds that: 1. Patent assertion entities (PAEs) have significantly impacted companies through lawsuits targeting their customers. Most respondents indicated their customers received PAE demands based on using the company's products. 2. Case management interventions that target the early stages of litigation, like timely decisions on summary judgment motions, are viewed as the most effective reforms. 3. Reforms aimed at the later stages of litigation, such as damages reform and legislative proposals, are seen as less effective. Respondents believe stronger guidance is still needed for calculating damages.

1. 5/3/2013
1
Best Practices in Patent
Litigation Survey
Professor Colleen Chien
colleenchien@gmail.com
Co-presented with Wesley Helmholz (SCU
Law ’13)
Patent Litigation has changed over the past 8 years…
New Plaintiffs: 62% of 2012 patent lawsuits brought by
patent assertion entities (PAEs)
New Defendants: through large tech cos capture headlines,
targets are increasingly non‐tech, small, and customers
New Trends: low‐cost, low‐risk patent assertion by PAEs,
investor‐driven monetization

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These changes have led to efforts to “fix” the patent
system
Decisions
Laws, Hearings, Bills
Model Rules,
Self‐help,
Market
offerings
Case Management
This research asks: how’s it going?
‐ What has been the impact of PAE cases?
‐ How are the fixes going? Do/will they work?

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In Today’s Presentation, we will …
1. Describe what we did
2. Summarize what people said
3. Invite Conversation (Wes Helmholz)
In Today’s Presentation, we will …
1. Describe what we did

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The Surveys
Objective
How goes? What does or doesn’t work?
Process
Develop questions with judges and in‐house counsel
Apply survey best practices
Responses
116 in‐house counsel from ~ 100 cos (mostly $100M+, tech)
Companion survey ‐ 115 outside counsel (all types)
Patent “sophisticates”
[%s are of in‐house counsel respondents unless otherwise indicated]
In Today’s Presentation, we will …
2. Summarize what people said

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What is impact of PAE suits
PAEs can have significant operational impacts

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82% said their customers got PAE demands for
using or implementing their products
68%
15% 18%
0%
20%
40%
60%
80%
100%
Yes, based on use Yes, based on
implementation
No
Have Your Customers Received PAE Demands
Based on Your Products?
The Fixes: what does/doesn’t work
Model e‐Discovery Order
Damages
Case Management
Legislative Reforms
Questions asked:
Is/Would the Fix Be Ineffective, Somewhat Effective, or Very Effective?
Why or Why Not

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Model e‐Discovery Order
The Problem: Discovery is expensive and wasteful
The Fix: the Federal Circuit Advisory Council’s development of a model
order to limit and streamline discovery
Has the model e‐Discovery order worked?
Yes
“Somewhat” effective (67%); very effective (10%)
It’s changed the norm, the conversation
Email, custodian limits principles have been most impactful
But there are still abuses
“It all hinges on how difficult the other side wants to be”
e.g. “plaintiffs make frivolous requests”; “defendants dump millions of
irrelevant documents” and “withhold []relevant documents”
So…
57% think greater sanctions/fee‐shifting for discovery abuse would be
“very” effective.

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Damages Reform
The Problem: Damage figures are guestimates
The Fix: Reform damages law– require sound evidence and reasoning
to determine damages
Has damages reform worked?
Yes… but parties and district courts need more guidance
“Somewhat” effective 41% of the time; very effective 12% of the time
“A lot of good ideas in the caselaw, but the practical upshot is very
hard for parties to work [it] out.”
“Post‐Uniloc, there is no cost‐effective method for calculating
damages.”
So perhaps we need to…
Devise new rules of thumb based on proportionality principles?
“Nothing meaningful can be accomplished if the parties do not know
the amount at issue.”

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Case management
The Problem: patent cases are complex and unwieldy, and judges are
swamped
The Fix: manage the case to more efficiently resolve it
Does case management work?
Yes
76%
71%
54%
44%
72%
30%
46%
52%
0%
20%
40%
60%
80%
Timely SJ decision Reexam Stays Timely Transfer
Decision
Claim limits/Early
Claim Construction
Share of Respondents Who Thought The Intervention
Was/Would Be “Very Effective”
Dark blue = inside counsel, Light blue = outside counsel

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Does case management work?
Yes, much more so than other interventions.
76%
71%
54%
44%
72%
30%
46%
52%
0%
20%
40%
60%
80%
Timely SJ decision Reexam Stays Timely Transfer
Decision
Claim limits/Early
Claim Construction
Share of Respondents Who Thought The Intervention
Was/Would Be “Very Effective”
Dark blue = inside counsel, Light blue = outside counsel
Damages
Reform
#1 Consensus Intervention: Timely SJ motion
76%
71%
54%
44%
72%
30%
46%
52%
0%
20%
40%
60%
80%
Timely SJ decision Reexam Stays Timely Transfer
Decision
Claim limits/Early
Claim Construction
Share of Respondents Who Thought The Intervention
Was/Would Be “Very Effective”
Dark blue = inside counsel, Light blue = outside counsel

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Why timing matters
Reforms that target the beginning stages of
litigation (e.g. early dispositive, stays) are more
effective than reforms that target the end of
litigation (e.g. fee‐shifting, damages reform)
Comments
Early Decisions Must be Decisive to be Effective
“An early claim construction and summary judgment has been very effective for
judges who are willing to make a clear decision. Other judges just sit on the papers
for a long time, or render a claim construction that is subject to twisting by one
party, such that a dispute on claim construction still remains.”
Without Stay, PTO Review Viewed as Unhelpful
“Reexamination has only been effective when the district court has stayed the
litigation. Otherwise, reexamination just complicates the presentation at trial.
Many judges will not stay the trial during the pendency of a reexam, so there is no
effect on trial costs. In fact, the reexam often adds to cost of the litigation.”
Some Believe Some Districts are Engaging in Sharp Transfer Practices
“Misjoinder rules of AIA are effective. Consolidation and denial of transfer, however,
[] makes a mockery of the process”

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Other Feedback …
Mediation: 4% very effective, 48% ineffective
“As a member of a court mediation panel, it pains me to say that court‐ordered
mediation is not effective. Mediation is effective only when the parties are ready to
mediate. "Court‐ordered mediation” can come off as a mom telling a school‐aged
child that they have to be friends with someone.”
Magistrates/Special Masters: 17% very effective/26.1% ineffective
“Magistrate judges can also be effective at resolving some issues, but there is a loss
of continuity at trial….[Re masters] they can add great expense and their cautious
nature seems to reward bad behavior”; Masters often encourage more discovery
disputes (because parties don't have the "wait this might annoy the judge" self‐
check)
Consider the Needs of the Parties Before You
“Patent local rules should not be considered ‘one size fits all’ for every case, as they
significantly increase costs in cases involving simple patents/technologies and
unfairly burden small defendants.”
Legislative Fixes
The Problem: Courts, the PTO, and parties don’t have the means to
solve what ails the patent system.
The Fix: Give them the means

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Will Legislative Fixes Work? Maybe
64%
57%
53% 53%
42%
0%
20%
40%
60%
80%
Fee-shifting to
Prevailing
Parties
Fee-shifting for
Discovery
Abuse
Reform ITC End User
Immunity
Heightened
Pleading
Share of Respondents Who Thought The Intervention Was/
Would Be “Very Effective”
Early
SJ
Comments
The ITC Has different rules
“The misjoinder rules are leading to more ITC cases which are very expensive. “ (the
misjoinder rules don’t apply there)
No Easy Way Exists To Resolve Consumer Cases
“NPEs sue customers who buy components for use in their consumer goods instead
of suing the component manufacturer. In some cases the NPEs refuse to license the
manufacturer. The manufacturer usually refuses to indemnify its customer. This
puts the consumer products company in a terrible position. “

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NB: “Reforms that target the beginning stages
of litigation are more effective”
64%
57%
53% 53%
42%
0%
20%
40%
60%
80%
Fee-shifting to
Prevailing
Parties
Fee-shifting for
Discovery
Abuse
Reform ITC End User
Immunity
Heightened
Pleading
Share of Respondents Who Thought The Intervention Was/
Would Be “Very Effective”
Early Stage
In Today’s Presentation, we will …
1. Describe what I did
2. Summarize what people said
What is happening
What fixes works
3. Invite Conversation (Wes Helmholz)

15. 5/3/2013
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Questions for Clients
1. Who’s Responsible for Case Budgeting
and Overruns
2. Selection of Counsel in Patent Cases
3. Technology/Patent Valuation for In‐
Licensing versus in Litigation
4. Venue and Forum (ITC, district court)
Decisions
Questions for Outside Counsel
1. Fee Arrangements
2. Provisions for Sanctions
3. Causes of Overbroad Discovery

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Questions for District Courts (Judges and
Magistrates)
1. Patent Cases versus Other Complex
Litigation
2. Primary Objective besides Fairness
3. Effectiveness of Recent Reforms
(Misjoinder, PGR, Fee‐Shifting)
4. What Additional Information can Help
Decision on Staying Cases?
Thank you!
Presentation downloadable from www.colleenchien.com

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Backup
The response population ‐ sophisticated
Profile:
54% of in‐house counsel had overseen 6+ patent lits, 70% were tech
70% of outside counsel had 10+ years of experience

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The CAFC model order: custodian and email
limits matter the most
Discovery: who oversees what