In early April of 2013, a US district court judge in Florida ordered Motorola and Apple to narrow the scope of their litigation within four months or the case would be put on hold. Motorola Mobility v. Apple, Case No. 1:12-cv-20271-SCOLA Document 182 (US District Court Southern District of Florida: April 10, 2013). Apparently, the judge felt that the parties were responsible for increasing the complexity of the case to involve 180 claims from 12 patents (patents assigned to Motorola and Apple and including multiple families directed to multiple different inventions) and that the parties had no interest in efficiently and expeditiously resolving the dispute. This type of court-forced patent litigation simplification is reminiscent of the June 2011 Federal Circuit affirmation (in a non-precedential opinion) of a District Court decision to restrict a 629 claim, 11 patent case to 15 claims (also involving multiple families directed to multiple different inventions). Stamps.com Inc. v. Endicia, Federal Circuit (No. 10-1328). Both cases, as well as others1, suggest a court trend to require parties to limit the many issues that can be contested in patent litigation.
FRCP Rule 1, contemplating a “just, speedy and inexpensive determination of any action,” poses a challenge for patent litigation, which is inherently complex. Although it is understandable that courts desire to simplify patent litigation involving multiple patents and hundreds of claims, this reaction may result in a substantial erosion of the ability of a patent owner to enforce its rights. After all, the federal courts (and the ITC, via exclusion orders) are the only venues for enforcement of patent rights. When courts force patent owners to pursue in a given proceeding enforcement of only a portion of their patent rights, the patent owner may be stripped of valuable patent rights. Rules of foreclosure, e.g., collateral estoppel and res judicata, may prevent pursuing omitted claims and arguments in another suit. A court’s refusal to provide a venue for the full complexity of existing rights may leave some rights without a venue for enforcement. Simplifying patent litigation in order to reduce court time and costs is laudable, but such a trend may limit protection of significant patent rights in the United States.
B. Model Order
On July 22, 2013, the Federal Circuit Advisory Council, a committee including practitioners, academics and judges, formed to advise the Federal Circuit, issued its Model Order Re: Excess Claims and Prior Art. The Model Order is available to guide trial courts should they wish to limit the number of claims and prior art references asserted by patent holders and accused infringers. The Model Order is not binding on district courts, and the Federal Circuit has not approved it2, but it may become a standard tool for limiting the scope of patent litigation.
The committee for the Model Order reports it considered four issue areas:
- What should be limited - number of claims, number of prior art references, number of invalidity theories, number of terms for claim construction, number of accused products, or some combination?
- Timing - when should limits on asserted claims and prior art references take effect?
- Per case / per patent - should the limits on number of claims apply per case or per patent?
- Effect - what effect does the judgment have on non-elected patent claims and prior art references?
In response to these questions, the main specifics of the Model Order are:
- It imposes limits at (a) a first point after production of "core" technical documents but before claim construction; and (b) a second point, after claim construction but before expert reports requiring further limiting of the preliminary claims/references.
- At both points, the patent claimant first identifies the asserted claims. Fourteen days later the accused infringer identifies prior art references.
- At the first point, the patent claimant is limited to no more than 10 claims from each patent and not more than 32 claims total, while the accused infringer is limited to no more than 12 prior art references against each patent and not more than 40 references total.
- At the second point, the patent claimant is limited to no more than 5 claims from each patent and not more than 16 claims total, while the accused infringer is limited to no more than 6 prior art references per patent and not more than 20 references total.
- If the patent claimant asserts only one patent as being infringed, all per-patent limits are increased by fifty percent.
The Model Order provides this opening for flexibility:
Upon a showing of diligence, and with due consideration for prejudice, a party may seek to modify this order for good cause shown. Any request to increase the limits contained in this order must specifically show why the inclusion of additional asserted claims or prior art references is warranted.
C. Patent Holder and Accused Infringer Strategies
Patent holders in the United States need to be aware of the trend for limiting case complexity and the Model Order. Holders of patent rights contemplating litigation of complex patents with many claims need to be aware that courts will push for simplification. The power of federal judges and magistrates over case management may make it difficult to resist orders to simplify that go too far. While a patent holder can assert denial of due process, the Federal Circuit, at least, seems inclined to uphold a district court’s restrictions on complexity as long as the plaintiff is given the opportunity to show good cause for introducing additional claims into a case that has been simplified by the court. In re Katz Interactive Call Processing Patent Litig., 639 F.3d 1303, 1312–13 (Fed. Cir. Feb. 18, 2011). The best approach may be to present a court that is aggressive on simplification with claims well-pruned to the essentials, so that a court does not feel overburdened without justification. Deliberately complicating patent litigation by including every patent and/or claim, whether or not relevant, may be a litigation strategy to bully opponents, but such strategies may backfire and cause a court to restrict litigation further than it otherwise would. As the Motorola Mobility v. Apple and Stamps.com Inc. v. Endicia cases seem to suggest, suits involving over a hundred claims (180 in the case of Motorola Mobility v. Apple and 629 in the case of Stamps.com Inc. v. Endicia) from unrelated patent families directed to different inventions may result in a court finding the case unduly burdensome and motivate a court to simplify the case on its own. Patent holders need to be prepared to choose which of their patent rights to enforce, and to draft a complaint that minimizes both complexity and possible foreclosure. They may need to cooperate with their adversaries in choosing which rights and issues are central and necessary to place before the court. The parties may need to focus on scheduling of staged discovery, claim construction procedures (including Markman hearings), fact stipulations and motion practice so that the court will have the central, decisive issues placed in front of it early and in their simplest form. Patent holders may also have another factor to consider where various forums for a case are available. They need to understand the trends in the various jurisdictions regarding mandatory case simplification and consider whether to avoid jurisdictions that emerge as more aggressive about restrictions on case complexity.
Of course, patentees are not the only parties involved in patent litigation. Defendants often desire simplification of the case in the early phases and should consider how best to take advantage of this trend. In a case with a significant number of patents or claims being asserted, this issue should be addressed with opposing counsel and the court as early as the initial scheduling conference. As Motorola Mobility v. Apple would seem to suggest, defendants may be well advised to attempt to work with the patentee to simplify before approaching the court, both to convey actual interest in simplification and to avoid further burdening the court with matters that could be resolved by the parties.
The issuance of the Model Order gives a new focus to the trend for judicially limiting patent litigation. It will be worth observing which courts and how many of them adopt the Model Order and observing the extent to which courts are willing to tailor application of the Model Order to specific cases.
To avoid judicial intervention that may have detrimental consequences, patentees should consider designing cases to avoid judicial impatience with perceived unnecessary complexity. Preserving judicial resources for enforcement of patent rights will become a strategic objective for a patentee, who may risk losing valuable rights as collateral damage from a court that seeks and requires simplification. Patentees and their lawyers should take note of this risk of judicial simplification and how it may impact the value of patent rights. An ‘ostrich head-in-the-sand’ approach of merely assuming that there will be a venue willing to provide full judicial resources needed to enforce all patent rights is not safe with current trends.