Author Archives: David Allgeyer

About David Allgeyer

For over 30 years, I have been a partner at the law firm of Lindquist & Vennum, located in Minneapolis, Minnesota. I have litigated, arbitrated and mediated cases in state and federal trial and appellate courts and hearing rooms throughout the United States, including those involving intellectual property protection and licensing, patents, trademarks, trade secrets, and copyrights, as well as related issues of unfair competition. I have been appointed an arbitrator in over sixty commercial arbitrations and have successfully mediated dozens of cases ranging from patent, trademark, copyright and other commercial disputes to disputes in most areas of civil law.

Efficient Arbitration, Part III: Getting Control of Depositions

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In the last two articles in this series we noted that one of the main objections to arbitration is its cost.  Some folks are convinced that arbitration is just as expensive as litigation in court.  I have found that not to be true, but encounter that perception frequently.  I had a discussion about that with a lawyer just today, in fact.

The main thing that drives up the cost in arbitration – as in any adversary proceeding – is discovery.  So we began looking at ways used to reign in costs in arbitration starting with document discovery in general and electronically stored information in particular.

The next form of discovery that we will consider is depositions.

Do you need them at all?

Of course, the way to save costs would be to simply not allow depositions at all.  In fact, in some smaller matters, that is the default.  But, while arbitration matters usually don’t need the full range of discovery and cost we see in litigation, there shouldn’t be a “trial by ambush” either.  In fact, under AAA Commercial rules for example, the Arbitrator must “manage any necessary exchange of information among the parties with a view to achieving an efficient and economical resolution of the dispute, while at the same time promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.”  So if depositions are actually needed to obtain necessary information, they should be allowed.

When are depositions really needed?

The first question you will want to ask is whether depositions are needed at all.  If they are, you will want to ask how to take only as much time as needed for them.

Here is a way to think about that.  With the advent of e-mail and electronic document storage, there is often a record of day-by-day events for important matters in a case.  This is particularly true for the kinds of cases often the subject of arbitration.  The contracts and formal documents are likely to be stored electronically, of course.  And people really don’t talk on the phone or in person quite as much as they once did.  So there is often a record of the parties’ communications in e-mail exchanges and the like.  E-mails tend to be fairly informal and candid.  Thus, you often don’t need to rely on someone’s memory of what happened months or years ago at a meeting or in a call.  Key events are often reflected in real time in e-mail and attached documents.

This often means you can eliminate the depositions we often see in commercial cases these days that go like this:

Q:  Marked as deposition exhibit 278 is an e-mail that appears to be from you to Mr. George Johnson dated January 7th 2013. Did you write this e-mail?

A:  Yes.

Q:  And here you say, “You’re right.  The entire shipment was defective, and we are really sorry about that.” Did you write that?

A:  I guess so. There it is.

Q:  And when you wrote that, did you mean that entire shipment was defective, and your company was really sorry about that?

And on it goes.  It’s hard to see how this kind of deposition is particularly useful.  You have the e-mail admission, and that’s what you will be relying on at the hearing anyway.

And yet, there are times when depositions are needed to understand technical terms, the importance of a sequence of events or other matters.  You may also want to see what key facts are admitted and which are not.  Often in a commercial arbitration it is more often the inferences and conclusions to be drawn from underlying facts that is really in dispute.  But there are sometimes actually disputes as to what happened.  Sometimes even the authenticity of an e-mail is an issue.  But not very often.

This suggests that depositions be limited to matters where testimony can advance the inquiry.  But you can’t expect the arbitrator to micromanage every question or topic.  That would be too expensive.

So the way to think about your case is to see if there is important information that can be gained from a deposition and to be prepared to explain, at least in general terms, why that is so and why there isn’t a different way to get it.

There are then useful approaches to making sure that depositions are not just being taken for the sake of taking them.  As with document discovery, an arbitrator can be fairly helpful in “saving counsel from themselves” by requiring an efficient process that forces everyone to get to the point quickly.

Limiting depositions when needed

Here are four approaches to consider.  I have seen a number of them work very well.  First, is simply limiting the time for depositions.  Each party could be given, for examples, ten hours in which to take depositions.  They can call anyone they want during that time, but still have the time limit.  Then the arbitrator can build in an “escape valve,” so the parties can come back for more if they can show they need them.  They usually don’t come back because they have used their time very efficiently and gotten what they need.   I’ve seen this work very well in cases I have handled both as counsel in arbitration and as an arbitrator.

Second is deciding at or shortly after the scheduling conference who the limited number of deponents will be and the general time for each.  It may only need to be one or two for each side.  Again, this will tend to get everyone to the point.

Third is to make at least some use of 30(b)(6)-type depositions in the case.  The Federal Rules allow depositions on identified topics where a representative who has looked into the issues speaks for his or her company on pre-designated topics.  It may seem odd to import a fairly technical federal rules-type procedure into an arbitration.  But in the right kind of case, I have seen this work to speed things up while still getting the information a party needs to present its case or defense. This can be combined with limits on time or number to make sure things don’t get out of hand.

The fourth is to simply have counsel agree to interview a witness on some specific topics just to clarify key issues.  Of course, both counsel would be present and the interview would proceed in questions and answers.  But it may not be necessary to have a formal deposition with all its expense to allow counsel to understand some technical matters or specific things raised in some documents.  This alternative probably won’t serve the purpose in every case, but in some situations it may well be all you need.   You can even agree to record it to have a record for those few times where the exact answer might be critical.

Electronics are cheaper than cars and airplanes

One final thing.  For many matters, phone or Skype depositions or interviews can work very well. Again, you can record them if you feel a record is necessary.  That can save time and travel.  In fact, there probably isn’t much excuse for not using available technology for fairly routine matters that simply need clarification.

Third party depositions and subpoenas are another tricky and sometimes expensive area in arbitration.  We’ll take that up next.

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Efficient Arbitration, Part II: Getting Control of Electronic Discovery

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In the last article on this topic, we identified cost as one of the major complaints about arbitration.  While arbitration is supposed to be faster and cheaper than litigation, the perception often is that it is not.  The culprit, as usual in legal disputes, is discovery.  If we are to maintain – or at this point perhaps re-establish – arbitration as a preferred alternative to litigation, we will need to deal with the cost of discovery.

One way to do that is to forego the sort of one-size-fits-all approach we have seen to discovery in court in favor of an approach thoughtfully balancing the need for information with the expense of getting it.  Arbitrators, who typically have a deep background in the sorts of issues presented in the arbitrations before them, are well suited to help the parties with the balance.

The last article in this series noted the general help provided by CPR’s document discovery protocol which presents different possible modes of general document discovery depending on the needs of the case.  We now take up discovery of electronically stored information, often called “ESI” for short.  This has the potential to be extraordinarily expensive if not handled properly.

The easy things to fix

Let’s start with the low hanging fruit. Not all cases require a great deal of electronic discovery.  More and more businesses simply have electronic versions of their files that are analogous to the paper files they used to keep. For many cases, the issue is no more complicated than simply looking in “the file” kept for the contract at issue and perhaps the related emails of those most involved.  But other cases may demand more.  And some counsel, used to federal court discovery, will demand a search of the opposing parties’ entire electronic storage system.  Dealing with electronic discovery at the initial scheduling conference will help determine how much of an issue this is likely to become in any given case and what level of expense makes sense to get the needed information.

At very least, if the case will involve electronic discovery  – and these days most cases will involve at least some – there needs to be some agreement on the format for electronic documents.  Some lawyers are used to producing documents in .pdf, others in native format, and others in .tif files, usually depending on their document management system, if any.  Before producing documents, counsel must discuss the format they want. Otherwise there will inevitably be a dispute about whether the documents should be produced in some other format and who should pay for it if they were produced in the “wrong” format.

Then there is the whole issue of metadata.  Metadata is data about data, including, who created it, when, where, in what form, what revisions were made, etc.  It is usually expensive to deal with and rarely critical.  It may be important to have it if the authenticity of an electronic document is in question.  But that is rare.  Normally, you will not want to require that extra effort be made to gather it for each document absent a showing it is needed for a specific purpose for specific documents.

Fitting the search to the need

Of course, the main issue is how to get information the parties need to prepare and present their cases without breaking the bank.  Again, CPR has a useful protocol that provides a way to think about this.

CPR posits different modes of electronic discovery.  The first is simply disclosure of copies of electronic information to be presented at the hearing, either printed out or in other usable form.  This would often be adequate for a routine matter.

The second mode includes disclosure in usable form of documents (a) from a specific, limited number of custodians, (b) provided from the time of signing the contract at issue to the date of filing the arbitration demand, (c) only from primary storage facilities with no need for disclosure from backup servers, tapes, PDAs, voicemails, etc., and (d) with no need to provide anything but reasonably accessible data.

The third mode would include the second mode, but with more custodians and a wider time period to fit the specifics of the case.  The mode would also allow require, upon a showing of special need and relevance, disclosure of deleted, fragmented or documents otherwise difficult to obtain by other than forensic means.

The final mode would be full discovery of electronic information relevant to any party’s claims or defenses, subject to limitations of reasonableness, duplication, and undue burden. This would be like federal court discovery in a large case.

Of course, these are just suggestions, but provide a good starting point for discussion and may even provide a basis for agreement between counsel for the parties.

Cost shifting

Another fairly simple approach to e-discovery sometimes proposed is to require the requesting party to pay the cost of responding.  Some arbitrators I know swear by this as the answer to overreaching demands requiring searching and production of electronic documents.  This seems like a simple solution, but may not always be as it may involve the arbitrator in determining whether the amounts charged are reasonable and the like.  For cases involving serious e-discovery disputes, however, this approach is worth considering.

Keeping a practical mind set

The key to all this is really a more sophisticated way of asking, “If I were this party, where would I go to find the important information regarding the dispute?”  In most cases, the starting point – and often the ending point – would be on the systems used by the people most involved in the contract and subsequent dispute for the time period of the dispute.  This normally would not require searching  all the company’s servers, PDAs, voicemails, and backup tapes or searching a whole system for key words, or using predictive coding .  Most disputes in arbitration are likely to be more discrete and focused than that.  If they aren’t, the parties need to be prepared to explain that to the arbitrator and maybe even pay the other side’s cost for extraordinary effort in looking.

That should go a long way to reigning in the costs of arbitration and making it a real alternative to litigation.

Of course, discovery isn’t only about documents.  Counsel is used to taking depositions for cases in court and will very often want to do the same in arbitration.  We’ll take that up in the next installment.

Efficient Arbitration, Part I: Getting Control of Document Discovery

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Arbitration offers many benefits over litigation in resolving commercial and intellectual property disputes.  The parties have an active role in picking the decision maker. In fact, they are generally given a listing of well-qualified arbitrators who are often experts in their legal field from whom to choose.  The whole system is set up to go faster with less formality and more emphasis on substance.  Continual procedural gambits and expense are easier to overcome, and the parties can count on a “date certain” for their hearing.  By contrast, a trial in court must be at the convenience of an often overburdened court awash in criminal and other matters.  In court you often are subject to call on a few days’ notice for a long period of time while the criminal matters go to the head of the line.

Why arbitration is not as favored as it used to be

So why isn’t every lawyer a fan of arbitration?  And I can tell you that there are many lawyers who are not fans of arbitration.  I’ve talked to them.

One reason we can’t do much about.  It is only natural to believe in the merits of your claim or defense.  When you lose, there is a tendency to blame arbitration.   The cure is to shun arbitration in the future if possible.  You normally can’t do that with court.

The other reason is cost.  The parties and their in-house counsel get the bill for the arbitration and conclude it is just as expensive as litigation.  The reaction is, “I thought this was supposed to be cheaper than court.  But here I have to pay arbitration fees and costs, and I also have to pay these large legal bills.  This isn’t cheaper at all!”  That may or may not really be true.  It could well be that court would have been more expensive. But the perception is still there.  In fact, while arbitration was once favored by corporate counsel, a study done in 2011 shows a significant decrease in use of arbitration in commercial matters since 1997 with cost being the main concern.  R. Lamare, The Evolution of ADR Systems at Large U.S. Corporations, Dispute Resolution Magazine, Vo. 20, No. 3 (2014)(online: http://ow.ly/NsI93).

Of course, the main thing that makes arbitration expensive, just as in litigation, is discovery, especially electronic discovery.

This should come as no real surprise.  Advocates want to be sure they have all the facts they can find to present their positions and maximize their chances of winning.  But this comes with what can be a huge price tag these days where the facts are to be found in computers, on servers, and even in smart phones, if you look hard enough.  But in many disputes the cost of getting all those facts can overwhelm the amount at stake.

Fixing discovery

This all suggests that, if arbitration is going to somehow provide an advantage over traditional litigation, containing discovery is a good place to start.  But how do you make sure the parties have the facts they need without breaking the bank?  Actually, there are plenty of tools available.  So let’s think about how to use them.

We’ll begin by focusing on normal document discovery.  Many lawyers in arbitration are focused on the traditional litigation-based rationale for discovery: parties may obtain discovery of any non-privileged matter relevant to a party’s claim or defense.  Fed. R. Civ. P. 26(b)(1).  This is true no matter whether or not the evidence is itself admissible so long as it is calculated to lead to discovery of admissible evidence, whatever that means. Id.   Usually one side’s “calculation”  looks to the other side like a “fishing expedition.”  The latest rule amendments replace “calculated to lead to discovery of admissible evidence” with “proportional to the needs of the case,” which is a welcome change.  But lawyers still know they are subject to later criticism unless they leave no stone unturned in search of that one critical clue that could turn the case around.  That is true whether such a clue exists or not. Besides, it is the opponent who actually has to turn over the stones in their trove of documents.  So why not insist that they do it?

Because arbitration is by its nature more flexible than litigation, the cost of discovery can be managed on a basis that makes the most sense for an individual case.  This is something we must take advantage of to try to manage the cost of discovery in arbitration.  And the arbitrator can usually save counsel from themselves regarding overly broad discovery by making sure the search for documents is rational rather than needlessly exhaustive.

A good place to start

A good way to begin to think about all this begins with the protocols issued by CPR on what it refers to as “modes” of discovery.  (Available under “Resources” at cpradr.org).  Different modes can be used, depending on the specifics of the case, including the amount involved and the likely location of information.

The first mode just requires provision of the documents a party intends to offer at the hearing a few days before the hearing.  That may be adequate in a fairly small-dollar dispute where the facts are straightforward.

The second mode requires the disclosures as in the first mode, but adds a prehearing disclosure of those documents “essential to a matter of import to the proceeding for which a party has demonstrated a substantial need.”  In other words, if a party thinks a certain category of documents needs to be provided by the other party, it needs to explain why.  It will be given the documents if the explanation is persuasive.

The third mode includes everything in the second, together with disclosure prior to the hearing of “documents relating to the issues in the case that are in the possession of persons who are noticed as witnesses by the party requested to provide disclosure.”  In other words, witnesses need to provide the documents they have that are relevant to the issues on which they will testify.

The fourth mode essentially tracks the scope of litigation discovery, requiring provision of “relevant documents regarding non-privileged matters that are relevant to any parties’ claim or defense, subject to limitations of reasonableness, duplication and undue burden.  This would be reserved for matters where there is enough at issue to justify this deep a dive into the documents.

These proposed modes are useful in suggesting the depth of discovery possible and, in many case, the parties will agree what makes sense for the matter.  In other cases, they will not agree.  That is where an experienced arbitrator comes in to weigh the likely burdens and expense against the likely value of the information.  The advantage of thinking of things this way, however, is it provides a basic structure for determining how far document discovery should go to begin to fit the procedures to the dispute.

Remember, these modes are just suggestions.  A careful study of the particulars of the case may reveal that there is another hybrid mode that makes more sense in the unique situation presented.  But these suggested modes are a good place to start and are quite a bit more helpful to crafting an efficient discovery process than general notions of relevancy, calculation, and burdens.

Of course, while the general scope suggested by the suggested modes are a good way to start getting a handle on discovery, there is still the complication of electronic discovery, which we will take up in the next installment.

 

Arbitrating the Patent Case Part XVIII: Presenting Testimony at the Hearing

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We have previously had a look at many aspects of arbitrating patent cases, beginning with the type of cases likely to be arbitrated, arbitration clauses, and the arbitration process up to the hearing.  We then began looking at the hearing itself, beginning with sequestration issues that can arise, opening statements, and case organization.  We went on to presenting documents on the hearing, including the positives — and pitfalls — of electronic document presentation as well as some observations on how most arbitrators actually use documents during the hearing and decision-making process.

We will now take a look at presenting testimony at the hearing.

TranscriptsFirst, an observation on having a transcript of testimony.  Most arbitrators I know would prefer to have a transcript if possible.  Most arbitrators, like most lawyers, are quite gifted note takers, having had decades of practice.  But notes often are not a perfect substitute for a verbatim transcript on closely contested issues.  The transcript gives everyone a way to be very precise about what the testimony was.

But most arbitrators are also committed to trying to keep costs down if at all possible, so it is unlikely that an arbitrator will ever insist or even suggest it is necessary that the parties bear the additional costs of a transcript.

So when is a transcript worth the cost?  Here is one way to think about it.

Many patent arbitrations are very document heavy so that the real evidence is in the documents.  In most patent cases, much of the key evidence is found in the patents, prosecution history, technical information about the involved products, financial documents, and the like.  While explanations and discussion of these documents and the issues raised by them in testimony is important and may even be critical, a verbatim transcript of what was said may not be necessary or worth the price.  The details are in the documents.  A transcript could  be overkill.

Occasionally, however, a case can turn on the testimony itself, particularly where the documentary evidence is lacking and personal accounts are critical.  If your case is likely to turn on that kind of information, then a transcript is likely worth the price.  This is particularly so if there is a great deal at stake that helps justify the added expense.

Presenting the testimony.  Let’s turn now to presenting witness testimony at the hearing.  Of course, as in any hearing the testimony will be under oath and subject to cross examination.  Because of the relative informality of the proceedings, it will be tempting to lead the witness to save time.  Avoid the temptation.  It simply is not as persuasive to ask the witness to agree to what the lawyer states as it is to elicit real testimony.  The arbitrator already has a pretty good idea what the lawyer would like the witness to say.  The real question is what the witness actually knows, not what he or she will agree to.

Because the rules of evidence in arbitration are relaxed, it may be tempting to take advantage of that and elicit hearsay and other testimony that would never be allowed during a court proceeding.  But be careful. Don’t confuse the ability to get evidence “into the record” with the persuasiveness of the evidence.  While most arbitrators will allow hearsay and the like because the arbitration rules allow it, the evidence is always taken subject to later reflection and study of the persuasive effect of the evidence.  Rank, unreliable hearsay is rarely persuasive and likely won’t advance your cause. Indeed, that a party may be willing to stake its case, at least in part, on such evidence may be detrimental to the integrity of the case as a whole.

Expert reports as direct testimony.  One technique that has gained some sponsorship over the years is the use of the expert’s report as the direct testimony of the expert. This has some advantages.  There is, for example, no question whether the expert’s testimony is straying from the opinions stated in the report because the report is the testimony.  Presumably it also saves time to use the report as testimony, because the arbitrators will have read the report in advance.

While originally enthusiastic about this approach, I am no longer a fan of it.  Part of what we are doing with testimony – and why we don’t just decide everything on written submissions – is gauging the expertise and trustworthiness of the expert.  Only observing testimony allows one to do that.  Perhaps most importantly, having the expert summarize what in the opinion is most important helps the focus the inquiry and pinpoints the most important aspects of the opinion and ultimately the issues in dispute.  Testimony that is given with the understanding that the arbitrators will have the report, but also with emphasis given to the most important points, is the best way to proceed, in my judgment.

Written witness statements.  I have a similar view on  presenting direct testimony of lay witnesses in written witness statements that are then subject to cross examination.  One simply cannot gauge the knowledge or veracity of a witness without listening to the witness’s testimony.  Indeed, we all know the statements are typically written by the lawyers, so it is as though we are simply asked to reread the facts section of the brief again.  In fact, it strikes me as a little unfair to meet the witnesses only on paper when they are telling their side of things, and first meeting them as speaking human beings only on cross examination.  Cross examination tends not to bring out the best in most people.

Next upPost hearing briefing and closing arguments.

Arbitrating the Patent Case Part XVII: Presenting Documents at the Hearing

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We have previously had a look at many aspects of arbitrating patent cases, beginning with the type of cases likely to be arbitrated, arbitration clauses, and the arbitration process up to the hearing.  We then began looking at the hearing itself, beginning with sequestration issues that can arise, opening statements, and case organization.  We will now continue on to presenting documents at the hearing.  This may seem a little mundane, but it is not.  It can have a significant effect on the efficiency and effectiveness of the hearing.

Patent arbitration tends to be document heavy, and the current technology available to present documents leads to many possibilities.  Here are a few thoughts on that from one arbitrator’s point of view.  Not all arbitrators will necessarily agree with me on all this, but this reflects what I have found over the years.

Presenting written documents

With the advent of Trial Director and other systems to present documents electronically, it can be tempting to default to that system for everything.  I’m not sure it is worth the expense in many cases.  I am sure that, if done improperly, use of these systems can be a detriment rather than a benefit.

But first let’s consider the benefits of trial presentation systems. These systems allow you to focus the witnesses’ and arbitrator’s attention to specific documents and passages in the way you choose.  You can project the page of the document, blow up or highlight a particular passage of interest, and otherwise direct everyone’s attention to the particular part of the document you are working on.  If done correctly, there is no need to fumble around through a book of exhibits and then call out page numbers and paragraphs so everyone can get to the right place.  Nor is the witness or arbitrator as likely to get distracted by other document content you aren’t dealing with at the time.  You may be able to avoid dragging pounds of paper copies around the country if everything is on your computer.

On the other hand, this way of presenting documents doesn’t take into consideration the way many people process and use information from documents in an arbitration.  I, and most arbitrators I have worked with, tend to take notes on exhibits, and underline or highlight key parts of the documents. This is very useful when it comes to analyzing the case and writing an award.  No one I know can memorize all the pertinent language in a document for later recall.  Thus, for matters where the information in the document is critical, you will often see arbitrators reaching for their copy of the document if it is available or asking for a copy if it is not. Be aware that a transitory projection doesn’t usually get the job done.  You need a way to put important evidence you want the arbitrator to rely on into the arbitrator’s hands.

Use of a document projection system can sometimes be annoying.  Have you ever been at a hearing where a vendor was hired to do the document retrieval and the presentation went something like this?

Lawyer:  [To vendor running system].  Put up bates number 14578. [Pause and wait for projection].   Oh, wait sorry, go to 14587.

Arbitrator:  Can I have the Exhibit number please?

Lawyer:  Just a minute.  [Pause.]  I’ll have to get that to you at the break.  OK, please blow up paragraph 2 – or I mean 3.  [Long pause.]  Can you highlight the second sentence?  Okay, blow it up, please.  Oh, before we do that, can we go to bates number 14586 for a little context?  [Pause]. Now, Ms. Witness, see that date?  Ok.  Now back to 14587.  [Pause.] I’ve blown up paragraph 2 . . . See where it says . . .

Witness:  Excuse me. It is hard for me to get the context of this without reviewing the whole document. May I see it instead of just the parts you are projecting?

You get the idea.  The whole process of explaining how to project the right part of the document can get lengthy and tedious.  And it may well appear unfair to the witness to pick out a sentence or two from a document he or she hasn’t seen in three years and start asking about it.

The answer, of course, is to have things better organized.  But in some cases, it is just easier and less time consuming to have a notebook with the exhibit tabbed and refer to it.  This goes more like:

Lawyer:  Let me direct you to Exhibit 27.  You will find it tabbed in the notebook you have in front of you.  Is this an email you sent to Joe Dokes on March 12, 2013?

 

Witness:  It appears so.

 

Lawyer:  Please turn to page two, the second paragraph.  Here you say, “I agree that we should be paying license fees on this product . . .” [Etc.]

If the arbitrator is going to turn to the tabbed exhibit to highlight it or make notes on the document anyway, it might be better to just get everyone to that document.

You may want to do a combination of the two, projecting the document to lead the witness through it, but giving the arbitrator a chance to pull it up in the exhibit book.  But if you want to forego some expense, use tabbed exhibits in three-ringed notebooks − one for you, one for the witness and one for the arbitrator − and skip the presentation system for written documents.  Or, if the technology is too challenging for you, but there is an advantage to having a particular document projected, just use a document camera to project it.

You can be sure of this: You won’t lose your arbitration because you didn’t project exhibits.   But tabbed exhibits are almost always necessary and generally are effective enough in the context of your patent arbitration.

Two more thoughts on notebooks.  First, giant notebooks with 5 inch spines are heavy and awkward, particularly if there is more than one of them everyone has to retrieve and you are moving between them.  Use more, smaller notebooks, clearly labeled so it is easy to find the one that has the right exhibit in it.

Second, it may seem like a good idea to simply have a book for each witness with the exhibits you will use for that witness.  This works well during testimony.  But it can get confusing in a long arbitration.  The arbitrator ends up with a jumble of notebooks, many with the same exhibits, so it is difficult to locate an exhibit and may be nearly impossible to locate the copy with the arbitrator’s notes.  Exhibit books with exhibits tabbed in order are usually best.  Make a list of exhibits organized by date, too, to allow easier retrieval and review.

Visual information

For drawings, photos, or other highly visual documents critical to patent cases, projection will often be the way to go, so everyone can follow along.  Thus, if you are trying to show where each element of a claim is in an accused product, or that an element is missing, a large visual you or the witness can point to is a must.  But remember to have a smaller version available in permanent form so that arbitrator can easily locate and study it as part of the decision or award writing process.

Sometimes you are better off with a large chart or two so you can easily write on it, draw arrows, or the like.  It depends on your case and what you are presenting with a given witness.  But the arbitrator won’t be hauling charts around, so remember to provide a small version of it for later reference.  A smaller version of the drawing and a document camera may be all you  need.

Computer animation

You can spend a small fortune on computer animations and the like, but this is rarely necessary.  Most patent arbitrators can visualize what is necessary from drawings or photos without the expense of animations that may or may not be completely accurate.

Of course, you can simply bring smaller devices to the hearing or take a field trip to observe large devices or systems in operation.

Helpful technology

It has become more and more common for counsel to provide arbitrators with documents electronically, either on a USB drive or by emailing pdfs.  Patent arbitrations tend to involve traveling to the hearing, so this is a good way to allow everyone having a computer or tablet to easily retrieve exhibits at the hearing and for review afterwards.  One typically can’t take notes on the documents (absent some extra software and practice using it), but having them easily accessible anywhere is a real plus.  Talk this over with the arbitrator early on to see whether he or she uses a computer or tablet and in what format to provide the documents.

Unused exhibits

Parties usually provide exhibits in books or electronically that they don’t end up using and that never make it into the record.  You may be worried that the arbitrator will go off on his or her own quest and review unused exhibits and use them to come to conclusions.  The arbitrators I know are very unlikely to do that.  There is always plenty to consider without looking for more outside the record, and it is thought to be unfair to consider documents that are not part of the record.  In fact, many arbitrators tell the parties that if an exhibit is in the record, but hasn’t been discussed with a witness, you shouldn’t expect them to consider it.

But if you are worried about having exhibits available to the arbitrator that aren’t in the record, the arbitrator will certainly let you remove them from the notebooks.  You will have to keep track of what exhibits are in the record and agree with opposing counsel on that.  If you provided pdfs of exhibits, you’ll have to ask the arbitrator to delete the old set and substitute a new set you’ll provide with only the exhibits of record.

Next upPresenting testimony.

Arbitrating the Patent Case Part XVI: Presenting the Evidence

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We have previously had a look at many aspects of arbitrating patent cases, beginning with the type of cases likely to be arbitrated, arbitration clauses, and the arbitration process up to the hearing.  We then began looking at the hearing itself, beginning with sequestration issues that can arise and, finally opening statements.  We have now arrived at the beginning of evidence and how most effectively to begin.

There is no one way to start, of course.  But the standard for admissibility for evidence in an arbitration presents some possibilities for efficiently presenting each party’s case that are worth exploring.  Let me give you a couple of examples I have seen that have worked well.

A first approach, and one that is very common, is having the most involved or responsible representative of a party narrate most of the facts involved, often in chronological order.  This is more likely to be effective in an arbitration than in court because of the standard for admissibility.  The standard set forth in AAA Commercial rules is, for example:

(a) The parties may offer such evidence as is relevant and material to the dispute and shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute. Conformity to legal rules of evidence shall not be necessary.  .  .

Because the real key to admissibility is relevance and materiality, it is possible for one witness to “tell the story” of a party by both relating personal experience and relying on business documents that help to tell the story. This is particularly useful because many arbitration issues turn on contracts and written documents.  Thus, a knowledgeable witness can introduce the key documents and much of the evidence in the case in a logical order.  This may be more difficult to do in a court where there are strict standards for laying foundation, hearsay problems with documents and related technical evidentiary matters to address. Many of those are obviated in an arbitration where, in the words of AAA Rule 34 “[c]onformity to legal rules of evidence shall not be necessary.”

A note of caution is in order here.  Just because the rules of evidence don’t apply, doesn’t mean that anything goes.  First, again in the words of Rule 34, “[t]he arbitrator shall determine the admissibility, relevance, and materiality of the evidence offered and may exclude evidence deemed by the arbitrator to be cumulative or irrelevant.”  So taking things too far and having a witness introduce a document that he or she knows nothing about and isn’t part of what one would expect to be in a company’s normal business records, may not be seen by the arbitrator as useful or relevant.  Have in mind that it should be clear that the witness, the testimony and documents introduced have enough in common that it makes sense the witness would be offering the testimony and evidence to provide a genuine understanding of the issues.  After all, getting a document or testimony into “the record” only means it is in there.  It doesn’t mean anybody will be persuaded by it or believe it.

Still, you likely can get into evidence documents and evidence that may not have gone in under technical legal rules with your first witness, but that are helpful to understanding the important events in the case in a logical order.   But for contested matters at the heart of the dispute, keep in mind you should be prepared to present evidence from the witness who wrote the document or observed the events described in it to provide first- hand information necessary for the arbitrator to determine the truth of the matter.

Another effective way I have seen of presenting evidence at the outset to outline the case was use of a technical expert.  The key to the case was the expert’s opinion, which was based on most of the evidence in the case, including all the key documents.  Thus, as the first witness, the expert basically gave each of his opinions on liability and backed it up with the key evidence on which he relied.  This was not a patent case, but was a fairly complex dispute over whether a software system met the specifications and representations about its functionality.  But one can imagine a similar approach to whether, for example, license fees are owed for certain products under the terms of a license agreement and underlying patent or the like.

When representing a respondent, a similar approach is available, using an involved and responsible witness or perhaps a technical expert.  While a fair amount of groundwork for the respondent’s position will likely already have been presented on cross examination, a coherent overview of the most important defense points can be made through a single witness.  And, of course, the respondent will have the benefit of knowing what points the claimant has emphasized in their case and be able to outline the key evidence in response to each point.  Again, contested matters will need to be addressed by other witnesses more directly involved, but providing a well-organized overview of the defense through a first witness can be quite effective.

Of course, the above approach won’t necessarily work for every case.  There may not be one witness who was really involved enough with the key facts and circumstances to provide a useful overview.  It may be that one event or issue is so important to the case that you would want to lead with your best witness on the point.  Or it may be that the subject matter of the case best lends itself to a few witnesses that have knowledge in one or two of each of the key matters in the case.

But however you end up doing things, you will want to pay attention to the most effective and efficient way to provide an understanding of the key issues and evidence at the outset.  In the end, the arbitrator will likely be able to piece together the case from evidence you present during the course of the proceeding.  Yet, finding ways to get the key information and issues out at the outset is worth the effort.

Put another way, it is difficult to rule for you if your position is difficult to understand.  So anything you can do to clarify your position at the outset should be considered.

Up next:  Practical considerations regarding evidence.

Arbitrating the Patent Case Part XV: Opening Statements

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Earlier articles in this series explored various aspects of arbitrating patent cases, beginning with the type of cases likely to be arbitrated, arbitration clauses, and the arbitration process up to the hearing.  We then began looking at the hearing itself, beginning with sequestration issues that can arise and suggested an approach to avoid problems with sequestration.

We now arrive at the beginning of the substance of the hearing:  opening statements.  Should you make an opening statement?  If so, of what sort?

Should you open?  

It is not unusual to waive openings at the arbitration hearing.  After all, you are trying to be efficient and make good use of time.   In a patent arbitration, the parties have almost certainly filed detailed pre-hearing briefs.   You may have already done a Markman hearing and gotten a claim construction decision.  So why would you spend the time and energy preparing and presenting an opening?  Why not just get on with the evidence?

Skipping the opening may be appropriate in some arbitrations, but I would suggest that you be very careful in foregoing this chance in a patent arbitration.  Like anyone else, arbitrators appreciate someone who can clarify the dispute and define exactly what issues they are being asked to decide.  An opening gives the advocate a chance to do that.  First impressions count with everyone, and this is time that can be used to make a good one.

Because arbitrators are professional decision makers, trained and skilled in carefully analyzing facts and law and reaching the right decision, first impressions may not be as important.  But why waste an opportunity to make it clear that you have mastered the facts and law and can efficiently outline what you will be proving?

And, of course, there is no better way to prepare for the hearing than figuring out just how you will explain your case in a succinct way.  It forces you to deal with all the key issues and facts in the case.

What kind of opening?   In constructing your opening, you will want to keep in mind your audience and purpose.  In a patent case, your arbitrator will normally be a lawyer very familiar with patent law and patent issues.  This means you can explain the case with a fair amount of sophistication.  You don’t need to explain what a patent is, how it is like a legal description that provides the boundaries of the intellectual property much like the boundaries of real property and all the things you would normally tell a jury or judge new to patent matters.

Instead, think like an arbitrator. What would you want to know about the case that you are being asked to decide?  Thinking that way will likely lead you to (1) explain what exactly needs to be decided, (2) identify the key evidence you will present so that those decisions should be in your client’s favor, and (3) explain why those decision are fair.  Let me elaborate on this a little.

Issues to be decided

Although the briefs will certainly lay them out, how you describe the real issues for decision is critical.  The emphasis that you can give the key issues in person is different than you can do in your brief.  That’s why we have hearings instead of just deciding everything based on written submissions.  When you are done with your opening, the arbitrator or panel should have a very good idea of what issues you are expecting will be decided.  They probably will have them numbered in their notes.

The key evidence

You will also want to emphasize the key evidence that will support a decision in your favor.  All evidence at the hearing tends to come in as if it is all equally important, one question and answer at a time.  But, of course, some evidence is the key to a decision once the preliminaries are established while the rest is just background.  You want to allow the decision maker to easily fit what is being presented at the hearing into the framework you have presented.  Thus, you want arbitrators to be able to say to themselves, “Yes, I remember, this is the evidence that I was told at the beginning would be one of the keys to deciding the case.”

If there is key evidence you know your opponent will raise, you will likely want to begin to deal with it.  If they are going to say your client’s patent is obvious over two prior art references, you’ll want to explain what is missing or that your expert will explain why no one skilled in the art would combine them except with the benefit of hindsight, or whatever your position will be.  You will want to make it clear you have not only identified the evidence that will allow you to win, but have thoughtfully considered the opposing points of view and will deal with them.

A fair result

You don’t want to ignore the justice of the result you are asking for. Arbitrators are not robots applying some sort of legal algorithm to reach a mandated result.  To be sure, the law must be carefully considered and fact-finding must be carefully done.  But arbitrators, like anyone else, want to arrive at a fair result.  To be sure, that result is informed — and often dictated in large part — by the law and careful analysis of facts.  In the end, however, every decision maker is hoping to arrive at a just result.  Give them the information and perspective that will help them do that.

Keep it brief

This is not to suggest that your opening will do all these things in great detail and last for hours.   In most cases, you would like to open in about half an hour or less if you can.  Shorter and memorable is better.

Thus, a framework should be just that: something to give the arbitrators a place to “hang” the evidence you are presenting.  You will not describe in detail each important document and each important piece of evidence.  You don’t have time. But you can emphasize, for example, that Exhibit 27 is the letter sent on May 13, 2013 by respondent’s chief engineer to claimant admits that the respondent’s device does in fact include the element of claim 2 of the patent now under consideration, despite what they say today.  Or whatever it may be.

Generally, infringement disputes get down to one or two elements that likely cut across a number of claims.  Organize your explanation in a way that makes it easy to follow.  If you are defending, you will want to, for example, explain the “dataflow”  (mentioned in a hypothetical in our last article) limitation in independent claims 1, 5 and 13 of the software patent at issue rather than have a listing of claims and an explanation of the various missing elements of each.  Your framework should be efficient.

I can’t tell you here what the fairness and justice attributes of your case will be, but you must have some.  No one brings a case or decides to defend it without some underlying sense that the opponent has done or is asking for is unfair.  It may be as simple as breaking a promise to pay license payments.   Or it may be much more complex, arising out of the parties’ relationship or other matters.  It all will depend on your case.  You don’t need to dwell on fairness, but don’t ignore it.  Decisions on close issues can often turn on simple fairness.

Of course, in a patent matter, fairness is all viewed through the lens of the specific application of patent rights and principles, all of which will be well understood by your decision maker, the arbitrator.

Next up.  The hearing continues.