Arbitrating the Patent Case Part XIII: The hearing

We have addressed the types of patent cases most likely to be arbitrated, formulation of arbitration clauses,  the federal statutes governing arbitration of patent matter, considerations regarding use of experts in arbitration, and the final pre-hearing schedule regarding pre-hearing exchanges of information as well as witness lists, document lists and briefs.  We then turned to specifics of the hearing schedule including transcripts, and the form of award to request.  We have now arrived at the point in the process when we begin to address the beginning of the hearing itself.

Final pre-hearing.  In many arbitrations, it will be well worth your while to ask for a final pre-hearing conference to iron out the details of the hearing and the arbitrator’s or panel’s approach.  Some arbitrators routinely set such a session, but many don’t.  Most will be happy to hold them if you request them to.

Another approach I have taken lately is to provide the parties with written guidance as to what to expect at the hearing by way of proceedings, approach to evidence and the like.  Below is a generic version of a communication I have used in past arbitrations.  It was developed with input from a couple of panels of experienced arbitrators.  Of course, your arbitrator or panel may look at things differently, so it is worth finding out.  But this will provide you with a checklist of issues to consider.  Here it is:

_________________

Arbitration Guidelines

Dear Counsel:

I am writing to provide some guidance for the upcoming hearing.  Please bear the following in mind:

We will start the first day at 9 am. We will finish by 5 pm. In subsequent days, if it appears we will need to work longer hours to finish on time, we will.

• We are set to finish on Friday, May 25^th. But we have all set aside Saturday as a “spillover day” if necessary to finish. I will check in with you daily as to our progress toward completing the hearing.
• Each party will be allowed to make a brief opening and closing if they would like. Please plan not to exceed twenty minutes or so for each side.   It isn’t necessary that you do an opening, particularly if the pre-hearing briefs lay the issues out well.
• All testimony will be under oath. Witnesses will be asked to “swear or affirm” the testimony they are about to give is the truth, the whole truth and nothing but the truth. If witnesses would rather not take an oath, they can opt to have their testimony taken “under penalty of perjury.” Please let me know if any of your witnesses would rather have the testimony “taken under penalty” rather than swearing an oath.
• We will proceed by question and answer. I normally will allow some brief redirect to clarify matters from cross. Re-cross is appropriate only if necessary to refine or explain critical points. There is no particular advantage in having the last word. I take notes.
• The rules of evidence do not apply. The standard of what is allowed into evidence is set forth in Rule 34 of the Commercial Rules of the American Arbitration Association:

(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. All evidence shall be taken in the presence of all of the arbitrators and all of the parties, except where any of the parties is absent, in default or has waived the right to be present.

(b) The 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.

(c) The arbitrator shall take into account applicable principles of legal privilege, such as those involving the confidentiality of communications between a lawyer and client.

• While not controlling, the rules of evidence often provide some guidance as to admissibility and, importantly, to persuasiveness of certain evidence. For example, rank hearsay subject to no exceptions is not likely to be very valuable in sorting out the controversy. A first-hand account is likely to be more useful. If you want to object based on an evidentiary ground to remind the arbitrator of the weakness of the evidence, you may do so.   But such objections cannot be speaking objections. Stick with basic objections, e.g. lack of foundation, hearsay, irrelevant, etc. Admissibility will still be judged under the arbitration standard for admissibility set forth in Rule 34. I may let you know if a path of inquiry is not helpful and ask you to move on.
• Leading questions, except as to preliminary matters and on cross, are disfavored. Arbitrators would like to know what the witness knows himself or herself and not what the lawyer would like the witness to agree to.
• If an exhibit is referred to during an examination without objection, it is considered to be ‘in the record.” If you object to use of an exhibit, please state your objection when the exhibit is first mentioned. This keeps things moving without the “offer/receipt” ritual. Having an exhibit admitted means only that it is part of the record. It will only be given the weight, if any, deemed appropriate even if it is admitted. Please keep track of which exhibits have and have not been used. If the parties want to do so, exhibits not used can be taken out of the exhibit books at the close of proceedings. The lawyers will need to take care of that.
• You should not assume I will look at any exhibit, even if admitted into evidence, if it has not been used in the examination of a witness or counsel has not expressly stated why I should consider it.
• Your exhibits should be in three-ring binders, tabbed with the exhibit number. Please don’t use notebooks for your exhibits of over 3” or so. If you have a large number of exhibits, it is better to have more notebooks of a manageable size than large, unwieldy notebooks. Counsel should work to eliminate duplicates of exhibits. It wastes time if the same exhibit has two different numbers depending on which side is referring to it. If the exhibits are voluminous, it would be most helpful for you to email them to me in .pdf form so I can retrieve them on my iPad, too.
• Please provide me with copies of any particularly important cases or legal authorities you rely on, preferably in alphabetical order by the last name of the first-named party in the caption. I am fine if you just email them to me in .pdf form.
• One of the benefits of arbitration is that it is fairly informal. This leads to a spirit of cooperation that will keep things moving and keep things inexpensive. Also, because we are in a little more informal setting than a courtroom, it is a good idea to “turn down the volume” a little bit in the presentations. You may be reminded of that occasionally. Please don’t take offense. It often takes lawyers who are used to appearing in court some time to get used to the more informal setting.
• On the other hand, we won’t be taking depositions either; you are presenting evidence critical to determining the outcome. There is sometimes a tendency because of the informality to go more into probing deposition mode than evidence presentation. You will do well to stick with presentation mode.
• Another aspect to the informality of the proceedings is there is a tendency to want to chat between breaks. We have to be careful, though. I will not speak with counsel or witnesses about the merits of the case outside the hearing and tend to avoid talking to witnesses and lawyers at all (except for small talk about the weather) when we aren’t all together. Arbitrators would like to be social, but it’s more important that we be impartial, so please don’t take offense if I avoid much conversation. Please advise your witnesses that I’m not being unfriendly, but just trying to be impartial.
• I may ask questions of the witnesses. This is normal. Some witnesses, unfortunately, have a tendency to try to determine what the arbitrator is getting at and answer so as to “agree” with the arbitrator. Please tell witnesses to answer my questions like any other questions. I don’t want agreement; I just want information. If you think I’ve gotten a wrong impression based on questions asked, you can ask to pose a few more clarifying questions to the witness.
• Sometimes people don’t know what to call arbitrators. Please call me “Mr. Allgeyer” or “Mr. Arbitrator.”  There is no need to call an arbitrator “your honor.” Don’t worry too much if you don’t get it right all the time. I’ll use Mr. or Ms. Lawyers’ last names during the proceedings, unless it fits to become more informal.
• It is fine to have beverages during the hearing.
• We will generally take a break every 1 ½ hours or so. If you or a witness need a break, let me know. There will be no breaks while a line of questioning is pending.
• We likely will discuss how to handle closing arguments and post-arbitration briefing, if any, during the course of the proceedings.
• Please refer to AAA Commercial Rule 28 regarding use of stenographer. If either party uses real-time reporting, please arrange to provide that capability to me as well.

I hope these guidelines will help answer some basic questions to make our hearing as comfortable and productive as it can be.   Please feel free to seek any clarification or address any other questions you may have during any final pre-hearing conference or when we are together at the hearing.

Arbitrating the Patent Case Part XI: the Prehearing Schedule

In this series or articles, we first focused on the patent cases most likely to be arbitrated, formulation of arbitration clauses, and some matters to be addressed during the prehearing conference.  We then took a slight diversion to examine federal statutes governing arbitration of patent matters.  After looking at considerations regarding use of experts in arbitration, we are now ready to consider how all these pretrial matters fit into the final schedule.

As earlier noted, arbitrators factor in the amount of discovery and other prehearing matters that must be accomplished before finalizing the schedule.  They then tend to set the final hearing date and work back from there on prehearing deadlines.

Planning for pre-hearing procedures.  This can become complex in a patent arbitration, but if well planned, can provide some real benefits.  Let’s assume, for example that the parties are convinced – and convince the arbitrator – that a separate Markman hearing to construe the patent claims at issue will likely resolve the key issues in the case.  Time will need to be built into the schedule to allow the parties to exchange the information necessary to inform the Markman presentations.  And here is where the flexibility of arbitration can potentially save time and money.  If, in fact, if the claim construction has some possibility of resolving much of the case, it may well be the best course of action to assure discovery is tailored only to those facts that bear on claim construction and discovery of everything else, including sales and related information, be done later.  It may not need to be done at all.  The Commercial Arbitration Rules of the AAA, in fact, encourage consideration of “whether there are any threshold or dispositive issues that can efficiently be decided without considering the entire case,” including “bifurcation of the proceeding.”  Rule 21 and Checklist P-2.

But be careful.  One of the problems with patent litigation in court is the mandatory phases of the case – infringement contentions, invalidity contentions, claim construction contentions, claim construction statements, claim construction hearing, etc. –  under local patent rules, all of which can add to delay and expense.  As earlier noted, some cases need to proceed with attention to all these matters, but many do not.  As earlier noted, the attractive thing about arbitrating patent disputes is fitting the process to the problem and avoiding unnecessary activities.  Thus, if there is only a minimal chance that separate Markman hearings – or any other separate proceeding, including a dispositive motion – will actually save time and money, it isn’t a good idea.

That said, I think arbitrators should always be on the lookout, with the parties’ help, for procedures that will help focus the arbitration on threshold issues and otherwise save time and money.  But one also has to remember that, from an advocate’s point of view, it is attractive to focus first on the strengths of their case or the opposing side’s weaknesses, which may or may not actually save time and may just prolong the arbitration.  If a party sincerely thinks that focusing on an issue can genuinely structure the case in a way that could avoid some expense and that is fair to both sides, it should be prepared to explain why.  Better yet, it may be able to convince the opposing party it will save everyone time and money to have key issues determined first.

Information exchange.  Of course, the schedule also has to account for discovery, known in the language of AAA rules as “exchange and production of information.”  It is worth remembering that the arbitrator is charged with managing “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.”  AAA Commercial Rule 22.

You will need to build in some time for the exchange and also for resolving any disagreements.  Discovery disagreements normally should not need to be the subject of court-style motions.  Instead, a brief letter from each side explaining the need for the information or problems with providing it should suffice. The arbitrator can then ask any questions during a phone conference and quickly get the parties on track with a prompt ruling.  In routine disputes a conference call with counsel and the arbitrator may be all that is necessary.

To avoid expensive disputes over electronic discovery, guidelines should be set in advance to limit where the parties must search for electronic documents and the format in which they are to be produced.  Here the arbitrator is charged with “balancing the need for production of electronically stored documents relevant and material to the outcome of disputed issues against the cost of locating and producing them.”  Rule 22.  Give some thought to this in advance to help the arbitrator help you save costs and avoid frustration.  An earlier article in this series provided some further guidance on that issue.

I recall the time counsel for each side produced electronic documents in the format they preferred, which was different than the other side preferred.   After doing so, each asked me to order the other to use the format they preferred.  Each was sincere in their belief and could give good reasons why their preferred format made sense.  But the result was a complication that cost money.  Discussing the issue before producing documents would have saved a motion, expense, and aggravation.

Subpoenas.  Remember, as noted in an earlier article, if you plan to subpoena witnesses or documents you will need to start analyzing how to do that and allow for possible delays in that process.  If you foresee difficulties, it is best to address them at the prehearing scheduling conference.

Inspections.  It may be that your case involves a process or device that requires a visit by the arbitrator to allow you to explain it and allow the arbitrator to understand it.  It may be that drawings, photos and videos will be sufficient, but often there is no substitute for observing the real thing.  If that is true in your case, you will want to account for that at the scheduling session and address the logistics as is necessary.  If travel is involved, this can be expensive, so think through this carefully.  Field trips are fun, but like anything else in arbitration, you must balance the cost and benefit.

Expert reports.  If the case will involve experts, which as noted in the last article in this series it often will, time needs to be built in for exchange of reports and possible rebuttal reports.  Parties may want to take depositions of experts, but be cautious about that.  If the reports include sufficient information, expert depositions may be unnecessary.  This is particularly likely to be true if the expert reports serve as the direct testimony of the expert.  Foregoing expert depositions in favor of good expert reports can present a real cost savings and not really any disadvantage in being prepared to cross examine the opposing expert.

Prehearing filings.  Once you have accounted for the time necessary to get ready for the arbitration, you will need to set deadlines for providing exhibit lists, witness lists, and prehearing briefing.  You will have to work out whether these will be phased in, with the claimant going first with response by the respondent, or whether the exchange will be simultaneous.  You will also want to think about providing an “escape valve” if one party is genuinely surprised by a document or witness and believes it needs to call another witness or present another document to fully air the issue.  This could be in the form of an additional disclosure of witnesses or documents if necessary.  The point, from the arbitrator’s point of view, is to avoid surprises and provide everyone a fair chance to present a case or defense.

Planning for the hearing.  Counsel will be asked for their estimate of how long the hearing will take.  Here are a few guidelines for that.  Things tend to go twice as fast in arbitration as in most courtrooms.  Breaks tend to be fewer and shorter, and there is generally much less need for preliminaries.  The arbitrator is already quite focused on your case and, having read your briefs and dealt with other aspects of the case, is likely to be familiar with the background.  Generally, the exhibits will go in faster and there is no need for sidebars and complicated evidentiary arguments, although at least some issues in that regard are bound to arise.  There may or may not need to be closings.  But when estimating your time for the case, factor in time for your opponent to cross-examine your witnesses and present witnesses.

It often makes sense to build in a “spillover day” into the schedule, so that everyone has their schedule clear if it becomes some extra time is needed to complete the hearing.  Trying to resynchronize schedules of counsel, witnesses and an arbitrator or panel to finish testimony of a witness or two can delay the conclusion of the arbitration by months.

With the above in mind, as well as the particulars of your case, you should be equipped to do your part to help realize arbitration’s promise of providing a fair opportunity to be heard while minimizing time and expense.

Next up.  The hearing schedule.