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.