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

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.

Transcripts.  First, 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 up:  Post hearing briefing and closing arguments.

Arbitrating the Patent Case Part XVI: Presenting the Evidence

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.