How to survive multinational patent litigation

Like international travel, multinational litigation can be long, exhausting and bad for your health. Also like international travel, it's advisable to start your journey with some basic safety instructions. To coincide with the publication of our annual patent survey, Managing IP asked lawyers at some of the world's top patent firms for their advice on handling international patent disputes. As all of them stressed, you have to start with a clear strategy, leadership and coordination.

Multinational litigation is becoming more common in patent disputes for a number of reasons. Business (and IP) is of course more global, with patent owners and manufacturers prominent in different parts of the world. As Mark Selwyn of WilmerHale in Palo Alto says: "So many economies are important now, and companies are thinking about IP in a global way." Perhaps the supreme example of this was the Apple-Samsung litigation, which saw cases in (at least) the US, UK, Germany, Netherlands, Korea and Japan. Last August, the two companies said they had settled the litigation everywhere outside of the US, where cases are still pending.

But it is not just about the world becoming flatter. There are also strategic reasons to fight a war on several fronts. Different laws and procedures, remedies and personalities might favour plaintiffs or defendants in different jurisdictions. Some courts are preferable if you want to hurry the litigation along; others are better if you want to slow it down. And don't underestimate the significance of lawyers, and even judges, seeking to attract litigation to their own country to raise their profile or simply boost business.  

Who's in charge? It might seem a simple question but where there are multiple parties, proceedings in different countries, and several local counsel (bearing in mind litigators are not known for their lack of ego) it's important to establish this at the beginning. The lead must come from the client, but often one outside counsel will be required to play a coordinating role. Jim Pooley, who has worked at Morrison & Foerster and WIPO and now has his own law firm in California, says "clear management and strategy" can be the difference between success and failure: "People have parochial perspectives and tend to see the world in the context of the law and practice they are familiar with."

It's also vital that everyone understands from the beginning what is the client's overall aim, including if necessary what the Board and CEO think. And you need to be clear that the person instructing you is properly authorised. "In one case early in my career, the UK managing director instructed me to do one thing, and then the European MD said something totally different, and it was quite tricky to unravel," says David Barron, a partner of Wragge Lawrence Graham & Co in the UK.

"People get worn down, markets change or strategies change" - Mike McKeon

Once litigation is underway, things can happen quickly so regular communication is key. Says Barron: "It's easy to slip up by doing the right thing at the wrong time, or the right thing in one country that is the wrong thing in another." That may require weekly conference calls where everyone involved can provide updates on the latest developments in their jurisdictions. "Monday is normally a good day for these; lots of developments in court seem to happen on Fridays," adds Barron. Ted Chwu of Bird & Bird in Hong Kong talks about acting as "a bridge" between local counsel in different countries, and says the importance of meeting face-to-face and understanding local cultures cannot be overestimated: "You need to invest time in building up trust and unblocking communications channels."

Lawyers who spoke to Managing IP all stressed the need to ensure that arguments are consistent in different jurisdictions, and that in particular avenues are not pursued in one country that could be damaging in another. That might mean you have a slightly weaker case than if your country was the only one involved, as Selwyn of WilmerHale says: "I might have four arguments, but one might be inconsistent with the position in another country, so I will have to drop it." He adds that his "three pillars" for successful multinational litigation are: having achievable goals, constant communication, and the right team organised.

It might also mean having a core document repository for essential files, or using tools such as Dropbox or secure intranet sites, instant messaging apps such as Microsoft Lync or desktop-sharing. Technology has made such coordination much easier, but it hasn't done away with problems resulting from different time zones or languages. "Being able to get translations of relevant documents quickly is vital," says Russell Levine, a partner of Kirkland & Ellis in Chicago. "If you have to wait several days or a week, that could be too long." For example, he says, he recently had to take part in a videoconference with an expert witness in a multinational case; the witness was in Germany, and the videoconference took place at 2am Chicago time.

"You have to be prepared to send and receive large numbers of documents," says Stephen Bang of Kim & Chang in Seoul. "At our firm we designate someone to handle incoming tasks and emails and manage the distribution lists for each case. If you need to know, even at 3am, whether anyone has briefed this issue worldwide, you should be able to get an answer to the question." A continuing problem in many countries is the lack of transparency regarding judgments and court documents: few countrie have an equivalent to the PACER in the US, though the UK is expected to improve online access soon, and Korea has recently started to publish redacted decisions, which lawyers welcome

"It's easy to slip up by doing the right thing at the wrong time" - David Barron

Once your strategy is in place, you need to decide on which fronts you want to do battle. You might want to pursue proceedings in national courts, special forums such as the US International Trade Commission, patent offices or other tribunals such as competition authorities. "We see more cross-border litigation, where there are two proceedings, not necessarily over the same patent, but maybe involving related claims such as trade secrets, unfair competition or antimonopoly," says Skip Fisher of Hogan Lovells in Shanghai. Whichever avenue is relevant, this is no time to hold back. "The goal is to hit them hard, make it painful and draw blood," says Mike McKeon of Fish & Richardson in Washington DC.

The next challenge is to coordinate "the substance and timing" of the litigation, says Marcus Grosch of Quinn Emanuel in Munich. "You should ask yourself: in which jurisdiction am I going to get the best leverage at the earliest time?" Where you take action will depend on what your goals are. If you want to win an injunction to put pressure on the defendant, Germany might be your first choice (as frequently happened in the smartphone wars). If big damages are more important, the US might be preferred. If you're a defendant, you might like the scrutiny applied in the UK courts, and attempt to bring an early action there. Whatever you're seeking, you might benefit from home advantage: the familiarity of proceedings and language and possible sympathy from judge or jury. On the other hand, in some cases, it might be in both parties' interest to focus on one jurisdiction. Whatever the circumstances, it means lawyers can no longer simply rely on being familiar with their own country, says Grosch: "You need to be on top of current court practice in every relevant jurisdiction."

A new factor that has to be considered are the procedures introduced by the US America Invents Act, which give third parties new opportunities to attack patent rights: they have been used enthusiastically and often successfully. "IPR proceedings are an integral part of the strategy in every case now," says McKeon. "Invariably one will be filed, and that also raises timing issues for the overall litigation." Levine agrees, saying that he sees greater use of IPR proceedings: "The foreign litigation may proceed to trial before the IPR is concluded. It necessitates a very high degree of coordination among the lawyers handling the various lawsuits."

One question you have to consider early on is where and how you will get the best evidence for your case. "In Chinese litigation, we lack a mechanism to get evidence and so we will consider whether to initiate action elsewhere," says Fisher. He points to a recent case where evidence from the US was used to support a damages claim. The US is the champion for evidence collection, thanks to its extensive discovery rules, and sometimes you may want to slow litigation elsewhere to see what emerges in US proceedings. But discovery is often subject to strict protective orders (particularly in the ITC) meaning US lawyers cannot share these riches. If necessary, however, you might be able to get round this, or at least negotiate a compromise with the other side. "In one case we persuaded the US judge to modify a protective order so that the companies could use information from the US in Korean litigation," says Ducksoon Chang of Kim & Chang (his client gave certain undertakings in return, and the judge understood the need for economy in litigation). European lawyers point to the US's Section 1782, which enables parties in foreign cases to obtain information from US court proceedings. "Section 1782 has been widely used in Germany in the past three to five years," says Grosch.

"I might have four arguments, but one might be inconsistent with the position in another country, so I will have to drop it" - Mark Selwyn

You also need to think carefully about expert witnesses, and in particular where they can be best used. Someone who has given expert testimony in the US, for example, may not be able to be used in the UK courts, where rules are stricter. You also need to consider how the language, experience and personality of the expert will play: an extrovert who can make witticisms in English might go down well with a US jury, but not in front of a judge in Europe. Selwyn says that choosing expert witnesses is often the most important decision to be made, and should be approached "in a global way". But he adds that differences between jurisdictions can be overplayed: "I look for a good teacher, regardless of the audience."

Finally, lawyers say that parties are looking at ever more exotic locations to bring actions, whether to gain leverage, take advantage of unusual systems or simply because judges are trying to attract business. This means you need to be familiar with rules and procedures in these jurisdictions. Ted Chwu of Bird & Bird in Hong Kong predicts more litigation in countries in south-east Asia, which has a growing market and is also a manufacturing centre, but warns that procedures can be unfamiliar: "For example, in Malaysia, there is no secondary infringement so it's important to draft agreements recognising that."

However well you plan, litigation is inherently unpredictable, and an unexpected ruling in one court can throw your entire strategy out. This is particularly the case where claim construction, prior art and the nature of the accused product are concerned. Prepare for the worst by reviewing patent claims and prosecution history, says Bang of Kim & Chang: "At the very beginning of the litigation if you're going to assert a patent, ask: is it sufficiently strong in every jurisdiction?" For good reasons, claims will be slightly different in each country, and it's important to be aware of the differences and why they are (or are not) important. Moreover, if the patent-granting process is still underway in certain countries, or if there are post-grant oppositions, you need to monitor them. Barron of Wragge Lawrence Graham adds that problems in multinational litigation can often arise where there are parallel opposition proceedings, in particular at the EPO, and "a claim amendment is proposed and it does not mirror the claim set put before the court".

Courts vary greatly in the extent to which they will take account of the patent prosecution history, with notable divergence for example between the Netherlands (where it is permitted), Germany (where it isn't) and the UK (where it isn't really, though it might be in some cases). Given the uncertainty around the world, Grosch says that litigators have to at least review the original patent application and changes made when building their case: "There is a definite tendency to look at more information and documents than 20 years ago." Chang in Korea adds: "The patent prosecution history may not be directly relevant to the Korean litigation, but certain aspects may have at least a psychological impact on Korean judges." Examining the alleged infringing product in different jurisdictions is also vital. "Look at how they describe the accused product, its functionality and how it operates," says Levine.

"We would certainly raise it, especially if the patent has been invalidated" - Skip Fisher

The invalidation or modification of a patent in one jurisdiction may not be directly relevant in another, but lawyers report that judges are increasingly likely to take note of comparable rulings, and you can be sure your opponents will make the most of it. Fisher of Hogan Lovells says a foreign decision would have "some but little impact" on courts in China, though he adds: "We as lawyers would certainly raise it, especially if the patent has been invalidated." Grosch in Germany adds that while courts like to "make up their own mind", they do notice inconsistencies in cases: "There is a tendency to be more inclined to take into account foreign opinions on the same patent and patent family. We see that increasing."

This has become common in European cases: judges routinely take account of judgments involving the same European patent and in Germany the Federal Supreme Court has ordered them to do so. But it now goes further. In the Servier v Apotex litigation, the UK Supreme Court last year addressed a situation where Apotex was importing generic drugs for sale in the UK (where the relevant patent was found invalid) from Canada (where the equivalent patent was held valid and infringed). In its judgment regarding Myriad's patent last year, Australia's Full Federal Court spent some time explaining why it disagreed with the US Supreme Court, and in the UK the courts have gone as far as granting declarations of non-infringement in relation to France, Italy and Spain (in the Actavis v Eli Lilly litigation). Chang of Kim & Chang says that Korean courts will at least look at rulings in other countries, particularly those that have similar systems such as Japan and Germany, though their impact might be limited. In one case, he says, the parties were arguing in court over German precedents. "That's all well," said the judge. "But this is Korea."

This trend has been particularly notable in the multinational smartphone cases, which often involve standard-essential patents. The most extreme example arose in the litigation between Microsoft and Motorola, where the latter won an injunction in Germany in 2012 but a US district court (subsequently endorsed by the Ninth Circuit) granted Microsoft an anti-suit injunction, preventing the German decision from being enforced.

"Section 1782 has been widely used in Germany in the past three to five years" - Marcus Grosch

Of course, you hope things will go smoothly in litigation. But it is still prudent to prepare in case they don't. "You need to plan for various exits," says Pooley. In particular, he says you should ask: "What happens if things don't go well? How easily can I stop something here to focus elsewhere?" Throughout the litigation, you will be regularly reviewing progress in different jurisdictions and considering how you can enhance your overall position, and there are natural milestones in cases that provide an opportunity to reflect and change course.

In extreme cases, you may want to abandon litigation in one country so you can focus elsewhere. However, this can be perceived by the other side as a sign of weakness and McKeon of Fish & Richardson says it is "very rare" in his experience for cases to settle jurisdiction-by-jurisdiction. More common, he says, is that "people get worn down, markets change or strategies change" or clients simply take different views in the light of information that's emerged during proceedings. Most clients, says Grosch of Quinn Emanuel, want "a global settlement or no settlement". That can be provoked though by a single decision in one jurisdiction that gives one party significant leverage - typically though not always an injunction in a major market or manufacturing centre.

Wherever your litigation travels take you, have a good flight and a smooth touchdown. We hope to see you on board again soon!

 

Clemens Heusch, head of European litigation for Nokia

Market size, competitor activity, the speed of the courts and the quality of the judgments are among the most important factors that influence where to bring patent litigation, according to Clemens Heusch, head of European litigation for Nokia. Asked what characterises a "quality judgment", Heusch talks about judges who are "brave" and willing to risk public criticism or reversal by higher courts. "It's always easier to dismiss cases than to issue injunctions. It's like a basket of flowers – you just pick one flower and everything else is left in the basket," he says. "If you want to issue an injunction, you have to answer many questions: is the patent valid? Is it infringed? Are there any defences, for example under competition law? That means judgments are usually longer."

Where there are parallel proceedings in different countries, Heusch says his preference is to have "one team taking the lead" and make a first draft filing, which lawyers in other jurisdictions can then use as a template. "But it's important to keep everyone in the loop and make sure information is exchanged to avoid good arguments backfiring," he adds.

In European proceedings, he adds, it often helps for lawyers in Germany to be in the vanguard, as that is where infringement proceedings are most likely to be heard first.

At Nokia, the in-house team itself typically takes charge of coordinating actions in different countries. "I want to be CC'd on emails they exchange – even if I only skim read them," says Heusch. This coordination extends to short weekly or monthly conference calls to discuss general issues, though for detailed discussions face-to-face meetings are preferred.

It also helps to manage costs. "We know what litigation costs, and we want our lawyers to work within agreed budgets," says Heusch. "We don't like getting surprise invoices." In particular, he will pay attention to the composition of teams, to see that they are appropriate for the amount and nature of work involved: "We might say: we need two partners, one senior associate and a couple of juniors to work on the first draft, for example." The company also recognises that different lawyers will have different hourly rates – so the headline rate charged becomes less important than the total cost. "People work at different speeds, and everyone in our team has private practice experience so we understand that," he says.

Given the industry it's in, Nokia is no stranger to complex patent litigation, having had some epic court battles with companies such as InterDigital, IPCom and Apple. Nevertheless, Heusch says there are always new challenges. In particular, he points to the emergence of new jurisdictions including big European markets such as Poland, Russia and Spain in Europe as well as medium-sized markets in Asia, such as Australia, Indonesia and Malaysia.

This partly reflects the fact that courts in some countries are actively seeking to attract business. But it also shows how plaintiffs are looking for new battlegrounds to put pressure on defendants, and second-tier markets often offer cost-effective procedures.

But involving more jurisdictions also of course increases costs and the risk of adverse decisions, or simply that the litigation gets out of control. In certain circumstances, then, you have to draw a line on some proceedings to promote a global settlement. That happened in the litigation between Nokia and IPCom in the Italian leg of their pan-European fight over 3G patents, says Heusch: the rival parties agreed to drop proceedings in the country so they could focus on battles elsewhere.

Xiaowu (Emil) Zhang of Huawei

Huawei is one of the most active patent filers in the world, but offensive litigation is not a preferred strategy, says Xiaowu (Emil) Zhang, deputy director of IP litigation. "Patent litigation is our last resort," explains Zhang. "We are not an aggressive company and we prefer to have commercial cooperation and negotiation. Thus, most of our cases involve Huawei as the defendant." The company's in-house IP department has more than 300 employees, and within that department is the IP litigation team with over 20 members responsible for handling all of the company's IP disputes.

Zhang explains that each case is typically managed by a three-person team, led by a case manager and supported by a person on evidence relating to legal matters and another on discovery. Because 90% of Huawei's litigation takes place in the US, having someone focused on discovery is especially important.

For more complex cases, the IP litigation teams can also rely on assistance from other Huawei employees. "One advantage we have is that we have employees all over the world, including in the US and in Europe, so we can get assistance from some of those patent professionals in those jurisdictions," he explains. "Because many of them are locals from those places, they can help us with language as well as legal issues that may arise, even while the IP litigation team is based in Shenzhen."

The case management teams are also responsible for managing deadlines and docketing. Though Huawei has some internal IT systems for managing some documents, a member of the case management team, usually a paralegal, is responsible for keeping track of deadlines and maintaining a spreadsheet. Zhang notes that several members of the IP litigation teams have legal educations or are legally qualified, which helps with juggling and keeping track of these deadlines.

Complex and high-profile cases get more attention. As the deputy director of IP litigation, Zhang regularly meets with the teams managing bigger matters. For the highest profile cases, the management team will get involved to ensure that everyone is aware of the company's goals and overall strategy.

For matters with proceedings in multiple jurisdictions, Zhang says that ideally the same three-person team will manage all the cases in order to ensure that information flows transparently. Tactically, Zhang also stresses the importance of having consistent arguments.

"Coordination is extremely important, even in cases where it's not the exact same patent but many of the same arguments and issues are being raised," he says. "The team has to understand clearly what the arguments will be, and how a position taken in one jurisdiction will affect the proceedings in another. You have to have internal discussions, weighing the pros and cons of possible positions." Huawei has been involved in several high-profile cases spanning multiple jurisdictions, including Huawei v Interdigital and the Unwired Planet cases.

Of course, outside counsel are a key component in most, though not all, patent disputes. Zhang says that an important part of litigation management is to understand why the dispute is occurring and what the goals of the other parties are. For example, he notes that if the plaintiff is an NPE looking for a quick licensing fee, Huawei may handle the entire matter in-house.

When Huawei needs to engage outside counsel, Zhang says that the company values creativity and efficiency in its lawyers, and in particular those who have the ability to explain complex matters clearly and convincingly. The firm has a list of individual lawyers that it has experience with as well as records of the budget and results that the lawyers have had in the past.

By Peter Leung, Hong Kong

Robert Calico, head of IP litigation for ARM

Handling litigation in several countries is becoming a bigger issue on the agenda of Robert Calico, head of IP litigation for microprocessor company ARM. "I do think this will be an issue more in the future," he says. "It seems we are on the verge of having litigation in several countries, and litigation that could be have significant financial penalties associated with it in the next couple of years."

Developments such as the pending implementation of the Unified Patent Court in Europe will mean the issue will affect ARM more directly in the future, he says.

"We are trying to build relationships," he says. "I get to figure out what the process of litigation is in country X when I got a letter that says we are being sued in country X. So we are always trying to reach out to people who practise in that area, who are members of the relevant bar, who are involved in the process of defining the process or who claim to understand what the process will be when it comes to pass. It is making sure, for example, if the UPC becomes a full reality some day and the day after we get sued that I've got somebody I can call and say: 'You need to get on this matter and show up on our behalf as quickly as possible.'"

ARM works with a number of law firms, with Winston & Strawn its main firm for international matters. Calico notes the firm's offices in China and strong London office. He says it is essential to cut down on billable hour costs incurred from the duplication of information being passed from clients to associates to partners.

"One of the things we are able to do pretty well with Winston & Strawn is I know the people working on the matter directly so we don't spend a great deal of time translating it between levels of upper management," he says. "I'm a big believer in finding people who are very capable even if they are not partner and diverting work to them such that we don't have a lot of overhead of people taking information form one group of attorneys and then providing it to me. A lot of times companies will go out and seek the lowest price all the time without building in any kind of relationship and going from firm to firm to firm. A benefit about coming back to the same people is that they have an understanding about the way you like to do things, you get to know them, you get to know what they are good at, and what they are not so good at."

Calico notes, however, that ARM uses a number of firms around the world, as well as a strong in-house team. Being able to find an associate at a law firm who understands what the technology in a particular suit involves is always challenging, he notes.

"ARM has a group of four patent analysts or patent engineers who work for me and they are all 25-plus years engineers in various areas, mostly in CPU technologies or semiconductor fabrication technologies. One of the things we do a lot of in-house is we find a lot of our own prior art, we do a lot of our own analysis with respect to non-infringement, we do a lot of the technical legwork. By having those resources in-house, we do a lot of that ourselves so I'm always confident in the level of the work and that it is correct. Additionally, if an expert or an associate outside the company involved in a matter that is going to be billing me $350/$400 an hour, they can talk to my guys directly and get on top of how the technology works. That really, really speeds the process."

The biggest challenge for Calico when it comes to litigation in multiple countries is making sure that everything the company says is consistent. Statements made about patents litigated in the US can come back to haunt companies in oppositions to the European equivalents of the patents, and vice versa.

"If we said something that was inconsistent with what we said in a US court in Europe that is going to be a big issue," says Calico. "There really isn't any way I know to walk that back. You're always at risk of having your own statements run against you."

By Michael Loney, New York