How to Dispose of Patent Demands without Licensing, Litigation or Outside Counsel

Posted on December 2, 2015 by Chris Neumeyer

The Wall Street Journal generated controversy last week when it published an article titled, “The Best Way to Fight a Patent Demand May be to Do Nothing.” The author surveyed 223 tech startups and found more than one-fifth resolved patent demands not by fighting or settling, but by “doing nothing.” She explained that patent owners often lack the resources or desire to litigate and suggested “doing nothing” might be a rational, cost-saving response.

Readers pounced, accusing the author of advocating reckless strategy and immoral disregard for the rights of inventors, but apparently most missed the point. Admittedly, the author expressed her point poorly, because she didn’t mean to suggest actually doing nothing. Instead, she explained that “doing nothing” means “looking at the claim, determining a license isn’t needed – and then filing the letter away rather than responding.”

I would go a step further. As former Legal Director at a $7 billion tech manufacturer, I received over 100 licensing demands and disposed of almost all without licensing, litigation or outside counsel, so I agree with the general sentiment. Most licensing demands can be evaluated and disposed of at no cost. However, the evaluation should be far less cursory than the above article suggests and one should almost always respond to the demand. Below is a rough outline of the types of matters that should be considered. Continue reading →

How I Dragged a $5.4 Million Patent Suit out of U.S. District Court and into Taiwan

Posted on November 12, 2015 by Chris Neumeyer

The first time I testified in court in Taiwan, I spoke English and the judge translated simultaneously for the attorneys and clerks. After fifteen years here, I speak enough Chinese to direct taxi drivers, but not enough to discuss complex licensing negotiations. Fortunately, our judge earned her law degree in the U.S., is fluent in English and was kind enough to help out.

The second time was different. The judge gave no indication that he spoke English, so the opposing witness and I each brought an interpreter. My interpreter regularly handles Taiwan legal proceedings and rode the subway twenty minutes to get to the hearing, as did I, while our adversary flew a lawyer, translator and witness from London, with the corresponding costs of airfare, hotel, meals and time.

Of course, that was why we sued them in Taiwan. Well, that and the fact that our adversary would be forced to try the case in Chinese, struggling with jet lag, unfamiliar procedures and potential bias, while my client would be comfortably on home turf, using native language, avoiding the hassles and costs of U.S. litigation. But I suppose I should start at the beginning. Continue reading →

Best Practices for Taking Depositions in Asia

Posted on November 3, 2015 by Chris Neumeyer

Global commerce often leads to litigation and the need to obtain evidence from foreign parties and witnesses. However, in most Asian (and other civil law) countries, discovery is conducted by judges, not attorneys, depositions and other formal discovery procedures do not exist, and attempts by foreign litigants to gather evidence contrary to local laws may be seen as violations of national sovereignty, for which criminal sanctions may be assessed.

Fortunately, lawful methods exist for U.S. litigants to depose parties and non-parties in most countries. Primarily, the Federal Rules of Civil Procedure (“FRCP”) and corresponding state laws authorize the taking of foreign depositions pursuant to (a) treaty or convention, (b) letters of request or letters rogatory, (c) deposition notice, or (d) before a consular officer; and the Hague Convention on Taking of Evidence Abroad authorizes depositions before a consular officer or pursuant to letters rogatory.

However, each of those options has flaws. Singapore and South Korea are parties to the Hague Convention, but Japan, Taiwan, Thailand, Malaysia and the Philippines are not. China is a party to the Convention, but strictly prohibits depositions. The letters rogatory process takes many months and results in not a real deposition, but only the submission of written questions for a judge to convey to the deponent. A deposition notice is useless against a non-party witness who refuses to comply. And taking depositions before a consular officer is troublesome, as reservations must be made long in advance and one cannot bring cell-phones and laptops into embassies or consular offices.

In short, plenty of depositions take place in Asia, but there are myriad legal and practical complications, so it is critical that U.S. counsel plan well in advance, informing the presiding judge of the plans, consulting with foreign counsel, and carefully observing best practices concerning the following matters, to ensure that the process will succeed and testimony will be admissible in court. Continue reading →

Managing Outside Counsel for Best Results and Lowest Cost

Posted on October 28, 2015 by Chris Neumeyer

As Legal Director at a multi-billion dollar tech company, I spent several years retaining and managing outside counsel to assist with global litigation, transactions and other matters, striving to satisfy the seemingly insatiable demands of upper-management. Cost-reduction was our corporate mantra, with every matter closely scrutinized and every fee seen as too high.

While I was fortunate to work with many outstanding attorneys from around the world, I found that counsel often excel in a particular area of expertise, but fail to look after the best interests of their client. Sound management of counsel is therefore critical. Below are ten lessons that I learned. Continue reading →

$500 Million Price-Fixing Sentence Affirmed against AU Optronics

Posted on July 17, 2014 by Chris Neumeyer

Last week the Ninth Circuit Court of Appeals affirmed criminal convictions against AU Optronics (“AUO”), a Taiwanese maker of Thin-Film Liquid Crystal Display (“TFT-LCD”) panels, its U.S. subsidiary and two of its top executives, for illegal price-fixing that resulted in prison sentences of thirty-six months for each of the individuals and a $500 million fine for AUO. The case offers many stark lessons to global manufacturers whose employees may communicate with competitors about the pricing and supply of their products.

Initially, AUO was one of several leading TFT-LCD manufacturers indicted in the Northern District of California for conspiring to fix prices for TFT-LCDs in violation of the Sherman Antitrust Act, based on a series of meetings that took place between the alleged conspirators. In the meetings, the defendants discussed prices at which they would sell TFT-LCDs to their U.S. customers, including Dell, Compaq and HP.

AUO was the only accused company to take the case to trial, with rivals including LG Display, Chunghwa Picture Tubes, Chi Mei Optoelectronics and Sharp Corp. all pleading guilty and paying a total of more than $890 million in fines. At trial, the jury found AUO and its executives guilty and imposed the $500 million fine. The Ninth Circuit affirmed the AUO convictions and fine. While the decision addresses many points, a few are particularly noteworthy. Continue reading →

PWC’s 2014 Patent Litigation Study

Posted on July 11, 2014 by Chris Neumeyer

PricewaterhouseCoopers has just released its comprehensive annual study of U.S. patent litigation, covering the period from 1991 through 2013. Examining everything from litigation success rates, time-to-trial and median damage awards to comparisons of judges, districts, jury v. bench trials and non-practicing entities (“NPEs”) v. practicing entities (“PEs”), the report is a treasure trove of fascinating statistics.

The report concludes that, “in some ways, 2013 appeared to be a moderating year in patent infringement litigation,” with fewer mega-damage awards and a continuing decline in median damages, but on the other hand, “both the number of patent cases filed and the number of patents granted continued to grow rapidly in 2013 – by 25% (to almost 6,500 cases) and 7% (to almost 300,000 patents) respectively.”

Just a few highlights of the report are set forth below: Continue reading →

Supreme Court Loosens Standard for Recovering Fees in Patent Suits

Posted on April 30, 2014 by Chris Neumeyer

In two 9-0 decisions, the US Supreme Court just made it easier for the winning party to recover its attorney fees in US patent lawsuits. In Octane Fitness v. ICON, the Court relaxed the standard for recovering attorney fees and in Highmark v. Allcare Health Management, the Court made it harder for the Federal Circuit to second-guess district courts on a party’s bad conduct.

The US Patent Act allows a successful party in patent litigation to recover its attorney fees in “exceptional cases.” In the Octane case, the Fed Circuit ruled that such cases required both objective baselessness and subjective bad faith. The Supreme Court disagreed, finding “A case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.”

In the Highmark case, a district court awarded Highmark $5.2 million in attorney fees after finding it was the subject of a frivolous patent infringement suit. The plaintiff in the underlying action appealed the decision and the Fed Circuit re-heard arguments on attorney fees and came to a different decision. The Supreme Court found the Fed Circuit should have left the judge’s decision alone unless it found the court acted unreasonably.

Nokia settles with HTC, adds to Patent War Chest

Posted on February 10, 2014 by Chris Neumeyer

After two years of litigation in seven countries involving more than fifty of Nokia’s non-essential patents, Nokia announced a global settlement with HTC that should conclude all patent litigation between the two companies, but add to fears that Nokia is transforming itself into a formidable patent troll.

The announcement came this past Friday, just days after Nokia scored its fourth victory over HTC in a German court (three in the past two months) and days before the U.S. International Trade Commission was scheduled to review a preliminary ruling finding HTC infringed two of Nokia’s U.S. patents.

Although Nokia and HTC have a “long standing” agreement concerning licensing of Nokia’s patents that are deemed essential for practicing industry standards, Nokia has been battling with HTC over non-essential patents since Nokia fired the first shot in 2012, followed by victories in England, Wales, Munich, Mannheim and the U.S. Continue reading →

Refusing to Testify in Civil Depositions based on the Fifth Amendment

Posted on November 25, 2013 by Chris Neumeyer

“You have the right to remain silent. Anything you say can and will be used against you in a court of law.” We’ve all heard those words a thousand times in crime dramas, as the cops handcuff the bad guy and haul him away. Most lawyers recognize that as part of the Miranda warning, uttered by police in criminal cases to avoid violating the suspect’s rights under the Fifth Amendment to the U.S. Constitution.

What many don’t know, especially here in Asia, is the Fifth Amendment may also provide a valid excuse – even for foreign citizens – to avoid testifying in a U.S. civil lawsuit. On its face, the Fifth Amendment appears to be limited to criminal cases. It states that no person “shall be compelled in any criminal case to be a witness against himself.” However, courts have long held that the Fifth Amendment privilege “can be asserted in any proceeding, civil or criminal, administrative or judicial, investigatory or adjudicatory.” Kastigar v. United States, 406 U.S. 441, 445 (1972).

Consequently, it is not uncommon for witnesses in civil lawsuits to refuse to answer deposition questions based on that privilege, so long as the testimony could possibly lead to criminal liability. At first, the tactic may seem an easy way out for the witness. However, there are serious risks to invoking – or not invoking – the privilege, so anyone for whom the subject may be relevant should consult with experienced Fifth Amendment counsel. Continue reading →

Negotiation, Brinkmanship and the Government Shutdown

Posted on November 2, 2013 by Chris Neumeyer

Last month the world watched as the U.S. president and Congress brawled fiercely in a dispute over funding of the federal government, failing to reach agreement for weeks, forcing the government to partially shut down, laying off 800,000 workers and allowing the nation to hurtle recklessly towards financial default. Warren Buffet called it “pure idiocy.” The U.S. Treasury called it potentially catastrophic.

But was the drama a display of utter incompetence, or reasonable tactics employed by skilled negotiators, fully conscious of the risks and acting within the constraints of the circumstances to maximize gains for their constituents? Regardless of one’s political affiliation, it’s interesting to examine the events to see if they may impart any lessons for those who negotiate business agreements. Continue reading →

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