Posted by Chris Crone on July 17, 2008 10:21 AM |Permalink|TrackBacks (0)

Dear Friends,

This issue of The Expert Advisor contains valuable advice from two of Round Table Group's experts with vast experience in corporate and patent matters. First, our Featured Expert, Prof. Douglas M. Branson, a renowned authority on corporate governance and securities regulation, provides litigators with 10 tips for use in preparing expert witnesses prior to depositions and trial.

An article authored by Philip L. Brooks, Managing Member of Brooks Consulting LLC, brings an insider's perspective to patent-infringement investigations. Phil explains how methods of investigation have changed over the last decade and notes that important data can be obtained by attending trade shows, speaking with employees and industry experts, and conducting Web research.

A third article highlights the U.S. Supreme Court's recent ruling that limits the ability of patent holders to demand royalties from companies at each stage of the production process.

Round Table Group is dedicated to providing our readers with assistance in locating, preparing, and utilizing experts. Please send your ideas for upcoming themes or articles to mswansiger@roundtablegroup.com.

Regards,

Russ W. Rosenzweig, CEO
Round Table Group, Inc.

Posted by Chris Crone on July 17, 2008 9:37 AM |Permalink|TrackBacks (0)

By Philip L. Brooks[1]

The VP of Sales for your company just returned from the industry's top annual trade show in Las Vegas with bad news. In addition to manning the company's exhibit booth and meeting with clients in a private hotel suite, she took a quick spin around the trade show floor. To her dismay, she discovered that a company, which none of you had heard of, was demonstrating a device with features eerily similar to your most recently launched product. Although the VP had attempted to strike up a conversation with the person at the "new" competitor's booth, he clammed up when he saw the corporate logo on her nametag.

Now what...?

In 1998, Jeff Moore, then a law student at Franklin Pierce Law Center, conducted an informal survey of law firms and companies in which he posed two questions:

1.      "How does an inventor know whether his process or method patent is being infringed?"

2.      "Where can an inventor go to have his IP protected on an ongoing basis by monitoring for illegal use?"[2]

Moore's report included the following observations: 

"The offensive search for potential infringers is targeted at finding infringers that can be forced to license or pay damages. Once an infringer is located the patent and literature searches may still be required to defend the patent and encourage a settlement."

"Companies have mostly relied upon internal resources to keep up on technology and identify potential patent infringers. Employees know the business, the key players, the technology, and often spot competitors that are infringing on process patents."[3]

Mr. Moore's comment that internal employees know the market best and are usually a more efficient and effective source for tracking down potential infringers might have been true 10 years ago. However, in 2008, his rationale appears to apply only in a fraction of patent-infringement investigations. Indeed, many clients are not really focused on such monitoring activities in the normal course of business--they have too many other things to concentrate on. Outside experts with industry, product, or patent-infringement experience are able to access information sources that may not be available to internal employees. Remember how the trade-show booth attendant clammed up when he recognized a competitor? 

Nevertheless, corporate employees are critical to the process because they can provide the retained expert with valuable information regarding the company's products and the industry in general. They are also helpful in defining the ways in which the claims of the patent might manifest in the features of products that your company does not currently produce.

One of the valuable side effects of patent-infringement investigations is the ability to obtain competitive and market intelligence, beyond the evidence of potential infringement. This information provides your company with valuable data that can be used going forward in day-to-day business activities.

Today, the volume of information available to businesses is much richer than it was in the past. Pertinent data can be gathered by attending trade shows, speaking with such parties as former employees and industry experts, and conducting Web research. In 1998, many companies (even very large ones) often had fairly static Web sites that consisted of only a few pages of text. Today, businesses often maintain multiple Web sites that offer deep content, multimedia informational sources, and links to third-party sources that provide supplemental information. This trend toward increased availability of valuable information shows no sign of slowing.

Retained experts may provide a valuable service in assisting your counsel in determining the liability aspects of patent-infringement cases. Product searches and investigations to establish potential infringement of your company's patent portfolio are conducted by:  

• Identifying businesses in your company's market and nearby markets
• Investigating companies and/or products that potentially infringe your patent portfolio using a detailed methodology, incorporating the latest Web-search technologies
• Identifying products of these businesses with features/functionality that potentially infringe upon your patents' claims



• Legally collecting documentation of this potential infringement
• Obtaining brochures, white papers, user's manuals, press releases, product reviews, financial filings, and other product or corporate document
• Developing questionnaires in conjunction with counsel to elicit information, through interviews and/or Web demos, that is relevant to the patent claim
• Attending trade shows and industry conferences in order to obtain product information
• Acquiring products for further technical evaluation

In "Patent Searching an Effective Tool for Competitive Intelligence," author Vinod Singh makes a very good case for why patent searching should be left to the experts--professional patent searchers.[4]   He discusses detailed steps--at least 13--that he considers essential for a complete search. He also points out that a skilled searcher should possess knowledge of search procedures, database limitations, technical tools, and software.

An early step in Mr. Singh's search process involves recordkeeping. He recommends that interested parties "[r]ecord the search words on a page in a project notebook and add other words as they come to mind or encounter them in other patents. Usually the word list becomes separated into groups of words covering different aspects of the invention."

This is excellent advice. When using search tools, you may end up following a number of different and often convoluted paths. Documentation of the keywords is essential to enable the researcher to explore all avenues and to revisit pertinent URLs using other search engines and/or tools. Moreover, the terminology used with respect to certain products or technologies often varies significantly in different parts of the world. Sometimes the variation may be as subtle as the use of acronyms, rather than complete word descriptions.

Also, while your company may rely on certain keywords to describe an invention, an expert may know that other members of the industry use a variety of keywords. In some cases, the infringement may occur in industries with which your company currently does no business. The expert's knowledge of the keywords applicable to other industries may lead to the detection of infringing products that your internal team would never discover. It is important to make sure that all relevant keywords are incorporated in your search--individually and in different combinations.

Back to the trade show...

Attendance at trade shows is a valuable tool in the expert's arsenal.  In the course of my patent-infringement investigations, I have uncovered some amazing details on products at trade shows.  Presented below are just a few of the insights I have gleaned over the past 12 years:

•  In addition to obtaining informational product brochures and white papers, attendees have access to demonstrations, cutaways, or components of products. Moreover, although the practice is not widespread, some visitors take digital pictures of booths and products. Thus far, I have not personally observed exhibitors discouraging people from taking pictures. [5]
• Salespersons are often more open to discussing product details in person than they might be over the phone.
• Conversations with other attendees can be a great source of information.
• Examining the exhibitor list before the show begins enables you to maximize the time spent at the show and to check out all companies that are of interest to you. In one trade show visit, my primary focus was on a specific company and its customers' booths. However, while reading the materials ahead of time, I noticed several businesses that were competitors to my target company, and I decided to stop by their booths. During the course of that show, I discovered eight to 10 competitors that had the potential of infringing upon my client's patents, and I subsequently shifted my primary focus to those entities.

Be sure to consider the role that an expert can play in your next patent investigation. You may derive significant value by retaining an expert to develop an ongoing infringement-monitoring program to protect your company's patent portfolio on a long-term basis. Having invested in the patents, you realize their true value only when you enforce those patents or seek out potential licensees.

Posted by Chris Crone on July 17, 2008 9:21 AM |Permalink|TrackBacks (0)

The U.S. Supreme Court's recent ruling in Quanta Computer, Inc. v. LG Electronics, Inc. (553 U. S. __, Dkt. No. 06-937, June 9, 2008) limits the ability of patent holders to demand royalties from companies at each stage of the production process. In this case, LG Electronics (LGE) licensed its computer component patents to Intel Corp., which then sold microprocessors and chipsets produced using those patents to computer manufacturers. Both Intel and non-Intel components were used in combination in the computers. The manufacturers did not modify the Intel components and followed Intel's specifications when incorporating the parts into their systems.

LGE unsuccessfully argued that the manufacturers' combination of Intel and non-Intel products infringed upon its patents. The Court determined that the doctrine of patent exhaustion applies to method patents. Even though a patented method cannot be sold in the same way as an article or device, methods can be embodied in a product, and patent rights are exhausted upon the sale of that product. Because LGE's license agreement authorized the sale of components that substantially embodied the patents at issue, consummation of that sale terminated its patent rights with respect to the components. The terms of the license agreement did not restrict Intel's right to convey its products to third parties for use in combination with non-Intel parts.

Posted by Chris Crone on July 17, 2008 9:13 AM |Permalink|TrackBacks (0)

Prof. Douglas M. Branson, the W. Edward Sell Chair in Business Law at the University of Pittsburgh and a permanent Senior Fellow of the University of Melbourne School of Law (Australia), has been on Round Table Group's list of experts since 1996, consulting and testifying in corporate law, corporate governance, and securities regulation cases.

As an expert witness in many high-profile cases[1] and a consultant/lawyer with respect to hundreds of major business transactions and securities offerings, Doug is an authority on the attributes that lawyers should look for when retaining experts. His tips for avoiding impeachment attempts to provide timely guidance on prepping experts prior to depositions and trial.

 

This Top 10 presentation, á la David Letterman, is a valuable checklist for litigators to follow:

10.  Make sure that your experts minimize the number of written drafts by editing their work product electronically whenever possible. In this way, the opposition will be unable to call attention to differences in drafts, changes in wording, and so on in an attempt to waste precious deposition time trying to make your witnesses look bad.

9.    Direct your experts to honestly relate their credentials or experience. Any good lawyer will detect embellishments and portray the witness as untruthful at trial. Knowledgeable, but inexperienced, witnesses will quickly build up experience; exaggeration of their qualifications is unacceptable.

8.    Caution your witnesses to remain calm and cool, regardless of potentially abusive conduct on the part of the opposition. 

7.    Tell your experts that although a sense of humor is acceptable at a deposition, they should never be flippant or sarcastic. Direct them to be pleasant, answer the questions, and go no further; it's not their place to argue with the opposition.

6.    Understand that experts, after repeated provocation, may push back with a show of anger against the opposition. Advise your witnesses to revert to calm and cool as quickly as possible after an outburst. Although the ostensible reason for discovery is to produce information, many lawyers are bullies who pride themselves on their ability to intimidate and embarrass. Occasionally, witnesses have to show their tormenters that they are made of firm stuff.

5.    Clarify that it is not the experts' job to win the case for your side; they are merely cogs in a wheel. Make sure that your witnesses have a well-defined role in the proceedings and that they stick to that role.

4.    Advise your experts that you will steadfastly defend them in the proceedings. Reassure them that you will request recesses when it appears to be necessary or ask that the proceedings end for the day if they seem to be tiring. Make it clear that you will be actively representing them and will stick up for them whenever possible.

3.    Direct your experts to be modest, but to push the envelope on their opinions to the extent possible. Discuss tactics before the deposition.

2.    Coach your experts to be effective teachers when testifying at depositions or in court. They must explain things in clear and simple terms and provide the jury with a comfort level in a field that is otherwise alien to them. This may be their highest and best use in the litigation.

1.    Finally, work with your experts to ensure that they will clearly present their opinions. Advise them to remain strong, stay firm on what they agreed to say, and stick to it. There is nothing worse than a wishy-washy expert witness.

When screening possible experts, attorneys should look for witnesses with firm opinions and insight into how they can aid in the development of the case. If they lack familiarity with an area or sub-area, they should tell you outright, rather than "faking it until they make it."

Using an expert who has done exactly what your case entails (for example, a proxy contest at a large bank or an IPO for a biotech company) may be counterproductive because many parties with personal experience in a given area may not want to be witnesses or experts for your side. You're better off finding somebody who has a good overall experience level and is honest with you, rather than someone who is second rate but "spot on."

Meet Doug Branson

Our Featured Expert, Prof. Branson, graduated cum laude from Northwestern University School of Law and later pursued a Master of Laws at the University of Virginia, where he specialized in corporate and securities law and finished first in his class. After teaching for 22 years at Seattle University, he was recruited by the University of Pittsburgh in 1996. He authored the first U.S. treatise on corporate governance,[2] as well as 10 books on corporate law.[3]  He wrote numerous law review articles for prestigious legal periodicals in the United States, Europe, Singapore, Hong Kong, and Australia. Doug is generally considered to be among the top U.S. scholars on corporate governance and securities regulation.

Branson has served as a visiting professor at Cornell University, the University of Oregon, and Washington University. He has been the Charles Tweedy Distinguished Visiting Professor at the University of Alabama, a Fulbright Scholar at the University of Ghent, and the Paul Hastings Distinguished Professor at the University of Hong Kong. He has lectured in numerous venues around the world. Additionally, he was a U.S. State Department-sponsored consultant on corporate governance and capital markets law four times in Indonesia, twice in Ukraine, and in Slovakia.