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Michael C. Smith
Marshall, Texas
Interests: Reading, history, architecture, and music.
Recent Activity
As to 2., there are proposals being discussed at the federal level that I believe would make the letter writer liable for a subsequent finding of invalidity. I don't think that this bill would, because the "bad faith" language is drafted in terms of making a representation that the patent is valid when a court has held it isn't. A later finding wouldn't make the prior representation false or deceptive when it was made. But this bill is also narrowly drafted to address objective representations, as opposed to other legislative efforts that define "bad faith" as asserting patents that are lacking in merit, under which yes, I think a representation made today would be arguably more actionable by the AG after a court has held that the patent is invalid or unenforceable. But it would be actionable immediately as well under that definition. The issue with more broadly drafted bills is that defining "bad faith" as lacking merit triggers in many peoples' mind preemption concerns because it would require the AG to litigate the patent's merits in state court as part of its case - which would get the whole shebang removed and eliminate the statute's benefits to letter recipients. For that reason, I know there are patent demand letter proposals in Congress that would establish a national set of standards for patent demand letters, and those proposals aren't having to face the preemption challenges state statutes do, so they could proscribe (as well as prescribe) a broader set of statements. We live in interesting times!
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Yeah, it's getting that way here as well!
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Absolutely right! Should be 2003, and I've made the change. Lawyers doing match...
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The reason I say it has hampered settlement is because when settlements were protected by a settlement privilege under Goodyear (the case most commonly cited for it), a plaintiff could settle for low numbers with some defendants knowing they wouldn't be used against them, and could negotiate freely, knowing it wasn't discoverable. In fact it was common (and I'm referring to non-patent cases here, but I saw a similar dynamic in patent cases) to settle cheap with some defendants to streamline the case for trial, eliminate good opposing counsel, get a floor of recovery for your client, etc. Lots of tactical reasons you'd settle some claims below market value in order to have the case at trial strategically placed where you wanted it, all of which worked to the settling defendants' benefit, and promoted settlement. Now with settlement numbers being potentially admissible at trial in damages expert testimony, in my experience sometimes plaintiffs can't settle for a low number out of fear of it being used against them at trial, and in many cases I can't get plaintiffs to exchange anything in settlement discussions in writing at all out of fear it will be discoverable later. And that's to say nothing of the ability to craft the paper trail to make a final settlement produce an apparently high royalty rate by manipulating what was settled (threshold sales amounts, dismissal of certain product lines, etc.. I don't see many plaintiffs take advantage of this, but I sure would consider it if I were in their shoes. Some settling defendants might even propose this sort of thing to try to extract a cheaper settlement. In addition, recent opinions have indicated, if not said outright, that settlements for minimal value may be sanctionable themselves, thus blocking defendants who'd be willing to make such payments and plaintiffs who'd be willing to take them from settling their claims. And now proposed legislation in DC and the new Vermont statute actually would make low settlement offers either sanctionable or evidence supporting a sanction - it's often part of the working definition of a troll, thus forcing plaintiffs to seek higher amounts to avoid triggering liability under this caselaw/statutes. I realize that settlements for minimal value are useful to the remaining defendants in negotiating and as evidence at trial - I fought to get evidence to that effect in at trial two weeks ago and hopefully used it effectively to impeach the plaintiff's damages claim. But had the settlement numbers been high our positions would have been reversed, and I have been in that box recently as well. And that value is, I believe, minimal compared to the loss of the settlement "privilege" under Goodyear that the judges had been providing, where parties were able to successfully settle a lot of claims for a small amount of money where they decided to do so. So that's why I'm saying I think it has hampered settlement - in my experience it can block parties from contracting small settlements when it's in their tactical benefit to do so. And of course as I also pointed out it has engendered a big fight over not just admissibility of the license but also discoverability of the negotiations leading up to it. A bright line rule prohibiting admissibility of litigation settlements would have eliminated that not inconsiderable cost. In the end, maybe we get marginally better information regarding the value of the invention (or maybe we don't - I do not know), but at a substantial cost, both in terms of the direct discovery costs as well as the change in settlement behavior. And, finally, all this hits the judges right when I need them looking at my Daubert and SJ motions, so the license-specific analysis is taking their time in pretrial when I have other important issues that I'd rather they be focusing on. I agree the doctrinal changes have helped parties evaluate cases - it's just the elimination of the settlement privilege as a bright line rule that I think has caused problems. They have made clear it's a relatively narrow exception, but in litigation, that it's narrow doesn't stop 95% of cases from litigating it anyway. I mean look at inequitable conduct. As for verb-splitting, apparently that's my fault - I wrote it the way the sidebar shows but they uniformly moved (moved uniformly) my adjectives after the verbs, which I think is their style convention - that one didn't get moved for some reason.
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