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Global Litigation Strategy and the art of war

Copyright Thursday, October 5, 2006 Duncan Bucknell Company

The ultimate goal in a global IP dispute is rarely to fight and win every case in every country in the world. This is usually a waste of time and money. Instead, the goal is to use the situation to obtain the best commercial result � better than before the dispute arose. As Sun Tzu said in The Art of War: “For, to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the supreme excellence.”

All manner of opportunities arise in the context of a potential IP dispute. The following five step approach is designed to put you in the best possible position to identify and seize these opportunities and, if necessary, to go out there and win the litigation as well.

In a global IP dispute, two critical factors will play a large part in determining your fate: choosing and coordinating the jurisdiction(s) in which you litigate and the outside counsel you use in each country.

Assuming that your strategy dictates litigation in a particular country, and you have chosen your advocate, then the next three steps to checkmate are: relentlessly seeking and analysing the facts; devising and implementing a consistent strategy; and making sure the team runs smoothly.

To make this article more interesting for you, I asked IP litigators from nine jurisdictions the following question: “In your experience, what is the single most important thing for your clients to focus on to maximise their chances of winning a major IP case?” The answers reinforce the suggested approach and provide some interesting additional insights.

Where and when to litigate

If you have the choice, then clearly you should litigate where you will obtain the greatest strategic advantage. Where is that? Well, it depends on your situation. The takehome message here is that the better you understand the options available in various jurisdictions, then the better you can make the most of them.

Here are some examples of factors to consider in designing your strategy � as you can see, they must be combined into a single, coherent strategy based on your particular circumstances.

Local procedural rules may act in your favour. For example, for years IP owners had been commencing proceedings in the courts of the Netherlands because of the courts’ willingness to grant cross-border injunctions across Europe (this practice is now in serious doubt, although it has not been specifically ruled invalid under the present Brussels regime by the European Court of Justice).

Similarly, if you are seeking to enforce a patent, you may wish to take advantage of the split systems in China or Germany which (usually) require separate courts to hear cases relating to infringement and validity. Such a system removes invalidity of the IP right as a defence in the infringement proceedings. So you can usually obtain a fast result on infringement, and subsequent remedies, such as injunctions. Of course, the defendant is still able to challenge validity and, if successful, have a finding of infringement become useless at a later date. This does not detract from many of the strategic advantages of having a fast infringement result, however.

You may want to make the biggest impact where the greatest commercial effect will be evident (either to seek an injunction against an infringer or to get the attention of the IP right owner). Clearly, this is dictated by standard commercial factors such as the market size in various countries.

If you are a relatively small player, you may first wish to seek the most cost effective litigation result. Consequently, you may elect to follow the administrative tribunal route in China, which will also return an enforceable decision in three to six months.

On the subject of cost, the concept of litigation efficiency (LE) helps in the comparison of relative costs of litigation between jurisdictions. LE is the market size divided by the average cost of running a full IP case in that jurisdiction. A larger LE means that you buy more market dollars for every dollar you spend on litigation. Note that the LE in a particular jurisdiction will be different for different types of IP litigation and should be compared on this basis. Due to its relatively large size and relatively low cost, France has an attractively high LE. Consequently, it may be most cost effective to commence proceedings here for a relatively inexpensive litigation in a relatively large market. Japan (because of the enormous size of its market) and Germany (due to relatively low cost) also have high LEs.

If your strategy dictates that speed is of the essence, you may elect fast-track litigation in the Netherlands (10 months) or the United Kingdom (10 to 15 months). Alternatively, if your case is quite technical, you may choose to go with one of the specialist IP courts which are now available in an increasing number of jurisdictions. For example, Germany, the Netherlands, the United Kingdom, China and Japan (the United States Court of Appeals for the Federal Circuit is also specialised in IP matters).

Selecting outside counsel

Selecting outside counsel is really a topic for another day. But here are a couple of important points to consider. Make sure that the outside legal team will work well with you and your internal people (more on this later). If there are any doubts about this, then fix it immediately. Otherwise, you will dramatically compromise your case.

The person who will lead the presentation of the case in court (the advocate) must have a proven track record. Ask for that proof. A list of cases argued, both won and lost, is a good start. In some countries, there are advocates who are separate from law firms and do nothing else (eg, barristers in the United Kingdom and Australia). Barristers are instructed by external legal counsel � make sure you have a direct line of sight to them and that you are confident in them.

Get the facts right, right?

Relentlessly pursue the facts, understand them better than anyone and be prepared to explain them simply in a consistent theme to the judge or jury. This includes unremittingly seeking evidence first from your own organisation and, later, from your opponent; and identifying and retaining the finest experts, and working closely with them to prepare the best evidence. As Jim Hurst from the Chicago office of Winston & Strawn says, winning requires “exhaustive investigation, analysis, and preparation”.

The paper trail

Gathering documents and evidence is a critical part of the forensic exercise. This is particularly important in jurisdictions which do not have court-ordered discovery (or disclosure). Marina Couste and Florent Guilbot from the Paris office of Howrey LLP explain that conserving and gathering documents prior to litigation is the most critical thing to focus on in France. Stan Abrams from the Beijing office of Lehman, Lee & Xu said the same thing about Chinese IP litigation. While it is now possible to obtain court-ordered preservation and collection of evidence in China, it is still relatively difficult compared to other jurisdictions, and in Stan’s words, proper documentation will “make or break” an IP case in China.

A solid foundation

As the facts come together, you need to confirm that you are on solid footing. So, the exhaustive analysis must include a thorough investigation of infringement and validity issues as early as possible. The analysis should be continually reworked as more facts come to light. Paul Steinhauser and Otto Swens from Steinhauser Hoogenraad in the Netherlands recommend a thorough validity analysis before taking any (legal) action against the adversary and in all situations, regardless of whether the client is the owner of the IP right or the alleged infringer. They suggest that validity searching should not only cover the industry in which the client is active, but also related industries.

Expert testimony will make or break your case

In some jurisdictions, the parties are permitted to submit evidence from suitable experts in support of their case. Such experts are usually extensively crossexamined so the choice of expert is critical. Most readers will have seen cases won or lost by expert testimony and clearly their importance should not be underestimated. Simon Cohen and Nigel Stoate from the London office of Taylor Wessing commented that careful selection of an expert will undoubtedly change the course and outcome of the litigation. This sentiment is echoed by Paula Bremner from Hitchman Sprigings in Canada who also strongly recommends retaining experts as early as possible so that they can assist in developing the strategy. However, in some jurisdictions, such as Australia, there can be severe strategic disadvantages to opening communications with experts, so be wary about direct involvement by experts in strategy.

A consistent strategy

Once you have a good handle on the facts (actually, you probably will not fully understand them until after the trial), then it is time to rework your strategy into a single, consistent theme. As Koichi Tsujii from Nakamura & Partners in Tokyo says: “One must set up a consistent and convincing strategy, and file briefs and exhibits in line [with it] from the beginning to the end.” Jim Hurst’s comments add further colour to this: “The best ideas often come late at night and only after tearing apart the patent and the prior art on literally a line-by-line basis. The best litigators then build that case-breaking idea into a simple and understandable theme for the entire case ...”

Knowing the facts is one thing, being able to cogently explain them is entirely another. As Scott Blackman from the Washington DC office of Winston & Strawn suggests, you must know the fact issues so well that you can comprehensively explain them to the judge (and/or jury) in terms that make sense to them and educate them as necessary.

As mentioned above, a critical component of this is your choice of advocate. The best advocates readily synthesize many complex facts and legal issues and weave them into a simple story. If you are lining up for a major IP case, then why not put your top two or three choice advocates to the test? Give them a complicated document � be it a technical document for a patent case, or a marketing or other document for a brand, trademark or copyright case � and 24 hours to digest it. Watch them explain it to someone from your organisation who does not have the relevant subject matter background. How well did they get the information across?

It’s a team effort

As we all know, IP litigation is expensive, not only in legal fees, but also in terms of drain on resources. Consequently, handsome rewards await those who ensure that the team of people from within and outside the organisation is operating effectively.

Christoph de Coster from the Munich office of Taylor Wessing says that building an effective team is crucial for success in Germany. Christoph gives the example of patent litigation, which in Germany is handled by a team of lawyers specialised in patent litigation, who take care of procedural matters, and patent attorneys (from a separate firm) who prepare the technical aspects of argument for the court. Ideally, the lawyer(s) and patent attorney(s) will have an excellent working relationship and be used to working together on the overall strategy for the case.

Robert Cooper from the Melbourne office of Mallesons Stephen Jaques agrees that creating and maintaining an effective team is critical. Robert emphasises the importance of excellent communication between client and litigators to deal effectively with critical strategic decisions as they arise.