Mediating IP Cases: Patents – When to mediate?

In previous articles in this series, we outlined the basics of the law on U.S. utility patents, identified typical types of disputes involving patents, and discussed how to identify the right mediator for a patent dispute. We now turn to when to mediate a patent dispute.

When to mediate?

You have many options about when to mediate. So, what’s best for your case? 

Having enough information

The guiding principle is to have enough information about the case to understand the possible outcomes of the case and the range of damages. That suggests that close of discovery would be the best time. 

But that could get terribly expensive. By the time both sides have exchanged thousands of documents, taken technical depositions, and completed the reports – and possibly depositions – of technical and accounting experts, you are likely into at least hundreds of thousands of dollars in expenses. 

Getting information

Most cases don’t really need that much information to understand them. 

Early claim construction

It may be that your case will have a quick Markman hearing. If so, the outcome of the hearing may be the right time to mediate. The claim construction may let you predict how the trial will go. There is still the issue of whether the appellate court will uphold the construction and other considerations, of course.  But in some cases the claim construction is the key to the case and having a ruling on the right construction will be all you really need to know.  

Valid or not?

In some cases, validity is the thing. As noted, no one can infringe an invalid patent. Validity may turn on the outcome of a re-exam at the patent office, a hearing in an inter partes proceeding, or a summary judgment motion. The outcome of the validity issue – and in some cases even the pendency of an outcome – might provide the right time for mediation of the broader dispute. Often, some claims are found valid and others invalid. That can clarify the scope of the dispute and value of the case.

How does it work?

In other cases, the real issue may be the specifics of the alleged infringing devices or processes. That’s often true in software patent cases, for example. Thus, it may be possible to get the case in shape for mediation by an early exchange of information focused on key aspects of the accused products or processes.

Dollars at stake and design arounds

In some cases, the overriding issue is the amount of damages. If the damages are not significant and aren’t likely to be significant in the future because the accused infringer can design around the patent, an early mediation makes good sense. The problem with early mediation of a case of that sort may be lack of information about sales. In those cases, focusing discovery on sales data before the mediation can be the key to an early settlement. The mediator can moderate that process to assure the parties are getting the information they need to intelligently assess the case’s value.

And the mediator can also work with counsel to find a design-around that would end the dispute after the parties agreed to an amount to settle damages for alleged past infringement. Or it may be that a design around is all the patent owner really wants if past sales are not significant.

Evaluate your case

The above are a few examples. Each case should be evaluated early on to see what the parties really need to know to approach settlement intelligently. They can then determine how to get the necessary information to have meaningful mediation early in the case. 

You opponent

Of course, your opponent may not see the advantage of early mediation. But I think you might be surprised to see how often you can arrive at agreement on a way to proceed that will save everyone time, money, and grief. 

Early is usually better – if you know enough

In short, the wisdom used to be that mediation is a waste of time until the parties know everything about the case. I am confident that, in most cases, that is wrong. Most cases have some key information that needs to be known to allow an intelligent approach to resolution. 

Bear in mind that you still will need to mediate or have a settlement conference at some point in almost every case.  In fact, over 95% of patent cases settle before trial. If you can focus on settlement earlier, you can save your client time, money, and aggravation.