Strategic Issues For Prospective Litigants

• Pages: 141-163

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CHAPTER III

STRATEGIC ISSUES FOR PROSPECTIVE

LITIGANTS

Patent holders with actual or potential market power often find

themselves exposed to antitrust counterclaims when they seek to enforce

their patents. Potential antitrust claimants who would not otherwise

consider filing time- and resource-consuming antitrust claims may have

more incentive to undertake this effort, even for colorable claims, if only

to raise litigation exposure for those who have already sued them for

infringement. The decision whether to assert an antitrust counterclaim

against a patent plaintiff, however, is rarely a straightforward exercise.

This chapter discusses a number of those considerations from both the

antitrust claimant’s and defendant’s perspectives.

A. Issues for Consideration by Both Antitrust and Patent Counsel

in Early Stages of Litigation

Patent and antitrust counsel should coordinate early in the litigation

to discuss the potential vulnerability of patent infringement claims to

antitrust counterclaims, or for patent defendants, the effect of

counterclaims on the overall case. Even the most thoughtful

infringement counsel on either side is unlikely to anticipate every detail

of the antitrust counterclaim, so coordination can help to ensure that

positions taken to support or defeat the infringement claim do not

inadvertently concede issues material to the antitrust counterclaim. Proof

of lost profits, for example, necessarily involves assumptions about the

market in which the parties compete and the nature of their competition.1

The damage theories and evidence offered in support of these patent

damages must be consistent with the antitrust approach to market power

and definition.2

Some of the other immediate issues that require coordination include

(1) how to handle possible dispositive motions; (2) whether to stay all or

some discovery; (3) whether to bifurcate discovery;3 (4) whether the

relevant markets alleged in the antitrust counterclaim force a

1. See, e.g., Grain Processing Corp. v. Am. Maize-Products Co., 185 F.3d

1341, 1350 (Fed. Cir. 1999).

2. See Chapter VI.A for a more in-depth discussion.

3. See Chapter V.B.2 for a more thorough discussion of bifurcation.

142 Antitrust Counterattack in Intellectual Property Litigation Handbook

reconsideration of the breadth of the claim construction; (5) how to

update any budgets governing the case; and (6) whether in-house counsel

are likelier to become fact witnesses by virtue of having given opinions

on infringement or validity that may arise as part of an infringement

defense.4

B. Strategies for Lowering Exposure to Antitrust Counterclaims

When Filing Patent Infringement Actions

The economic value of a patent derives from the right to exclude

others from practicing the invention, the strength of the patent and the

ability to invent around the invention. A patent that is likely to be

declared invalid or unenforceable has less economic value because the

patent holder is less likely to prevail in its enforcement efforts. Thus,

any possibility of facing a viable antitrust counterclaim reduces the value

of a patent because such a counterclaim decreases the patent holder’s

likelihood of success on the merits, drives up the patent holder’s cost of

litigation,5 and exposes the patent holder to antitrust damages.6

Even if the patent holder is able to defeat an antitrust counterclaim,

the evidence presented in connection with an antitrust counterclaim—for

example, evidence of bad faith conduct by the patent holder—may lead a

jury to reduce its damages award in an infringement suit. Further, the

existence of actual or potential competitive harm may also decrease the

4. Although the Federal Circuit recently held “as a general proposition, that

asserting the advice of counsel defense and disclosing opinions of opinion

counsel do not constitute waiver of the attorney-client privilege for

communications with trial counsel,” In re Seagate Tech., 497 F.3d 1360,

1374 (Fed. Cir. 2007), cert. denied, 128 S. Ct. 1445 (2008), it makes

sense for opinion counsel and trial counsel to operate separately so as to

minimize the risk of forced disclosure on close questions of

discoverability.

5. See Chapter IV for additional discussion of discovery issues arising from

antitrust counterclaims.

6. The Clayton Act provides that “any person who shall be injured in his

business or property by reason of anything forbidden in the antitrust laws

may sue therefor in any district court of the United States in the district in

which the defendant resides or is found or has an agent, without respect to

the amount in controversy, and shall recover threefold the damages by

him sustained, and the cost of the suit, including a reasonable attorney’s

fee . . . .” 15 U.S.C. § 15.