The overwhelming majority of patent cases settle at some point in their lifespan. Some settle quickly after a case is filed, while others do not reach their denouement until after a trip up to the Federal Circuit or even the Supreme Court. No matter how convoluted a path a patent case may take to its final destination, the reality is that a negotiated resolution, rather than with an executed judgment, is almost always how a case ends.
Considering the importance of settlement to patent cases, you would think that law firms would invest as much into training their less experienced attorneys on the set of skills necessary to achieve good client outcomes at settlement as they do in training up-and-coming litigators on how to take a deposition, for example. Maybe some firms do, but speaking from personal experience, in order to make partner in IP litigation at my prior Biglaw firm, I needed to undergo rigorous trial and litigation skills training. Settlement training? That was for figuring out on your own, assuming that you were lucky enough to get assigned a settlement agreement to draft and negotiate in the first place.
Despite a lack of formal training in the settlement arts as associates — a program for which should be considered by firms with robust patent litigation practices, which necessarily also have robust patent litigation settlement practices, even if no one thinks of it that way — we can assume that most experienced patent litigators learn how to get a settlement closed over the course of their careers.
In most patent litigation scenarios, all it takes is a straightforward settlement and license agreement, where most of the negotiation is centered on the amount of money changing hands and payment terms, if any is at all. There are of course more demanding situations, where licensing specialists may be brought in to assist the litigation team in an effort to protect the client’s interests to their maximum. Most cases do not present the complexity or importance to justify that type of expense, however, which means that in practice most settlement agreements are handled by the litigation team. In practice, that often means a more junior member is given the task of updating a previously used agreement to at least serve at the first turn of a document that will be sent to the other side for comment and revision.
It is understandable, particularly in situations where a case has not yet gotten off the ground or where many years of intense fighting have fizzled out with clients willing to hang up their gloves, that there can be a distinct lack of focus given to something as prosaic as an initial draft of a settlement agreement. That is particularly true where the expectation is that the initial draft will be sent back with voluminous comments and redlines from the other side, even in those rare cases where all the key terms are agreed to before that first draft is sent.
Sometimes, that lack of focus can come back to create problems, as a recent District of Delaware decision points out — to the chagrin of a branded pharmaceutical company that sought to enforce a settlement agreement that they had thought was a done deal. (As usual, there is some great commentary on the decision over at the IP/DE blog, which I recommend.) Besides providing interesting fodder for the next episode of “Patent Settlements Gone Wrong,” a few interesting tidbits in the decision are worthy of attention.
To start, it was a real pleasure to read a decision in a patent case that had hyperlinks to both the briefing leading up to the motion as well as to cited cases and statutes. It makes for a more immersive review experience and I hope that other judges decide to do likewise when issuing decisions of their own. That aside, it was also a curious artifact of the Hatch-Waxman litigation regime that you had the plaintiff here pushing to enforce the purported settlement agreement — in effect arguing that its claim should be dropped in favor of a negotiated resolution. (While I have been in the position of representing a patent owner trying to get a recalcitrant defendant to finalize a settlement agreement after they had agreed to a licensing payment, it is also true that defendants sometimes find themselves trying to get a plaintiff to follow through on a proffered deal.)
Here, settlement discussions started about a month before the complaint was even filed, lasting about six months before breaking down on the eve of execution of the negotiated agreement. Upset about the deal flying away, the plaintiff moved to enforce the settlement agreement, on the grounds that but for the signatures, the parties had come to a meeting of the minds on all the relevant terms. But the court rejected that reasoning, pointing to the fact that a clause explicitly stating signatures were necessary for a final agreement had been included from the very first turn of the settlement agreement draft.
Add in that the initial draft was a “template” provided by the plaintiff themselves, as well as the fact that neither party had actively negotiated any changes to that provision, and it was clear to the court that both sides knew “that signatures were a necessary condition to settling the matter.”
Boilerplate language from a template? Enough to sink a deal that might have prevented many years and dollars that have and will be invested in litigation.
Ultimately, this decision highlights the continued importance of making sure that each and every draft of a settlement agreement is reviewed thoroughly before being shared with the other side. At the same time, the decision also reminds us that even though the temperature around settlement negotiations is often much lower than what we often see in active litigation, everyone involved in settlement talks must bring their utmost attention and focus to that effort. Because mistakes happen, even to sophisticated companies represented by sophisticated and able counsel, and we all have been reminded that the deal may not be done until everyone signs on the dotted line.
Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.
The post On The Dotted Line appeared first on Above the Law.
The overwhelming majority of patent cases settle at some point in their lifespan. Some settle quickly after a case is filed, while others do not reach their denouement until after a trip up to the Federal Circuit or even the Supreme Court. No matter how convoluted a path a patent case may take to its final destination, the reality is that a negotiated resolution, rather than with an executed judgment, is almost always how a case ends.
Considering the importance of settlement to patent cases, you would think that law firms would invest as much into training their less experienced attorneys on the set of skills necessary to achieve good client outcomes at settlement as they do in training up-and-coming litigators on how to take a deposition, for example. Maybe some firms do, but speaking from personal experience, in order to make partner in IP litigation at my prior Biglaw firm, I needed to undergo rigorous trial and litigation skills training. Settlement training? That was for figuring out on your own, assuming that you were lucky enough to get assigned a settlement agreement to draft and negotiate in the first place.
Despite a lack of formal training in the settlement arts as associates — a program for which should be considered by firms with robust patent litigation practices, which necessarily also have robust patent litigation settlement practices, even if no one thinks of it that way — we can assume that most experienced patent litigators learn how to get a settlement closed over the course of their careers.
In most patent litigation scenarios, all it takes is a straightforward settlement and license agreement, where most of the negotiation is centered on the amount of money changing hands and payment terms, if any is at all. There are of course more demanding situations, where licensing specialists may be brought in to assist the litigation team in an effort to protect the client’s interests to their maximum. Most cases do not present the complexity or importance to justify that type of expense, however, which means that in practice most settlement agreements are handled by the litigation team. In practice, that often means a more junior member is given the task of updating a previously used agreement to at least serve at the first turn of a document that will be sent to the other side for comment and revision.
It is understandable, particularly in situations where a case has not yet gotten off the ground or where many years of intense fighting have fizzled out with clients willing to hang up their gloves, that there can be a distinct lack of focus given to something as prosaic as an initial draft of a settlement agreement. That is particularly true where the expectation is that the initial draft will be sent back with voluminous comments and redlines from the other side, even in those rare cases where all the key terms are agreed to before that first draft is sent.
Sometimes, that lack of focus can come back to create problems, as a recent District of Delaware decision points out — to the chagrin of a branded pharmaceutical company that sought to enforce a settlement agreement that they had thought was a done deal. (As usual, there is some great commentary on the decision over at the IP/DE blog, which I recommend.) Besides providing interesting fodder for the next episode of “Patent Settlements Gone Wrong,” a few interesting tidbits in the decision are worthy of attention.
To start, it was a real pleasure to read a decision in a patent case that had hyperlinks to both the briefing leading up to the motion as well as to cited cases and statutes. It makes for a more immersive review experience and I hope that other judges decide to do likewise when issuing decisions of their own. That aside, it was also a curious artifact of the Hatch-Waxman litigation regime that you had the plaintiff here pushing to enforce the purported settlement agreement — in effect arguing that its claim should be dropped in favor of a negotiated resolution. (While I have been in the position of representing a patent owner trying to get a recalcitrant defendant to finalize a settlement agreement after they had agreed to a licensing payment, it is also true that defendants sometimes find themselves trying to get a plaintiff to follow through on a proffered deal.)
Here, settlement discussions started about a month before the complaint was even filed, lasting about six months before breaking down on the eve of execution of the negotiated agreement. Upset about the deal flying away, the plaintiff moved to enforce the settlement agreement, on the grounds that but for the signatures, the parties had come to a meeting of the minds on all the relevant terms. But the court rejected that reasoning, pointing to the fact that a clause explicitly stating signatures were necessary for a final agreement had been included from the very first turn of the settlement agreement draft.
Add in that the initial draft was a “template” provided by the plaintiff themselves, as well as the fact that neither party had actively negotiated any changes to that provision, and it was clear to the court that both sides knew “that signatures were a necessary condition to settling the matter.”
Boilerplate language from a template? Enough to sink a deal that might have prevented many years and dollars that have and will be invested in litigation.
Ultimately, this decision highlights the continued importance of making sure that each and every draft of a settlement agreement is reviewed thoroughly before being shared with the other side. At the same time, the decision also reminds us that even though the temperature around settlement negotiations is often much lower than what we often see in active litigation, everyone involved in settlement talks must bring their utmost attention and focus to that effort. Because mistakes happen, even to sophisticated companies represented by sophisticated and able counsel, and we all have been reminded that the deal may not be done until everyone signs on the dotted line.
Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.
