10.6.4 Alternative dispute resolution
The vast majority of patent cases (about 95 percent) settle prior to trial, but often not until late in the case. In the meantime, the litigation can be extremely expensive for the parties. Each side can expect to spend several million dollars in fees through the close of discovery, and between double or triple that amount in total through trial.145
Most parties to patent litigation recognize the high economic stakes, uncertainty, and legal costs involved. Nevertheless, various impediments to settlement – ranging from the relationships between the particular parties to institutional issues arising out of the nature of some patent litigation – often prevent parties from settling cases without some outside assistance. Consequently, district judges seek to motivate the parties to settle patent cases. Early judicial intervention, usually at the initial case management conference, can be a critical factor in bringing about settlement. Such initiative by the court emphasizes to the parties that the court wants them to actively consider settlement strategies as well as litigation strategies throughout the case.
Effective judicial encouragement of settlement involves several considerations: (1) appropriate initiation of mediation, (2) selection of the mediator, (3) scheduling of mediation, (4) delineating the powers of the mediator, (5) confidentiality of the mediation process, and (6) the relationship between mediation and litigation activities. Additional considerations come into play in multiparty and multijurisdictional cases.146
Many courts require, either by local rules or standardized order, that counsel for the parties discuss how they will attempt to mediate the case before the initial first case management conference and that they report either their agreed plan or differing positions to the court at the conference. District judges can order the parties to participate in mediation.147 By requiring this early discussion, the court eliminates any concern that the party first raising the possibility of settlement appears weak. This can be particularly important at the outset of a case when attitudes may be especially rigid, posturing can be most severe, and counsel may know little about the merits of their clients’ positions.
Courts can identify successful mediators for patent cases from a variety of sources: other judges and magistrate judges, retired judges, professional mediators and practicing lawyers. In some courts, the trial judge serves as mediator, but this requires the express consent of the parties.148 Many judges decline to act in this role for their own cases because they believe that it is difficult to have the requisite candid discussion with parties and their counsel and later objectively rule on the many issues the court must decide. In some district courts, magistrate judges serve as mediators.
To maximize open communication and candor, most district courts treat everything submitted, said, or done during the mediation as confidential and not available for use for any other purpose. Confidentiality is usually required by agreement of the parties or by court order or rule.149 Generally, the confidentiality requirements go beyond the evidentiary exclusion of FRE 408 to ensure that the parties, their counsel, and the mediator can candidly discuss the facts and merits of the litigation without concern that statements might be used in the litigation or publicized. This same concern for confidentiality usually precludes reports to the trial judge of anything other than procedural details about the mediation, such as the dates of mediation sessions, or a party’s violation of court rules or orders requiring participation. In addition to being confidential, briefing and communications relating to mediation may be privileged against discovery in future litigation.