Guest Post by Lisa A. Dolak (Angela S. Cooney Professor of Law, Syracuse University College of Law and Practice Center Contributor)
Misconduct in civil litigation is not a new phenomenon. Nor is it confined to particular types of cases. Because of their characteristic intensity, however, intellectual property cases may be more likely to inspire bad behavior than other types of cases. In patent cases, in particular, often much is at stake for both counsel and client. The potential outcomes range from a judgment for the patent owner, potentially including trebled lost profits, a permanently enjoined infringer and even an attorneys’ fees award, to a ruling that the asserted patent is partly or entirely invalid, or even unenforceable, with the patent owner ordered to pay the infringement defendant’s attorneys’ fees. And the complexity and potential intensity only increase when multiple patents and/or multiple accused products are involved. The associated pressures seem, on occasion, to lead litigants and trial lawyers to succumb to the temptation to step outside the bounds of vigorous advocacy.
Trial and appellate judges in a number of recent IP cases have wrestled with the issue of whether certain litigation tactics crossed the line between advocacy and abuse. The decisions contend with a range of conduct, occurring at various phases of litigation. In several, the trial courts’ decisions to sanction were reversed or modified on appeal or reconsideration. Accordingly, these cases shed light on a question which challenges courts, litigants and trial counsel: when it comes to zealous advocacy, how much zeal is too much zeal?
For example, trial judges have recently rebuked counsel for:
- pressing forward with infringement allegations in the face of adverse claim construction rulings;
- trying to prejudice jurors against the plaintiff patentee by asking them if they had “a problem with a company that puts its headquarters offshore on a Caribbean island in order to avoid paying U.S. taxes”, in violation of an order in limine;
- “prolong[ing] the proceedings unnecessarily (thus unduly imposing upon the jury’s time), [seeking] to mislead both the jury and the Court, and [flouting] the governing claim construction as set forth by the Federal Circuit”;
- “persist[ing] in improperly trying to equate [the patentee’s] infringement case with the current national banking crisis implying that [the patentee] was a banker seeking a ‘bailout’”
- knowingly pursuing a meritless lawsuit; and
- contributing to a “massive discovery failure” including failing to meet or “discuss appropriate document collection” with the client’s employees, “obtain sufficient information . . . to understand how [the client’s] computer system is organized”, or take “supervisory responsibility for verifying that the necessary discovery had been conducted . . ..”
In several of these and other cases, however, sanctions awards have been subsequently reversed or modified, including because the conduct at issue was viewed as insufficiently egregious, as not unreasonable, or even as entirely within the rights of the sanctioned firm or attorney. These reversals raise a number of questions, including:
Aren’t Sanctions Reviewed for Abuse of Discretion? Yes, although relevant fact-finding is reviewed under the comparatively exacting clear error standard. Furthermore, the Second Circuit, at least, regards sanctions rulings as in a category of their own when it comes to appellate review: “when the district court is ‘accuser, fact finder and sentencing judge’ all in one, our review is ‘more exacting than under the ordinary abuse-of-discretion standard.’”
Are Reviewing Courts Too Tolerant? To be sure, the “judge, jury and executioner” nature of sanctions rulings, combined with the very serious potential ramifications of such rulings for attorneys and law firms, justify appropriately searching review. Nevertheless, it seems fair to ask whether reviewing courts are sometimes too tolerant. Surely there are limits to what opposing parties, counsel and the courts can reasonably be expected to tolerate when it comes to litigation conduct. And the nature and incidence of the conduct at issue in recent IP reasonably suggest that litigation counsel and reviewing courts are expanding the definition of acceptably zealous advocacy.
What About the Trial Judges? It is important to acknowledge the “wear and tear” that overly zealous conduct and sanctions litigation inflict on trial courts. It is also worth noting that judges are only human, and that sanctions proceedings are high-drama, high-stakes events that potentially evoke emotions in all involved. Accordingly, the possibility that frustration or annoyance might have played a role in a sanctions decision also justifies careful review, at least in some cases. Still, the number and nature of sanctions orders reversals, of late, seem to warrant consideration of whether/to what extent trial judges might hesitate, in future cases, to impose sanctions.
What Motivates the Lawyers? It’s impossible to know, of course. However, one federal district judge recently surmised that misconduct may derive from the transformation of the practice of law from a profession to a business.
At What Price, Fairness? In another recent sanctions order, the federal magistrate judge described the extraordinary amount of effort the court had invested in considering whether and how to sanction litigation counsel. Her order reminds us of another aspect of the costs that attorney misconduct and the associated sanctions proceedings impose on the system – the diversion of precious court time and resources from the merits of disputes, which, of course, injures other litigants as well as the taxpayers.
Recent IP sanctions decisions serve as sobering examples of how even intelligent, experienced counsel can get caught up in the heat of the battle that is modern intellectual property litigation, and the potentially devastating consequences of that conduct.
Ms. Dolak was kind enough to forward us this abridged version of her paper she published on SSRN. Read Dolak’s paper here.