The Eastern District of Texas is well known for its intense patent activity and already provides early disclosure of infringement and invalidity contentions to facilitate faster resolution of these cases. The Court has now taken similar action by providing an option for accelerated damage discovery, including requiring a two week turnaround between defendant's production of potentially infringing sales data and plaintiff's good faith estimate of damages. Accomplishing this will require expert assistance immediately in the process. Even for cases that do not settle, this damage estimate will inform the Court's discovery decisions and resource allocations.
On February 25, 2014, Chief U.S. District Judge Leonard Davis issued General Order 14-3, which provides this optional schedule in patent infringement cases called the Track B Initial Patent Case Management Order ("Track B"). Track B generally requires early disclosure of the most critical information in assessing the plaintiff's damages, although the estimates offered during the accelerated period are non-binding and additional discovery is available later in the process.
The Court can preemptively put parties on Track B, or it can be elected by mutual agreement among the parties on or before the last defendant files its answer or motion to dismiss. Any additional parties added after the filing of a Track B election may file an objection. Upon election, the Court will impose a standard protective order and the following schedule applies:
If followed in good faith, Track B should provide knowledge of an opposing party's liability and damage positions within a short time after its election. This enables earlier resolution via settlement (especially when lower amounts are at stake), as parties will have an educated basis for potential damages and an opportunity to avoid the considerable expense of a more prolonged fight. However, the accelerated schedule requires that expert involvement occur quickly in order to properly interpret the discovery (including identifying the specific value of the patented technology) and respond with damage calculations within the required timelines. Should this process prove effective, other districts may follow suit.
David Nolte is a principal at Fulcrum Financial Inquiry LLP with over 30 years experience performing forensic accounting, auditing, business appraisals, and related financial consulting. He regularly serves as an expert witness.
©Copyright - All Rights Reserved
DO NOT REPRODUCE WITHOUT WRITTEN PERMISSION BY AUTHOR.