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Joint
Defense Pacts Pose Pitfalls
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by Robert Ambrogi
BullsEye Bulletin: March 2010
IMS ExpertServices™ is the legal industry's premier full-service
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Facing increases in litigation and decreases in legal budgets, corporate
defendants in patent and trademark lawsuits are more regularly employing
a tactic most would not have dreamed of a decade ago. Rather than fight
these cases single-handedly, they are joining together and hiring a
single law firm to represent them as a group.
Joint representation agreements make
sense from an economic standpoint and even, in many cases, from a strategic
standpoint. But when it comes to the hiring and use of expert witnesses,
joint representations require special precautions.
The potential pitfalls
regarding experts are many. These cases pose dangers of disputes over
practical issues such as which expert to hire, who employs the expert and
who pays for the expert. On a far-more serious level, these arrangements
can increase the potential for conflicts of interest and make it more difficult
for parties to maintain work-product privileges and client confidentialities.
That
said, many of these risks can be avoided, lawyers say, by clearly spelling
out roles and responsibilities at the outset of the joint representation
and by maintaining open channels of communication throughout the representation.
Possibility for Conflict
Joint representation agreements are a step beyond the more common
joint defense agreements. In the latter, separately represented defendants
work together to coordinate all or part of a defense. Under a joint representation
agreement, separate defendants come together in a single defense mounted
by a single law firm.
Under such an arrangement, one obvious area of possible
conflict is in coordination of the expert witness. Paul W. Reidl, an
intellectual property lawyer in California and the former president of
the International Trademark Association, recalls an example he observed
in a case.
Two
defendants operating under a joint representation agreement hired a marketing
expert to provide testimony on market operation and performance. "One
defendant had a very clear view about what that report should and should
not cover," Reidl says. "The other defendant wanted something far
different."
For the most part, the two defendants were able to work out
their differences between themselves and outside the presence or knowledge
of the expert. But there were times when their tactical dispute spilled
over into meetings with the expert.
"As a result of that conflict, the
expert report was viewed as OK but sub-optimum by both parties because
it was a compromise approach to the problem," he
says. "At the end of the day the defense prevailed so things worked out
well, but it was a real headache to get the expert report together."
Issues Matter
In patent cases, the potential for problems will vary depending on the
relationships among the parties to the joint representation agreements
and the nature of the testimony to be offered by the expert.
"A lot
depends on how the groups of defendants are related," observes
R. David Donoghue, a patent litigator with Holland & Knight in Chicago. "If
the defendants are a supplier and its customers, and the cases arise
out of the same accused product or process, then the potential for
conflict is minimal."
"But if the defendants that enter into the
joint agreement are different manufacturers of a category of products,
then you can face complex issues as an attorney representing these
different parties," Donoghue believes.
It also matters whether the
expert's testimony relates to the invalidity of the patents or to
establishing non-infringement, says Donoghue, who has written about
these issues on his Chicago IP Litigation Blog.
Defendants can more easily share
an expert to testify with regard to invalidity, he notes. "That expert
is not focused on the accused product, but is looking at the prior
art. That is generic to the defendants." But
in the non-infringement portion of a case, there may be an element
that, if construed a certain way, suggests that some defendants do
not infringe but that others do.
Advice from Lawyers
The best way to avoid problems with experts in joint representation
matters is to anticipate and address them up front, Donoghue advises.
"Do
the upfront technical analysis to understand the infringement claims
and potential positions and claim constructions as best as you can.
You want to avoid the potential for conflict, because conflicts tend
to arise at times when they are most difficult to deal with – in
the weeks before discovery closes or before the expert's report
is due."
It is also important, at the outset of the joint representation,
to spell out in writing the ground rules for hiring and supervising
expert witnesses, advises Joseph C. Gioconda, an intellectual property
lawyer in New York City. "All the parties to the joint defense agreement
and their respective counsel must work out in advance who is going
to be the point person with the expert."
Gioconda further suggests
that the parties hold periodic conference calls outside the expert's
hearing to discuss the status of the expert's work and any issues
of concern.
If Conflicts Arise
If conflicts do arise over the course of a joint representation,
one way to deal with them may be to have separate teams of lawyers
within the same firm work with separate experts, Donoghue suggests.
Alternatively, it may be possible to use multiple experts and still
coordinate them through a single counsel.
A variation on this would be to hire one
expert to address the primary issues in common among the defendants
and then hiring separate experts to address discrete issues faced
by individual defendants, recommends Erin B. Moore, a litigation
partner with Green & Green
in Dayton, Ohio.
Still another approach is for the defendants to hire
a single firm to represent them in the litigation but to have their
own, separate counsel. Paul Hletko, a patent attorney at the Cardinal
Law Group in Chicago, says this arrangement allows potential competitors
to enter into joint defense agreements while simultaneously protecting
their trade secrets and other competitive information.
Direct and open communication
with clients is the surest way to avoid problems under a joint representation
agreement, lawyers agree. "Spend
the time with the clients to make sure they understand the relationship," Donoghue
says. "Particularly in the representation of multiple defendants,
write down the understanding and agreement so no party is confused."
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