Mediation is probably better suited and more underutilized in patent cases than in any other type of case. Legal expenses in patent cases that go to trial average $1,500,000.00 per side. Even if mediation is unsuccessful in finding a way to increase the size of the pie, it can at least be successful in ensuring the size of the pie eventually divided is not $3,000,000.00 smaller.
Patent litigation translates into a one hand all in poker game with the house taking its $3,000,000.00 cut. Legal fees are not even the worst of it. Damage awards and punitive damages typically exceed legal fees. In addition, the disruption to the company, in terms of monopolization of key personnel during discovery and trial can bring a company to a halt. Companies sometimes invest so much in patent litigation that they cannot back out. They end up staking the entire company on decision of a mercurial jury. What odds of winning do you have to have to make mediation an unattractive option? 80%? 90%? If you think you have a 90% chance of winning a patent case at the time you file suit, you may want to get a second opinion.
Most litigators do not want to admit it, but suggesting mediation shows strength. It takes a party with a very strong fall back position to suggest coming to the table. Think about it. If you have a terrible case would you suggest mediation? You might push hard for a settlement, but do you want to bring in an objective third party to decide your fate? No. You want to mediate a great case. Worst case scenario in a successful mediation, you do not get as much as you would have gotten at trial, but you saved your client seven figures in attorney fees and three years (five or more with appeals) of anguish.
I have been very lucky in litigating patent disputes. Even so, I cannot say that a 100% litigation win is preferable to a successful mediation. I typically advise clients that litigation is advisable only if they would be willing to cut off their toe to force the other side to cut off their foot. You are not going to “win” you just might be less unhappy.
95% of patent cases settle before trial. Once litigation has begun, most settlements occur after discovery, with each party already averaging $800,000.00. Odds are the parties will settle. The only question is whether the parties come to the table fresh-faced and eager, or battle worn and penniless.
In most situations the lawyers wield the control necessary to bring the clients to mediation. Many attorneys, not wanting to appear weak in front of their clients or opposing counsel, shy away from suggesting mediation. Similarly, many clients do not want a patent lawyer that appears to be shying away from a fight. Unfortunately, a self-conscious patent lawyer and a demanding client is not a recipe for success in any patent litigation.
While suggesting mediation might seem difficult, mediation provides both the patent lawyer and the client the latitude to showcase their creativity, negotiation skills, business acumen and experience. Regardless of the outcome, if the patent lawyer and client are both honest, skillful and reasonable, mediation will solidify the attorney-client relationship, bring about a greater understanding of the other side’s position and leave the other side with a better understanding of your position. All of these things will help to reduce costs and streamline the patent litigation, even if a settlement is not reached.
And who knows? You might even settle.