I recently read a thought-provoking article in Headnotes, a monthly periodical published by the Dallas Bar Association. The basic gist is we may soon see courts issue guidance on damages theories early on in patent cases in an effort to clear the fog of war and encourage settlement. For example, courts may offer early, case-specific weigh-in on whether a plaintiff’s damages theory may appropriately include the Entire Market Value Rule, or whether a damages theory is inappropriate because an accused infringer would have likely forgone use of the invention-at-issue in favor of a non-infringing alternative.I could see such a strategy possibly being beneficial to the following:

• Any party wanting to drive settlement earlier in a case – it’s amazing how clarity on potential liability (and spoils) can cut the…puffery…and bring parties to the negotiating table.

• Small-company defendants fearing a large competitor may try to “spend them under” – judges may limit the scope of costlier phases of litigation, thereby hamstringing Goliath’s attempts to force David to spend everything he’s got defending himself over a small-potatoes controversy.

• Small-company plaintiffs seeking significant relief without incurring the cost of a full-blown trial or high-percentage contingency fee payout – turning the “potential-risk screw” early may allow a cash-strapped plaintiff who’s suffered real damage to obtain significant relief without going the distance – that is, if the other guy doesn’t call his bluff.

• Contingency-fee plaintiffs attorneys seeking to better understand their cost/benefit models early on in a case – is the juice worth the squeeze?

It will be interesting to see which courts adopt Chief Judge Rader’s and Judge Posner’s perspectives, but more importantly, which are willing to make calls on damages theories early enough in cases to matter.

Source: http://www.dallasbar.org/content/early-damages-assessment-patent-case

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