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Everyone loves a good ending. Doesn’t matter if we are talking about a television show, sporting event, or IP case. Ok, so maybe the latter is more of a niche interest, but for those who care, a good ending to a heated IP dispute is still something to savor. Since the overwhelming majority of IP disputes settle, it is often easy to determine when a dispute has come to a close. While the terms of most disputes remain confidential, the interested public can usually at least glean that an agreement was reached between the former combatants. And for those of us who represent clients, negotiating (hopefully) favorable settlements for our clients is a critical aspect of IP practice, due to the importance of ending disputes in a way that allows clients to move forward with their businesses and interests better off than they were going into the case.
As everyone recognizes, settling cases brings finality, even when the parties assume ongoing obligations as part of their agreement to settle. The alternative to settlement is usually additional litigation, which in IP cases can drag on interminably, sometimes through multiple rounds of appeal and remand. This phenomenon can lead to interesting circumstances in some cases, where one party is desperate to declare at least part of a case “over,” while the other fights to keep proceedings going so that they can avoid having to pay on a big verdict, for example. The point is that closing out cases that actually go to trial is difficult; in contrast to settlements that tend to end matters immediately, providing some element of closure to the dispute between the parties.
The truth is that getting to final judgment in a patent dispute is a difficult road, navigated successfully by only the most dogged of patentees. It is nearly always far easier to just settle matters, rather than have to deal with the difficulties of enforcing a judgment. But sometimes hands are forced, requiring a patentee to move the trial court for an order allowing it to collect on a judgment. As one would suspect, such maneuvering is usually reserved for the most valuable of cases, where the amount in controversy justifies protracted legal wrangling between parties. It is the rare case indeed where the parties bring as much vigor to the fight four or five years into the case as they did when hostilities commenced. But it happens on occasion, with those circumstances worth studying as both a roadmap laying out how to proceed when trying to enforce a judgment, as well as a caution to those who hold to the belief that fighting to the bitter death is a road worth taking.
Take a recent decision out of the District of Kansas (not a patent hotbed, in case anyone was wondering) that dealt squarely with the issue of when a patent judgment can be enforced. While also reminding everyone just how long big-ticket patent cases can take to resolve — absent settlement, of course. The case — a patent dispute between Sprint and Time-Warner on technology for handling telephone calls over a network, was filed back in 2011. In a split decision, the Federal Circuit affirmed the damages awarded at trial of $140mm (big verdict) and declined to find the patents invalid for lack of written description. That decision was rendered on November 30, 2018, seven years after the case was filed. Since then, Time Warner has brought on leading Supreme Court advocate Paul Clement to file a petition for certiorari (good discussion here) based primarily on the idea that the awarded damages were too high due to a lack of apportionment by Sprint’s damages expert. (Whether or not that petition will be accepted is as of now unclear, though the issues presented are important — particularly the apportionment issue, which has readthrough to many patent cases that are ongoing or that will be filed.)
At the same time as Time Warner waits for the Supreme Court to decide whether it is interested in reviewing the damages award, Sprint filed a motion back in the district court — following the Federal Circuit’s affirmance — seeking to enforce the judgment it had received in March 2017 for about $140mm or so in damages. The trial judge granted the motion, finding that it no longer had the power to extend a stay of judgment pending Supreme Court review, since that power rested in the hands of the Federal Circuit, as the court whose order was being appealed to the Supreme Court. The judge granted the motion, even though he was sympathetic to the fact that it had appeared that Sprint had previously consented to a stay through a Supreme Court review, but no longer wanted to agree to such a stay once the Federal Circuit ruled in its favor. Either way, the judge found that even if he wanted to, he couldn’t extend the stay. Whether or not Time Warner actually has to pay the $140mm before the Supreme Court actually rules in uncertain. What should be clear, however, is that Sprint has been waiting a long time to see their money. And this is with Sprint having a winning patent hand.
Ultimately, the Sprint case confirms that even the most persistent patentees face a long road before they can collect on a judgment from a dogged, well-resourced defendant. While serving as a public service announcement in favor of settlement, cases like Sprint also caution against both patentees and litigation funders getting their hopes too high that a trial win is all that is needed to get a reluctant defendant to pay. Indeed, that trial win is often just one incremental step on the long march to actually getting paid on a final judgment. Want real finality? Settle.
Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.