Northern Ill.'s New Local Patent Rules
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1 Portfolio Media, Inc. 648 Broadway, Suite 200 New York, NY Phone: Fax: Northern Ill.'s New Local Patent Rules Law360, New York (November 06, 2009) -- On Oct. 1, 2009, The Northern District of Illinois adopted new local rules for patent cases ( Illinois Rules or LPR ) designed to provide more predictability and streamline patent litigation.[1] Historically, the Northern District of Illinois has consistently had one of the heaviest dockets for patent cases.[2] In 2008, the Northern District of Illinois ranked fourth in IP case filings in 2008, with 385 cases filed, putting it behind the Central District of California, Southern District of New York and the Northern District of California.[3] The highly respected judges of the Northern District of Illinois are well acquainted with patent issues and the various ways in which patent litigation differs from most other civil litigation, in factual complexity; routine assertion of counterclaims; the need for the court to construe, and thus for the parties to identify, disputed language in patent claims; and the variety of ways in which a patent may be infringed or invalid. While the Northern District of Illinois is not transforming itself into a rocket docket, the Illinois Rules should have a significant impact on the number of patent litigation filings. The court s intention in adopting the Illinois Rules is to eliminate the need for litigants and judges to address separately in each case procedural issues that tend to recur in the vast majority of patent cases. [LPR Preamble]. The Illinois Rules provide a structure for patent cases that will provide greater predictability and allow easier planning for the court and the parties, which should streamline patent litigation and reduce litigation cost. In addition, the Illinois Rules will increase the early exchange of information without discovery battles, which also tends to decrease litigation costs. Thus, the Illinois Rules may attract even more patent cases to Chicago.
2 However, because the Illinois Rules do not provide the perceived benefits for patent holders that are found in other districts with local patent rules, such as the Eastern District of Texas and New Jersey, patent holders may be more likely to file in those districts over the Northern District of Illinois, so long as venue and jurisdiction are proper in those districts. The Illinois Rules incorporate many provisions found in the local patent rules of other districts, such as the Northern District of California, Eastern District of Texas and New Jersey, but also include certain rules that are unique to the Northern District of Illinois. Like the Northern District of California, the Illinois Rules provide for a standardized protective order that is deemed to be in effect upon the initiation of the lawsuit, expediting the exchange of confidential information. [LPR 1.4 and N.D. Cal. LR 2-2]. The parties may, either at the outset of the case or later, seek a revised protective order that is tailored to their case, so long as it is not a basis to delay the disclosure and discovery schedule that the Illinois Rules contemplate. [LPR 1.4]. The Eastern District of Texas and New Jersey, on the other hand, require that documents be produced under an Attorney s Eyes Only designation until the entry of a protective order. [NJ LPR 2.3 and E.D. Tex. P.R. 2-2]. The Illinois Rules also include some interesting provisions that are not found in the other districts. For example, the Illinois Rules preclude a party from filing a motion to stay the lawsuit pending re-examination at the Patent Office after the due date of service of that party s final contentions. [LPR 3.5]. If any declarations are filed with a claim construction brief, those declarants must be promptly produced for deposition. [LPR 4.2]. In addition, discovery of opinions of counsel offered in defense to a charge of willful infringement are not discoverable until 35 days prior to the close of fact discovery, whereas other districts, such as the E.D. of Texas, allow discovery of opinions of counsel much sooner. [LPR 3.6]. Early Disclosure Of Highly Relevant Information The Illinois Rules require the parties to provide particulars behind allegations of infringement, noninfringement and invalidity at an early date. A complaint under the Illinois Rules must meet the Twombley / Iqbal pleading standard and cannot be worded in bare-bones fashion. The Illinois Rules also require that some highly relevant information be produced along with the initial disclosures under Federal Rule of Civil Procedure 26(a)(1). The initial
3 disclosures must be exchanged by all parties within 14 days after the defendant files its answer or other response. If the defendant asserts a counterclaim for infringement, the date for simultaneous exchange of initial disclosures is within 14 days after the plaintiff files its answer or other response to the counterclaim. [LPR 2.1]. Along with the initial disclosures, the patent holder must produce all documents regarding: 1) any disclosure, sale or transfer, or offer to sell or transfer any item embodying, practicing or resulting from the practice of the claimed invention prior to the date of application of the patent in suit;[5] 2) the conception, reduction to practice, design and development of each claimed invention, which were created on or before the date of the application for the patent-insuit or the priority date, whichever is earlier; 3) all communications with the U.S. Patent Office (i.e. the prosecution history) for each patent-in-suit and any patents from which they claim priority; and 4) ownership of patent rights. The accused infringer must produce 1) documents sufficient to show the operation and construction of each element of any product or process specifically accused in the complaint; and 2) copies of all known prior art. Id. Generally, additional contentions and documents must be produced by each party at two-week intervals, except for the final contentions which must be served after a longer interval. The patent holder must serve initial infringement contentions on all parties 14 days after exchange of the initial disclosures. [LPR 2.2]. The initial infringement contentions must provide a detailed claim chart showing separately for each asserted claim, an identification of each claim element in the accused product or process, and an identification of whether each element is present literally or under the doctrine of equivalents. Id. For any claim of infringement under the doctrine of equivalents, the initial infringement contentions must include an explanation of each function, way and result that is equivalent and why any differences are not substantial. Id. Detailed information must also be provided for any claims of indirect infringement, including a description of the acts of each alleged infringer that are contributing to or inducing direct infringement. Id. Information regarding the basis for willful infringement must be provided and any commercial embodiments of the claimed invention must be identified, including whether they are marked with a patent number. Id.
4 Initial noninfringement, unenforceability and invalidity contentions must be served by the accused infringer within 14 days after service of the initial infringement contentions. The noninfringement and invalidity contentions must contain a detailed claim chart with a similar level of specificity that is required for the infringement contentions. [LPR 2.3]. The invalidity contentions, for example, must contain the following information to the extent known to the party asserting invalidity: 1) Identification, with particularity, of each item of prior art that allegedly anticipates each claim or renders it obvious. Prior art relating to public use or an offer for sale under 102(b) shall be identified by specifying the item offered for sale or publicly used or known, the date the offer or use took place or the information became known, and the identity of the person(s) involved in the offer for sale or use. Prior art under 102(f) and (g) must also be identified with a similar level of detail. 2) A statement of whether each item of prior art allegedly anticipates each asserted claim or renders it obvious, including any combination of prior art items relied upon for obviousness with an identification of the reasons to combine such prior art items. 3) A detailed claim chart identifying where specifically in each alleged item of prior art each element of each asserted claim is found. 4) A detailed statement of any grounds of invalidity based on indefiniteness under 112. [LPR 2.3(b)]. Additional documents relating to the operation of any aspects or elements of the accused product identified in the noninfringement contentions must also be produced by the accused infringer at this time, along with copies of any prior art that is not found in the file history of the patents-in-suit. [LPR 2.4] Fourteen days later, the patent holder must serve its initial response to the invalidity contentions, which must also contain a detailed claim chart that states as to each identified element in each asserted claim, whether the party admits to the identity of the elements in the prior art and, if not, the reason for such denial. [LPR 2.5]. The Illinois Rules contemplate a different schedule for initial disclosures in a declaratory judgment action seeking a judgment that a patent is invalid or not infringed. If no claim for infringement is made by the patent holder in the declaratory judgment action, initial invalidity and unenforceability contentions under LPR 2.3 and 2.4 are served within 28 days after the exchange of initial disclosures. [LPR 2.6]. Final infringement contentions must be served by the patent holder within 21 weeks after the due date for service of the initial infringement contentions. The accused
5 infringer must serve final unenforceability and invalidity contentions at the same time. [LPR 3.1]. The accused infringer must serve final noninfringement contentions within 28 days after service of the final infringement contentions. At the same time, the patent holder must serve its response to the final unenforceability and invalidity contentions. [LPR 3.2]. Amendment of the final contentions is only allowed upon a showing of good cause and absence of unfair prejudice to the opposing parties. [LPR 3.4]. As in other districts which have adopted local patent rules, this early disclosure of information, which is generally contemplated by Rule 26, but hardly done in practice, should allow patent holders to evaluate the strength of their infringement allegations and allow accused infringers to evaluate their defenses early in the case before incurring significant discovery expenses. Claim Construction Briefs The Illinois Rules require a late claim construction briefing schedule during the later portion of the fact discovery period. In addition, the Illinois Rules adopt a significantly different schedule for claim construction briefing compared to most other districts, which either have two rounds of concurrent claim construction briefing or a traditional opening-response-reply schedule with the patent holder opening and replying. In contrast, the Illinois Rules provide for a opening-response-reply schedule with the accused infringer not the patent holder submitting the initial and final briefs. Writing first and last generally benefits the accused infringer. However, the court reasoned that the claim construction hearing affords the patent holder an opportunity to rebut any arguments raised by the accused infringer in its reply brief. The court also opted to have the alleged infringer file the opening brief because, according to the committee, patent holders are more likely to argue for a plain meaning construction or for nonconstruction of disputed terms, whereas alleged infringers tend to be less likely to do so. [Comment to LPR 4.2]. The Illinois Rules also place a limit of no more than 10 disputed terms that may be submitted to the court for construction. The number can only be increased with prior leave of court upon a showing of good cause. [LPR 4.1]. A limit on the number of claim terms to be presented for construction should require the parties to focus on outcome-determinative or otherwise significant disputes and should also result in a quicker issuance of a claim construction ruling.
6 Seven days after claim construction briefing is completed, the parties must submit a joint claim construction chart setting for each disputed term addressed in the briefs and each party s proposed construction, as well as a joint status report containing the parties proposals for the nature and form of the claim construction hearing. [LPR 4.2(f)]. The Illinois Rules also require that the entire prosecution history of each patent-in-suit be attached to the responsive claim construction brief. The claim construction hearing may be held within 28 days after filing of the reply brief, unless the court orders otherwise. [LPR 4.3]. Experts and Dispositive Motions Initial expert reports for issues other than claim construction are served within 21 days after the close of discovery after the claim construction ruling. Rebuttal expert reports must be served 35 days after the exchange of initial expert reports. [LPR 5.1]. Depositions of all expert witnesses must be concluded within 35 days after exchange of the rebuttal expert reports. [LPR 5.2]. Finally, dispositive motions must be filed within 28 days after the end of expert discovery. [LPR 6.1]. That said, the Illinois Rules do not preclude a party from moving for summary judgment at an earlier stage if circumstances warrant. It is left to the trial judge to determine whether to consider an early summary judgment motion. [Comment to LPR 6.1]. Conclusion The adoption of local patent rules by the Northern District of Illinois is a major step forward. The Illinois Rules will streamline the flow of patent cases in Chicago. Although it appears that the cases will not proceed to trial faster than the average twoyear period for all civil cases in the Northern District, the path to trial should be more predictable. Early disclosure of outcome-determinative information should eventually reduce the cost of patent litigation and make early disposition more likely. These factors may encourage the filing of more patent cases in this district, which already has one of the heaviest dockets for patent litigation in the nation. --By Sailesh K. Patel, Schiff Hardin LLP Sal Patel is a partner with Schiff Hardin in the firm s Chicago office.
7 The opinions expressed are those of the author and do not necessarily reflect the views of Portfolio Media, publisher of Law360. [1] The new rules are effective immediately for all patent cases filed or transferred into the Northern District of Illinois after Oct. 1, [2] See e.g. Kimberly A. Moore, Forum Shopping in Patent Cases: Does Geographic Choice Affect Innovation?, 79 N.C. L.Rev. 889, 903 (2001). [3] Judicial Business of the United States Courts, 2008 Annual Report of the Director published by the Administrative Office of the U.S. Courts [4] The Rules provides some protection to patent holders here because production of a document with the initial disclosure cannot be used as an admission that the document evidences or is prior art under 35 U.S.C [LPR 2.1].
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