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Section on Patent Damages Hearings The Sedona Conference Working Group Series The Sedona Conference Commentary on Case Management of Patent Damages and Remedies Issues: Section on Patent Damages Hearings A Project of The Sedona Conference Working Group on Patent Damages and Remedies (WG9) May 2017 Public Comment Version The Sedona Conference Patent Damages Hearings May 2017 The Sedona Conference Commentary on Case Management of Patent Damages and Remedies Issues: Section on Patent Damages Hearings A Project of The Sedona Conference Working Group on Patent Damages and Remedies (WG9) MAY 2017 PUBLIC COMMENT VERSION Author: The Sedona Conference Editor-in-Chief: Andrea Weiss Jeffries Managing Editor: Jim W. Ko Judicial Advisors: Hon. Cathy Ann Bencivengo Hon. John D. Love Contributing Editors: Chris Bakewell Vernon Evans David Fry Eric Hutz John Jarosz Carol Ludington Janet Ramsey Alan Ratliff Bijal Vakil Jennifer Yokoyama The opinions expressed in this publication, unless otherwise attributed, represent consensus views of the members of The Sedona Conference’s Working Group 9. They do not necessarily represent the views of any of the individual participants or their employers, clients, or any organizations to which they may belong, nor do they necessarily represent official positions of The Sedona Conference. We thank all of our Working Group Series Sustaining and Annual Sponsors, whose support is essential to our ability to develop Working Group Series publications. For a listing of our sponsors, click on the “Sponsors” navigation bar on the homepage of our website. REPRINT REQUESTS: Requests for reprints or reprint information should be directed to Craig W. Weinlein, Executive Director, The Sedona Conference, at [email protected] or 602-258-4910. Copyright 2017 The Sedona Conference All Rights Reserved. Visit www.thesedonaconference.org i The Sedona Conference Patent Damages Hearings May 2017 Preface Welcome to the Public Comment Version of The Sedona Conference Commentary on Case Management of Patent Damages and Remedies Issues: Section on Patent Damages Hearings, a project of The Sedona Conference Working Group on Patent Damages and Remedies (WG9). This is one of a series of working group commentaries published by The Sedona Conference, a 501(c)(3) research and educational institute dedicated to the advanced study of law and policy in the areas of antitrust law, complex litigation, and intellectual property rights. The mission of The Sedona Conference is to move the law forward in a reasoned and just way. The mission of WG9, formed in November 2010, is “to create guidelines that will help to clarify and guide the evolution of patent damages and remedies considerations to encourage patent damages and remedies law to remain current with the evolving nature of patents and patent ownership.” The Working Group consists of members representing all stakeholders in patent litigation. The original WG9 Commentary on Patent Damages and Remedies was published for public comment in June 2014, and was the focus of the dialogue at The Sedona Conference’s 14th Annual Conference on Patent Litigation in Del Mar, CA, in October 2013 and The Sedona Conference’s WG9 Meeting in New Orleans, LA, in November 2014. The content of that original WG9 Commentary has been split into two stand-alone Commentaries: the first, entitled the Commentary on Patent Reasonable Royalty Determinations, was recently published in December 2016; and the second, entitled the Commentary on Case Management of Patent Damages and Remedies Issues, will be brought to publication later this year. In early 2015, the WG9 Steering Committee formed a subcommittee to draft a Proposed Model Local Rule for Damages Contentions, which was published for public comment in April 2016. Later in 2016, the WG9 Steering Committee formed a subcommittee to draft this section on Patent Damages Hearings. To develop this section, the subcommittee held numerous conference calls over the past year-plus, and the draft was a focus of dialogue at The Sedona Conference’s Working Group 9 Meeting in Houston, Texas, in February 2017. Both the Proposed Model Local Rule for Damages and Contentions and this Patent Damages Hearings section will ultimately be incorporated, along with additional preexisting and new material, into the upcoming WG9 Commentary on Case Management of Patent Damages and Remedies Issues. This publication represents the collective efforts of many individual contributors. On behalf of The Sedona Conference, I thank everyone involved for their time and attention during the drafting and editing process, and in particular: Chris Bakewell, Vernon Evans, David Fry, Eric Hutz, John Jarosz, Carol Ludington, Janet Ramsey, Alan Ratliff, Bijal Vakil, and Jennifer Yokoyama. The Working Group was also privileged to have the benefit of candid comments by several active district court judges with extensive patent litigation trial experience, including the Honorable Cathy Ann Bencivengo and the Honorable John D. Love. The statements in this publication are solely those of the non-judicial members of the Working Group and do not represent any judicial endorsement of the recommended practices. Following the Working Group Series review and comment process described above, The Sedona Conference’s commentaries are published for public comment, including in-depth analysis at Sedona-sponsored conferences. After sufficient time for public comment has passed, the editors will ii The Sedona Conference Patent Damages Hearings May 2017 review the public comments and determine what edits are appropriate for the final commentary. Please send comments to [email protected], or fax them to 602-258-2499. The Sedona Conference hopes and anticipates that the output of its Working Groups will evolve into authoritative statements of law, both as it is and as it should be. Craig W. Weinlein Executive Director The Sedona Conference May 2017 iii The Sedona Conference Patent Damages Hearings May 2017 Table of Contents Patent Damages Hearings Principles “At a Glance” .................................................................................... v Patent Damages Hearings Best Practices “At a Glance” ............................................................................ vi I. Introduction ................................................................................................................................................... 1 II. Timing of the Damages Hearing ................................................................................................................ 3 III. Pre-Hearing Damages Discovery ............................................................................................................ 5 IV. Preparation for the Damages Hearing ..................................................................................................... 7 A. Damages Expert Statements ............................................................................................................ 7 B. Technical Expert Statements ........................................................................................................... 7 C. Identification of Points of Agreement and Disagreement .......................................................... 8 V. Conducting the Damages Hearing ............................................................................................................. 9 VI. Modification or Supplementation of Damages Hearing Positions .................................................... 11 iv The Sedona Conference Patent Damages Hearings May 2017 Patent Damages Hearings Principles “At a Glance” Principle No. 1 – A damages hearing can be used to facilitate communication between the court and the parties regarding competing damages theories by: (1) clarifying and narrowing the contested damages issues in the case; (2) identifying additional discovery the parties may require; (3) simplifying pretrial and trial proceedings (e.g., Daubert motions and motions in limine); and (4) facilitating settlement discussions. ................................................................................................................... 1 v The Sedona Conference Patent Damages Hearings May 2017 Patent Damages Hearings Best Practices “At a Glance” Best Practice 1 – A damages hearing, if held, should be conducted after the parties have disclosed their damages contentions, and sufficiently in advance of trial to allow the parties and the court to reap the full benefits of the hearing. ............................................................................................................... 3 Best Practice 2 – A damages hearing, if held, should be scheduled as soon as practicable, and ideally no later than 60 days before service of the opening Rule 26 expert report on damages (i.e., the report from the party with the burden). ..................................................................................................................... 3 Best Practice 3 – The discovery related to damages hearings should focus on key information that will allow experts to prepare a meaningful damages statement prior to the hearing. The type and timing of this discovery should be agreed upon in advance of the Rule 16 conference or ordered by the court at the Rule 16 conference if no agreement is reached. ................................................................ 5 Best Practice 4 – The parties should discuss damages issues as part of the Rule 26(f) and initial case management conference. These discussions should
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