Anyone who becomes a litigant in intellectual property lawsuits—whether wittingly or unwittingly—must understand four facts.
First, federal courts have almost exclusive jurisdiction over patent and copyright lawsuits; state courts cannot, according to the U.S. Constitution, deal with them.
Second, federal courts generally are of high integrity and honesty. While the rules may not be what any one person might prefer, they apply equally to all and are applied fairly to all.
Third, the extent of discovery allowed in the American system far exceeds that of almost any other system in the world. Even in Europe, litigants do not disclose the type of information that’s required in the United States, and many European companies are amazed at the scope of discovery allowed during federal litigation. While the rules may be intrusive and disconcerting, they govern all parties.
Fourth, without derogating any other legal system, my experience, and that of others who practice in the field, suggests that litigants from Asia, Eastern Europe, South America, and the Middle East have vastly different expectations of their judicial systems. In many foreign countries, a judge’s decisions are controlled, judges are bribed, the executive interferes with the judicial system, lawyers are not trustworthy, and court employees may be dishonest.
As a result, the U.S. federal court system can spark cultural conflict in litigants who grew up under foreign judicial systems, especially corrupt systems that deserved—and received—little respect. But if such litigants bring a suspicious attitude to American courts, they risk running afoul of the law. A closer look at the U.S. system of litigation can help readers avoid cultural-conflict pitfalls.
THE PROCESS
Discovery A legal complaint is filed in the federal court, and an answer is filed later. Thereafter, the court normally sets a status conference to schedule discovery, the process where each side “discovers” information about the other party and its positions. Each party may serve the other with documents identified as interrogatories, document requests, and requests for admission. Each party is required to answer the proffered discovery within a set time period. Answers are required to be complete, honest, and non-evasive.
The process seems ordinary to most American lawyers, but it may seem perfectly extraordinary to a client whose lawyer presents the other side’s requests and asks for the answers within two weeks. Some clients comply, usually because they know and expect the other side will do the same. Other clients, whose expectations of the legal system are very different, refuse to cooperate or try to be evasive with their own lawyers.
That won’t work in the American system. If parties refuse to identify information about their defenses during the discovery process, the courts may bar that party from introducing evidence during the trial that was supposed to be revealed during discovery, even if that evidence is helpful. Parties are required to produce not only evidence that is helpful but also information that is unhelpful or intrudes on their businesses. In the jewelry industry, such information can include customer identities, sales, profits, and other sensitive information.
Litigants who expect little from the judicial system don’t respect document requests because they don’t expect the other side to answer properly. Thus, some litigants balk or think they don’t have to play by the rules. Also, many litigants own companies and aren’t used to answering to others. They’re certainly not used to giving information they don’t want to give in an arena they don’t understand.
Sanctions The courts usually don’t sanction parties at the first suggestion that the rules are not being followed, but if the court senses that either party does not honor the rules, sanctions can be entered. Sanctions can include fines, payment of the other side’s legal fees, and serious financial penalties. Recently, Ron Perelman, in a case against a major financial institution, received an award of over $1 billion because the bank and its lawyers played games with producing documents. Ultimately, after a year, that case was remanded for reconsideration of the damages, but the reality is that not playing by the rules can be very costly.
If a plaintiff fails to play by the rules, its case can be dismissed by the court, and the plaintiff can be required to pay the other side’s legal fees. If a defendant refuses to play by the rules, the defendant’s defenses can be struck, and all that needs to be determined is the amount of the damages. The court has the power to strike either side’s position for either side’s failure to follow the rules, whether or not their positions are meritorious. Moreover, an opposing lawyer will take advantage of a party’s refusal to follow the rules by pushing issues even further, hoping that continued obstinacy will cause that party to lose its case, independent of the merits.
Depositions Following the exchange of the initial discovery materials, each party can subject the other to depositions, which are live questions under oath with a court reporter present. Depositions are conducted away from the courtroom, usually in a lawyer’s office, and they are taken in the presence of a court reporter, who swears in the witness. Depositions are taken in order to fix each witness’s story, to obtain information not easily obtainable by written documentation or interrogatories, and to probe around and find what other information might be available that is not easily obtained without an oral deposition. In fact, many courts prefer oral depositions as the most effective way to obtain information during the discovery process. Note that parties can be forced to answer questions, and failure to do so can result in sanctions.
Protective Orders Opposing lawyers often enter into what is known as a “protective order” in which each lawyer guarantees to protect the confidentiality of certain types of information, including sensitive business information. This means the information is revealed only to the opposing lawyer, who signs a document saying he or she will not disclose it to the party he or she represents. I cannot tell you how many times clients have scoffed at the idea that lawyers would honor such an agreement. I also cannot tell you how many times I have repeated that I do not know of a single lawyer who would violate a protective order. Litigants who expect lawyers to give confidential information to their clients are sadly mistaken, because any lawyer who engages in that practice is subject to disbarment and other penalties.
Whatever your expectations of the federal court system, don’t allow cultural differences or cynicism to sabotage your day in court. Be honest with your lawyer and let him or her guide you through the system, which is designed to be fair to all parties and, hopefully, produce a just result.