On January 17, 2017, the Northern District of California enacted revisions to the Patent Local Rules which require the early disclosure of damages-related discovery and contentions. The revised rules are effective immediately in all patent cases pending in the Northern District.
At the Initial Case Management Conference, the parties are to provide the court with a "non-binding, good faith estimate of the damages range expected for the case along with an explanation for the estimates." Patent Local Rule 2-1(b)(5).
Local Patent Rules 3-1 and 3-2, related to a patentee's Infringement Contentions and the accompanying document production, require patentees to disclose additional details regarding their damages contentions. For example, the patentee must disclose its contentions regarding the time of first infringement, the start of claimed damages period, and the end of claimed damages period. The patentee must also produce all license agreements that it contends are "comparable to a license that would result from a hypothetical reasonable royalty negotiation," all licenses and agreements transferring any interest in any patent-in-suit, documents reflecting F/RAND commitments, and all agreements that "may be used to support the party asserting infringement's damages case." These all must be disclosed and produced within fourteen days of the Initial Case Management Conference.
Local Patent Rule 3-4, related to an accused infringer's document production accompanying its Invalidity Contentions, requires accused infringers to produce all license agreements that they contend are "comparable to a license that would result from a hypothetical reasonable royalty negotiation," documents sufficient to show the "sales, revenue, and profits for accused instrumentalities" identified in the Infringement Contentions for the time periods specified, and all agreements that "may be used to support the party denying infringement's damages case." These must be produced within forty-five days of receiving the patentee's Infringement Contentions.
New Local Patent Rule 3-8 requires patentees to serve "Damages Contentions" within 50 days after receiving an accused infringer's Invalidity Contentions. The Damages Contentions must contain a disclosure of all "theories of recovery, factual support for those theories, and computations of damages within each category." The accused infringer then must provide Responsive Damages Contentions 30 days later, which must include "the party's affirmative position on each issue." For both sets of Damages Contentions, to the extent a party contends it is unable to provide a fulsome response to the disclosures required, "it shall identify the information it requires."
These changes to the Northern District of California's Patent Local Rules reveal that the parties should be thinking about the potential value of a litigation earlier in the life of the case. Consistent with the new proportionality standards under the Federal Rules of Civil Procedure, the early disclosure of damages-related information will likely help frame the resolution of discovery disputes to ensure that the burdens of discovery are proportional to the needs of the case.
The Northern District of California has historically required a showing of good cause and diligence for parties to amend their contentions and accompanying document productions after the deadlines required by the Patent Local Rules. Because parties tend to postpone consideration of damages issues until late in the life of a patent case, these revised rules further underscore the importance of assessing the damages case from the outset of a case.
The new rules are available on the Court's website here.
A redlined set of rules showing the changes are also available on the Court's website here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
