New rules, new issues: revisions to Northern District's local patent rules

The Northern District of California was the first jurisdiction to issue special local rules governing patent disputes in its courts. Since that time, more than 30 other jurisdictions have followed suit by adopting similar patent local rules and most, if not all, borrowed heavily from the original Northern District local patent rules.

On Jan. 17, the Northern District enacted revisions to the Patent Local Rules. The revised rules are effective immediately in all patent cases pending in the Northern District. The most significant revisions relate to (1) earlier damages disclosures, (2) separate damages contentions, (3) more specificity in infringement and invalidity contentions, and (4) a sharper focus on factual issues at the claim construction stage.

Earlier Damages Disclosures

Initial Case Management Conference

Under Revised Patent Local Rule 2-1(b)(5), the parties are required to provide the court with a "non-binding, good faith estimate of the damages range expected for the case along with an explanation of the estimates" at the initial case management conference. If the parties are unable to do so, they must explain their reasons, and identify what information is needed to do so.

Initial Infringement Contentions and Accompanying Document Production

Revised Patent Local Rule 3-1(h) requires patentees to disclose the time of first infringement, the start of the claimed damages period, and the end of the claimed damages period.

Revised Patent Local Rule 3-2 requires patentees to produce the following additional documents with their initial infringement contentions:

* All agreements, including licenses, transferring an interest in any patent-in-suit.

* All agreements that are comparable to a license that would result from a hypothetical reasonable royalty negotiation.

* All agreements that otherwise may be used to support the party asserting infringement's damages case.

* If a party contends that it (or a licensee) practices the invention, documents sufficient to show marking of such embodying instrumentalities and if it wants to preserve the right to recover lost profits based on such products, it must produce sales, revenues, costs and profits of such instrumentalities.

* All documents comprising or reflecting a F/RAND commitment or agreement with respect to the asserted patent(s).

Additional Damages-Related Documents Accompanying Invalidity Contentions

Accused infringers are required to produce additional documents and details with their invalidity contentions. More specifically, under revised Patent L.R. 3-4, Accused Infringers must produce the following documents along with their Invalidity Contentions:

* 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.

* All agreements that may be used to support their responsive damages case.

Separate Damages Contentions

Revised Patent L.R. 3-8 requires patentees to serve "damages contentions" within 50 days after receiving the accused infringer's invalidity contentions. The damages contentions must include 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 an explanation of areas of disagreement, as well as "the party's affirmative position on each issue."

For both sets of damages contentions, in the event a party contends it is unable to provide a fulsome response to the disclosures required, "it shall identify the information it requires."

Revisions to Specificity in Infringement and Invalidity Contentions

Under Revised Patent L.R. 3-1(c) and 3-3(c) patentees and accused infringers are required to disclose: where and how each limitation of each asserted claim is found within each accused instrumentality, or within the prior art.

Identification of Requested Factual Findings for Claim Construction

Revised Patent L.R. 4-3(f) requires the parties to include "an identification of any factual findings requested from the Court related to claim construction" in their joint claim construction and prehearing statement. This new requirement is likely intended to address the U.S. Supreme Court's 2015 ruling in Teva Pharmaceutical v. Sandoz, which altered the appellate standard of review for factual findings made in the context of claim construction decisions by a district court. Historically, all portions of claim construction decisions were reviewed de novo. However, as a result of Teva, claim construction decisions based on extrinsic evidence (i.e., "subsidiary facts," according to the court) are now reviewed under the deferential "clearly erroneous" standard. Claim construction decisions based on intrinsic evidence (e.g., the patent itself and its file history) continue to be reviewed de novo.

What's Next?

The changes to the Northern District's Patent Local Rules will require parties to think about the potential value of a claim earlier in the life of the case.

To this end, it will be interesting to see what impact, if any, the early disclosure of damages-related information will have on framing the resolution of discovery disputes to ensure that the burdens of discovery are proportional to the needs of the case. Additionally, it will be interesting to see how the court handles motions related to the sufficiency of the disclosures and contentions themselves, especially as they relate to damages information.

Also, as noted above, the Northern District has historically been a trendsetter with regard to patent local rules. That said, it is likely that other jurisdictions, especially those that handle a high volume of patent cases, will adopt similar revisions to their patent local rules.