The idea that one should be a zealous advocate for my client may be good, but it can also lead to large sanctions. The image of the “I’ll do anything to win” lawyer may be exacerbated by media; yet many firms have that attitude without any need of media reinforcement. Two recent intellectual property cases highlight the problems of that approach. Both involve millions of dollars. One resulted in close to 2 million dollars in sanctions, and the other will likely result in a sanction of similar amount. Both raise questions about judges, trials, and questions of law or fact. When, if ever, should a judge stop a trial that seems to have no basis or that has an event so egregious that it will merit setting aside a jury verdict? If a judge lets the case proceed, and then later sets aside the verdict as well as ordering the payment of fees, should the fee claim be stopped at the time at which the offending event occurred? A recent patent case highlights these problems.
Some may remember Mattel’s run in with sanctions in the Walking Mountain case. There the case was handled at summary judgment, and Mattel had to pay close to $2 million in fees and expense for bringing an unreasonable case. In that situation, if the case was so unreasonable, the court might have dismissed the case earlier, but one can see that in many cases letting the sides complete discovery is the only way to reach the law.
As the Recorder reports, in a recent patent case, however, U.S. District Judge Richard Matsch, has sanctioned attorneys (order here) from McDermott Will & Emery for disobeying court orders regarding claim construction during their closing arguments. The jury returned a $51 million verdict. Judge Matsch set aside the verdict and required the firm to pay the other side’s attorney fees which could run into millions of dollars. The initial ruling was upheld by the Tenth Circuit. This ruling will likely be appealed. The key difference seems to be why let the case proceed?
Judge Matsch has said that he accepted that fact questions were still open, and that is why he let the trial move forward instead granting the motion to dismiss. The attorneys representing McDermott argued that the Judge should have stopped the behavior when it occurred. As one attorney, Paul Vapnek of Townsend and Townsend and Crew explained, “Judges are often reluctant during trial in trying to control the lawyers too closely — They don’t want to give the jury the impression they’re picking one side or the other.” That may be. In addition once the damage is done, a judge can’t reel it back in; at best one tries to limit the damage.
Judge Matsch seems here to have left the fact questions to the jury, done his job and given a ruling regarding the claim construction, and trusted the attorneys to adhere to this balance. They did not. Judge Matsch ruled; the Tenth Circuit upheld; and now more money will be spent on how much the sanctions need or can be. If one argues that the fees should be cut off at the time of the offending event, the problem is that the attorneys seem to tempt fate: Stop us or we’ll win despite your ruling. The judge is correctly letting the case proceed, because she can’t stop it to cure the problem in the flow of the trial. So the other side must finish the case and incur fees. There are probably many ways to analyze the fees question so if anyone has insights on how to do so, please chime in.
Either way, one side may be willing to bet that ignoring the judge may payoff well (sometimes $51 million well). Nonetheless, some are saying that this case is a caution regarding lawyer behavior. With so much at stake and in the heat of believing one’s own argument, I wonder whether attorney’s ever have the reality check that sanctions such as this one are claimed to be.