Judicial Strategies for Resolving Intellectual Property Cases without Trial

EarEy Neutral EvaEuation

Roderick THOMPSON and Michael SACKSTEI>EK*

Early neutral evaluation, or ENE, is a new and increasingly accepted tool used by federal courts to enhance case management and, where the parties are so inclined, settlement. During the past fifteen years, its use has steadily increased in the federal court based in San Francisco, the U.S. District Court for the Northern District of Cahfornia and, more recently, in other U.S. &strict courts. Although the procedure has enjoyed broad success in a variety of cases, it has proven particularly well suited for use in IP cases, where it has enjoyed especially strong popularity. There is no reason why the basic model now used in the Northern District of California cannot be replicated in whole or in part in other busy civil dockets with large IP case-loads.

I. THE HISTORY OF EARLY NEUTRAL EVALUATION

Although ENE is a newly created alternative dispute resolution (AIXC) technique, it has a relatively long history in the Northern District of California. Its origins can be traced to the late Chief Judge Robert Peckham’s desire to lower the cost of litigation to clients and to the vision of Magistrate Judge Wayne Brazil, who has developed and implemented the ENE program.

Judge Peckham was deeply concerned that the growing cost of even relatively routine c i d litigation in the federal court was becoming an unacceptable burden on the average litigant. The federal court was failing in its mission, mandated in Rule 1 of the Federal Rules of Civil Procedure, to “secure the just, speedy, and inexpensive determination of every action.” He charged a task force, composed of experienced lawyers and judges, to study the problem, and specifically asked one committee to develop new procedures to help resolve it. After studying the problem, the

* Pillsbury Madison & Sutro LLP, San Francisco, U.S.A. The authors were assisted inmensely by information provided by the Alternative Dispute Resolution

( A I ~ ) Program of the U.S. District Court for the Northern District of California, and particularly by Howard Herman, the A m Program Counsel, and Carroll De Andreis, the Program Administrator.

644 THE JOURNAL O F WORLD INTELLECTUAL PROPERTY

Committee concluded that an early, candid and objective case evaluation would enable the parties and counsel to achieve efficiency in resolving disputes. This led to the idea of an “early neutral evaluation” of the case.

A. CREATION OF THE ENE PROGKAM

At the recommendation of this Committee, the judges of the Northern District of California first adopted an experimental ENE program in 1985. When initial feedback proved positive, the program was enlarged to one hundred cases in 1986. In 1988, the judges of the Northern District voted to make ENE a permanent program. Today ENE is assigned to cases in two ways:

(i) it is assigned to all qualified, even-numbered cases not assigned to the

(ii) it may be chosen by the parties in those cases assigned to the multi-option Northern District’s multi-option ADK program; and

program.

B. ENE IN THE NORTHERN DISTRICT

From its begmning, the heart of the ENE program has been a confidential case- evaluation session before an experienced and respected neutral attorney. As originally implemented, the ENE session consisted of four major components:

(i) a fifteen- to thirty-minute presentation by each party; (ii) a discussion, led by the evaluator, of ways to reduce the scope of the

dispute and to identify areas of agreement; (iii) a candld evaluation of the strengths and weaknesses of the arguments and

evidence presented, includmg a specific discussion of likely outcomes and the dollar range of potential damages; and

(iv) a plan for expeditious discovery designed to provide the parties with the information necessary to conduct early settlement discussions.’

Ths basic outline of ENE has changed little in the years since. The principal change has been a recognition that in some cases, ENE may serve more than a purely evaluative function. Today, the parties are given the opportunity, where all agree, to change the ENE into mehation or a settlement negotiation.

’ See generally, Brazil, Kahn, Newman & Gold, Early Neutral Evaluation: A n Experimental EJort to Expedite Dispute Resolution, 69 Judicature, 1986, p. 279: where the authors discuss the origms of the ENE program in the Northern District and its status as of that time.

RESOLVING 1P CASES W I T H O U T TRIAL 645

C. THE HEART OF THE ENE IS THE CANDID EVALUATION

The primary focus of ENE is to provide the parties with an early and frank evaluation by an objective observer of both the merits of the case and of expeditious ways to aclueve resolution. The evaluation is not mediation. As the method has been refined, evaluators are now trained not to act as mehators unless expressly requested by the parties to do so, and then normally only before the evaluation is given. Experience has shown that once an evaluation is delivered, one side or the other tends to be disappointed and the neutral may no longer be in a position to be perceived as an unbiased mediator. Neutrals advise the parties at the outset, directly and unambiguously, that they are acting as evaluators, not medators.

Before delivering the evaluation, the neutral asks the parties if they want to discuss settlement. The neutral emphasizes that no party wdl be forced into such discussions, and unless all parties agree to hscuss settlement, the neutral goes on with the evaluation. The neutrals are also trained to look the parties (not the attorneys) directly in the eye when the evaluation is delivered. This ensures that the parties realize when the evaluation is being given, and listen. Early surveys had shown that some parties were not aware that the evaluation was being presented and did not focus on its significance.

The evaluation is not an off-the-cuff or “gut” reaction. The evaluator studies all materials provided in advance of the session, performs independent research into relevant case-law as necessary, listens to the presentations carefully, clarifies positions and facts through questioning, and then drafts a carehlly worded, but direct, evaluation.

The evaluation focuses specifically on the key issues raised by the facts of a case and the controlling law. It is not, however, necessarily confined to the arguments raised by the parties. Evaluators identitjr the key factual and legal issues, whether or not spotted by the parties. The depth of analysis and subject-matter expertise provided by the evaluator set ENE apart from other evaluative AUK methods, such as a judicial settlement conference or evaluative mediation.

D. THE USE OF ENE HAS EXPANDED SIGNIFICANTLY OVER THE YEARS

Today, early neutral evaluation has become the single most popular ADIX method in the Northern District. Table 1 shows the AUK method selected for multi-option program cases in which the parties were required to select an ADR option as reported by participants in actual ADR sessions in 1995.

Thus, in those cases where the parties were allowed to choose, 68 out of 227 cases (or 30 percent), the parties chose ENE, and in a slightly higher percentage, 52 out of the 143 (or 36 percent) of those cases actually conducting an AUR session, the ADR method selected was ENE. A magistrate judge settlement conference was

646 T H E JOURNAL O F WORLD INTELLECTUAL PlOPEIITY

TABLE 1: NUMBER OF ADR REFERRALS I N CASES OF ATTORNEYS RESPONIXNG TO THE

SURVEY FOR THE NORTHERN DISTRICT O F CALIFORNIA-1995

Multi-Option Cases

Type of ADR No. Referred No. with Session

Arbitration 5 2 Mediation 36 28 Early neutral evaluation 68 52 Magistrate judge settlement

conference 65 47 Private ADR 14 9 Other 39 5

Total 227 143

Note: During this period, even-numbered cases which met the qualifications for ENE were also required to participate in the ENE program; these cases are not reflected in the Table.

Source: FJC Report to the Judicial Conference Committee on Court Administration and Case Management on the Civil Justice Reform Act Demonstration Programs, 24 January 1997, p. 197.

almost as popular, with mediation a distant thrd. In ten years, ENE has evolved from an experimental idea to the most popular ADR method in the District.

11. How IT WORKS: KEY FEATURES OF EARLY NEUTRAL EVALUATION AS USED IN THE NORTHERN DISTRICT OF CALIFORNIA

It is important to reahze that ENE, or neutral evaluation, is used differently in different districts. For example, an “ENE session” in San Diego (Southern District of California) was held before a magistrate judge and lasted for thirty minutes. ENE outside the Northern District of Cahfornia may not match all of the details in the following overview of ENE as used in the Northern District of California.

A. BASIC FEATURES

- Free: The first four hours of a session are 6ee. However, after that, the evaluator may charge at $150.00 per hour.

- Early: The ENE session generally takes place within one hundred and fifty days of the filing of the complaint (or withln ninety days of the first Rule 16 Conference if the case is assigned to the ADR Multi-Option Program).

- Non-binding: The evaluation does not bind anyone and there are no penalties for not accepting the evaluator’s assessment or procedural suggestions.

RESOLVING IP CASES WITHOUT TRIAL 647

- Confidential: The court, counsel and parties “shall” treat as confidential all statements and communications made in the E N E . ~ The written evaluation statements submitted by the parties, the ENE session discussions, and the “evaluation” by the neutral lawyer are confidential and will not be disclosed to the judge assigned to the case.3

- The evaluator has subject-matter expertise: The Northern District selects experienced lawyers and requires them to participate in a one-day training session. They are then assigned to cases according to availability and expertise.

B. THE ELEMENTS OF ENE

- Pre-session conference call with counsel: The evaluator receives a preview of the case and ensures that the parties and counsel understand their obligations.

- Written evaluation statements: These are required ten days in advance; special dxlosures are required in IP cases.4

- The ENE session: A one half-day session attended by counsel and parties with authority to settle is held. Typically the session is held in a conference room in the neutral’s law office, but the court will make rooms available where warranted, and is conducted as follows: - introductions of all present and opening remarks by evaluator; - presentations of claimddefences by parties, usually by the attorneys, with

- responsive presentations by parties; - questions by evaluator to clari@/probe, discussions of facts and law; - evaluator identifies common ground and possible stipulations; - evaluator identifies key dlsputed issues (issue clarification); - evaluator leaves the room (or adjourns the session) and privately prepares

the evaluation and reduces it to writing; - evaluator determines if parties want to explore settlement before the

evaluation is presented and, if so, conducts settlement negotiations and medation;

- evaluator presents evaluation orally, looking parties squarely in the eye (Written evaluation in general is not handed out.);

- evaluator asks again if parties want to explore settlement; - case development planning; - discuss and schedule follow-up.

parties:

client participation optional;

- Follow-up: Any follow-up is done by the evaluator, but only as desired by

See Local ADR Rule 5.13. See the discussion of G ~ I Dirertoricr Scwicc Corp. v. PnciJc Bell Directory, 135 F.R.D. 187 (N.D. Cal.

The special requirements in IP cases are discussed below in Section IV. 1991). at the text accompanying footnote 13, infin.

648 THE JOURNAL O F WORLD INTELLECTUAL PROPERTY

C.

- telephone conference with attorneys; - letters to and fiom evaluator; - possible adhtional sessions (usually mehation).

ENE IS DIFFERENT: COMPARISONS WITH MEDIATION, SETTLEMENT CONFERENCES,

AND AI1BITRATION

- ENE is not mehation, although the parties (not the evaluator) may choose to convert the process to mediation.

- ENE is explicitly evaluative. The mediator is not explicitly evaluative and evaluation is not a principal objective of the process: - in mediation, any evaluation-if communicated at all-is oblique and

- in ENE, evaluation is direct and explicit, and is based only on information

- The principal purpose of mediation is settlement. ENE has multiple case- management purposes, and the settlement purpose is secondary.

- In mediation, the neutral primarily needs process expertise, not necessarily subject-matter expertise. In ENE the neutral must have subject-matter expertise.

- in mediation, the presentations should be directed to the other side; - in ENE, the presentations are directed to the evaluator.

- in mediation, the focus is on interests (rather than positions), with each

- in ENE, the focus at the case presentation stage is on evidence and law, and

could be based on information learned in confidence;

that all parties have shared.

- The presentations are directed at different targets:

- The principal focus is different:

side trying to identifjr and explain its situation, needs and perspective;

later on case management. - ENE is not an early settlement conference: - the parties are under no duty to discuss or negotiate settlement at all. The

evaluator does not have the authority to compel settlement negotiations; - except with respect to matters related only to scheduling, in ENE there is

no ex-parte communication or caucusing with the evaluator before he/she formulates the evaluation;

- in many settlement conferences, by contrast, there is considerable ex-parte communication with the neutral before he/she articulates an assessment of the parties’ positions.

- ENE is not judicial arbitration: - ENE involves no talung of testimony under oath and no cross-examination,

resulting in less disclosure of trial strategy;

RESOLVING IP CASES WITHOUT TRIAL 649

- the proceedings in an ENE session may not be recorded, malung it more

- ENE involves no “award” or filed result; - ENE is generally earlier than arbitration; - in ENE, the neutral not only passes judgment, but also helps with

confidential than arbitration;

settlement and case development planning.

111. THE ENE TRACK RECORD

As shown by its growing popularity, ENE has enjoyed a successful track record. Because the ENE program was new and experimental, from its beginning the Northern District sought to obtain feedback from both lawyers and clients on the desirability of ENE generally, and on ways in which it could be refined and improved. As described in more detail below, the surveys consistently showed a majority of respondents favoured ENE and believed its use beneficial to the efficient resolution of their cases. Very few considered the experience a waste of time. That is not to say that ENE (or Arm generally) has escaped criticism.

A. POTENTIAL CIUTICISMS OF ENE

Aim has been challenged on a number of points, but there has been little criticism singling out ENE alone. Nevertheless, critics have raised serious theoretical concerns. Some consumers and trial lawyers have dubbed ADR “secret justice for the privileged few”, citing the high cost and confidentiality. In the context of commercial cases, most criticism has focused on compelled ADR and the added cost of an expensive neutral. Some of the generalized criticisms of ADK may apply with equal force to

The use of lawyers, instead of judges, to evaluate cases has been criticized as being an abdication of judicial responsibhty, and also potentially ineffective. The reality is that few judges or magistrates could devote the time (four hours, plus preparation time) required for a meaningful evaluation session. Moreover, even if they could, litigants would fear that a judge’s participation might taint his ability to be objective and impartial in subsequent proceedings. While the mandatory training and screening process should ensure a generally high level of quality in evaluators, some unevenness is unavoidable. On balance, the use of lawyers who have subject- matter expertise has worked well.

’ Somewhat ironically, these criticisms are presented persuasively in a detailed discussion by Magistrate Judge Brazil, the principal architect of ENE: see Brazil, A Close Look af Tiwee Court-Sponsored ADK Programs: Wiy they Exist, How they Operate, mat they Deliver, and Whether fhcy i’lreaten Important Valua, U. of Chi. Legal Forum, 1990, p. 303, at 345-59.

650 THE JOURNAL O F WORLD INTELLECTUAL PROPERTY

The early timing of ENE has been questioned. By requiring an early ENE session, lawyers and parties are forced to invest time, effort and expense to come to grips with the facts and the merits of their case much earlier than normal. Although this may be seen as negative to some, it directly promotes the speedy and efficient resolution of cases. It is precisely because of the early intervention that the evaluator (and the parties) can devise efficient means to streamhne the course of adjudication. Further, in the Northern District, special Local Am< Rules for patent cases were adopted in July 1997. These Rules impose a very ambitious time-line for specified disclosures of claim charts, prior art and claim construction statements. In patent cases, therefore, ENE’s early but more limited required disclosure may not necessarily accelerate the schedule to any great degree.

The role of evaluator could interfere with the relationship between attorney and client. One fear is that clients wlll view the evaluator as being critical of their attorneys, perhaps offering new and more persuasive arguments not previously voiced by their attorneys. Evaluators are trained to explain their neutral role in the process to parties. It is possible that the evaluator will seem more able than attorneys who do not prepare well. To the extent that parties are able to more accurately assess the performance of their counsel as a result of ENE, it seems a small price to pay for efficiency.

An evaluation by a slulled practitioner in the field may upset the balance of power among the parties. This appears to be the most serious theoretical criticism. Before the ENE, one counsel may be more experienced and sawy about the facts and law presented. By exposing all sides to a penetrating analysis, and thereby filhng holes left open by the weaker advocate, the evaluator may effectively rearrange the relative assessment of the merits and thus the power balance. Specifically, the evaluator may offer a key legal theory or avenue for factual inquiry that profoundly changes the direction of the case. Should this outcome-changing behaviour be encouraged? Or should the evaluator refrain from volunteering new and different theories no matter how compelling? The Northern District has-rightfully-come down on the side of full penetrating disclosure. The goal of achieving a just and speedy resolution of cases requires nothing less.

B. ENE HAS GENERALLY PROVED POPULAR IN SURVEY RESULTS

As noted, ENE was recently rated as the most popular of the various Aim options offered by the court’s multi-option program. ENE has also been studied extensively since its beginning in 1985, sometimes promoting refinement and minor adjustment.

The data is not sufficient to allow any firm conclusion as to which type of case is best suited for ENE (or any other particular Aim method). According to general comments, however, parties chose ENE when they sought the opinion of an expert.

RESOLVING 1P CASES WlTHOUT TRIAL 651

In contrast, for example, they chose a juhcial settlement conference when seeking a judge’s opinion. And where the attorneys had the choice of any ADR method, the 1997 Federal Judicial Center Report concluded that “most selected ENE, suggesting that in this, district attorneys want an expert evaluation when they use ADR.”‘

Early feedback on ENE strongly suggested that it was well suited for IP cases. In a 1989 survey by Professor Levine of Hastings College of the Law, 90 percent of attorneys and 100 percent of clients and evaluators surveyed opined that IP cases would benefit from E N E . ~ It is thus not surprising that the local rules for the Northern District of California have long provided for the early neutral evaluation of these cases.

Another early survey, published in 1988,8 found that a sigrzlficant majority of lawyers who had taken part in ENE preferred ENE to initial status conferences (Iscs). Approximately three out of four lawyers surveyed found ENE superior to Iscs in clarifying issues; roughly four out of five preferred ENE for communicating information about the case across party lines and enhancing the prospects of settlement; and a large majority preferred ENE for setting the groundwork for cost- effective discovery.

IV SPECIAL PROVISIONS FOK INTELLECTUAL PROPERTY CASES

The Northern District Local ADR Rules treat IP cases specially in two ways. As noted above, all new civil filings are screened for eligibility for automatic referral to the ENE program. Generally spealung, all c i d actions not involving civil rights claims are eligible unless falling under an excepted category. The rules exclude from ENE all class actions, cases involving a party proceeding in pro per, and cases in which the “principal relief sought is injunctive”.9 The exception for injunctive relief, however, does not cover cases designated as copyright, patent or trade-mark cases on the civil cover sheet. This special treatment of IP cases is in apparent recognition that injunctive relief is common in IP cases and reflects the belief that ENE can stdl provide meaningful benefits in IP cases where the primary relief sought is injunctive.

The Local ADR Rules also impose special, additional requirements for the written ENE Statement in IP cases. ADR Rule 5.9 specifies the required contents of the ENE Statement for all cases. ADR Rule 5.10 sets out a special set of added requirements for litigants in cases that include trade-mark, patent, or copyright claims. This is the only area of law for which the Rules make such requirements. The ENE session occurs early (within three to six months of filing), and this rule

The Northern Disfrict 4‘ Cal$rnia’r ADK and Multi-Option hgrarns, in Report to the Judicial Conferetice Committee on Court Administration and Case Management, 1997, p. 173. ’ Levine, Early Neutral Evaluation: 7’he Second Phase, J. Dispute Res., 1989, p. 1.

Lawyers Prefer Early Neutral Evaluation to Court? Initial Status Conferences, ADR Report, BNA, Vol. 2 ,

ADR Rule 5.2(a)(2). 18 A y s t 1998, p. 294.

652 T H E J O U R N A L O F W O R L U INTELLECTUAL PKOPERTY

requires significant preparation over and above that required at the same stage for other types of cases.

A. REQUIREMENTS IN TRADE-MARK CASES

In cases involving allegations of trade-mark or trade-dress infringement, or unfair competition, the party making such an allegation must provide the evaluator with the following:

- any relevant trade-mark registrations; - exemplars of the use of the mark by both the plaintiff and the defendant,

including a description of the goods and services in connection with which the marks are used;

- any evidence of actual confusion; - the nature and extent of advertising and the volume of goods sold (where

secondary meaning is in issue).

Both parties are required to describe in their evaluation statements the manner in which the public is exposed to their respective marks and goods or services. Photographic or other demonstrative evidence of this is required if available.

The alleged infringer is required to reveal the dollar volume of sales and profits from the goods or services sold in connection with the allegedly infringing mark.

B. REQUIKEMENTS IN COPYRIGHT CASES

A copyright claimant is required to provide the following:

- the copyright registration for the allegedly infiinged work; - exemplars of the copyrighted work and the allegedly infringing work; - a “systematic comparison showing points of sidarity” between the works; - any available direct or indxect evidence of copying; - a statement indicating whether it intends to seek statutory or actual damages.

The accused infringer must include in its written statement the dollar volume of sales and profits from the allegedly infringing works “that it and any entities for which it is legally responsible have made.””

C. REQUIREMENTS IN PATENT CASES

A party who alleges patent infiingement is required to submit an element-by- element analysis comparing the claimed invention to the accused device or process.

‘” Local ADR Rule 5.10.

RESOLVING IP CASES WITHOUT TKIAL 653

This party’s written statement must also include its theory or theories of damages and “all available information” in support of each theory.

Accused infringers who intend to base their defence on prior art must submit an exhibit that describes each example of prior art and the relationship between the prior art and the claimed invention. The statement must also explicitly describe the basis for any claim of non-inhingement. The accused infringer is not expressly required to submit or summarize any prosecution history, excerpts upon which a claim interpretation or prosecution hstory estoppel defence might be based. However, this information is likely to be submitted as part of the “basis” for a non- infringement claim. (And, as noted above, the Local Patent Rules impose an ambitious schedule for detailed dsclosure in patent cases.)

D. ANALYSIS OF INTELLECTUAL PROPERTY REQUIREMENTS

The special requirements for IP cases are dn-ected toward focusing dscovery and motions at this early stage of the dispute. The required information is the sort that often goes to the heart of a trade-mark, copyright, or patent claim or defence. By probing the sufficiency of the evidence upon which such a claim or defence is based, the evaluator can identify the relative merits of positions and areas where hrther detail is crucial.

Some of the intellectual property requirements come close to crossing the line between fostering discovery and actually being discovery. For example, as noted above an alleged copyright inhinger must provide the dollar volume of its sales of the allegedly infringing work and the profits derived from those sales. In order to recover profits under the Copyright Act, the claimant must prove only the infringer’s gross revenues from the infringing work, before the burden shfts to the infringer to prove deductible expenses and ultimately, profits.” Although statements and communications dsclosed in an ENE proceeding are not admissible in any subsequent proceeding,’* information on the infringer’s gross sales, once revealed, may be proved independently by the party alleging infkingement.

The IP requirements also help serve the “reality check” hnction of ENE. They permit both attorney and client to see, perhaps for the first time, the elements of the claim or defence and the support for each element laid out in detail. For example, with the elements and evidence laid out this way, a copyright claimant may recognize for the first time that although the copyrighted work and the allegedly infringing work demonstrate some points of similarity, the likelihood of proving access is remote. Simdarly, a patentee who is forced to pay close attention to its attorney’s claim chart in an adversarial atmosphere where some of the patentee’s assumptions are challenged, may discover that the claims of the patent do not read as

” 17 U.S.C. 9: 504(b). l 2 Local ADR Rule 5.13.

654 THE JOURNAL OF WORLD INTELLECTUAL PROPERTY

closely on the accused device as initially thought. Obviously, the evaluator’s comments on the disclosed information may serve this purpose as well.

V. PRIVILEGE AND WAIVEK IN ENE PKOCEEDINCS

The application of the Northern District’s ENE Rules has raised an interesting privilege waiver issue in IP cases. Assume that the client-an accused patent intiinger-dscloses to the evaluator and the other side during the course of an ENE proceeding that it obtained a non-infringement Opinion-Letter fiom counsel before using the accused product. Assume further that the client actually produces a copy of this Letter to the evaluator and the other side as part of the ENE proceeding. This is a waiver. Production of such a Letter in discovery is clearly a waiver of the attorney- client privilege, not only for the Letter itself, but for any otherwise privileged materials on the subject of the attorney’s analysis of the non-infringement issue.

In an ENE proceeding in the Northern District, however, such a disclosure by itself apparently would not waive the privilege in either the document or its subject- matter. Rule 5.13 of the court’s Local ADR Rules requires that the court and all participants and other attendees shall “treat as confidential all written and oral communications made in connection with or during an ENE session”, and prohibits any such communication &om being used for any purpose, including impeachment, in any pending or future proceeding in the court.

The courts take this rule very seriously. In GTE Dire~tories,’~ a trade-mark infiingement case, the defendant submitted to the plaintiff and the ENE evaluator a copy of a privileged analysis of a trade-mark search. Later, and inexplicably, but apparently because the plaintiff had already seen the document during the ENE session, the defendant produced the document in response to the plaintiffs discovery request. The Court (Magistrate Judge Brazil) held that because the issue may not have been clear, in that case, the production of the document in discovery did not waive the privilege for other documents dealing with the subject-matter of the disclosed document.

The Court emphatically endorsed the notion that a party cannot waive the privilege-even for the disclosed document itself-by submitting it in connection with an ENE proceeding:

“The capacity of the ENE program to deliver the services it promises would be seriously jeopardized ifparties could not communicate fkankly about the case and share with the evaluator and their opponents materials that arguably are protected by privilege or the work product doctrine. One key purpose of ENE is to create a setting that permits common sense and frank communication to break through the posturing that can so needlessly increase the cost and delay the disposition of civil litigation. That objective would be much more difficult to achieve if litigants and lawyers had to worry about

Supra, footnote 3. 13

RESOLVING IP CASES WITHOUT TRIAL 655

whether the disclosure or communications they made in connection with the program could be used as bases for claims of ~ a i v e r . ” ’ ~

The Court also made explicit, however, that any disclosure in discovery (whether or not disclosed initially through ENE) would thereafter be a waiver.

Disclosure is, therefore, the rule in a Northern District ENE session. An accused patent infringer can theoretically rebut a patentee’s assertion of wdlfi~l infringement with an ordinarily privileged document, without adverse collateral consequences. There are, nonetheless, still tactical considerations that militate against such a course. If the suit does not settle, the contents of the Opinion-Letter will be known to the adversary. There would be little possibility of “unringing the bell”. While the Letter itself would not be discoverable or admissible per se, the adversary could use the information to help shape theories and prepare for the possibility of a later waiver on the wdlfidness issue. In short, disclosure of an Opinion-Letter in ENE is still a high-risk strategy.

VI. CONCLUSION

ENE is a case-management tool that has particular utility in IP cases. The Northern District of Cahfornia, where IP cases make up the single most common type of new civil-case filing, has demonstrated success with ENE. IP cases are subject to special rules to help promote the desired case-management efficiencies. In short, there appears to be a close fit between ENE and IP.

Ibid., at 190 (footnote omitted). 14