Lessons LearnedA golden age of civil antitrust, from the 1960s into the 1980s, enriched the victims of cartels and monopolies but upset corporate America.  The high cost of paying treble damages claims eventually provoked a spare-no-expense approach to defense. That in turn influenced the way plaintiffs prosecuted their Sherman Act claims.

Much the same thing has now happened with patent infringement cases, which had their own golden age in the last decade. What, if anything, can patent litigants learn from the antitrust experience? I think they can divine quite a lot. In this post, I will tell you why.

Bigger cases on average

The “millions for defense, but not one cent for tribute” attitude that developed in the antitrust defense bar and their gigantic clients aims to deter the bringing of cases in the first place. It also taxes the resources of the plaintiff, who may thus find out too late that she cannot afford to take a case through trial. Scorching the earth additionally makes a loss on the merits all the more painful for the plaintiff (or her counsel), who will have now lost a great deal of money as well.

Making the prosecution of civil antitrust cases more costly had a predictable demonstration effect over time. It principally resulted in an increase, on average, in the stakes at issue. A higher damages figure made the average Sherman Act case attractive enough to lawyers willing to work on a contingent-fee basis. It also rendered the case a better candidate for a worthwhile settlement, one that more than covered fees and expenses.

A similar dynamic exists in patent litigation. For companies that face a lot of infringement actions, the standard defense budget tops $1 million. The plaintiff needs a case worth more than $10 million in such circumstances to obtain the services of a capable contingent-fee lawyer, who will insist on a chance to earn at least three times his investment.

Aggregation

One way to make antitrust cases large enough to justify their risk and cost involves aggregation. Rule 23 of the Federal Rules of Civil Procedure permits one kind of aggregation — the class action. Rule 23 and its state-law counterparts allow even a single class representative to bring claims on behalf of hundreds, thousands, or millions of claimants who have similar claims. Class treatment could convert a small, hopelessly uneconomic one-off lawsuit into a juggernaut involving many hundreds of millions of dollars and possibly even billions.

The stakes-raising feature of the class action device has turned the class certification process into an extremely expensive battlefield. In a case that I have handled for more than a decade, for example, the parties submitted more than 30 different expert reports and presented live testimony and dozens of exhibits at a five-day evidentiary hearing.

Class members with larger claims may also choose to opt out of a class action. They generally engage lawyers who specialize in handling those sorts of cases, typically on a contingent-fee basis. The lawyers in those instances may serve as aggregators, enhancing their clients’ collective bargaining leverage while reducing average costs by spreading them over more claimants and higher aggregate damages.

Patent cases do not qualify as readily for class treatment. Nor can different patent holders band together to bring infringement claims as a group. The venue and joinder rules under the America Invents Act of 2012 made multiple-party patent cases much harder to bring.

But patent holders aggregate anyway. They do it by acquiring a critical mass of patents in particular fields and even entire portfolios. In February 2015, for instance, RPX Corporation bought the large portfolio of Rockstar Consortium.

The aggregation of patents in a single holder makes for a more formidable adversary. That has led the targets of their infringement lawsuits to call them names. A favorite rhymes with goal.

Specialization

The higher cost and greater complexity that came to characterize antitrust cases as defendants counterattacked them led to another device for managing risk on the plaintiff side. Taking a Sherman Act case across the juridical goal line now demanded a high degree of skill, mastery of the subject matter, and staying power. Few plaintiff’s firms could meet those criteria.

In 1980, Steve Susman founded the first litigation boutique, Susman Godfrey (my firm), which served as lead counsel in the largest price-fixing class action then working its way through the courts, Corrugated Container. The case produced a jury verdict for the plaintiff class and more than $360 million in settlements. Other boutiques have followed suit.

Boutiques that specialize in patent cases have likewise sprung up as infringement actions have proliferated. A significant part of my firm’s cases involve infringement claims. These firms’ trial-savviness, knowledge of the peculiarities of patent law and litigation, and financial resources are all but essential for high-stakes infringement actions.

Counterclaim avoidance

A factor that deterred antitrust cases — the possibility of having to defend against a counterclaim — also may limit the appeal of patent infringement cases. Antitrust claimants often avoided the counterclaim problem by taking a low profile in class action cases but then demanding a settlement at an opportune moment, usually after the class reached a resolution of the class claims. Assignment of claims to a trustee may also work.

Patent holders generally have two choices for dealing with the possibility of a counterclaim. Either they can build or buy a patent portfolio that enables them to overawe the defendant in a dueling-patent contest (Apple and Samsung provide an example), or they can limit their business to ownership, licensing, and litigation of patent rights and thus avoid countercharges of infringing conduct.

The second model tends to make repeat infringement defendants say undiplomatic things about patent holders that do not “practice” the inventions by doing or making things or providing services with them. But the non-practicing entities are simply doing what any sensible plaintiff would do if she could — avoiding a costly and complicating counterclaim.

Past as prologue

That an older type of high-stakes commercial cases can provide lessons for a newer kind should not surprise us. The basics of the civil justice system have not changed that much.

What do you think about the way patent infringement cases have followed a pattern similar to what happened with antitrust cases? Do you think the responses of defendants have gone over the top? Have they struck an appropriate balance? Or should they go even further?

Let your fellow readers know what you think.

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

TRIAL COUNSEL
Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

COMPLETE PACKAGE
A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

HARD GRADERS
Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

CIVIC ENGAGEMENT
Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

KEEPING PERSPECTIVE
Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

PERSONAL
Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.