From: srctran@world.std.com (Gregory Aharonian) Subject: Patent Office Reform Panel Final Report PART2b Message-ID: <C1xHrA.1u4@world.std.com> Organization: The World Public Access UNIX, Brookline, MA Date: Thu, 4 Feb 1993 14:33:10 GMT Lines: 2373 Last year, the Patent Office sponsored a committee to review current patent practices in the United States. Last fall they issued their final report, which contains many interesting suggestions, including first to file, software patents, excessive secrecy orders, international harmonization, challenging patents, reexamination, excessive legal costs and other issues. In particular, I know that a few Congressmen are introducing legislation this spring to switch the U.S. from first-to-invent to first-to-file. Also, it seems that the Patent Office library does not have any IEEE or ACM publications, as incredible as that might seem (nor have they deemed to buy a copy of my directory of much of the government's software, a great prior art source). What follows is the text to their final report, split into five files. A paper version of this text can be obtained from the Patent Office. I would like to thank Noah Friedman, Toni Emerson, Keith Berrier, Glenn Tenney, Rahul Dhesi and Jude Wilkinson for all contributing ten dollars to help me defray the cost of acquiring a $1.50 diskette from the Patent Office with these files. Gregory Aharonian Source Translation & Optimization ============================================================================== PART TWO PATENT ENFORCEMENT ISSUES V. REDUCTION OF THE COST AND COMPLEXITY OF PATENT ENFORCEMENT A. Overview and Introduction The Commission recognizes that one of the most significant problems facing the United States patent system is the spiraling cost and complexity associated with enforcement of patent rights. Patent litigation suffers from many of the problems of excessive costs and delay which plague the modern system of civil justice in the United States. Yet, additional unique problems exist for patent litigation, problems which are not shared by other forms of civil litigation, and which have the potential to eradicate the basic incentive provided by the patent system. In addressing this issue, the Commission looked at ongoing legislative and judicial efforts to reform civil litigation in the United States, and identified specific proposals from those efforts that would be particularly beneficial in reducing cost and complexity of patent litigation. The Commission also considered the unique aspects of patent litigation, and formulated proposals which address these unique aspects. In both instances, the Commission was cognizant of the problems associated with dramatic reform, and therefore formulated three tiers of recommendations. The first set of recommendations propose reforms to practice which can be implemented without legislative action. The second set require more extensive action, including legislative reform. The final set are directives for further study on novel approaches to resolution of patent disputes. Most of the recommendations of the Commission concentrate on procedural reforms, rather than reform of substantive patent law.Reducing "transactional" costs of modern civil litigation, particularly through efficient and straightforward procedures for enforcing patent rights, will provide the most immediate tangible benefit for parties involved in patent-related disputes. Subsequent reform of substantive patent law principles, and provision of alternative mechanisms for resolution of patent related disputes can then follow to maximize benefits. 1. Litigation Problems as a Threat to the Patent System For over 200 years, the patent system has been hospitable to private inventors and entrepreneurs of limited means, to businesses, both large and small, and in more recent times, to universities. This has been so notwithstanding instances where owners of meritorious patents have been unable to enforce their patent rights, or where commercial firms have been required to pay tribute to patents of no merit, due to high transaction costs associated with litigation. In recent years, however, this situation has changed substantially, due to the explosion in both the volume and cost of modern civil litigation [1]. The protracted nature of modern complex civil proceedings results in enormous costs, measured not only in dollar amounts, but in lost opportunities and burdens on the day-to-day operations of businesses, both small and large [2]. Yet, the inherent value of granting a right to exclude others from making, using or selling a patented invention, can only be realized if the patent owner has effective and inexpensive access to an efficient judicial system. This is due to the unique nature of the property right bestowed by the grant of a patent. The value of this right of exclusivity cannot be realized without the exercise of the option of resort to the Federal judicial system for enforcement of that right. As such, the patent system has a particularly close and dependent relationship with our system of civil justice. Recent cases involving multi-million dollar damages awards tend to camouflage the problem of excessive costs in enforcing patent rights [3]. In such instances, legal fees in excess of even a million dollars appear to be a reasonable expenditure based on the magnitude of the return. But viewing excessive costs of enforcing patent rights as an acceptable form of "transaction" fee which merely reduces the patentee's net return is a dangerous step to take. Current levels of litigation costs can be easily absorbed for only the most significant, and economically valuable patented inventions. The vast majority of patented inventions that serve to promote the technological advancement of our Nation, however, are not those of a "pioneering" stature, but instead are incremental, useful improvements to established technology. As Judge Rich of the Court of Appeals for the Federal Circuit aptly summarized, [i]n the very nature of things, progress is made as a result of the big and the little contributions, mostly the latter. We get a telephone or a triode -- in modern jargon a "major scientific breakthrough" -- only at rare intervals. The seemingly little advances are the bread and butter of progress and sometimes turn out to be of much greater importance than at first thought. The biggest contribution the patent system makes is to induce a steady flow of contributions and secure their continuous disclosure [4]. Significant transaction costs threaten this steady flow of innovations, and their voluntary disclosure, by making enforcement of patents to such innovations impossible from a simple cost-benefit analysis. Removing the capacity of the innovators of such techniques and improvements to benefit from use of their patent rights due to excessive "transaction" costs thus threatens the basic incentive that the patent laws are intended to provide; namely, the reward of exclusive rights in exchange for disclosure of the innovation. Thus, there is an essential relationship between the value of patent rights, and the cost of patent litigation. Where the market value of a patented invention is less than the cost of its enforcement, the patent has essentially no economic value to its holder. If the patent owner does not have a strong financial posture, threatened litigation can be used as a bargaining tool to decrease or even eliminate the potential value of a patented invention to the patent owner. Even where parties are equally situated, excessive "transaction" costs in enforcing patent rights serve only to lessen the value of patents to their holders, and thus, weaken the incentive they are designed to provide. The Commission fears that, unless problems of cost and delay in patent litigation are addressed now, the central purpose of the patent system to provide an effective incentive for development and commercialization of new technology, will be seriously eroded. Such an erosion could well pose a threat to the very existence of the patent system, and to the significant contributions the patent system makes to the Nation's economic and competitive status. 2. Common Problems - General Civil Justice Reform Initiatives and Reform Many of the sources of delay and expense in patent litigation are not unique, but rather are shared by other forms of complex civil litigation. The Commission therefore believes that reform of the basic model of civil litigation in the United States in a subject matter independent fashion will provide the most effective first step in reducing the cost and complexity of litigation related to patent enforcement. Recognizing this, the Commission has endeavored to study existing legislative, administrative, and private initiatives to reform civil litigation [5]. In 1990, Congress took a major step to address the problems of modern civil litigation, when it passed the Civil Justice Reform Act. This Act provides a framework to effectuate reform by reducing the cost and delays associated with modern civil litigation [6]. The specific goals of the Act are to facilitate deliberate adjudication of civil cases on the merits, monitor discovery, improve litigation management, and ensure a just, speedy, and inexpensive resolution of civil disputes. It seeks to achieve these goals through use of mechanisms such as differential case management, judicial monitoring and reporting requirements, and through additional judicial resources. The only mandatory requirement of the Act is implementation of civil justice expense and delay reduction plans in each Federal district by December of 1993. The Act does not require implementation of a defined or minimum set of specific procedures, but leaves this to be determined by advisory groups appointed by the courts in each district. Expense and delay reduction plans thus will be developed and implemented on a district-by-district basis. Early adoption of cost control and reduction plans is voluntary, except for certain courts which are designated as early implementation district courts. The President's Council on Competitiveness also commissioned a study by a Commission on Federal Civil Justice Reform, led by former Attorney General Kenneth Starr. The Commission's study of civil litigation, titled the Agenda for Civil Justice Reform in America, set forth a series of measures designed to reduce cost and delay in modern civil litigation [7]. The report is helpful in both identifying current problem areas, and in providing substantive reform measures which would effectively reduce litigation costs in the United States. A bill based upon the report, entitled the Equal Access to Justice Act of 1992, was recently introduced into both houses of Congress, and incorporates a number of the recommendations of the Agenda for Civil Justice Reform, including - implementation of the so-called "English Rule" of awarding costs and attorney fees to the losing party, - a requirement for pre-filing notification by a potential plaintiff of the intent to file suit, and - a "multi-door courthouse" system for promoting alternative dispute resolution through the framework of the Federal Judiciary [8]. In addition to the bill, President Bush issued Executive Order 12778 of October 23, 1991, which directs Federal agencies to adopt many of the suggestions made by the Agenda for Civil Justice Reform in conducting civil litigation [9]. The patent bar is also active in studying and analyzing civil justice reform, in the specific context of patent litigation. Several excellent reports on the costs and problems of modern patent litigation have been produced by associations such as the Patent, Trademark and Copyright Law Section of the American Bar Association (ABA/PTC), and the American Intellectual Property Law Association (AIPLA). These reports have been an important source for both the identification of problems of modern patent litigation, and for information and solutions to these problems. Finally, an invaluable source of information is the public, either through the commentary received in response to the Commission's invitation for public comments [10], or via commentaries in the legal and technical literature and in the press. This source has provided perspectives and suggestions as to how best to reduce the cost and complexity of patent litigation, and civil litigation generally, in the United States. 3. Overview of Problems in Modern Patent Litigation To accurately assess the status of modern patent litigation, the Commission analyzed enforcement of patent rights from two perspectives; interpretation and application of substantive patent law to define rights of patent owners and parties charged with infringement, and the procedural system of resolving disputes related to patent rights. The former area has seen dramatic improvement since the implementation of the Court of Appeals for the Federal Circuit in 1982[11]. Prior to the Federal Circuit, there were numerous problems in the enforcement of patent rights caused by different interpretations of substantive patent law among the various districts. Forum shopping was rampant, the presumption of validity of patents was seriously eroded, and the divergence among districts in application of the standards of validity and infringement led to a tremendous uncertainty in patent rights. Since its inception, the Federal Circuit has greatly assisted in bringing about uniformity, consistency and certainty to the patent law, and this has led to a stabilization of problems in the application of the substantive patent law [12]. For this reason, the Commission has provided relatively few recommendations calling for changes to the application and interpretation of the patent laws. While great progress has been made toward stabilization of the substantive patent laws, the opposite has occurred as to the process of defining and interpreting patent rights. There has been a large increase in the number of criminal cases filed and heard in Federal courts, and a noticeable rise in the volume of Federal civil litigation. These two forces have placed tremendous burdens on the Federal courts, which in turn has led to increased delays and spiraling costs in litigation. Unfortunately, the delays and complexity of modern patent litigation have provided overaggressive lawyers with an ample assortment of opportunities to stall, delay and harass. The net of these factors is that patent litigation has become an increasingly inefficient, ineffective and undesirable means of resolving patent-related disputes. (a) Discovery Problems The problems in modern civil litigation have led to many studies and calls for reform, some of which were mentioned earlier. The implementation of any effective cost and delay reform program, however, first requires identification of the factors which increase cost and complexity. Not surprisingly, there is a substantial correlation between the perceived problem areas for patent litigation and complex civil litigation in general. The most significant single problem area, without a doubt, is uncontrolled or abusive discovery practice. Excessive and uncontrolled discovery is cited in nearly every study of civil litigation as being the dominant factor adversely influencing modern civil litigation. For example, Congress cited a "compelling need for judicial officers to control discovery and its attendant costs" pursuant to enacting the Civil Justice Reform Act [13]. Lawyers who overdiscover cases rather than focusing on controlling issues, and who use discovery as an adversarial tool or tactic, were the most frequently cited cause for increased transaction costs. The Agenda for Civil Justice Reform indicates that over 80% of the time and cost of a typical lawsuit stems from the pretrial examination of facts through discovery. More shocking is their finding that fully 77% of the litigators in one large U.S. city acknowledged that they used discovery as an economic weapon against their opponent. This view of discovery is also shared among members of the patent bar, the patent user community and the public in general. For example, in a recent AIPLA report, discovery problems led a list of factors which representatives of the patent bar, corporate patent counsel, and the bench viewed as imposing an adverse influence on litigation cost and complexity [14]. A report of a survey of corporate patent counsel showed that lack of control over discovery by both in-house and retained counsel and the court was viewed as a major, if not the predominant, problem affecting cost and delay in litigation [15]. Comments from the public uniformly labeled discovery abuse by overzealous and unrestrained lawyers as being the primary factor leading to increased costs for litigation[16]. Many comments suggested that adoption of strict controls over discovery would be the most dramatic single step that could be taken to reduce litigation costs. In fact, one commentator recently suggested that discovery be eliminated altogether; this after indicating that discovery is in the process of overwhelming civil litigation [17]. A quote from a recent article criticizing the modern discovery practice effectively illustrates the nature of the discovery problem. Some have suggested cynically that lawyers have glommed onto discovery because it has become the ideal way to rack up billable hours -- with legions of leveraged associates reinventing new forms of multipart interrogatories, and document requests spewing forth from word processors like the multi-headed Hydra of mythology. As soon as one discovery head is cut off, two more appear in its place. When the other side responds in kind by launching its retaliatory first, second and third waves, the lawyers then can generate even more billables by dispatching another team to sift through every nook and cranny of the client's files. The object is to find the smoking gun the other side just knows has to be there. Of course, all the while, both sides have to fight about the scope of discovery, privilege, protective orders, the length (and place) of depositions, and so on -- generating even more revenue [18]. This view of the suffocating and hostile arena of modern discovery practice perhaps unfairly targets attorneys and their practice of discovery. The problem, however, is not simply that attorneys are vigorously defending the interests of their clients. The blame for this problem area extends also to clients who urge or consent to this war-like perspective of modern civil litigation. Finally, the failure of the judiciary to consistently and aggressively suppress such practices perpetuates the problems. Thus, any solution to the problems of discovery must involve all three elements; namely, clients, attorneys and the judiciary. (b) Lack of Control Over Litigation Proceedings Delays and interruptions in each stage of the litigation process, either as a result of inadequate judicial case management, crowded criminal dockets, or through intentional or inadvertent actions of counsel, contributes substantially to the cost and complexity of patent enforcement. Delays in reaching trial, for example, can lead to more opportunities for unnecessary and expensive discovery. Forced rescheduling of trial dates to accommodate criminal actions leads to enormous expenses due to the unnecessary re-preparation of witnesses, counsel and parties. Inadequate judicial control over the different stages of litigation, especially the pre-trial discovery stage, can lead to extended delays between the filing and resolution of an action and can allow parties to run up enormous costs in preparation for trial. Problems related to scheduling and control of litigation proceedings are also not unique to patent litigation. For example, the Brookings Institute in a report entitled "Justice for All" pointed out that a substantial proportion of the lawyers and Federal judges interviewed indicated that the inability of judges to adequately manage and control their cases, especially during the discovery stage, is a significant cause of delay and expense [19]. This, however, was not the sole problem. The report indicates that a substantial number of lawyers and judges also consider the failure of judges to hold early substantive conferences, to use the rules and discretion with which they are empowered, and to set early, firm trial dates creates unnecessary costs and contributes to delays. The concern over efficiency of the trial process is also reflected in the Agenda for Civil Justice Reform, which stresses the need for more efficient litigation. The AIPLA reports also rank inadequate control over litigation as a primary factor in increased costs and delays in patent enforcement. The Myrick report, for example, compiled a list of the most significant factors which lead to cost increases and delay. These factors include: - inadequate judicial case management, including failure of courts to control the discovery process, to impose sanctions or protective orders, to manage cases within the rules and within court discretion, and to hold substantive conferences at an early stage; - the court's failure to schedule early, firm trial dates, and to promptly decide motions and render opinions, and - clogged dockets, backlogs of cases, and interruptions from criminal dockets due to the requirements of the Speedy Trial Act. Thus, the reports stress the need for more aggressive control by the courts over litigation, as well as substantive reforms to avoid delays in beginning and concluding litigation proceedings. (c) Problems Unique to Patent Litigation As noted above, many of the problems encountered in enforcing patent rights are not unique to patent litigation. Positive, substantive changes to the basic model of civil litigation will have a correspondingly positive impact on patent litigation. However, there are features unique to patent litigation which have a direct bearing on costs and complexity. These include the quality of the patent itself and certain provisions of substantive law. The extent to which a patent owner or accused infringer is willing to commit resources to engage in litigation depends not only on the merits of the claimed invention but also on the quality of the patent. The Commission believes that patent enforcement can be improved by increasing the quality of patent examination at the USPTO. Increased quality of examination will strengthen the presumption of validity, which in turn will decrease the number of unwarranted challenges to patent validity. This will also increase the confidence of the courts in applying the statutory presumption of validity. Therefore, the Commission firmly believes that it is essential that the USPTO continually strive to improve the quality of its examination process and that it be provided with the resources to do so. The Commission endorses USPTO's efforts to improve patent quality through examiner training courses, improvements in searching facilities, and other such programs. There are several provisions, however, in the patent law which, in the view of the Commission, impose disproportionately large costs on the patent enforcement process compared to their punitive benefit. Certain problem areas of modern civil litigation have a particularly detrimental effect during patent litigation. For example, uncontrolled discovery can pose an especially heavy burden on both the patentee and the accused infringer. Interruptions in the work schedules of key scientific or research staff can cause significant delays in a product development cycle, and can lead to economic harm unrelated to the patent dispute. Where there is intense competition in the field between the two parties, litigation, and in particular discovery, can be exploited as a potent economic weapon. Another problem is the inadequate or ineffective use of protective orders, as well as sanctions for violation of such orders, which can lead to disclosure of sensitive information useful to one's opponent outside of the context of the litigation. Also, because patent enforcement actions frequently raise complex technical or scientific issues, there is frequently a heavy reliance on testimony of expert witnesses. Inadequate control over expert witnesses in patent litigation can lead to a disproportionately greater risk for abuse because of this reliance. When an expert witness is permitted to act as an advocate, the process of fact-finding becomes distorted. Furthermore, conflicts in testimony from experts from either side of the dispute increase the complexity of the already complicated issues involved in the patent enforcement action. Finally, patent rights are uniquely susceptible to abuse, due to the availability and increasing reliance upon injunctive relief. Here, the mere threat of an injunction can be used as an economic weapon against a party unable to afford either the time or the cost to defend against a patent infringement suit. Similarly, where a start-up company has obtained a patent and intends to rely on those rights to establish itself in the market, the threat of a long, drawn-out and expensive patent fight can force that party to effectively relinquish the advantage it has earned through procurement o the patent grant. B. Summary of Public Comments There was nearly a universal consensus among the public comments that the costs, delays and complexity associated with modern patent enforcement are excessive [20]. Numerous comments stressed the need for a means for resolving patent-related disputes in a cost-effective manner, noting that patent rights become basically worthless if the costs of enforcing such rights outweigh their commercial value. While echoing the concern over the costs of patent litigation, many respondents, however, noted that problems in enforcing patent litigation are not unique, but are common to nearly all forms of complex civil litigation. As such, these comments suggested reform in a subject matter independent fashion. Several comments also suggested that existing judicial reform measures, such as the Civil Justice Reform Act, once implemented, will sufficiently address many of the problems associated with patent litigation. The most frequently cited source of excessive cost and complexity in patent litigation was discovery, specifically, abuse of the discovery process by overzealous, uncontrolled trial counsel, and lack of judicial oversight and control over discovery requests. While many suggestions were offered to address problems related to discovery practice, the most frequent was for strict control of, and limitations on, discovery practice to control costs of litigation. Specific suggestions included: - require greater judicial control over discovery proceedings, either by the judge hearing the case, or through use of a magistrate or "special" master; - require parties seeking unnecessary discovery to pay all costs associated with the discovery request; - require "standardized" forms of interrogatories and requests for admissions on key issues ("core issues") pertaining to validity, infringement, and damages, coupled with judicial enforcement to ensure complete and candid responses; - encourage more efficient resolutions of discovery disputes; - encourage greater use of sanctions for abuse of discovery practice; - require mandated admissions and answers, and a severely limited motion practice; - require more concrete pleadings; - impose an inflexible discovery period in every case; - restrict the ability of parties to defer responding to discovery requests through pro forma initial responses followed by supplemented responses at a much later date; and - enact a "small claims" procedure which would have as a main element a significantly limited discovery practice. The second general problem area pointed out in the public comments is the failure or inability of judges to control discovery and trial proceedings. Two sources were cited for this problem. The first was the scheduling burdens created by heavy criminal dockets by the Speedy Trial Act and an ever-increasing jurisdiction of Federal courts over criminal activity. The second was the failure of certain judges to use their authority to manage and control cases. For example, one response stated that the Federal Rules of Civil Procedure provide enough authority for a court to adequately control parties through use of sanctions, but is not exploited by many judges in their handling of patent-related cases. Some indicated that these problems were largely due to judges and trial counsel inexperienced in handling the complicated legal and technical issues endemic to patent litigation. Several problems were cited as being caused by this lack of control. For example, several individuals suggested that inadequate control over litigation enables parties to file unwarranted requests and motions designed to delay the proceedings and harass the other party. Others suggested that interruptions and delays in long, complex litigation significantly increase the costs of litigation because witnesses, counsel and parties must constantly reschedule their appearances, re-prepare testimony, and repeatedly refresh their familiarity with all the issues in the case. The suggestions offered to combat these problems included: - encourage or mandate greater control over all phases of the litigation and over the parties by the judiciary; - require Federal judges to decide fully submitted matters within a stated and fixed time period; - impose a strict, non-extendible timetable (e.g. between six and eighteen months) for trial and entry of judgment, similar to ITC proceedings (one party predicted that such a timetable would encourage use of alternative dispute resolution (ADR) to resolve patent disputes); - provide better training of judges and counsel, with respect to management of complex litigation; - make the criteria for obtaining punitive damages more severe; - limit the number of witnesses which can be called at trial; - eliminate the option of a jury trial for patent validity cases; - encourage courts to approach summary judgment motions more aggressively; and - encourage use of judge-party conferences after pleading and basic discovery to focus litigation on only essential issues. Factors other than problems in discovery and control over litigation were cited as well. For example, some argued that the availability of certain defenses to patent infringement such as the "best mode" requirement and non-objective standards for evaluating inequitable conduct only serve to increase litigation cost and complexity without providing benefits commensurate with their costs in practice. Some of the suggestions offered to generally improve patent litigation included: - remove patent validity issues from judicial consideration by creating an administrative panel located in the USPTO with exclusive jurisdiction to hear patent validity questions, staff the panel with knowledgeable and experienced people, permit the panel to issue decisions on validity, infringement and/or damages issues, permit the entire range of patent defenses to be raised, and prohibit live testimony; - eliminate or reform the non-substantive mechanisms for invalidating patents (e.g. "best mode" requirement, formalities of the oath/declaration, duty of candor requirements), as such procedures do not clearly enhance the quality of the public disclosure made through the patent, and typically do not have counterparts in foreign patent enforcement systems; - create a special branch in the Federal district court system, which would be staffed by judges experienced in patent litigation, would not have criminal dockets, and would provide only bench trials; - appoint a special "patent" expert magistrate or judge to each Federal district court to assist or handle patent-related litigation; - reduce the number of trial courts with patent jurisdiction rather than create specialized patent courts; - permit the use of "express mail" filings in district courts, and permit parties to be represented by non-local counsel which have been admitted to practice in another Federal district, to reduce the need for "local" counsel; and, - reform current reexamination proceedings, and/or provide for pre- or post-grant oppositions. The responses showed mixed support for the concept of a "small claims" patent proceeding or court. Some respondents argued that such a proceeding would be unnecessary once adequate reforms to the basic civil litigation model were effected. Others added that a small claims proceeding which excluded the option of injunctive relief would not be widely used due to the frequent requirement for this form of relief as part of a patent enforcement strategy. Others suggested that specialized patent courts, rather than a "small claims" court, should be pursued. Finally, one response commented that a small claims proceeding would only serve to tie up the currently overcrowded Federal district court dockets, and would introduce additional complicated procedures and issues into the already complex and confusing current nature of patent litigation. On the other hand, several responses indicated support for a simple, straightforward, and low-cost procedure to enforce patents. The responses supporting such a proceeding believed it would provide a viable alternative to full scale patent litigation, provided that parties of unequal bargaining strength could be compelled to use the "small claims" format, that there would be a severely limited discovery practice, that a realistic upper limit on the amount and form of damages, and that the costs associated with such a proceeding were kept at a minimum. A summary of the elements recommended for inclusion in a small claims patent court or proceeding included: - restrict the issues and defenses which could be raised during such a proceeding; - avoid introduction of procedures which unfairly favor a claimant; - require strictly controlled discovery, by requiring particularized pleadings, standardized discovery requests, tightly controlled discovery deadlines, and early identification of witnesses; - allow the procedure to be compulsory at the option of a small claimant; - if injunctive relief is permitted, only allow such relief in the form of a post-trial, and not pretrial, injunction; - permit awards of attorneys fees and increased damages where appropriate; - restrict issues to the main claims and compulsory counterclaims; and - provide a direct appeal to the Court of Appeals for the Federal Circuit. Finally, many individuals indicated support for increased use of ADR mechanisms. Many comments pointed out that the benefits of alternative dispute resolution procedures, such as speeding resolution of a dispute settlement, simplifying the process of resolution, and providing greater control over the procedure and effects of the resolution. Other responses, however, pointed out problems associated with either the alternative dispute resolution process, or its lack of use. For example, some comments suggested that there is no significant cost savings or reduction in complexity of issues or of a proceeding when arbitration is used. Others pointed out that arbitration will not be sought voluntarily except when both sides to a dispute are forced into a mutually undesirable situation. Reasons offered for the failure of parties to pursue the use of alternative dispute resolution means included a lack of formal authority, or of participation by business principals which causes problems during negotiation, a lack of adequately skilled arbitrators, and the inability of small entities to force larger entities into using alternative dispute resolution. Suggestions offered to encourage greater use of alternative dispute resolution mechanisms included: - allow judicial discretion to assign costs of trial to a party which refuses to employ ADR, and then loses on the merits; - encourage, as appropriate, the practice of having judicial officers point out the benefits of an alternative dispute resolution proceeding early in the litigation; - impose strict requirements on litigation as a means of providing an incentive to use extrajudicial procedures to resolve patent disputes; - combat the lack of expertise of the bar in use of alternative dispute resolution procedures through education and promotion; and - provide experts from the Patent and Trademark Office to mediate disputes related to validity. The responses as a whole were very helpful, both with respect to identifying problem areas and in providing possible solutions. C. Recommendations and Discussion The tenor of nearly every recent study of civil litigation stresses the need for some change of the existing system, whether that change takes the form of formal revisions to the Rules of Civil Procedure, creation of specialized procedures or courts, or simply urging courts to take a more aggressive role in controlling litigation. Whether one views the basis for change as a necessary means for controlling modern civil litigation, or as a means for ensuring that the value of the patent grant as an incentive continues, change, per se, is not objectionable, provided it reduces the transactional costs associated with modern civil litigation. As both the Brookings Report and the Myrick Report noted, there is no inherent advantage to either defendants or plaintiffs through changes in procedure which are effective in reducing these "transaction" costs. Thus, the Commission presents a series of specific recommendations designed to change the way modern patent litigation is conducted, so as to reduce the transactional costs associated with the litigation. Recommendation V-A (i) Encourage implementation by the district courts of differentiated case management plans for cases raising issues of patent validity or infringement, where that plan includes: (a) the early setting of a firm trial date; (b) use of a discovery case management system that requires the court, either through direct intervention of the trial judge, use of a magistrate, or through appointment of a "special master" pursuant to Rule 52 of the Federal Rules of Civil Procedure, to exhibit careful and deliberate monitoring over discovery so as to encourage the limiting of issues by the parties, the range of issues discoverable, and the number and extent of discovery requests; (c) strict deadlines for filing, hearing and deciding discovery-related motions; (d) use of a mandatory disclosure procedure for core information having the following elements: (1) an automatic protective order that will cover any information provided under the core disclosure requirements which the parties designate, and which the court shall issue prior to the disclosure of such designated core information; (2) a short time frame to comply with the mandated disclosure requirement; (3) the use of Rule 11 sanctions for non-compliance with the mandated disclosure provisions; (4) a pretrial conference to define the remaining scope of discovery, to finalize the pleadings, and to limit issues pending in the action to take place shortly after the mandated disclosure has been completed; where the information to be disclosed by each party is established by the Court according to preestablished guidelines and shall not be subject to change through actions of the parties or the court; (e) use of a mandatory mediation conference to resolve some or all issues pending in the action, conducted not by the trial judge but by a person trained in the conduct of mediation, to be held at a time before the final pre-trial conference. (ii) Provide formal recommendations to the advisory groups of each district on key provisions for inclusion in the district's civil justice expense and delay reduction plan. (iii) Implement changes to practice in a uniform and consistent manner among the Federal district courts. The first element of the Commission's plan for reform of patent litigation is based upon a central theory of the Civil Justice Reform Act, namely, differential case management [21]. Differential case management procedures will permit courts to fashion flexible, content-oriented procedures for handling specific classes of litigation, such as patent litigation. Importantly, courts can implement case management plans to address problems commonly encountered in patent litigation by exploiting existing provisions of the Federal Rules of Civil Procedure. Through such plans, immediate benefits in reducing costs and complexity associated with patent enforcement can be realized [22]. Development and implementation of specific differential case management plans has been entrusted to Civil Justice Reform Act advisory groups in each district. As such, the Commission favors promoting certain procedures which it believes will provide the basis for effective patent case management scheme. The recommendations on this point are thus largely directed at these advisory groups with the hope that they will consider the model scheme in formulating their final civil justice cost and delay reduction plan. The Commission believes it is imperative that these groups take into account the special needs of patent litigation in formulating their litigation cost and delay reduction programs. It is important to stress, in view of the desire for uniform national policy on patent law, that adoption of civil cost and delay reduction plans which address the unique problems of patent litigation should take place in a uniform manner nationwide. While justifications exist for variations in local rules, such variations should be restricted to those matters for which there is a clear local need. Inconsistencies in rules of practice between the different Federal district courts introduces unnecessary transactional costs through the need for local counsel and additional training of retained counsel. As such, the Commission encourages the various Federal district courts, and the Federal Judicial Center, to implement rule changes in a uniform, and consistent manner. With the goals of increased control over proceedings, and decreased costs and delays, the Commission identified certain procedures which should serve as the basis for voluntarily adopted plans for management of patent litigation. 1. Useful Elements of a Patent Litigation Case Management Program The findings and recommendations of the Commission represent a compilation of changes which can provide immediate benefits in reducing costs and delay in patent litigation. The list of procedures and practices is not intended to be exhaustive, nor is it intended to restrict discretion of the court in conducting litigation proceedings. The recommendations instead serve as a basic template which can be adopted by a court desiring to reduce the cost and delays in patent litigation through use of a differential case management plan. An underlying basis for the recommended elements of a differentiated case management plan for patent litigation is active and controlled judicial involvement in the proceeding. To effectuate this increased control, courts are encouraged to utilize pre-trial conferences [23], as well as increase the use of magistrates or "special masters" to oversee and control certain stages of the litigation proceeding [24]. Each conference would provide the court with an opportunity to encourage parties to limit issues in dispute, limit the range of necessary discovery, and implement key scheduling dates. Through these measures courts could increase control over the litigation proceedings. In addition to the general role of increased judicial participation and control over proceedings, the Commission identified several specific procedures which courts should employ to exert control over the proceedings, and to streamline and reduce the time and costs involved. (a) Early Setting of a Firm Trial Date An oft-cited problem of modern civil litigation is the inability of parties to obtain a fixed, firm trial date early in the proceedings. Setting a firm trial date can have a "galvanizing effect on the attorneys and parties alike; establishing the date promptly and firmly reduces the occasions for delay and gamesmanship" [25]. As many of the public comments noted, the failure to reach trial as scheduled requires each party to engage in duplicative and unnecessary preparation, which only adds to the overall cost of the litigation. The Commission believes, therefore, that shortly after the commencement of an action, the court should set a firm trial date which ensures that trial will commence between 12 and 18 months after filing of the complaint [26]. This policy should be strictly enforced in all but the most exceptional cases. A firm trial date will be particularly effective in reducing the incentive for intentional delays where such delays are used primarily as a litigation tactic. Requiring parties to work within an inflexible time frame prior to trial will also force parties to narrow issues in dispute, and will provide an incentive to use alternative, non)judicial means for resolving such disputes. A firm trial date should, therefore, impose less of a burden on the parties involved. The Commission recognizes that judicial adherence to the practice of setting a "firm" or "inflexible" trial date may be difficult due to the impact of heavy criminal dockets. Judicial discretion in scheduling is confined by the limits of the Speedy Trial Act, which restricts the discretion of courts to postpone or delay criminal trials by giving criminal cases precedence over civil cases [27]. Absent legislative reform of the impact or implementation of the Speedy Trial Act, the prospect of minimizing interruptions and forced rescheduling of fixed trial dates due to pressures from criminal dockets may seem limited. Yet it is imperative that some action be taken, and the most effective means short of legislative reform is through judicial action in case management and scheduling. Thus, while the Commission is cognizant of the scheduling pressures in the district courts, it remains convinced that action to set and adhere to a firm trial date is not only essential, but will assist in reducing burdens on judicial resources. (b) Use of a Discovery Case Management System The Commission urges courts to take greater control over discovery by implementing effective discovery case management practices. Maintaining effective control over discovery may be the most direct means courts can use to control costs and avoid delays during the early stages of patent litigation. This extra effort on the part of the judiciary to control and monitor litigation is an essential component of the Commission's plan for patent litigation management. The Commission is cognizant, however, of the existing burdens on judicial resources, and is not intent on adding to those burdens. Yet, effective and early involv