Defensive Code Review: Fight Fire With Fire
The pendulum against covered business methods and software continues to swing backward or forward depending on whom you ask. Patent litigation statistics from 2014 and 2015 show that patent litigation on the whole decreased by over 13% - while NPEs in general increased their share of filings in the last year. America Invents Act and Alice-related decisions failed to rein in the number of case filings, contrary to knee-jerk public opinion.
However, one effect the America Invents Act and Alice did have is that plaintiffs, especially NPEs, find it increasingly difficult to successfully argue broad infringement reads. At the same time, plaintiffs are also required to furnish increasingly detailed evidence of infringement in their contentions and expert reports. This has generally worked in favor of defendants – however plaintiffs that do survive these early tests pose an increased threat for the defendants. A defensive code review can enable defendants to more effectively counter plaintiff’s infringement contentions in such environments.
A review of defendants' source code has traditionally been seen as the plaintiffs' burden. On a typical software/telecommunications patent lawsuit worth more than $25 million, plaintiffs spend a median $3 million until end of discovery. By the end of the case, the median expense rises up to $5 million. Of the $3 million, plaintiffs can spend up to $100,000 on code review alone, not including the hundreds of hours of derivative work such as interrogatories, depositions and costs of movement, storage and security of code printouts.
Plaintiffs’ experts conduct their review of the code and present their opinions substantiated with select portions of the source code. Depending on the scope and complexity of the claims, these contentions are seldom comprehensive. Instead, code excerpts included are notional at best and the governing language is intentionally ambiguous and over inclusive. It is not uncommon for plaintiffs to cite 10 lines of the code, taken out of any context, with omnibus comments that encompass the entirety of the code production as potentially infringing - escaping their burden to provide exact evidence of potential infringement and leaving the defendants in dark f about the actual infringement read the plaintiff is enforcing.
Defendants on the other hand incur a median expense of $2 million by end of discovery – and a median $4 million by the end defending similar cases. A major portion of the expense is code collection and production – often up to $1 million. However, beyond diligent collection, a marginal effort is actually spent on review of the collected code by the non-infringement expert. Non-infringement arguments most often hinge on difference in opinion of experts on how claim terms are interpreted and how code functions are interpreted. An in depth review of the defendants source code by the defense expert may often be overlooked by the outside counsel in this process.
Defensive code reviews increase the confidence of the non-infringement expert as well as of the jury regarding the expert’s opinions. In addition, defensive code reviews can also provide non-infringing alternatives (and in some cases, even prior art). It is not uncommon for different programmers within the organization to use varying approaches in different products or modules – some of which can be working proof of viable non-infringing alternatives.
In addition, in select situations where plaintiffs are operating entities, the plaintiff should be compelled to produce their code from around the time or before the asserted patents were filed. Experts can review this code for bolstering on-sale bar and/or non-enablement arguments.
Given that code productions can be fairly large – running into millions of lines, thousands of files, gigabytes of data – clients desire to keep expenses at a minimum. Fortunately, a number of tools exist that help streamline code reviews.
Review platforms such as Scitools Understand and Eclipse, for example, allow experts to quickly navigate bi-directionally between classes and functions – reducing efforts and cost by over 80%. These tools also provide experts the ability to visualize the code as flowcharts, graphs and butterfly diagrams – which work as great visual aids for not only understanding the code but also during technology tutorials.
Using the tools such as above, defense experts should deepen their analysis beyond rebutting only the interpretation of the code under the claim construction guidelines and/or highlighting gaps in the contentions.
Taking plaintiff’s citations at face value is indeed a risk generated by the defense counsel and one that can be easily mitigated. Further, the defendant expert has a clear and consequential advantage conducting this review by virtue of access to the institutional knowledge from the defendants’ general counsel and engineers. The cost benefit of such a review is easily assessed and should be a standard operating procedure of every patent defense.