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S1:E11 | #11 The Art of MedTech Litigation (War) w/ David Shaw

UMN David | MedTech Litigation

The response from “Episode #10 Winning The Patent Wars w/ David Shaw” was incredible. It was clear from the messages we received the Unmet Need community has more questions about IP litigation. David was kind enough to deliver an encore and on Episode #11 shares his 4 key concepts for litigation strategy.

David Shaw was Intuitive Surgical’s Vice President, Legal Affairs and Chief Patent & Corporate Counsel (1999-2003) during the nascent stage of robotic surgery. His expertise in patent strategy, prosecution, and litigation helped Intuitive overcome early IP missteps to become the market leader with a present market capitalization of $80 billion.

David played a similar role at Kyphon (2003-2007) as Vice President, Legal Affairs General Counsel & Secretary where he helped the company defend the balloon kyphoplasty market it created and ultimately be acquired by Medtronic for $4 billion.

David received his B.S. in Chemical Engineering from North Carolina State University, earned his J.D. from Duke University School of Law, and served two years as a Law Clerk to Federal Judge Raymond C. Clevenger, III on the U.S. Court of Appeals For The Federal Circuit.

David currently consults with private medical device companies on patent strategy and helps entrepreneurs patent and defend the breakthrough innovations transforming the practice of medicine.

David Shaw



The Art of MedTech Litigation (War) w/ David Shaw

In this episode, we have a special treat. David Shaw, our guest from episode ten, has agreed to spend some more time with us to specifically talk about small company patent litigation. This is an important topic that we need to understand better. David, thanks for making time again. I will turn it over to you.

Thanks, Jeff. I’m like a bad penny. I keep showing up. I’m happy to be back. I apparently had so much fun last time that I got thinking about other stuff that might be helpful in some ways to your audience. We came up with this idea together, chatting a little bit about small company litigation, specifically, small med-tech company litigation. That’s certainly what I focused on. There may be insights that are specific to med-tech that may not translate into IP but we will see where we go.

I had a few thoughts that I wanted to share. I should start with that typical attorney disclaimer that this isn’t legal advice. Having said that, I hope I can provide some insights that will give some folks pause and something to think about and maybe change some of the things that they are doing if they are in these small companies and have litigation in their future.

Unfortunately, it seems to be part of the journey when a little company that is built succeeds and has settled on something that materially improves patient lives and patient outcomes. Invariably, value comes with that. As a result, competition comes with it. If you are set on building a company that is going to succeed and build value and change people’s lives, it’s somewhat naive to believe that you can be litigation free, certainly with your competitors in the patent space. The amount of litigation in med-tech is quite well understood as being frequent, unfortunately.

With that said, shall I jump in and start sharing a few thoughts? The way I thought about it, they fall into a few categories. One is communications, people, documents, and then substance. The substance I’m focused on is actual considerations that the company should take into account when thinking about the various different levers to pull when defending litigation and some of the tools in the patent offices, some of the tools abroad, and how those pieces go together.

Yeah. I like to add a framework for the discussion. Communications, people, documents, and substance are all themes that you have seen emerge or that are consistently present in med-tech companies and litigation.

Big buckets of stuff that fit into those buckets. There are certain issues that fall within those buckets that crop up time and time again that cause issues. That’s what I wanted to touch on. The other thing that I should share at the outset is that when I’m talking about med-tech little companies and litigation, I’m talking about bet-the-company litigation.

When you are a little company with 1 product or 1 line of products, and you get into a fight with a competitor of your patents, if you own the patents and try to stop the competitor from copying what you are doing, it is bet-the-company in the perspective. If you fail, you’ve essentially sent the signal to the marketplace and acquirers that you are unable to protect the only technology you have.

It’s bet-the-company in the sense that if you fail to enforce the patents and fail to effectively use that meaningful protection to protect your company, your value will be significantly reduced. I’ve seen this in my career. We would win a patent fight, put out a press release, and gain a billion dollars in a day because the market understands the value of being able to protect your product.

If you do not own the patents, you are now in a patent fight and patent litigation with a company that owns the patents, and you are the defendant. It is bet-the-company in the sense that if you lose that fight, it doesn’t matter how brilliant your company or how good your technology is, and if you fight the fight all the way and lose, you are materially impacted if not shut down. It is in that context that this conversation rests. I thought it was worth saying that.

There’s one other final initial caveat. I may have mentioned this when we chatted last time. Litigation certainly is not to be celebrated. It’s a tool, for sure. If you can win the market without fighting, what a great way to succeed. The way of doing that is a different podcast. I’m not going to be on number twelve. This one is focused not on how to avoid litigation but it is what do you do when litigation is foreseeable? How do you prepare for it? What do you need to keep in mind? How do you fight it and, hopefully, prevail in a way that your company survives and potentially builds real value?

With that in mind, why don’t we jump into the first one? The first one I had was communications. The first one I want to put into that is the scintillating, edge-of-your-seat topic of attorney-client privilege. We are not going to get into a lecture on what the attorney-client privilege is other than it is a tool that companies can use effectively to prevent communications about patents and IP competitors from being discoverable in litigation. What you need to understand about it is that it is commonly misunderstood and not used appropriately.

The first thing, what’s the benefit of it? The benefit of it is if you have a series of communications that you want to make sure are appropriately protected from discovery, make sure you talk with your attorney about how to use the attorney-client privilege to help you do that. When there’s litigation, there’s discovery, and you must turn over a bunch of information to the other side. Probably everybody knows that. You don’t have to turn over material that is appropriately protected by the attorney-client privilege. Among other things, I’m just talking about privilege.

What’s the problem with that? First, people don’t really understand what it is. Second, they don’t really use it correctly. No criticism but a number of CEOs, when they find out about other privileges, all of a sudden, they think everything is privileged. They put privilege in everything. It’s the assumption that everything is going to be predicted from discovery, “This is great. I can hide everything.” That’s not how it works. If a company takes that approach, it is ineffective.

Litigation is not to be celebrated. If you can win the market without fighting, that is a great way to succeed. Click To Tweet

There is an insidious side to privilege, and that’s what I want to focus on. Here’s the insidious side of it. If the privilege is appropriately used to protect communications between the client, the CEO, the board and its attorneys or members of the team and the attorneys, those communications will not see the light of day in litigation unless the company decides that it is in its best interest to waive the privilege.

If the privilege is waived, then all of the communications that otherwise would be protected by the privilege are then subject to discovery. There are various limitations that we don’t need to go into now. The point is that a communication that is protected by the privilege, when viewed several years down the road in the heat of litigation, the company might say, “I need to defend myself by talking about what the lawyers said, the defenses we thought about, and the conversations we had that otherwise wouldn’t be subject to discovery.” That’s a tool the company has.

What’s the downside of that? The downside of that is that once the privilege applies, many companies say whatever the heck they want to say. They don’t think about the potential of a waiver. They don’t think about, “All these communications that I’m flying back and forth in an email, at some point, it may help me to waive the privilege and defend my company better by revealing all of this.” They don’t think about that.

As a result, they almost take the privilege as a license to say things in their right mind they might not otherwise say if they knew it was subject to discovery. They get very comfortable with the fact that, “This is not going to see the light of day.” How does that play out? It plays out in the following way. As a result of the way in which the privilege was used to protect communications that otherwise are appropriately protected, the company, as a practical matter, cannot waive the privilege even if it wanted to.

If it were to waive the privilege, all of these communications come out that could be devastating to the picture that the company is trying to otherwise paint about how it thinks about its competitors, its products, and patents. The dangerous side of the privilege is that companies can paint themselves into a corner by almost getting too lackadaisical about how they are communicating in a privileged context.

That’s the real insight that I wanted to share that I’ve seen so many companies not understand until it’s too late. When you are in litigation, and then you go and look at how the privilege was being used to protect whatever communications were going on, the lawyers come in and say, “We can’t waive privilege. That is impossible because here are all the bad things that are going to happen when all these communications come out.” The other side is that highly paid lawyers get a hold of them and start to paint us as something that we don’t believe we are but, yet, our communications may support.

Could I take a shot at that, David, from the entrepreneur’s perspective?

Go for it.

This will be purely a hypothetical scenario. Imagine a company is developing novel technology, they found their first patent, and maybe they do some degree of patent abilities and research. They see what other patents are out there. They gain some comfort, “This place that we are developing in, this segment, seems like we could get some claims.” They file some patents. They begin prosecution. As that process plays out, the entrepreneur sees another patent that they hadn’t seen or maybe just issued. It looks problematic.

The founder says, “This is exactly what we do, and they beat us to the punch.” A mistake that I’ve heard about is they send a panicky email to maybe one of their partners, investors or even their attorney and they say, “David, this is terrible. This is exactly what we do. We have a problem.” They attach the issued patent.

You’ve touched on two different issues. The first one is that email is sent to the attorney that normally would be privileged. If there is a waiver of privilege where that email would be responsive and relevant to the fight that is underway, that’s the email you don’t want to come out, especially if you are trying to waive privilege to defend against something called willfulness.

Willfulness in Patent Law is you are not only infringing but you are willfully infringing. You knew what you were doing. You intended to do it. You didn’t do the things that normally prudent companies do. You are found willful, which means that your damages could be trebled. If you have to pay $100 million, now you’ve got to pay $300 million. You might have to pay the other side’s attorney fees. It may get into the mix for an injunction. Willfulness is an interesting area. There’s always a discussion about whether to waive privilege to defend against it. Your email would not be helpful in that context.

The other issue you touched on is one that I was going to touch on later but let me talk about it. That email doesn’t go to the attorney. It goes to the executive staff or comes from the executive staff to the CEO, or the CEO sends it to the board. None of that’s privileged. That touches on a couple of things. Use of email, which I love, when the other company uses it to document all of its worst fears because it’s dynamite in discovery.

I hate it when my clients are not disciplined in how they use email. Email is this incredibly useful tool that all of us and I certainly have. All of us have fallen into this trap of writing down what we otherwise would have said to somebody in person or on the phone when there is no record cap to it. Suddenly, we sit at our desks, and we wrap out an email, and they respond, and I respond. Suddenly, you’ve got this record of exactly what we are thinking, and it sticks around forever. It is a dangerous habit to get into when litigation is either foreseeable or you are in the middle of it.

UMN David | MedTech Litigation
MedTech Litigation: The dangerous side of privileged communication is making companies paint themselves into a corner by almost getting too lackadaisical about how they communicate.

Imagine having all the thoughts documented about a competitor. I guarantee you that many of those thoughts shouldn’t see the light of day. When they are documented in real-time about what the CEO, the board, and the executives in the field were saying, thinking, and doing, you follow the tracks in the snow to how to nail this company. It is a very dangerous tool when you think about the insidious side of how that information can then be used against the company. Your comments relate to that.

One of the things that I wanted to talk about in the communication area if I could, Jeff, is going back to the notion. If you are in the process of building a business and you are building a business that has the potential to create real value, change the practice of medicine, help a lot of people, and in the process, make a lot of people a lot of money. You will be naive not to be sophisticated in areas that I think of as litigation preparation.

If I’m involved in a company, and it isn’t in litigation and we are building that business, we start preparing for potential litigation years in advance. We have started to get sophisticated about communicating about our rights, our IP, our patents, and third-party patents. We do it in a way that is protected to the greatest extent possible.

No bright engineer or founder is going out and doing all of their independent IP research and analysis without the involvement of somebody that can protect all of that from discovery, namely an attorney. No one is talking about our IP or third-party IP in email or in-person to any third party. It builds on that notion that we need to get sophisticated about not saying and doing things now that later on could be misconstrued and used against us to place us in a false light. Getting sophisticated early and preparing yourselves in advance for a fight that may well come down the road will do you wonders.

Imagine a company has raised a seed round or a Series A, they have 5 or 6 employees, and you are brought in as an advisor to help them implement some best practices around these types of communications. What are some specific things that you would recommend they do and do not do?

One of them, I’ve alluded to. It’s understanding the competitive space that they work and operate in and the nature of third-party patents that are out there in the hands of what are euphemistically called trolls. It’s a sad term but it’s a term that has stuck over the years. A troll is defined as a non-practicing entity that has patent rights. It’s some very smart person who has no company, has no product but has the wisdom and wherewithal the patents, something that it turns out is quite valuable.

They try to hold people or industries up for a lot of money, NPE, Non-Practicing Entities, or your competitors. Companies out there with a portfolio of patents that are in the space that you have. Without performing a sophisticated FTO early, in your scenario, you got a company and they are a little bit wide-eyed and bushy-tailed but they are years and years away from any product on the marketplace. You don’t want to perform an early FTO because you are going to waste your time. You are going to have to do that again and again as the product is iterated.

A formal FTO doesn’t make sense. Nonetheless, knowing the space is important. Many companies have very bright people, Engineers oftentimes, who get out into the patent space and start looking, searching, learning, commenting, forming opinions, and sharing views. The more that goes from simply, “Here’s a patent that I found,” to, “Did you read the claims? That’s going to block us from where we are going. This is a huge problem. We need to rethink this.” It turns out that the patent is ultimately asserted against the company.

There’s a spectrum of potential damage through letting that person do what they are doing but you want that person to do what they are doing. You should get an attorney to act that person to do what they then do, and they are doing it for the attorney. You essentially make them an extension of the legal department. You then can leverage all of the engineer’s work but none of it is subject to discovery, at least nominally.

In that process, you will also help the entire team to understand despite the fact that you may have some very important insights into these patterns. I don’t want emails discussing them. If we are going to talk about these patterns, you are going to send them to me and say, “Here’s what I found. Let’s have a discussion.” We will then have a discussion. It won’t be on email and recorded. We will chat about what you found.

We don’t have an email down the road with eight exclamation points. I have been in depositions. One of my clients, an engineer, wrote a statement. I can’t remember what it was but it had eight exclamation points. The questioning attorney roasted that engineer for twenty minutes, “Why was it only one exclamation point? Why did you feel the need to put multiple exclamation points? Why did you decide to put eight exclamation points? Have you commonly put eight exclamation points on your email?” You must have thought this was super important. Isn’t that correct?” That’s twenty minutes of this.

It was simply because he didn’t understand how his communications were meant in the best way to get the attention of everybody. In fact, it would be used against him and his company at the most inopportune time, right when they were launching their product. He wrote it several years ago. One of the things that I would help them do is not do that type of thing.

There’s a quick segue that I would love to take into document retention. Probably everybody reading understands that in litigation, there’s document discovery. Document discovery is exceedingly expensive. If you have a company that has very few documents, then that litigation will be a fraction of what you otherwise would spend for a company that has hundreds of thousands or potentially even millions of documents.

There’s nothing we can do with documents in the medical field that we are required to create and retain but that does not typically apply, I’m going to suggest, to 95% of all emails that are sent back and forth between people in the company and outside the company. That’s not how formal records are kept. One of the things that I would encourage clients to do is be very thoughtful about how they keep what they need to keep to support their business and how they do not retain the information they don’t need to retain to support their business. It gets into document retention policies, document destruction policies, email retention policies, and all those things.

People often take privileged communication as a license to say things they might not otherwise say if they knew it was subject to discovery. Click To Tweet

What I would say here without getting too deep into this is it’s a topic that absolutely should be discussed. Your council should guide you through it carefully to make sure that if one is to be adopted, it is adopted appropriately, and it is adopted when the company is not under a duty to retain all communications. That duty can kick in before actual litigation is filed. There are detailed rules when a company has to start retaining information.

Let’s say you adopt some sort of document retention policy that discards things after a certain period. You can’t forget that it’s there. For 5, 6 or 7 years later, it has been operating in the background. All of a sudden, the duty of a company changes. You can’t forget it’s there. You’ve got to make sure that it’s front and center. The folks who need to know, mainly the attorneys, do know so they can help the company understand when it would be appropriate to address that issue. That’s closely related to all this email stuff as well.

Imagine a startup decided to get their website, and now they have their email address, David@NewCo.com. Looking at the market share for new companies, the Google G Suite product has become competitive with the traditional Microsoft 360 Outlook. A lot of companies have G Suite, so they are using the Gmail corporate email system. The default is to archive and saves everything. It’s not like you push the delete button, you archive it. 1, 2 or 3 years into the journey, it saved every single email that went back and forth.

If they are using the G Suite Drive, which is the cloud storage for their computers, all their files are on G Suite, and all the collaborative Word processing, PowerPoint, and Excel. There’s not an incentive to ever delete anything because the storage capacity is high and cheap. If you focus on email, specifically, I’m really curious about the concept because of document retention policies but more specifically, document destruction and email destruction. What are some best practices that you could share?

Don’t keep everything. That is the best practice than neon lights flashing from the top of the Empire State Building. It’s because storage is available, and we don’t see it, and it’s offside in some farms somewhere in the middle of Nevada. We don’t care. We leave it there. I guarantee you that when the company gets a bill for $700,000 and $800,000 in two months and they go, “What the hell are we spending our money on?” They go, “You ended up saving eight years’ worth of emails.”

We have to go through all of those to find out what’s relevant, search them, produce them, base number them, catalog them, review them, and take the privilege stuff.” When you have that volume of information that is potentially relevant has to be searched, and then a lot of it has to be produced on the other side, it is incredibly expensive.

The companies that understandably aren’t conscious of the volume of information that they are saving are setting themselves up for a massively expensive and potentially dangerous headache down the road in litigation. Not only do they have the expense of producing it all but it turns out that innocuous statements that nobody ever thought would be retained never see the light of day. All of a sudden, exhibits numbers 2, 3, and 4 are at trial in front of a jury, and people are going, “Why did I say that, first of all? Why in God’s name did we keep it?”

What’s interesting to me is that the email is the trail of these conversations of every fear, thought, freeform, and excessive use of exclamation points. The ability for something to be discovered at all is one of the first points I never considered. Even if you have a great policy and you are following this type of advice where you see a patent or something that is an issue or concern, you send, “David, I thought this would be interesting. Let’s discuss.” Even if you follow all the right rules, the sheer volume of documents and emails that you have saved could lead to a very costly discovery if there is litigation. That’s interesting.

A lot of folks reading this will understand that. If they’ve gone through litigation, they will understand it. Nonetheless, a lot of folks are not so sophisticated in understanding what tools they can use to manage it. At a minimum, I would say go to your legal counsel and start talking to them about how we control the volume of information we are retaining, especially when a lot of it is simply irrelevant to the information we need to run our business and comply with our obligations to retain. That’s where I would litigate.

Have you ever encountered the Google Vault product?

I live in a cave so I am very tech-unsavvy. Hopefully, one of the few other guests may know about that. There is one other very quick point that I want to make on communication that I need to turn because I’m already burning a bunch of time. It’s on diligence. Here’s the context. Little medical company has done some searching for third-party patents and needs to raise money. The finances come in, the VC, the private equity, and the corporate partners. They want due diligence on the company. One of the things they want to do is diligence in IP.

There’s no way that communication can be privileged because the privilege is between client and attorney. My client is a company that is diligent. I have no relationship with the entity that is performing diligence on my company. The only thing I want to say about this is to ask the questions when you go into diligence about how you present, to the greatest extent possible, the disclosure of information that in litigation could come back to haunt you.

There are ways of doing that. In terms of engaging with partners to do the full diligence, they need without creating this paper trail that will then come out later in litigation if you happen to get into the litigation with the company that owned the patents that you were defending and diligence. Folks, I have seen, and it blows my mind when this happens in diligence because they are so focused on raising the money. They create 10, 20, 30, 40, and 50-page memos about all of these third-party IPs.

Let’s say it’s from 1 or 2 companies that they then share with pride and give to all the people who are trying to decide whether to put money into the company. Oftentimes, neither the company nor the VC that is doing the diligence understands the damage that approach can do to their investment 4 or 5 years down the road when those patents are litigated against the company that they are trying to invest in. It is beyond foolish in my view to take that approach but I have seen it on a few occasions where it made no sense to me.

UMN David | MedTech Litigation
MedTech Litigation: There are enough tools online that can help you figure out which patents out there might cause problems. This way, you can set up your litigation success many years in advance.

If the company has an NDA with the potential investor, is that discoverable still?

Sure, as is the NDA. This is a common misunderstanding. People say, “That was confidential. That’s not supposed to be produced in the litigation.” First of all, you are absolutely right, it was confidential, and it remains confidential, which is why it is going to be produced in the litigation only to the other company’s attorneys. The other company can’t see your confidential communications but the other company’s attorneys will see all of them.

It’s the attorneys that you want to prevent from getting the information in discovery because they are the guys who are paid $1,500 an hour to destroy the company you are trying to build. The fact that it’s confidential and that you’ve got an NDA and was setting doesn’t matter in litigation. It all comes out. You are only shielded from discovery.

There are various techniques for saying, “The requests are too broad. It’s not relevant.” Your only true shields in discovery are privilege and relevance. Even relevance is a bit weak of a defense. Imagine if you were having a tiff with the DOJ, for example, that wouldn’t be relevant to patent litigation. Maybe. It depends on the facts. Confidential communications all come out in litigation.

What’s actionable about this is you start off, you are pitching all these investors to get to 2 or 3, maybe there’s even a term sheet, and now they are in this diligence phase where you want to close the round. The opportunity to give a positive signal to your potential investor with such savvy questions, “Mr. Investor, Mrs. Investor, how can we discuss IP? How can I, as the Founder, support your IP diligence in a way that it’s going to protect you as a potential shareholder to the greatest extent possible? Should there be litigation?” If I was an investor, they probably don’t hear that as often. It shows a degree of sophistication that would be a good signal.

I agree with it. I will go one step further. The question is appropriate but the way I do it is I don’t ask the question. I indicate how we are going to do it to protect both parties and lay the groundwork for how we are going to exchange information and have the discussion while protecting both the company’s and the investor’s interest at the end of investing. Can I shift topics now to people?


The big one that I wanted to touch on comes down to hiring the right litigation counsel and counsel for your company to get you through what might well be the biggest risk to your future success that you have ever experienced. I have been involved with several companies where, in moments of candor, the executive team looks at each other and goes, “How is this even possible? We are doing great. Things are great. We are helping many people. All of a sudden, the future of our company is completely out of our hands, beyond our control, and we turn it over to a team that we don’t know.” It happens all the time.

Set aside for a moment who the right counsel is. I will comment on that not by names but by process. The biggest problem that I’ve seen, and I see it over and over again, and frankly, it’s why my business exists, is when a little company is unsophisticated in litigation. Maybe the CEO or the executive team has never been through med-tech litigation. Maybe the board hasn’t. More likely, the board has at least one director who has had a really bad experience in litigation and is gun shy and bemoans the fact that litigation may be foreseeable or they may already be involved in it.

You have this unsophisticated consumer of a med-tech company and its board, and they go out and hire litigation counsel. They sit back and say, “Thank God, the cavalry is here. We can relax. We are saved. We hired Joe Schmo. Joe Schmo is the best patent litigator in the world. Joe Schmo is going to save our company.” They stopped doing what made them so successful in the first place. They become passive consumers of whatever Joe Schmo and his team say.

They don’t speak the litigation language. They don’t understand that levers can be pulled. They don’t understand the questions they should be asking. They don’t understand how to challenge what Joe Schmo declares because they believe everything he says is right. They blindly defer to that litigation team and don’t have anybody to act as a go-between between the world of the litigation team, all that’s involved, the issues, and the language that the attorneys are using on the one hand.

A business team that is unsophisticated is my model. That’s what in-house counsel does. That’s what quasi-in-house counsel does. It is such an important role to play, and I will tell you exactly why. It is mind-blowing to me the number of times that these highly paid $1,000-plus an hour attorneys roll in and defend the medical company and miss the biggest defenses. They don’t know that they exist because they are so expensive. They are paid to block and tackle. They are not paid to dig.

The guys that are paid to dig aren’t the expensive attorneys. They are the 1st and2nd-year associates. You don’t hire Joe Schmo, who’s 40 years into his career, to look through documents. That ends up all the way down at the most unsophisticated attorneys on the team who are wet behind the ears out of law school and are looking through documents to try to see if there’s anything helpful. They don’t even know what to look for.

I can almost not count them on the one hand. The number of times I’ve gone into a company and started to dig, poke, investigate, and find defenses and documents that the litigation team didn’t find, it’s incredible what we pay them but it’s in large part because of the way in which litigation firms are structured. The brightest people and the best minds are expensive that they don’t do the foundational work on which the case depends oftentimes. They eat what’s put on their plate from the guys lower down the totem pole. As a result, they miss stuff. The biggest mistake that med-tech companies make, if you follow my line of reasoning, is they assume that these litigators are not human, and they are, and they make mistakes.

Be sophisticated about not saying and doing things that could be used against you in a false light. Click To Tweet

The problem is that when that litigation team makes mistakes, they miss things and don’t defend the company with all the available defenses that are available, guess what happens? That litigation team gets paid and moves on to their next client. Unfortunately, for their client, that company fails as a result of the mistakes they make.

The company may never know that the mistakes were made because, in a sophisticated manner, they don’t know how to consume what the litigation team is providing to them. That’s why being critical consumers of what the litigation team is doing is imperative to making sure that the company is defended in the best way possible.

You’ve then got two different varieties of in-house counsel. You’ve got an in-house counsel who says, “I’ve hired the best guys. I’m going to manage the process. I’m going to let them do their job.” What that’s called is hope. The team you hired is going to do what they are supposed to do because if they don’t do what they are supposed to do, they are still going to get paid but your company fails.

You’ve got the class of in-house counsel, and I am blown away by how rare this really is. They get dirty. They roll up their sleeves. They go into the trenches. They look at the documents. They understand the nitty-gritty defenses and create tension in the team by asking them questions and sometimes the very tough questions. You then get two types of litigators. You get litigators who go, “Who’s this guy asking me questions?” “I’m like Joe Schmo. I don’t get questioned.”

The other way is litigators who go, “This is going to make us better. Welcome to the team.” If you come full circle now, hiring the right litigator for your company, to me, means three things. The first is that they are at the top of their game. When you go to bet-the-company litigation, you better have a very good team. A very good team doesn’t necessarily mean the world’s most superb trial lawyer. Cases are won and lost, not always but oftentimes before you ever get to trial.

If you have a trial attorney who will come in and try to save the day at the end of the case but otherwise is too busy with his ten other cases, then you’ve hired the wrong team unless his supporting cast is fantastic. When I hire a team, I don’t necessarily look for the world’s best litigator. What I look for is the team that is most well-versed and capable at all levels of the team who will represent the company.

The second thing is there had better be a rapport between the company’s CEO and the lead litigator because that CEO is about to turn over his baby to someone he may not know. If he does not have a rapport and a relationship with that lead attorney, when things get stressful, it is going to be a nightmare. To me, that is really important.

It comes down to the human dynamic. You need to be able to work well with the team that you hire. If there’s no mutual trust, no mutual respect, it may succeed but it’s not going to be a fun journey. It may well fail because trust starts to be eroded when it most matters trying to maintain it. The third thing I look for is a team that is not of the mindset that says, “We are good. We don’t want any input. We want to come in and do our thing.”

If that’s the approach that they take, like the not-invented-here approach, I’ve seen enough bad representations from teams like that. It’s a mistake to go down that road. It’s that team that says, “If you’ve got ideas, input, come on in, challenge, think with us, and to the product.” It makes for an exceedingly powerful end product when you are able to work with the litigators who have to do their job. You are able to make them better through the dynamic tension I’m talking about by not always taking what they say as a given. That’s how I think about it.

It’s such an important part of the whole process. You see it time and time again when companies are deer in the headlights, “We got to go hire somebody to save the day.” They stop doing what they’ve done so well to build the company to this point by continuing to challenge, be creative, and be proactive in terms of getting ahead of the problem. They turn the keys to the castle over to the litigators and say, “Save us.” It’s a disaster waiting to happen.

Let’s say the company made some progress where someone cares enough to litigate, and maybe they’ve used a law firm for their financing documents, employee matters, just good general counsel. How often when litigation arises does that firm and board of directors choose to use the same corporate counsel and maybe their litigation team, versus how often do you see venture-backed companies go out and get a specific specialized litigation counsel?

It’s a question I can’t answer yet because it’s an empirical question. I don’t know the numbers. When big litigation is involved, it is obviously a huge potential profit center for any law firm. If you are a law firm and you see this issue brewing, you absolutely will throw your hat in the ring because you want the business. What I do know is a lot of decisions on counsel are made through almost inertia.

Hire the guy you know. They are around the corner, “We are comfortable with them. They have been involved with us for a few years. They know us. They are the right team for this project as well.” I don’t think so. They may be but don’t just knee-jerk hiring a counsel. Put yourself in a position where now you are riding the wrong horse, and then you realize that two years into the litigation, they have to switch.

The other thing that folks may overlook sometimes and underestimate is the extent to which the court in which the litigation is pending may influence the choice of counsel. There are some courts in the country where I would always want somebody who is known to the judge, seen him before, maybe is in the same circle, as respected, has won before, the judge likes them. I don’t think that’s always important but in some courts and judges, I do. Sometimes that factor is overlooked as well.

UMN David | MedTech Litigation
MedTech Litigation: The problem for the little company is not simply paying your attorneys. The problem is being able to cover the bond while you appeal.

There’s another point in this. To me, this is equally as important as hiring the right counsel. Shame on any med-tech company that gets surprised by being sued. I’m not saying, “I thought they were going to sue us but I didn’t think they were going to sue us now.” I’m not talking about the surprise of the timing. I’m talking about the surprise of being sued. We have enough tools at our disposal, search tools and online tools. You can figure out pretty efficiently and quickly what patents are out there that might cause you a problem.

Once you do that, litigations oftentimes are set up for success many years in advance. If you are sitting, developing a business and developing into a landscape that is owned in large part by a company that is already established and have a better mousetrap, you bet your bottom dollar that another company is going to come after you at some point. It’s knowing what their patents, issues, and potential defenses are.

The way I put it is if I’m involved in a company sufficiently in advance of the time that any litigation ultimately occurs, I want to know that competitive portfolio equally as well but I want to know it better than the company that owns the rights. I want to know what its strengths are. I want to know what its weaknesses are. I want to know how I’m going to challenge it. I want to know how I’m going to put the pieces together and set the chessboard.

By the time they say, “We need to sue that company,” my client. By the time the other company figures out that it’s time to do it, I already know what they are going to do, how they are going to come after us, and what we are going to defend with. It’s part of being ready for this when you are building a company that is worth something. It is such a shame.

I’ve seen it time and again where little companies knew that it was coming, had somebody looking at it, and pushed around some papers on it but didn’t get sophisticated about it until the lawsuit had been served. They go, “What are we going to do?” They look at each other, “We got to hire somebody.” Good God, you should already know exactly what you are going to do if you are serious about protecting the value that you have created. That’s the other part of what I end up doing and enjoying.

When you come into a company that’s somewhat raw, and the chessboard has no pieces on it, and you get to put your pieces on the board, and the other side’s pieces on the board, and the other side doesn’t even know it’s playing chess yet, it’s fantastic. You then anticipate all the moves they are going to make, and they play right into your hand. I’ve seen that before, and it works wonders but involves an investment of effort, time, and money before the litigation ever occurs. Maybe it never does. Companies say, “Maybe I don’t need to do that.” Believe me, they have second thoughts when it happens.

Is the first step in that process doing Freedom To Operate, the FTO that you mentioned?

FTO is thrown around and used in a lot of different ways. FTO means Freedom To Operate. Everybody probably knows that. Freedom to operate is a formal analysis of, “My product is almost final. I got all the bells and whistles on it. Now I need to do a bunch of searches to figure out where the various features are covered and whether the combination is covered,” and so on.

It’s usually a formal exercise that is done shortly before a launch, maybe a little bit earlier depending on the timeframe associated with the development and when the pieces are fixed to make sure that there are no glaring issues. FTOs can be quite complicated and can be quite simple. If you do an SEO search and you don’t find anything in your field, you are the first mover into a field. All that I’m talking about doesn’t matter. By definition, no one’s got any patents that are relevant to what you are doing.

However, it is very often the case that the first entity that moves into a space with its first technology has a lot of patents but has a product that isn’t very good. Other companies go, “I could build a better product and solve all the clinical issues they are having.” They are the second mover into the market but they don’t have all the early patents. The rest is history. The number of lawsuits that have occurred over that situation where the second mover has the better product, and the first mover has the patents but has a crap product, you could fill an encyclopedia with.

What I’m talking about is you may not have done a formal FTO but you’ve already done landscape searches and figured out the company or companies that have the relevant patents in your space. You have already been through them to get an idea of, “Eighty percent of them, I don’t even care about but 20% of them, I do. Ten percent of them I want to watch. I want to see how they prosecute and where they go. Ten percent of them, I need to read them again because that’s a little too close for comfort.”

I got a couple of them. I need to start having a conversation with the company about potential design around. “Why do we need to put that in? In which case, we knock out this portfolio. If we are going to put it in, we should do a validity search and make sure that we’ve got an answer for those patents.” If you have been through several rounds of diligence for fundraising, you must know the patents that you always talk about.

It’s those patents that I’m talking about, and you might as well assume you are going to be sued on them. What do you do on days 1, 2, 3 or 4? What are your defenses? What else do you want to find out? What evidence internally to your company do you want to create to help defend against those patents that you keep talking about?

Don’t assume it isn’t going to happen. Don’t assume you are going to be bought before those patents are ever asserted. Don’t assume the future is bright and rosy when you already know, if you were honest with yourself, “We got a problem with those. We hope we don’t have to face them.” It’s not a strategy. There’s a New Zealand saying, “Sweet as.” Do you know what that means?

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It’s a saying, “Life is good.” There was a massive earthquake in New Zealand a few years ago, and I was down there. I was heading out in the boat down to several archipelagos between New Zealand and Antarctica for about a month. This earthquake just hit. I was reading one of the newspapers, and it was talking about how many people were not insured, lost their homes in this massive earthquake, lost all their belongings, and the trauma that is associated with them.

The saying that stuck out to me was, “Sweet as is not a strategy. Sweet as is not always of protecting what you have.” It is the same in med tech. Simply hoping that everything will work out great is not a way of protecting the value you are building when you have a boss that you see coming down the road but you think it’s much further away from you than it is. Unfortunately, you are sitting on an armchair in the middle of the road and going to get run over. You’ve got to get more sophisticated in this area. More med companies might well save a lot of money in litigation if they did that a little earlier.

We set out to discuss communications. That was extremely helpful, the significance when it comes to the people for a CEO and management team to have to trust and feel like they have a connection with their general counsel. If it comes to litigation, it’s one of these bet-the-company situations that if specialized litigation counsel is brought on, it can’t be someone that the management team doesn’t have trust and feel like there’s a fit. Everyone else must be proactive because so much of that preparation work needs to be done by not $1,500 an hour, Joe Schmo. That is great, the documents as it relates to communications and having a policy at all. I’m intrigued to talk about substances. What is that one?

Here’s what I want to talk about on the substance piece. The first is financing for litigation. What does that mean? You’ve got to pay the lawyers. It doesn’t mean that. It includes it but it’s way more than that. When a company either foresees litigation, thinks it’s coming or is involved in it, it’s not just the bills, and the large dollar-an-hour attorneys are going to be sending for their work that the company has to be financed for. Finance means either it’s got the money in the bank or it knows exactly where the money is, and the money is available on terms that the company can tolerate.

It’s amazing how much more expensive capital gets when the company is in litigation, and the investors see an opportunity to take more of the company for that capital. You’ve got to figure out how to finance for the long term. You can’t allow the other side to beat you by spending you into the ground to the point where you can’t pay the bills anymore. You’ve got to be able to finance the cover of that stuff.

I am also talking about the bond. This doesn’t apply when you own the patents. When you own the patents to a certain extent, you have the ability to control the timing of the lawsuit and the place of the lawsuit. Unless you have very loose lips and give the other side that doesn’t own the patents, the accused infringer, you give the accused infringer the opportunity to sue you first in what’s called a Declaratory Judgment. I’m not talking about the DJ now.

When you are a patentee, the bond doesn’t apply. When you are an accused infringer or a defendant in patent litigation, it is highly foreseeable that if you lose at trial, a damage award is awarded. Either that damage award will be based on a trial that was absolutely perfect, and there were no issues, and you won’t have to appeal or you don’t want to appeal, that’s probably about 0% of cases. Would you say, “We have been affected damage award but we’ve got a litany of things that went wrong? We should have a new trial. The jury was crazy. We need to appeal.”

How does that company appeal if it can’t cover the bond? The answer is it can. Let’s say the bond for discussion purposes is $30 million or $50 million, pick a number. I don’t care. The number is large enough that the little company doesn’t have that money lying around. This isn’t a situation that even hits the radar of Medtronic, Alcon, Algan, or one of the big spine companies, J & J. They can easily post a bond. They go to bond and they say, “You are a big company. You can pay. It’s not an issue.”

Try doing that as a little company, “I need a $30 million bond.” “What do you have as collateral?” “I got some account receivables. I got $5 million in the bank. I got a good product.” “I’m sorry. I can’t give you a bond for that.” They are not assured of being paid. The problem for the little company is not simply paying your attorneys. The problem is being able to cover the bond while you appeal.

The day that you realize that litigation is maybe foreseeable, you should start thinking about that, and many companies don’t. How do I cover a damage award of $30 million, $40 million or $50 million? How would I do it? You better start getting very creative because it’s not so easy to do as a little company. Many companies don’t think about that. That’s the first piece.

Is the bond a requirement? As you begin this litigation, is that something that the courts mandate that you have a bond? Who dictates that?

We could get into a complicated conversation but here are the points that folks should understand. Bonds are usually always required to be posted before an appeal as a practical matter. Yes, technically, you could appeal without posting a bond. Guess what happens if you do that? As soon as you appeal without posting a bond, the patentee who’s got the judgment against you will take your assets, your bank accounts, your IP, and your receivables.

They will shut you down because they have a right to enforce the judgment unless you get the court to try to state it somehow. The issue associated with funding for a bond is simply making sure that you are preventing the patentee from doing what it may try to do if you don’t post the bond to preserve your right to appeal. I don’t know if that answers your question. Maybe I got off track a little bit. Did that answer your question?

UMN David | MedTech Litigation
MedTech Litigation: Once you pull that IPR trigger, you better win. If you don’t, you will get sued on your lost claim. If you reframe that claim and your only hope was validity, you might as well pull your checkbook out.

Yes. Thank you.

Financing, you got to think about more than, “I got to cover $3 million in fees over the next year. I can do that.” The second is there are now tools for challenging patents. Folks may have heard of the term IPR, Inter Partes Review or PGR, Post Grant Review. They are almost like mini litigations in the patent office. They are relatively quick. They are relatively inexpensive compared to full-on court litigation. In my view, they are overused.

When you tell a business company, “We have been sued on these patents. We may have a jury trial in two and a half years. It’s going to cost you $10 million to defend. There’s maybe this multimillion-dollar defense verdict against you, and then we would appeal or could go to the patent office and file an IPR.” “Let’s file an IPR. That sounds great.”

To me, it is a little bit of a siren song in the following sense. My point here is not to say don’t file IPRs. IPRs have been a wonderful tool that a lot of people have used with great success. There are some serious drawbacks to them if you are not a sophisticated consumer of what an IPR is, what it does, what it can’t do, and how things may end up for you.

I wanted to hit four of them super quickly. First is PGR, Post Grant Review. This first bond doesn’t apply to PGR but PGR is much more limited. I don’t want to get into an IPR. This is a PGR. Ask your counsel what they are. You, as a business team, need to be asking the following questions. First, “What can I challenge in an IPR?” The answer is you can challenge with the prior art, 102 anticipation, 103 obviousness. You can’t challenge any of the defects in the patent, inventorship, written description, and enablement.

You can’t challenge equal conduct and fraud in the patent office. You can’t challenge if your best defense is, “We don’t infringe this patent.” If you construe this pattern broadly to cover what we have, your patent must be invalid for these reasons. You can’t present that defense either. Infringement has nothing to do with the IPR.

The way in which patents are judged in an IPR is almost in a sterile environment. You take the claim, you take the piece of the prior art, you argue about whether the piece of prior art invalidates the claim, and that’s it. There is no context and no story. Oftentimes, the best defense for the company is to tell the story, “What’s going on? Why don’t we infringe? How can you say we infringe while still having a valid claim? The interplay between those two doesn’t match. By the way, these guys lie to the patent office. They didn’t have enough written description and all of this.” You can’t do any of that on an IPR.

You’ve got to very quickly decide unless you are playing the game in a more sophisticated way by seeing the bus when it’s way down the road and have the conversation early on about whether or not you want to IPR before the litigation comes to your doorstep. You’ve got to decide, “Where do I tell my best story?” Sometimes, if the prior art is so good, IPRs can make a great path but sometimes, no.

Personally, representing three dozen companies, I have yet to file a single IPR because of the other risks that I’m about to talk about. The next one is estoppel. What does that mean? Here’s what estoppel means. If you want to challenge 30 claims of a patent in an IPR, it is highly likely that the first few claims that you challenge, you’ve got the best prior art out there. It reads directly on it. What they did was they patented an invention that existed twenty years ago. Those claims are clearly invalid.

They then have some of these other claims. As you go further down the claims, claims 20, 25, and 30, they start to add features, “They are not in that reference. They are not what’s called anticipated.” “Now I’ve got to find some other references and put together an obvious argument. It would have been obvious.” Nobody did what this patent says to do but it would have been obvious to do it. It turns out there’s another feature that they added. All of a sudden, you need three references.

I’m seeing somebody file an IPR with four references attacking a single claim. That is insane. Here’s why. If the IPR is declared, if it’s instituted, if the patent office says, “We need to take a look at this patent. Thank you very much, little medical company, for drawing this to our attention. We are going to take this patent and take a real close look at it.” If the patent office disagrees with you on any claim that you challenge, you have no further prior art defenses to that claim in future litigation.

You cannot make the same arguments you lost in the patent office. You cannot make arguments on other prior art that you could have drawn to the attention of the patent office but chose not to. Once you pull that IPR trigger, you had better win. If you don’t and you then get sued on a claim that you lost in the IPR, oftentimes, companies have no defense other than non-infringement. If you infringe that claim and your only hope was validity, you might as well pull your checkbook out.

Folks need to understand the full scope of the risk associated with this principle of estoppel. They should be asking their counsel tough questions about, “How’s this going to play out? What claims do we challenge? What’s the risk of not challenging some claims? What’s the risk of not bringing the prior art in? What’s the risk if the patent office disagrees with this? How are we going to defend those claims and litigation?” There’s a whole litany of questions that they should be asking, and oftentimes they go, “IPR is cheaper? Let’s do that.”

It’s interesting. One of the common things as an expert patent litigator is if you are going to win because it is clear that you are right, there’s still a risk that you could lose because of savvy litigators on the other side. One of the things I thought is when it comes to communication, the attorney-client privilege, while beneficial in suppressing information and discovery, the overuse of it limits your optionality where it could benefit you.

Choose your battles. Know when and how to find. Know your strengths and weakness. Know the enemy better to win without fighting. Click To Tweet

Similar to the use of the IPR, if the company chooses the IPR because it seems less expensive and potentially easier, if they go that path and lose, they can’t use all the other potential ways to win this litigation because they are at that point, limited to validity infringement. Is that true? Is that the option that you were looking for when you come in to help companies with these litigations? Is that an important requirement for you or something that you need?

Let me see if I can answer this way. I agree with your overall premise, which is that IPRs can be way overused, and companies oftentimes don’t appreciate the consequences of going all-in on that strategy and coming out the other side when it doesn’t completely kill the entire patent. I’m not saying it’s not worth rolling the dice if the company, for whatever reason, decides that that’s what it chooses to do.

My only point is that I would hope that company goes in with its arms open and doesn’t lose the IPR in at least some claims and then turns to his counsel and goes, “What do we do now?” They go, “There’s very little we can do at this point.” It might cause a different decision-making process. My other point is that in no way, shape or form should any company ever decide on the IPR path simply because it’s cheaper.

It’s foolish in my mind when you start thinking about the longer-term consequences of an IPR that doesn’t go quite so well. When I hear about some companies going, “We got sued on ten patents. We’ve IPR-ed them all.” If you think you are going to knock out ten patents in every claim, good luck. If you don’t, you’ve killed your company.

Bringing it back to where we started, I’m so appreciative that you took the time to focus us on this specific topic after such an expansive conversation on the last episode. It is about small MedTech company litigation where it is bet the company. These big buckets that you’ve described with communications, people documents, and now we’ve covered substance are incredibly informative for me, and I’m going to have a lot of follow-up questions.

It’s complicated, and you have so much experience with several dozen companies. If you had to summarize maybe one thing for the reader or the entrepreneur that may be feeling a little fearful and unprepared, what’s one thing that the entrepreneur could do next week that’s actionable to at least start down the right path on preparing for potential litigation?

It totally depends on where their company is on the spectrum of IP sophistication. You can imagine a company that hasn’t even done landscape searching. Surely, they are bright-eyed and bushy-tailed, and they don’t know what they are playing with to the company that isn’t involved in actual litigation but realizes that there are 1 or 2 competitors that own the space through the patents.

What I would say is maybe the highest level that would apply to all of them. If you are building a company that truly you believe in and can create value for the patience that your customers wish to serve, your employees, shareholders, and board both value through clinical benefit and financial benefit. If that is something that is within reach or possible, get more sophisticated on the IP risks that you may face and do it earlier than later.

That’s the broadest advice I would do because a lot of companies wake up when they are slapped with a lawsuit, and then they’ve lost time. Most companies have time on their side when they start early. There was a company that I represented several years ago. It’s because I was involved with them three years before the lawsuit, we ended up triggering it, and that became part of our strategy.

We wanted to bring the fight on our terms when we wanted it, even though we didn’t own the patents, and we found a way to do that. That’s a whole other podcast but the point is that we were able to take the approach that we did because we got sophisticated early about the other company that was in the space. Two final quick points, if we have time. If we don’t, I will shut up.

It’s all the time you have. It’s great.

One other substantive point is OUS challenges. We are US-based. We are talking in the US. We represent US companies. US companies typically value US patents much more than OUS patents, usually because the US is the largest medical device market in the world, so it makes a ton of sense. However, if I own a bunch of patents and I want to cause your company grief, I might choose to attack you overseas first and interrupt your supply chain. I could sue you in Germany, where if I sue you for infringement, you can’t defend on invalidity.

You have to file a separate lawsuit. You have to do a whole bunch of things in Germany that I don’t care about because all I want to do is get a quick injunction to shut you down, and all of a sudden, I take out 10%, 15%, and maybe 20% of your revenues. OUS is an important part of understanding the bigger picture when it comes to defending a little MedTech company. You’ve got to be cognizant of what’s overseas but you also have massive opportunities overseas as well.

It’s because there are so many ways to fight overseas and start to erode the strength of the patent protection that this company has through using tools overseas that simply aren’t available to us in the US Patent Office. It’s being thoughtful about what rights exist overseas and what risks we face as a result of those rights owned by another company. What levers do we get to pull potentially to play that game? How can we do it without the other company even knowing it’s us that’s fighting the fight? There are effective ways of doing that that I’ve used with some success.

UMN David | MedTech Litigation
The Art Of War

I would also encourage companies that think they are heading into some multi-fronted war to start to be thoughtful about how we start to pick away at what they have at a time when they may not be able to attack us in the US but nonetheless, we can start to eliminate that right. That’s quite powerful. The final point that I wanted to share is a fluffy point now that I think about it. This is how about it but here’s what I have said to all my CEOs. I would certainly say to any CEO I worked with, “You have to find a way to get off the litigation rollercoaster.”

Litigation is going to have the highest highs. You file a motion that you care about, and you win. It’s great and fantastic. You are as high as can be. You are like, “I will put a press release out,” and two weeks later, you lose the motion, and it’s the lowest of lows. What do you mean? It’s soul-destroying when you don’t live in this world.

My best advice for a business team is to get off that roller coaster. Understand you are going to have highs and lows. Understand that you might think you can win it all, and you will likely won’t. Understand you will think you will lose it all, and you will likely won’t. Rather than riding the roller coaster and looking for extreme results, if you are winning, find a way to get out at the right time where you preserve your win without risking that win. If you are losing, have faith that there will be an opportunity to turn the tide.

It is a rare case where that doesn’t happen. Set yourself up to take advantage of that opportunity. I’ve seen companies litigate, and they thought they were going to win everything and lost it all. They snatched the proverbial defeat out of the jaws of victory, and it was because they got so arrogant. By strongly believing that they couldn’t put a foot wrong, they lost what they were trying to achieve. I’ve seen little companies come out the other side because they had stamina, the belief, and the wherewithal to weather the storm and keep fighting.

If there’s a way to take that tough set of experiences over multiple years, and it’s an expensive one, and almost focus on what matters and hire the best people that you trust to do the job that needs doing, then you will sleep better at night in the end. That’s where my business name comes from. Turnstone Consulting. Somebody told me once, “David, you don’t leave any stone unturned.” That’s why I call it Turnstone.

Thanks for sharing that. I always wondered about that. In wrapping up, we won’t go to the vault because you were gracious enough to do that in the last episode. I do want to preface this by saying, David is incredibly busy, and we haven’t even discussed what I’m about to ask but you were kind enough to include your contact information in the last episode. If I’m an entrepreneur and my head is spinning now, I must say I am, and that last bit on the international piece, the only rational conclusion I could reach is I need to get a hold of David Shaw, how should I reach you? Do you have the capacity to take on clients? How does that process work?

I do, and I don’t. It totally depends on the life cycle of the clients that I’m representing. There’s a case that I’m involved in now that’s going to trial in a few months. For example, if they had a trial coming up in March, then the answer would be no. I can’t. The good news is that over the years, my clients usually exit. They will sell, will IPO, and find an exit for the shareholders, etc.

When that happens, I do not stay on to work for the acquirer or the much larger company. I will go back and take on new smaller clients. I have a quite frequent turnover for a very good reason because we’ve seen it through to the point where the company has succeeded. Once the company succeeded and navigated the shoulders of that IP presented, they didn’t need me anymore.

I can go on to work for other companies that do need me. There’s always that potential to work for new clients, and I would welcome it. How to get a hold of me? My email is a mouthful. It’s DShaw@MontereyAdvisors.com. It’s an old email that I’ve used. Monterey Advisors doesn’t even exist anymore but it’s an email that I’ve used because everybody knows me by that. The cell is (408) 390-8329. Those are probably the two ways.

Any final thoughts?

One final thought. I’m going to ask myself a question from the vault. I’m going to try to channel you, Jeff. “David, if you have a book to recommend for MedTech CEOs before they go into litigation, what would you recommend? Sun Tzu’s The Art of War. No question. Read it. The lessons in Sun Tzu’s The Art of War are what we have been talking about. There are so many parallels.

Choose your battles. Know when and how to fight and when not to. Timing is everything. Know yourself. Know your strengths and weaknesses. Know the enemy. It’s better to win without fighting if you can. On and on, the vast majority of lessons that you can learn from some Sun Tzu apply directly to MedTech patent litigation, especially in bet-the-company litigation where the company’s back is against the wall. That’s how I would wrap things up.

I can’t think of a better way to end the episode. David, you have been extremely generous with your time. This is going to help a lot of people. Thanks so much for being on UNMET NEED.

It’s a pleasure, Jeff. Thank you very much.

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