Winning Against the Odds: Insights from Yealink's Landmark IP Victory in the Eastern District of Texas - An Exclusive Dialogue with Lead Counsel Stephen Yang

Source:IP Today

In the high ground of patent litigation, the U.S. District Court for the Eastern District of Texas, defendants rarely secure favorable verdicts. Recently, however, Stephen Yang of Dentons, serving as lead counsel, achieved a crucial victory for his client Yealink in a trial presided over by Judge Gilstrap. While plaintiff Barco sought millions of dollars in damages but the jury ultimately awarded only 900,000 dollars and dismissed the core allegations of "indirect infringement" and "willful infringement." This outcome not only safeguarded the client’s significant interests but also provided a valuable practical model for Chinese tech companies navigating overseas intellectual property (IP) disputes amid their global expansion. In this exclusive dialogue, we invite Stephen Yang to delve into the winning logic and practical experience behind the case.

IPR Daily: Could you please briefly introduce your practical and highly professional background to the readers of IPR Daily?

Stephen Yang: Certainly. As Camila mentioned, I am a partner at Dentons US. My practice focuses on patents and intellectual property litigation, and I have been engaged in this field for nearly 15 years. I have handled more than 70 cases to date. These cases have been litigated before U.S. District Courts, the International Trade Commission (ITC) in Section 337 proceedings, and the Patent Trial and Appeal Board (PTAB) in Inter Partes Review (IPR) proceedings. 

I often serve as lead counsel for my clients, being responsible for overall case strategy formulation and presenting the case in court during opening statements, closing arguments, and ensuring all evidence is properly admitted. My clients are often global entities, including a significant number from Asia, like China, as well as many European clients and U.S. clients, especially those involved in matters with foreign parties, whether foreign defendants or foreign plaintiffs. This has been my core area of expertise. 

Over the years, I have handled cases across a wide range of industries, including high technology (such as video conferencing equipment and drones), the pharmaceutical and medical device sector, chemical manufacturing, and various commodity products like diamond drill bits and fire trucks. That summarizes my professional experience and background in a nutshell. 

IPR Daily: Thank you for your self-introduction. The jury verdict you secured before Judge Gilstrap in the Eastern District of Texas is regarded as one of the rare victories for defendants in this venue. Could you specifically share the core disputes of this case?

Stephen Yang: Certainly. As you noted, the Eastern District of Texas is the busiest patent litigation venue in the United States, and it has a specific reputation in this regard. For instance, in the two trials preceding ours, one resulted in a $500 million verdict against the defendant along with a finding of willful infringement, and the next trial, immediately before ours, led to a $200 million verdict against the defendant, also with a finding of willful infringement. This is precisely why the plaintiff chose this venue in our case: to exert substantial pressure on our client, Yealink. 

In this matter, the plaintiff, Barco, and the defendant, Yealink, are two leading global competitors in the audio-visual (AV) sector and major manufacturers of video conferencing equipment. Barco holds six patents directed to the equipment manufactured by our client, covering two sets of products. The first set consists of the base units, Yealink’s core video conferencing equipment, which boasts significant sales globally, including in the United States. The second set comprises accessories for these base units, known as dongles. Barco’s claims included: compensation for past infringement; a finding of ongoing indirect infringement, particularly with respect to the base units, to secure substantial ongoing royalties potentially amounting to millions or tens of millions of dollars annually; and a finding of willful infringement, which would enable Barco to request the court to treble the damages awarded. In summary, these constituted the core disputes in our case. 

IPR Daily: While the plaintiff, Barco, sought millions of dollars in damages, the jury ultimately awarded only $900,000 and dismissed the claims of ongoing indirect infringement and willful infringement. What do you believe were the key reasons for achieving such a crucial victory?

Stephen Yang: There are multiple factors contributing to this favorable verdict, but broadly speaking, we developed a clear plan from the outset of our engagement and executed it through thorough and thoughtful preparation during the trial. Nearly two years ago, when we first began working with Yealink, we did not merely prepare for the trial in a conventional manner; instead, we worked backwards from the desired outcome, treating the case as a holistic endeavor to achieve that specific result. 

Upon our initial collaboration, we reviewed with Yealink’s team the case, the relevant products, and our potential exposure in detail, then we jointly formulated a unique and somewhat unorthodox strategy, one that I am happy to elaborate on further. This strategy not only secured the excellent verdict you mentioned but also significantly limited the scope of discovery. 

As you may be aware, discovery is the most resource-intensive phase of U.S. patent litigation, both in terms of time and cost, and the Eastern District of Texas is known for its broad discovery scope. By limiting this scope, we not only achieved the client’s litigation objectives but also saved them millions of dollars in legal fees. Additionally, and perhaps most importantly, we had an exceptional team: a small yet highly effective and collaborative trial team that worked diligently, as well as a fantastic client, including Yealink’s legal team and management, who provided full support. They understood our objectives and furnished us with the necessary resources and assistance to prepare the case thoroughly. With all these elements in place, the successful outcome was not surprising.

IPR Daily: As the lead counsel overseeing the entire process, what do you consider to be the biggest challenge you faced?

Stephen Yang: There were certainly numerous challenges in this case, but the most significant one, particularly during the trial, was effectively communicating the right narrative to the jury. We were appearing before a jury in Marshall, Eastern District of Texas, representing a large, powerful Chinese company that had been accused of patent infringement. Collectively, these factors placed us at a disadvantage from the outset. 

To illustrate, during the voir dire process on the first day of trial, when we ask jurors questions to understand their perspectives, impressions, and potential biases, after we provided some details about the case, one juror stood up and stated publicly, “Boy, I wouldn’t want to be in your shoes.” That statement succinctly captures the challenges we confronted. 

It is important to note that patent litigation typically lasts 2 to 3 years, involving extensive discovery and the collection of vast amounts of information. However, in this trial, we had only three days to present our case to the jury. In those three days, we needed to introduce ourselves, explain the nature of the case, not only familiarize the jury with us but also gain their trust, get them to like us, and ultimately their agreement with our position. Therefore, the biggest challenge was: How to effectively tell our story in just three days, enabling the jury to overcome any preconceived notions they might have had about our client and the case, and ultimately persuade them to render a favorable verdict.

IPR Daily: That is indeed a considerable challenge. How did your team collaborate to overcome it?

Stephen Yang: As I mentioned earlier, our core objective was to communicate the right narrative to the jury. This involved two key aspects: first, what we told the jury and how we told it; and second, shaping the plaintiff’s actions, an equally important component. 

Regarding the first aspect, while there was infringement, it was limited in scope, and the plaintiff’s demand for millions of dollars in damages was unreasonable, as they were seeking excessive compensation for minimal infringement. However, I knew going into the trial that relying solely on arguing the unreasonableness of the plaintiff’s demands or their inconsistency with the law would be insufficient. The jury would have thought, “You infringed the patents, yet you refuse to pay the rightful amount.” This approach would not have been effective. Therefore, we decided to tell the complete story to the jury. The patents in question were granted in 2020, so the plaintiff framed the narrative starting in 2020, portraying us as the “bad guys” for infringing their patents. In contrast, we extended the timeline back to 2011 when Yealink first began developing the products at issue in this case, a fact that is fully corroborated by the evidence. We also emphasized what I refer to as the “collaboration” aspect, a detail the plaintiff deliberately omitted from their presentation.  By truthfully restoring the background of cooperation and the process of product development, the jury’s perception of the dispute was fundamentally altered. 

Turning to the second aspect: shaping the plaintiff’s actions, we made a series of strategic decisions throughout the case, including filing motions and opposing certain requests by Barco. And to a certain extent, those actions led Barco to act in our favor. I believe their confidence played a role as well. On the first day of trial, during opening statements, Barco’s attorney addressed the jury, stating, “This case is about collaboration, there are good collaborators and bad collaborators.” I nearly jumped out of my seat, as this was precisely the narrative we wanted Barco to embrace. This made my opening statement significantly easier. I told the jury, “You just heard about good and bad collaborators. Let me share something you haven’t heard about, the partnership program between the parties.” It was evident that the jury resonated with our story. They recognized that, while Yealink may have technically infringed the patents, Yealink was the “good guy” and a fair player. From that point onward, we successfully shifted the jury’s perspective, setting the stage for our favorable outcome from the very beginning.

IPR Daily: Thank you for sharing this fascinating courtroom narrative, very interesting! The Eastern District of Texas is widely known for being plaintiff-friendly, especially in patent litigation. How did you tailor your strategy for the jury, particularly in this court?

Stephen Yang: That is an excellent question. As we noted earlier, the Eastern District of Texas is the busiest patent court in the United States, and while its reputation is more nuanced than simply being “plaintiff-friendly,” it is true that many high-dollar verdicts have emerged from this jurisdiction. Although I am based in New York City, I spend a significant amount of time in Texas handling cases and working with clients. From my experience, juries in Texas value honesty, forthrightness, and integrity, they reward individuals and entities that act with integrity and treat others, even competitors, fairly. They can easily detect when a party is acting unfairly or attempting to take advantage. This is precisely why we developed and implemented the strategy outlined earlier: we wanted the jury to be aware of the prior relationship between the parties, particularly the collaboration aspect. 

Another key component of our strategy was witness selection and preparation. Nearly 20 months ago, when we first began working with Yealink, I met individually with all potential witnesses. My goal was not only to gather information they possessed but also to observe their demeanor, how they responded to questions, and assess their ability to testify effectively before a Texas jury. We ultimately selected witnesses who testified at trial, and the particular witness from Yealink delivered an exceptional performance. The jury found them highly credible and likable, and they effectively communicated Yealink’s side of the story. Beyond the verdict itself, one of the most rewarding moments of the trial occurred at the conclusion, when the jury foreperson approached us and stated, “We really appreciated the way your team presented the case, and we were very impressed with your witnesses, both the fact witnesses and the expert witnesses.” This moment validated the 20 months of preparation we had invested, as we knew that success before this jury required the right evidence, the right narrative, and, of course, the right witnesses.

IPR Daily: It must have taken a great deal of time to prepare the witness.

Stephen Yang: Surprisingly, preparing this particular witness from Yealink did not take an excessive amount of time. Of course, we worked with the witnesses to ensure they understood their role, the impact of their deposition testimony on their trial testimony, and the importance of evidence. I was extremely fortunate to have Yealink as a client, they were highly cooperative and supportive. However, based on my experience working with clients from China and other regions, I have encountered witnesses with misconceptions or incorrect impressions, and in those cases, it is necessary to invest significant time to ensure they understand their responsibilities and how to effectively communicate their story. In this instance, Yealink was an exceptional client with a strong support team, which greatly facilitated the witness preparation process. 

IPR Daily: You have long provided IP legal services to multinational enterprises. Based on your experience, what common misunderstandings do Chinese companies have when selecting cooperating attorneys for overseas IP disputes, and what specific suggestions do you have in this regard?

Stephen Yang: This is an important question. Chinese companies facing overseas litigation, particularly in the United States, encounter numerous challenges. One key issue that I have observed, and which is often overlooked, is the importance of building a strong relationship not just with any attorney, but specifically with the lead counsel. The lead counsel should be someone with whom the company has a trusting relationship, who understands the company’s business, goals, and what it seeks to achieve through litigation. Unfortunately, I frequently observe Chinese companies, including at some seminars I have attended, that companies prioritize selecting attorneys who can communicate in Chinese and with whom they can easily converse. While this is understandable, it often results in selecting attorneys who are not the lead counsel at trial. These attorneys are not responsible for shaping the overall strategy, ensuring the admission of key evidence, or leading the trial team during litigation. In many cases, these communicating attorneys are not deeply involved in the litigation or even a part of the core trial team. 

I have heard numerous clients and companies report communication breakdowns, where the attorney they are working with fails to effectively convey their needs to the lead trial team. It is critical to recognize that proceedings such as litigation in the Eastern District of Texas or ITC Section 337 investigations move very quickly, making open and direct communication with lead counsel essential. In many major cases involving large Chinese enterprises, I have witnessed cases derail during the discovery phase because counsel fails to effectively control the production of evidence or deposition testimony. Often, this occurs because the lead counsel either lacks effective communication with the client or becomes involved too late, sometimes on the eve of trial, when it is too late to shape the narrative to the client’s advantage. 

Chinese companies can improve in this area by building a direct relationship with the lead counsel at the law firm, someone who not only has extensive litigation experience but also significant expertise in cross-border disputes, particularly representing foreign defendants and Chinese enterprises. These cases involve unique cultural and legal issues, and having counsel with relevant experience is crucial. I am not suggesting that I am the right fit for every client, in fact, I am quite selective in the clients I represent, as my approach requires a deep understanding of the evidence and issues. However, this point cannot be overstated: building a relationship with lead counsel, understanding their experience, and ensuring they have the necessary expertise in cross-border disputes is critical for success.

IPR Daily: Returning to the case, I understand that during the litigation, Yealink took the initiative to suspend U.S. sales of related products and recall inventory. Did this responsible measure have an impact on the trial outcome, and how do you evaluate enterprises’ proactive compliance behaviors in IP disputes?

Stephen Yang: Yes, this measure had a critical impact on the trial outcome and was a core component of our overall strategy. As you mentioned, Yealink suspended sales of the accessory products and recalled inventory, a decision that demonstrated Yealink’s sense of responsibility. By taking this step, we were able to portray Yealink as a company that acts with integrity, even as a large global competitor. 

As I noted earlier, juries in Texas value integrity highly, and this became a central theme of our trial. During my opening statement and, in particular, my closing argument, I emphasized this point to the jury: “You have heard all the evidence and observed the actions of both companies. Through its decision to suspend sales and recall inventory, Yealink has demonstrated that it is a company with strong integrity.” It was clear from the jury’s reactions that they agreed with this assessment. With this understanding and the evidence presented, the favorable verdict was not surprising. 

Regarding the importance of proactive compliance, I agree with the underlying premise of your question. Many foreign companies respond reactively when faced with litigation, but proactive compliance, anticipating potential vulnerabilities and ensuring compliance with relevant laws, regulations, and standards, is extremely important. In the United States, both juries and judges view proactive compliance favorably, as it places the company in the best possible light. While we have focused on Texas juries, this principle applies to juries nationwide, they consistently favor companies that act proactively, comply with legal requirements, and demonstrate integrity. Therefore, proactive compliance is particularly crucial for foreign clients, and especially for Chinese clients in the current business climate.

IPR Daily: You often develop unique and efficient IP strategies in complex IP litigation. Based on this case, how do you believe enterprises should transform IP and litigation into competitive advantages when confronting unreasonable patent claims?

Stephen Yang: This is a valuable question. For many enterprises, it is essential to recognize that once entering overseas markets, particularly the U.S. market, litigation and patent litigation in particular, is an inherent part of doing business. It is a reality that many companies must confront. The sooner an enterprise acknowledges this, the sooner it can prepare, leverage its advantages, and mitigate risks. 

As we discussed earlier, selecting the right legal team and building a trusting relationship is critical. Ideally, this relationship should be established before litigation arises, enabling the company to potentially prevent litigation or, at a minimum, prepare thoroughly to minimize its impact. Enterprises should consult with their counsel on compliance matters to ensure adherence to relevant statutes, laws, standards, and regulations. They should also organize and review evidence proactively, so that if litigation does occur, they are prepared and not caught off guard. Having a pre-determined strategy and being ready to execute it is essential. Ultimately, the key is to build a relationship with lead counsel whom you trust, and to discuss real-world case examples and lessons learned. This preparation will enable enterprises to better navigate the market and respond effectively if litigation arises. In summary, success lies in being proactive and thorough in preparation.

IPR Daily: Thank you for your detailed answers. We appreciate your time today.

Stephen Yang: Thank you for having me. It has been a pleasure.

Source:IP Today